The University of California, Los Angeles (UCLA) warned that the deportation policies implemented by the Donald Trump administration have begun to leave a negative mark on the Californian economy, particularly on the labor market.

According to an analysis by the Anderson School of Management research center, the state experienced a sustained reduction in payroll jobs in the first eight months of 2025, something that had not occurred since the most critical months of the pandemic. The report indicates that California's unemployment rate reached an average of 5.5% in August, exceeding the national rate by more than one percentage point. This increase, according to researchers, is related to the impact of mass deportations, which have altered consumption patterns and generated disruptions in sectors where immigrant labor plays a key complementary role. The construction, non-durable goods manufacturing, retail, leisure, and hospitality sectors are among the most affected. The analysis highlights that, historically, severe immigration restrictions “tend to increase unemployment,” not only among foreign workers but also among US-born employees, due to the decline in economic activity associated with reduced household and business spending. Initial county-level data show that the effect is most pronounced in areas with a greater reliance on foreign workers, especially in agriculture, residential construction, and tourism services. This is compounded by an economic environment marked by federal spending cuts, tariffs that increase the cost of inputs, and financing conditions that remain high. The labor shortage generated by deportations is also slowing the development of new housing in a state already facing a critical housing shortage. The report warns that material costs, driven by trade tariffs, are further aggravating the sector's situation.

Despite this outlook, UCLA experts point out that California maintains outstanding performance in high-productivity industries, such as artificial intelligence, advanced manufacturing, and aerospace, sustained by high levels of venture capital investment.

Unemployment is projected to remain around 5.5% through 2026, with a gradual improvement toward 2027.

More studies confirm the impact

On the other hand, according to another study published in August of this year by the UC Merced Community and Labor Center, the economic impact of President Donald Trump's mass deportation campaign on California's workforce is comparable to the beginning of the Great Recession.

This study analyzed data from the US Census Bureau and the Bureau of Labor Statistics to measure labor force participation in the private sector.

During the week of June 8-14, when Immigration and Customs Enforcement (ICE) agents conducted mass raids in Los Angeles and other parts of the state, California saw a 3.1% drop in its labor force participation rate, while in the rest of the country this rate increased by 0.5%, according to the report.

For comparison, the study notes that California's labor force decreased by 3% between December 2007 and January 2008, the first month of the Great Recession.

The data suggest that the Trump administration's aggressive immigration policy—where federal agents target all undocumented workers, not just those with serious criminal records—is affecting the entire workforce.