Recently, a major Alabama construction project suddenly went silent. Nearly every worker, despite apparent sign-off through the “E-verify” system, failed to show up on a $20 million job site. The reason? They were scared by an Immigration and Customs Enforcement raid on a work site 230 miles away. When it’s a matter of being deported and there are reports of immigrants deemed guilty until proven innocent, word travels quickly.

Granted, ICE’s stepped-up activity is a sensitive and complicated issue, but any conversation on the matter should acknowledge that its sweeping nature is creating quite a bit of economic turbulence.

At another, much smaller, Alabama home construction site, a contractor reported to me that he was the only English speaker on the project, and that the rest stayed inside at lunch for fear that, even though properly documented, they might be apprehended and forced to prove their legitimacy.

We all understand that President Donald Trump is keeping a campaign promise to round up and deport at least 1 million undocumented immigrants this year. It’s easier to forget that 685,000 were deported in 2024 under the Biden administration. Some have criminal records. Others, with clean reports, are released after crossing the border and then await judicial review of their status (a procedure, given the backlog, that may be years away).

Added to this may be as many as 1.6 million unauthorized immigrants who have voluntarily left the country since ICE efforts became more intense. The count is much disputed, but it’s not just the number that matters. The uncertainty, both for affected individuals and throughout the economy, is an inevitable result of the Trump administration’s high-profile approach.

The round-up activity is making an already tough construction labor problem more difficult. Construction costs are rising, and thousands of new homes that might have been are not materializing. That’s concerning in a nation where housing scarcity has been driving prices to uncomfortable levels for quite some time now. A recent study by the Home Builders Institute and National Association of Home Builders examined the effects of an earlier labor shortage on single-family home building. Labor scarcity led to a reduction of approximately 19,000 single-family homes in 2024.

The problem cuts across many industries, not just construction. According to the IPUMS center, in 2024, noncitizens accounted for 33% of maid and housekeeping workers and 24% in landscaping. The Department of Agriculture reports that 42% of crop workers are undocumented immigrants.

Though this is speculation, America’s ICE-disturbed labor markets may have helped cause the University of Michigan’s August consumer sentiment index to fall after rising for four consecutive months. As for the notion that native U.S. workers might enjoy more opportunities in the labor market, consumers expressed concern about declining employment prospects.

The National Federation of Independent Businesses’ optimism index also fell in August after being positive for three consecutive months. Get this: Some 40% of all “small business owners reported job openings they could not fill.” This was up two points since July and probably not coincidence.

There’s obviously a paradox here. Ordinary people are worried about getting or keeping jobs while employers are concerned about finding enough workers to keep their businesses flourishing. In theory, native workers step in to replace immigrants. So far, ICE crackdowns that are exporting workers and causing others to be scared to go to work seem to be the more powerful economic force. Border fences are getting tighter and we are importing fewer workers.

There’s more to the shrinking supply story, but one thing is certain: One way or another, the U.S. is running low on workers and we no longer produce as many at home. We will soon be running low on the things they make and paying higher prices.

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Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of the Clemson College of Business and Behavioral Sciences and a former executive director of the Federal Trade Commission.

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