OC businesses took $58M economic hit as ICE sweeps ramped up, study finds

Spending in Orange County decreased by about 25% after immigration enforcement ramped up last summer, according to a study by UC Irvine’s Social Impact Hub.

Study authors also analyzed data from the California Department of Tax and Fee Administration to find Orange County saw economic output drop by $58.9 million over an eight-week period last year, coinciding with ramped up ICE enforcement, leading to $4.5 million less in sales tax.

“ I wish I could say I was surprised or shocked. I'm really not,” said O.C. Supervisor Vicente Sarmiento, whose office partnered with the study authors to create and distribute the study survey among business communities. “I think what the results and findings showed was that we can quantify the impact that all of us logically believe is occurring.”

Sarmiento added that the results show it’s not just the labor supply, where industries like construction and hospitality are heavily reliant on immigrants, that is affected by immigration raids.

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“ We also are seeing that there is a demand side that is affecting our economy, meaning that there are countless consumers from the immigrant and undocumented population that have significant purchasing power,” he said.

After President Donald Trump promised to carry out the “largest deportation operation” in U.S. history, Southern California became the epicenter, with federal agents carrying out raids across the region, including in Orange County. And they haven’t taken their foot off the gas, causing prolonged periods of fear and uncertainty for businesses that can be difficult to sustain, Sarmiento said.

“Small businesses, especially ones that don't have reserves and don't have excess funds on hand to be able to sustain themselves, will probably end up failing and will probably end up closing down,” he said.

Small-business owner weighs in

LAist checked in again with Alejandra Vargas. She runs a small boutique selling clothing and knick-knacks on Fourth Street in Santa Ana. In June, she said she lost around 80% of her walk-in customers.

Those numbers are still bleak.

“ Where we're at on Fourth Street, it's still empty. There's no people still,” she said.

Vargas has since had to pivot her business model. When the raids started, she began hosting paint-and-sip events for the community to decompress and create art, which brought in more customers. Her next one is right in time for Valentine’s Day, where people will listen to funk music and paint figurines.

She has also tried her hand at online sales.

But because of the ongoing ICE sweeps, people remain hesitant to spend money. And it’s also “nerve wrecking,” Vargas said, because she’s visibly a Latina.

“ I'd rather put up a fight than do nothing,” she said.

Preying on the vulnerable

Sarminento also said his office has seen an uptick in calls from people falling victim to scams. Undocumented workers are being exploited by employers withholding wages. And he said there are phony businesses popping up preying on vulnerable, scared immigrants looking to find legal help.

 ”We've been in contact with the district attorney's office to look into that,” he said.