3 immediate effects ICE sweeps and protests could be having on LA's economy

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An economist tells us what ICE activity in Southern California could mean for the local economy and the national labor force.

3 immediate effects ICE sweeps and protests could be having on LA's economy

An economist tells us what ICE activity in Southern California could mean for the local economy and the national labor force.

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As ICE sweeps continue across Los Angeles and protesters take to the streets for the second week in a row, many businesses and industries have lost customers and employees.

Chris Thornberg, founding partner at Beacon Economics, spoke with Austin Cross on LAist's AirTalk program to talk about what that could mean economically for a city that's already facing a significant budget shortfall.

Listen to the conversation

Here are the three takeaways:

A still recovering downtown

Probably the most affected area in Los Angeles is downtown, where the bulk of the protests have occurred and a curfew has been enforced.

Thornberg explained that downtown is also still reeling from the effects of the pandemic and that recent ICE activity has only compounded long-standing issues.

“ Prior to the pandemic, we saw a lot of new life,” he said. “It was really a renaissance going on down there, but post pandemic, with the enormous increase in the number of homeless, it really took the air out of downtown's revival.”

Thornberg said beyond downtown, the rest of L.A. is on “normal footing,” at least in terms of immediate impact.

• Read more: Downtown LA restaurants are closing early and pivoting to lunch in the face of curfews and protests

Threats to tourism

With the fires earlier this year and now protests that led President Donald Trump to call in the National Guard, Thornberg said “the rest of the country seems to think that all of L.A. is on fire and or under siege.”

He said this perception of L.A. being unsafe will have an effect on the city's desirability as a tourist destination, despite the reality that only small portions of the city are currently affected.

The nation’s labor force

Although immediate effects to L.A.'s economy are small and could be limited to downtown, Thornberg said continual ICE sweeps and limits on immigration will have long-term effects on the national labor force.

According to 2024 data from the Bureau of Labor Statistics, nearly 20% of the U.S. labor force is foreign born. Thornberg said a significant portion of those workers are undocumented. He said if the government really tries to stop people from immigrating, the U.S. labor market will quickly tighten and slow the economy.

“ If you go back to the first Trump administration, it wasn't so much that they threw a lot of people out of the country. It was rather that the chill over the economy prevented people from coming in here,” he said. “And really, by 2019 you saw the U.S. labor market just absolutely stall.”

ICE sustainability

But this labor chill may take some time to materialize as Thornberg said he's skeptical that ICE has the staffing and facilities to support the mass deportations needed to cause long-term economic turmoil.