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Austin, Texas • Though construction is in high demand in Texas' booming capital city, Oscar Martinez's drywall company is suddenly struggling.
One-third of the approximately 20 employees Martinez uses to build new homes and commercial spaces have recently fled the state, spooked by a combination of a federal immigration crackdown by the Trump administration and a tough anti-"sanctuary cities" law approved last month by Texas' Republican-controlled Legislature.
"I took a big hit since my workers started hearing crazy stories about being deported, and they panicked," said Martinez, who relies on immigrants in the U.S. illegally for labor and has failed to find replacements for the physically grueling, precise work.
"The Americans I hire can't last in this job more than half a day," Martinez said.
Similar fears have sent shockwaves through many sectors of the U.S. economy. In most cases, demographers and economic experts say it's too early to quantify the full impact of workforce shortages fueled by immigration fears, but anecdotal evidence is widespread.
"I've heard from growers, construction, and the service industry about a destabilization of the workforce in Texas and around the country," said Ali Noorani, executive director of the National Immigration Forum, a Washington-based immigrants' rights advocacy group. "It's definitely happening more in states that are considering major immigration enforcement policies."
The issue is particularly pronounced in Texas because it's a conservative state and has one of the largest populations of immigrants who are living in the U.S. illegally. Texas' new law has exacerbated more general fears among immigrants about immigration policies becoming stricter nationwide under President Donald Trump.
Opponents have dubbed it the "show me your papers" law because it allows police to ask about the immigration status of anyone they stop and requires them to turn over immigrants to U.S. immigration authorities upon request. Sheriffs and other police officials who don't comply could see their departments fined and could personally face criminal charges and be booted from office. The law is aimed at so-called sanctuary cities a term with no legal definition that loosely refers to jurisdictions where police have traditionally refrained from enforcing U.S. immigration law.
The biggest industry to take a hit from the immigration crackdown is construction. About half of that industry's workers are in the U.S. illegally, according to the immigrant rights organization Workers Defense Project.
"Projects are coming in late because we don't have enough labor," said Frank Fuentes, chairman of the U.S. Hispanic Contractors Association, based in Austin. "When paranoia hits this segment of the community, it truly affects the industry as a whole."
Fuentes said he "gets calls of concern on a daily basis" from states including California, Georgia, and Florida about staffing shortages. But Texas' new law has triggered an extreme crisis, said Fuentes.
"It's funny because they know these workers are needed," Fuentes said of state lawmakers. "Yet they don't want them."
Faced with the labor deficit, Martinez has recently lost contracts with two big clients. One of his workers was deported; others told him they were moving to Mexico, California, and other states with more forgiving immigration policies.
"It just breaks my heart when they have to leave because of the situation," said Martinez, whose employees typically work 15-hour days and six or seven days a week. "It's not fair."
Immigrant fears have also rattled other industries.
"Everyone's on pins and needles," said Craig Regelbrugge, vice president of horticulture industry group AmericanHort, noting that farms were already in need of more employees.
Hotel and restaurant owners have also reported losing workers, said Cathy DeWitt, a spokeswoman for the Texas Association of Business. But she said the bigger economic impact could be from the loss of customers.
"We're more concerned about the buying power of this population," she said, pointing to the estimated 1.1 million people in Texas who are living in the U.S. illegally, second only to California. "When you have over a million people not feeling welcome they'll move somewhere they are welcome."
Texas for many years led the nation in job growth, though its economy has slowed more recently, in part due to a slump in oil prices. Republican Gov. Greg Abbott has defended the new law, and the measure's author, state Sen. Charles Perry, said it's key to ensuring security in the state.
"Banning sanctuary cities is about preventing those who commit terrible crimes from being released back into our community while affording protections to undocumented victims and witnesses of crime," said Perry, a Republican from Lubbock.
Steven Camarota, director of research for the conservative Center for Immigration Studies, said businesses may suffer, but U.S. citizens and other workers living here legally should benefit.
"The poorest American workers may see an increase in wages and employment," Camarota said.
Randy Capps, director of research for U.S. programs with the Migration Policy Institute, a bipartisan think tank based in Washington, predicted that most immigrants ultimately would remain in the state.
"I think, as long as the economy is strong in Texas, you're less likely to see that impact," he said.
Martinez, for one, desperately hopes that's true.
"At the end of the day, we need these people," he said.