A new report from UC Merced Community and Labor Center shows California’s economy just took a big hit – the likes of which has not been seen since the COVID-19 pandemic.
But this economic impact is not from a virus, but likely fear, as the state’s workforce grapples with intensified immigration raids.
The report, released Tuesday, showed the state lost over 3% of its private workforce in four weeks and described the loss as a sudden and rare drop not seen outside of major economic crises.
Between May 11 and June 8, UC Merced researchers tracked a 3.1% decline in the number of Californians reporting private sector work.
“In California, only two historical cases can compare with the loss of work that just occurred from May to June 2025: the Great Recession and the COVID-19 pandemic,” the report says..
While immigration officials have not released detailed accounts of where the raids occurred, the period aligns with widely reported federal enforcement actions in key agricultural and urban centers across California, particularly in Los Angeles.
According to the analysis, no comparable decline in employment was observed in other U.S. states during the same time period.
National employment among male citizens increased by 1%. In contrast, employment among noncitizens and women remained essentially unchanged elsewhere, strengthening the case that California’s drop was state-specific and enforcement-related, the report states.
Another recent study by UC Merced and the Bay Area Council Economic Institute warned that mass deportations could drain more than $275 billion from California’s economy.
Job losses hit noncitizens and women hardest
The report found that job losses disproportionately affected noncitizens and women – two groups more likely to work in vulnerable sectors such as agriculture, retail, and domestic labor.
Although more U.S. citizens, about 271,000, reported job losses compared to about 193,000 noncitizens, the study found that the highest rates of decline were among noncitizens and women, with decreases of more than 5%. Noncitizen workers in the private sector declined by 7.2%, the research brief found.
“Between May and June 2025, California lost more than one in 12 noncitizen females reporting private sector work,” said UC Merced Community and Labor Center spokesperson Alejandro Carrillo in a press release. “Over the same period, the state lost almost one in 15 noncitizen males reporting private sector work.”
The effects of federal immigration enforcement didn’t hit all communities equally, according to researchers.
Latino workers experienced a decline of over 363,000, or 5.6%, while white workers declined by about 258,000, or 5.3%. Meanwhile, Asian workers experienced a 2.2% increase in reported employment, and Black workers saw a 5.3% rise.
The findings suggest that fear of enforcement may have pushed workers into the shadows or discouraged employers from hiring individuals perceived to be at risk, researchers said, even if those individuals were legally authorized to work.
Worse than the Great Recession, faster than COVID-19
In a notable comparison, the report found that the one-month decline in California’s private sector employment exceeded the entire first-year rise in unemployment during the Great Recession, from December 2007 to December 2008.
While that crisis saw unemployment rise by 3.3% over 12 months, the current drop of 3.1% occurred in four weeks.
The study suggests that immigration policy shifts can carry the same economic weight as recessions or global pandemics, but with fewer public safeguards or coordinated responses.
Potential policy solutions
While undocumented workers in California can access certain benefits such as disability insurance and paid family leave, they are not eligible for unemployment benefits. They cannot receive pay while on leave.
The UC Merced researchers called on lawmakers to consider treating immigration enforcement actions as economic emergencies, akin to natural disasters or health crises, and to plan accordingly.
“State policymakers should consider how the current moment may require significant action on behalf of the state,” the report notes, comparing how during those times of crises, the state infused the economy through stimulus payments.
“Similarly, policymakers might examine how to simultaneously protect those workers who must shelter in place during heightened immigration enforcement while infusing massive amounts of cash into the economy.”