The Labor Crisis Quietly Fueling Inflation

Back in 2011, Georgia passed a state law known as HB 87. 

Broadly speaking, it was a crackdown on immigration. 

It gave police the authority to demand documentation from suspects detained for other possible violations. It also instituted tougher penalties on businesses that employed undocumented workers.

“Our goal is to eliminate incentives for illegal aliens to cross into our state,” said Georgia State Rep. Matt Ramsey, one of the bill’s authors. 

It worked. 

The  population of undocumented immigrants in Georgia today is roughly 347,000 — down from 425,000 when HB 87 was passed 14 years ago.

However, it’s also created a crippling labor shortage that’s plagued the state for more than a decade now. 

Georgia racked up $180 million in agricultural losses immediately after the law was implemented as 11,000 workers disappeared from the fields, leaving crops to rot.

Other industries with high concentrations of foreign-born workers (such as construction, hospitality, and food service) were hit as well. 

Even now, the state is short about 106,000 workers, with just 63 available employees for every 100 jobs available in the state.

It’s a situation more and more states are going to have to address if they’re not already seeing it. Because under the Trump administration, the crackdown on immigrant workers has gone nationwide, beginning with California.

One farm operator in Venturer County, California, estimates that 70% of the workers have disappeared amid aggressive ICE raids throughout the state. And if they’re not able to fully optimize their harvests, the farms will inevitably collapse.

 That’d be a disaster, because among other things, California produces…

• 61% of our country’s leaf lettuce
• 56% of its head lettuce
• 57% of its celery
• 48% of its broccoli
• 38% of its spinach
• 30% of its cauliflower
• 28% of its strawberries
• 3.6% of its wine grapes

In all, California grows more than a third of America’s vegetables and over 75% of its fruits and nuts. 

The state’s farms and ranches also generate roughly $60 billion in agricultural sales a year.

At issue, though, is that 80% of U.S. farmworkers are foreign-born, and roughly half of them are here illegally.

And again, it’s not just agriculture.

Foreign-born workers make up less than 20% of America’s total labor force, but they account for a disproportionately high number of workers in specific sectors.

They make up 24% of jobs preparing and serving food, 34% in construction and extractions, and 38% of jobs in farming, fishing and forestry.

Going back to Georgia, three-quarters of the state’s $45 billion construction industry is reportedly struggling to find enough workers.

And nationwide, the construction industry is facing a deficit of 200,000–400,000 workers, depending on who you ask.

These labor shortages result in supply chain bottlenecks and higher labor costs, which in turn push up prices for consumers.

That’s been one of the key catalysts behind the inflation we’ve seen since the pandemic.

The USDA says farm labor costs are expected to rise by $1.8 billion (3.6%) to a record $53.1 billion in 2025, driven by wage increases and ongoing labor shortages. Tax and fee expenses are also expected to reach record levels — up 5.7% ($1.01 billion) over 2024.

These higher costs inevitably lead to higher prices.

To wit, U.S. grocery prices rose 0.3% in May, despite a broader CPI reading that was largely considered muted. 

That is, the headline consumer price index increased just 0.1% for the month, which means prices for groceries rose three times higher than the overall trend.

Cereal and bakery goods made the biggest jump — surging 1.1% in May. Meanwhile, frozen foods saw a 0.6% increase and fresh fruit prices edged up by 0.3%.

And with respect to the restaurant industry, the cost of food away from home rose 0.3% month over month and is up 3.8% from last year.

You can fully expect these prices will continue to rise so long as ICE is raiding job sites and rounding up immigrants regardless of their legal status or criminal records. 

And while President Trump has acknowledged the issue, no real policy changes have been implemented to address it. 

To the contrary White House border czar Tom Homan has said the administration will continue to carry out worksite enforcement operations, even on farms, hotels, and construction sites.

That’s going to continue to put pressure on prices in those respective areas of the economy and on consumers in general. 

On top of that, tariffs are being implemented in fits and starts and the Federal Reserve is edging close to cutting rates. 

So you might want to start bracing yourself for some higher inflation figures in the back half of the year.