Research from the Federal Reserve Bank of Dallas reveals that net unauthorized immigration in the U.S. has not only slowed but reversed sharply, turning negative in early 2025 and continuing to shrink through mid-year — a development with important implications for labor markets, especially in border states like Texas.
In the Dallas Fed’s new analysis, co-authored by Daniel Wilson and Xiaoqing Zhou, monthly estimates from immigration court and parole records show that net unauthorized immigration dipped to about –89,000 in July 2025, indicating more people are leaving than entering the country without formal legal status. Adjusted for working-age adults, this suggests a loss of roughly 49,000 unauthorized workers in that month alone.
The reversal follows a surge in unauthorized immigration from 2021 through early 2024, when millions crossed into the U.S. during the post-pandemic period. Since then, strict federal enforcement and policy changes have sharply reduced new arrivals while increasing exits.
That trend has local implications in Texas, where unauthorized immigrant labor historically made up a large share of the workforce. Separate data show Texas was home to one of the largest shares of the nation’s unauthorized immigrant population as of 2023 — roughly 14 percent of the U.S. total, with an estimated nearly 2 million unauthorized residents statewide — and Dallas County alone had one of the country’s highest unauthorized populations.
Dallas Fed surveys also show that immigration slowdowns are already affecting Texas businesses. The Texas Business Outlook Survey found about one in five Texas firms reported that recent federal immigration policy changes have hindered their ability to hire and retain foreign-born workers, with sectors like construction and agriculture likely underrepresented in the survey.
The construction industry in Texas, which employs a high proportion of immigrant workers statewide, is seen as particularly vulnerable. Analysts note that immigrants make up around 40 percent of the state’s construction workforce, meaning tighter immigration flows could amplify existing labor shortages as large infrastructure and industrial projects continue.
Economists say the combination of reduced unauthorized inflows and rising outflows is likely to dampen labor force growth in Texas, especially in industries and regions that had come to rely on immigrant labor. This could slow job creation and complicate hiring at a time when broader economic growth has already cooled.
Wilson and Zhou’s findings underscore how detailed, up-to-date immigration data are crucial for understanding evolving labor market dynamics — particularly in states like Texas, where immigration patterns are deeply intertwined with regional employment trends.