Impact of Mass Deportations on Existing Construction Labor Shortage

Homebuilders have been wrestling with a persistent labor shortage driven by an aging workforce, post-recession workforce losses, and strong demand for new housing for more than a decade. Research performed by the National Association of Home Builders (NAHB) and the Bureau of Labor Statistics through 2025–2026 explains the shortage this way: the residential construction sector needs 723,000 new hires every year for the foreseeable future to meet demand, replace retirees, and address the existing backlog.The problem, which is becoming critical, is finding those new hires. Few researchers and even fewer Construction Directors have a solution to an already shrinking workforce which is soon be strained further by mass deportations.

ECONOMIC IMPACT

The shortage of skilled labor cost had a $10.8 billion economic impact in the single-family sector alone. This includes $8.1 billion in lost revenue because of the 19,000 homes that were not built in 2024 because the industry didn’t have the labor to build them, and $2.7 billion in increased carrying costs from slower construction schedules.

Total construction employment stands at about 8.3 million payroll workers (3.3 million in residential) or 11.9 million when the self-employed and temporarily unemployed are counted. Job openings hover around 300,000, but 92% of firms report hiring difficulties.

The sector lost over 1 million craftsmen since 2005, and the median worker has aged to 42 years old. The problem has been fueled by chronic under-hiring relative to sector needs for decades, compounded by high interest rates slowing starts in 2025.

IMMIGRANTS A HUGE PART OF THE WORKFORCE

Illegal immigrants play a substantial role in the homebuilding workforce. Foreign-born workers comprise 25.5% of the total construction labor force, or about 3 million people. This number rises to 33% among craftsmen and tradespeople. Estimates place illegal workers at approximately 1.7 million, roughly 20% of the nation’s 8.5 million illegal workforce and a key share of the 11.9 million total labor pool.

Construction laborers alone account for 574,700 illegal workers. Construction is the top occupation for illegals nationally. As a result, they are becoming a larger target for deportations as the deportation trend continues. The share of workers is higher in certain trades (e.g., drywall installers, roofers, painters) and in states like Texas where up to 23% of the workforce is illegal.

SHIFTING LIABILITY TO EMPLOYERS

As the planned deportations continue, there will be a shift towards employer liability for employing illegal aliens, with substantial fines, and even jail time in the offing. We are already seeing construction companies demand proof that applicants are legal to work here. And with the IRS becoming increasingly involved, just calling them 1099 workers won’t fly.

These workers often fill lower-skilled, labor-intensive roles that native American workers have been slow to accept, especially amid generational shifts away from trades. Immigrants have helped offset native-born declines of over 550,000 since 2005. That will begin to penalize employers.

EFFECT OF DEPORTATIONS

Mass deportations—whether the scale proposed, millions over several years, or the stepped-up enforcement already underway, would directly remove a large portion of this workforce. Analyses project losses of between 1.4M to 1.7M construction workers if illegal aliens are targeted at scale.

The Economic Policy Institute (EPI), modeling deportation of 4 million people by 2028, estimates 1.4 million fewer immigrant construction jobs and a net loss of 861,000 US-born construction jobs, for an 18.8% contraction in the sector workforce. The American Immigration Council similarly projects up to 1.5 million removals in the sector nationwide.

LEGNTHENING BUILDING CYCLE TIMES

In residential construction (where about 42% of construction employment occurs), the effects would compound the existing $10.8 billion annual economic loss. Projects would face delays, with builders already reporting longer timelines due to labor scarcity.

Costs could also rise sharply, with some estimates suggesting up to 25% increases in construction costs from wage pressure and supply bottlenecks, further inflating home prices in an already tight market. Even partial enforcement in 2025 chilled attendance by illegals on jobsites.  Already one third of construction firms report impacts from raids or even just rumors of raids, with subcontractors losing workers temporarily and 10% experiencing permanent worker losses.

Studies of past enforcement action confirms complementarity between immigrant and native labor: removing illegal workers reduces overall employment, not just immigrant cuts, as projects scale back or halt. A University of Utah analysis linked stricter enforcement to declines in homebuilding and higher prices. Oxford Economics warns that removing 50% of illegal construction labor would reduce sector growth by 50%

OFFSET BY DECLINING DEMAND

On the demand side, deportations are reducing population and housing needs. Illegal immigrants contribute to rental demand (often in multigenerational or lower-income units), and some analyses (e.g., Center for Immigration Studies or HUD reports) attribute recent price growth partly to immigration-driven household formation. Removing millions could ease pressure on existing stock in high-immigration areas. In Austin, Texas landlords are reporting a 21% decline in rents. However, most economic and industry assessments conclude the supply-side shock dominates: fewer homes built exacerbates the 1.2–1.5-million-unit deficit faster than demand falls, especially since new construction targets ownership and higher-price segments.

Longer-term outcomes remain uncertain. Higher wages (already up 9.2% for residential production workers in the past 12 months alone) might attract more US-born or legal workers, women (currently 11.2%), or veterans. Training programs, automation, and legal immigration reforms could help.

INABILITY TO RECRUIT AMERICAN CITIZENS

But the sector has struggled for years to recruit American citizens into trades despite shortages; reluctance persists even at higher pay levels. Self-employment has stabilized at 23%, and shifts toward white-collar roles within construction continue. Without offsets, production could fall further, delaying any closure of the housing gap which is projected for 2026–2030 under baseline assumptions.

Current enforcement trends in 2026 already signal a disruption. Voluntary departures and removals are exceeding prior year’s levels, with construction sites affected disproportionately. Full-scale mass deportations would deepen the crisis in housing affordability precisely when supply expansion is critical.

PRELIMINARY CONCLUSIONS

In summary, while the labor shortage in residential construction is real, longstanding, and persistent gap necessitating hundreds of thousands of annual hires. Illegal immigrants fill an irreplaceable role, comprising roughly 1.7 million positions. Mass deportations would sharply reduce workforce capacity, slow homebuilding schedules, raise costs further, and worsen the existing housing shortage.

The resultant reduction in demand for housing because deportees don’t need housing offers partial mitigation but it will be insufficient to offset supply losses, per multiple economic models.

Addressing the challenge sustainably will require difficult moves and more than a little risk for all homebuilders, especially those who guess wrong. Nonetheless, it will take bold moves to stay ahead of this looming crisis. Homebuilders who don’t adequately prepare for these challenges will absorb the biggest share of the $10.8 billion annual drag on the industry, that could balloon, delaying homes for millions, and inflating prices further.

Solutions Not Articles

Articles aren’t going to solve this problem. Ignoring this looming problem will lead to disaster. When I finish gaming the looming disaster, I’ll publish possible and aggressive solutions.