Los Angeles businesses have experienced substantial revenue losses and decreased foot traffic, new research reports show – a trend business leaders link to President Donald Trump’s administration’s immigration enforcement campaign in the region.
Yet experts estimate that the damage could deepen if the administration accomplishes its mass deportation goals – with California losing $278 billion in economic output.
The Golden State would likely lose its status as the world’s fourth largest economy, falling behind Japan, the United Kingdom and India, according to the Bay Area Council Economic Institute.
As the state’s largest hub for undocumented immigrants, according to BACEI, Greater Los Angeles stands to see especially concentrated consequences.
“Los Angeles has always been this very fertile soil for immigrants to feel safe,” said Eddie Navarrette, president of L.A.-based Independent Hospitality Coalition, chief executive of FE Design & Consulting and member of newly formed CA4US. “This is a place where you can not only live the American dream, but you can feel comfortable doing it among other immigrant communities.”
An expert in Los Angeles tourism and business performance, Navarrette and others at CA4US are raising awareness of the economic impacts of immigration enforcement throughout the state and in the L.A. region.
In addition to the undocumented immigrants impacted by these policies, immigrants with legal status and U.S.-born citizens of color – or those with businesses located in communities frequented by ICE – are feeling the heat.
Take Michelle, a 27-year-old immigrant from El Salvador who first obtained a green card as a child and then became a citizen at age 18. For the last four years, Michelle and her mother have co-owned a nail salon in East Hollywood, proudly marketing their business as Latina-owned with a bilingual staff to foster inclusion for a diverse client base. Michelle has asked the Business Journal not to reveal her last name out of fear her business will be targeted.
Estimating that more than half of their regular customers are Latina, Michelle said client volume has taken a massive hit since the ICE raids began in June – noting a 30% decrease in customer traffic and appointments.
“Our small business was deeply impacted because many of our clients come from immigrant families,” Michelle said, adding that this has been the salon’s slowest season since opening. “Some of our regular clients have lost their jobs or their family members have been detained – so getting your nails done is really not a priority at the moment.”
The slump in business activity, which began “right when the ICE raids started,” has continued since June, Michelle said. As a Latina-owned business – and one that advertises a bilingual staff – Michelle said she worries customers are more fearful to come to her business, deeming it a possible target for a raid.
“People have stopped going out as much because they’re scared,” she said. “They see the news so they think they might get detained if they go out.”
‘Climate of fear’
Michelle isn’t alone.
Recent data from the Los Angeles Economic Equity Accelerator and Fellowship – which partners with Los Angeles County’s Economic Development Corp. – shows Michelle’s experience replicated throughout Los Angeles.
LEEAFF interviewed nearly 200 business leaders across the county, with an emphasis on areas where the ICE raids were most prevalent – including downtown, South and East L.A. The organization found that 43% of Hispanic/Latino business owners reported revenue losses of 50% or higher since June. For business owners not fluent in English, this jumps to 68%.
By comparison, 12% of Black business owners said they experienced major revenue declines along with just 5% of other ethnic groups.
Across all ethnic groups, close to two-thirds of respondents said their employees were impacted by the raids, and one-third reported that they had to temporarily close their business as a result. Additionally, 78% likened the immigration enforcement to creating a “climate of fear,” the report stated.
“The anxiety, heaviness … and sadness is a distraction that really impacts the effectiveness of how anyone can operate a business and live their life,” Navarrette said.
This fear permeates through businesses and consumers alike. During the nighttime curfews imposed between June 10 and June 16 by Mayor Karen Bass amid downtown raids and subsequent demonstrations in June, foot traffic in the area declined 10.3% and dropped 9.8% for the entire month. This coincides with downtown’s restaurant scene seeing a 19.1% slump in business visitations from May to June.
“Businesses are reporting this widespread uncertainty and disruption, and the fear itself is a tangible economic force, even if it’s sometimes a bit hard to quantify,” said Carlos Singer, senior vice president and chief policy officer of the L.A. Area Chamber of Commerce and member of CA4US.
While the community feels ICE-related setbacks, Singer also points out that local businesses have already faced disruptions at the hands of the January wildfires and tariff policies. At the center of this intersection is construction, as immigrants make up 60% of California construction laborers – nearly half of which are undocumented, according to BACEI.
“At some point, we really need to rebuild a lot of properties across the region at a historic rate,” Singer said. “…Between the fires, the cutting off of federal funds, the tariffs – which operate as taxes to businesses and individuals – and these immigration enforcement actions, (construction projects) are either grinding to a halt or becoming really expensive through staffing (and supplies) shortages.”
Mitigation efforts
In grappling with the effects of her business’s disruptions, Michelle said she and her mother have had to go without pay, instead using that money to keep up with bills and paying workers.
Nevertheless, Michelle is steadfast in not giving up as she works to employ new strategies to grow the business. This includes an interior renovation, updated logos and branding, increased social media presence, offering special discount deals, and partnering with other local businesses and organizations for collaborative events.
In late summer, the salon hosted a self-care themed event. On the surface, this meant indulging in services like a manicure, but it was also a space where the salon provided information about ICE raids, such as what to do if your family member has been detained, and corresponding resources.
“Some of our clients do not have legal status, so we wanted to make them feel safe in coming into a space where they knew they were going to get information on ICE raids,” she said.
When it comes to government assistance, Michelle said she wants to see more opportunities for grant and relief programs, noting that even a little bit can really go a long way at a time when many businesses are forced to tap into their savings to keep up with rent.
The county and nonprofit sector see the need. Upon collecting their own data and considering the findings from LEEAF’s research, Los Angeles County Department of Economic Opportunity launched the Small Business Resiliency Fund aimed at providing $5,000 grants to small brick-and-mortar businesses and $2,500 grants to microbusinesses such as street vendors.
To be eligible, businesses must have experienced disruption due to recent immigration enforcement, be based in Los Angeles, generate revenue under $6 million and have fewer than 100 employees.
Keeping up with the demand already generated from the fund requires a $10 million raise. Currently, the fund has secured $1.8 million from L.A. County’s Care First Community Investment with a second round of $3.7 million pending. Based on volume and eligibility, the DEO expects there may not be enough to provide grants to all eligible applicants.
“A weighted lottery prioritizes businesses without insurance and those in areas that were impacted by the curfews and with high immigration enforcement activity,” the department said in a statement to the Business Journal. “This ensures limited resources reach the most vulnerable businesses quickly and fairly.”
Those unable to secure grants will be put on a waitlist with the hope of a second funding round.
Street vendors
A separate grant initiative comes from Inclusive Action for the City, a Boyle Heights nonprofit which provides microloans and advocates for policies for the economic development of underserved communities. Along with several other partners, Inclusive Action launched a fund to support street vendors impacted by ICE raids.
Based on the fund’s GoFundMe page, the group distributed more than $423,000 to 840 local street vendors as of Oct. 21. The site shows an additional $214,000, as of Wednesday, which will also be deployed to vendors.
Whether street vendors have been the direct target of a raid, the impacts trickle down, said Shannon Camacho, senior policy associate at Inclusive Action.
“Many of our clients lost incredible amounts of income due to the fact that either there was less foot traffic outside in certain neighborhoods where ICE was heavily targeting or they just were unable to vend outside due to the real fear of being potentially arrested or targeted,” Camacho said.
The nonprofit also created a “hire-a-vendor program” to connect vendors in their network with catering and other business opportunities. Camacho sees this as an avenue to secure business for vendors in lower-risk settings for raids.
Aside from grants to help mitigate the present issues businesses are facing, Navarrette said it boils down to education, dubbing this “the best weapon against fear” as well as action from local municipalities to make it easier to operate a business in Los Angeles.
This means loosening up on certain restrictions and regulations like outdoor dining and alcohol licenses, lowering barriers to entry and easing access to permits for entertainment elements, he said. Removing some of these requirements with such high costs associated with them “is like writing a check to the business owner without even having to spend a dime,” Navarrette said.
Data protection
On the legislative side of things, another push from Inclusive Action was co-sponsoring SB 635 – known as the Street Vendor Protection Act – which Gov. Gavin Newsom signed into law last month. After Trump was named president-elect, Camacho said Inclusive Action and others began working on this bill to prohibit the Department of Homeland Security from accessing street vendors’ personal data from things like permit applications for the purpose of immigration enforcement.
This seemingly addressed concerns raised by business leaders surveyed in the LEEAF report, which cited one respondent as saying they were “less likely to register or apply for services and resources to help their businesses grow and succeed (because they are) fearful that the information they share will be used against them to target them.”
And it’s not just people’s individual businesses and livelihoods at stake. Without undocumented immigrants’ taxes, the nation is losing revenue on a local, state and federal level, Camacho asserted. According to USC, undocumented immigrants in L.A. County contributed $1.7 billion in federal taxes and more than $2 billion in state and local taxes in 2023 alone.
“The economic reality is that this country would not function without immigrants,” Camacho said. “It would not function without the hard work and the taxes that they contribute into a system that they don’t even see the benefit from most times.”
While Camacho understands in theory the push for immigrants to enter and stay in the country “the right way,” she points to an “arduous,” lengthy process that tends to favor certain countries over others. An immigrant from Mexico could wait up to 25 years to become a naturalized citizen, according to nonprofit American Immigration Council which cited processing protocol from the U.S. Department of State.
“The ‘right way’ doesn’t work… (when) our immigration system is inherently broken,” Camacho said.
