A new study warns that mass deportations could severely damage California’s economy, costing the state up to $275 billion in GDP losses and hitting small businesses especially hard.
The report, conducted by UC Merced and the Bay Area Council Economic Institute, highlights how deeply undocumented immigrants are woven into the state’s economic fabric—especially in regions like the San Joaquin Valley, Bay Area, Los Angeles, and the Inland Empire.
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“Undocumented immigrants are really intricately tied to our communities and the economy of the state,” said Maria-Elena Young, assistant professor at UC Merced. “A mass deportation in California could cost the state up to $275 billion.”
Businesses Already Feeling the Strain
Angela Aguilera, who runs a small business in Merced, says ICE raids have caused foot traffic to plunge:
“Less and less people have been coming. They’ve been scared to come out of their homes,” she explained.
The study found:
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40% of small businesses in California are immigrant-owned
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10% are run by undocumented immigrants
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Small towns in economically struggling areas are especially vulnerable
“Immigrants are the backbone of small businesses,” said Young. “They give vibrancy to communities, particularly in the Valley.”
The Broader Economic Impact
While the fear and uncertainty are already disrupting business, researchers warn that the ripple effects would touch all Californians.
“It’s heartbreaking that people are not coming out,” Aguilera said. “It’s affecting a lot of people—kids, women, fathers, grandparents.”
The report underscores a growing concern: that immigration enforcement policies, if taken to extremes, could cripple local economies and worsen social divides, especially in communities that rely heavily on immigrant labor and entrepreneurship.
