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Los Angeles is reeling from a one-two punch. First, devastating wildfires destroyed more than 16,000 structures, displacing tens of thousands of residents in January. Now, immigration enforcement raids are threatening the city’s ability to rebuild.
Last week, the Department of Homeland Security announced that nearly 2,800 people had been arrested in a series of sweeping immigration raids across the city. The announcement sent shockwaves through L.A.’s immigrant communities, and subsequently rattled the contractors, builders, and homeowners trying to piece the city back together.
The labor the city desperately needs to recover is now going underground. Experts say the raids have created a chilling effect that could mean blown budgets, delayed rebuilds, and deferred dreams of recovery.
“It’s just added another layer of uncertainty to an already very difficult time,” says Brock Harris, a local real estate agent who is working closely with developers on rebuilding efforts.
‘I could literally get snatched off my job site’
The fear is no longer hypothetical. Since June, ICE’s high-profile enforcement actions have left a deep mark on L.A.’s construction workforce. So much so that many contractors and laborers were unwilling to speak on the record, worried that saying too much could make them a target.
Economists have a name for this phenomenon: the chilling effect. It’s almost exactly what it sounds like: a situation where uncertainty or fear discourages businesses, investors, or individuals from conducting business.
Harris is seeing it firsthand.
“People are really going into hiding,” he says. “There’s a noticeable sense of fear that ‘I could literally get snatched off my job site.'”
It’s not just isolated to the jobsite. Harris says that over the 4th of July weekend, there was a conspicuous lack of celebration in parks and other popular spots for families to gather.
The ripple effects are immediate: fewer workers, slower jobs, and growing unease about what comes next.
Fear is reshaping how L.A. builds
For developers, what were once signs of progress are now seen as liabilities.
Developers are “disguising those job sites,” says Harris. “They’re hiding the porta potties. They’re taking down the construction fences. They’re moving the dumpsters off the street … because they’ve become targets, or at least their workers feel like they could be targets.”
And that fear comes at a cost. Disrupted deliveries, delayed inspections, and half-filled crews are upending carefully timed project schedules. Developers—especially small, independent ones—are losing money, momentum, and in some cases, the will to continue.
“There was already a housing shortage. There was already a labor shortage before the fires,” Harris adds. “The fires just made everything that much worse … [and now] to add these ICE raids, it just feels like the final insult.”
The rebuilding crisis before the raids began
Even before the fires, L.A. was struggling to build. Rents were climbing, demand was outpacing new development, and labor shortages were stretching construction timelines.
“The top three issues for construction firms are all workforce shortage–related,” says Brian Turmail, vice president of public affairs and strategic initiatives at the Associated General Contractors of America. “They’re worried about finding enough people. They’re worried about labor shortages’ impact on their cost, and they’re worried about labor shortages’ impact on safety and performance on the job site.”
Then, disaster struck. More than 16,000 structures burned in January, forcing tens of thousands from their homes. Rebuilding at this scale requires an enormous workforce: 70,000 additional construction workers by mid-2026, according to experts from the Urban Land Institute, UCLA, and USC.
But instead of growing, that workforce is shrinking.
Immigrants make up 23% of the U.S. construction workforce, including an estimated 700,000 to 900,000 undocumented workers in key roles like roofing and framing, according to the Hispanic Construction Council’s 2025 Building the Future of America Report. Legal work visa caps remain far below demand, and domestic pipelines haven’t scaled up fast enough.
“We don’t have a domestic supply of construction workers when we’re essentially spending most of our federal dollars encouraging young people to do anything but work in construction,” says Turmail. “We don’t want our children working in construction, and we don’t want other people to come to this country [to work in] construction.”
These aren’t day laborers; they’re family
Behind every halted project or abandoned site is a loss that’s deeply personal. For many developers and contractors, construction crews aren’t just workers—they’re trusted teams, built over years, bound by loyalty and shared success.
“These are not day laborers. These are not fly-by-night guys,” says Harris. “These employees are family members.”
When one member leaves, the entire crew can unravel.
George Carrillo, CEO of the Hispanic Construction Council, points to a jobsite in Tallahassee where ICE detained 100 out of 180 workers.
“You would think that the next day at least 80 people would show back up to work,” he says. “Actually, only 20 showed up the next day.”
That kind of fear ripples through every layer of the rebuild. These aren’t easily replaced workers—they’re skilled, experienced teams. And when they disappear, the replacements often aren’t equal.
“There’s an added complication,” explains Pia Orrenius, vice president at the Federal Reserve Bank of Dallas, who studies the labor impact of immigration policy. “You might think the equivalent worker would cost more, but if you can’t find someone with the same skills and experience, you may be hiring a replacement who’s less qualified.”
That means less productivity and longer time frames as new workers are brought up to speed.
Stalled projects and a silent exodus
For some developers, it’s less about delays and more about whether to build at all.
Carrillo says some of the contractors he’s spoken to are considering walking away from L.A. altogether, heading inland where job sites feel safer.
Others are pulling back more quietly.
“I’ve heard my own clients say they’re just going to build on what they have and see what happens,” says Harris.
And even for those determined to rebuild, the permitting process has become another drag on momentum. While not tied to the raids, it’s an added friction at the worst possible moment.=
Six months after the Eaton and Palisades fires, unincorporated L.A. County had received 1,207 rebuild applications—yet only 90 permits had been issued. In the Palisades, just 70 of 360 applications were approved.
That kind of delay discourages bidding. Even contractors who want to take on jobs are hesitant to wait in line with limited crews.
“Most contractors that are our members will tell you that there’s at least one project out there, if not more, that they’ve just opted not to bid on because they don’t have enough people,” adds Turmail.
Why some builders say the rebuild no longer adds up
“Contractors are now being punished … because they are experiencing the consequences of the last four years of federal workforce policy,” says Turmail. “It’s like, ‘Hey, we’re going to starve you, and then we’re going to prosecute you for being starved.'”
Even in ideal conditions, California homebuilding is a high-risk, low-margin business. Between permitting delays and tight timelines, there’s little room for error.
“Homebuilding is already one of the most legislated and complex businesses in the state,” says Harris. “A project that takes 14 months vs. 12 months is the difference between making money and not making money.”
Now, that margin has evaporated. Fear and disruption are breaking timelines and budgets.
“This has worsened the labor shortage considerably, absolutely considerably,” Harris says.
Across L.A., confidence is cracking. Some developers are pausing. Others are pulling out altogether. The rebuilding math no longer adds up—not because demand is gone, but because the labor is.