OPINION: Is there a labor crisis looming over NM? The economic toll of mass deportation

The early signs are that President Donald Trump is following through on his pledge to deport millions of undocumented migrants from the United States. Beyond the humanitarian concerns, the economic impact of such a policy poses a significant challenge, particularly for New Mexico’s already tight labor market. Such actions could lead to severe labor shortages in key industries, driving up costs and creating ripple effects that hurt consumers and businesses alike. State and local officials must prioritize research and planning to prepare for these potential disruptions.

As of 2023, around 36,000 undocumented immigrants were part of New Mexico’s labor force, accounting for 3.8% of the total, compared to the national average of 4.8%. While New Mexico is less dependent on undocumented workers than other states, its lower labor force participation rate (58% versus the national average of 63%) creates unique challenges. In December 2024, there were 33,000 unemployed workers in New Mexico, an insufficient number to replace the 36,000 undocumented workers. Nationally, the imbalance is even more pronounced, with 8 million undocumented workers far outnumbering the 6.5 million unemployed individuals.

Undocumented workers are vital to New Mexico’s economy, particularly in industries like hospitality, construction and agriculture. They make up 9% of the hospitality workforce and 10% of the construction workforce. These workers cannot be easily replaced. For example, the hospitality industry relies on 8,000 undocumented workers, but there are only 4,200 unemployed hospitality workers in the state. Similarly, the construction industry employs 7,000 undocumented workers, but there are only 1,500 unemployed construction workers in the state. These industries would face severe disruptions without undocumented labor, threatening the state’s economic stability.

In Rural New Mexico, the consequences are especially high. Given that nearly half of the state’s visitor spending occurs in rural communities, addressing potential hospitality labor shortages is essential to maintain the economic vitality of rural communities.

Labor shortages of this magnitude will also have a direct impact on consumers. Businesses facing worker shortages often raise wages, which inevitably increases prices for goods and services. These price hikes are likely to affect sectors already impacted by inflation, such as food, housing and hospitality. For example, higher labor costs in agriculture will drive up grocery prices, while higher construction costs will make housing even more expensive. This inflationary cycle could strain household budgets further, particularly in a state where 33% of the population relies on Medicaid and 17% live below the poverty line.

Efforts to address these challenges require a proactive and strategic approach. The state should identify industry vulnerabilities, forecast the impacts of labor shortages, and develop targeted solutions. Workforce development initiatives should focus on expanding the labor pool through training and education programs. Additionally, legal avenues, such as H-2A and H-2B visa programs, should be actively promoted to help employers access migrant labor.

Technical assistance programs are also essential, particularly for businesses in highly impacted industries like agriculture, construction and hospitality. These programs can guide employers through complex immigration systems and provide resources to mitigate labor shortages effectively.

The bottom line: A well-researched, strategic response, combined with technical assistance for businesses, is essential to safeguarding New Mexico’s economy. By equipping employers with the resources they need, the state can prevent economic disruptions, protect vital industries and alleviate financial strain on businesses and families alike.