Texas Employment Slump Linked to Decline in Immigration
According to data from the Dallas Federal Reserve, a significant reduction in immigration is negatively impacting employment rates in Texas. The Federal Reserve’s latest employment forecast indicates that the state’s job growth will be limited to 1.4% in 2026, a slowdown that follows a weak performance in February.
The anticipated growth comes after an optimistic prediction in early April suggested that job growth could reach 1.9%, potentially adding 278,400 jobs in 2026. However, new projections now estimate total job additions to be closer to 205,500 by year-end.
Texas saw only a 0.3% increase in employment during February, further emphasizing the sluggish pace of job creation.
Luis Torres, a senior economist at the Dallas Fed, identified the decline in immigration as one of several challenges contributing to the state’s economic downturn. He noted that a reduced influx of immigrants is limiting the available labor force, while rising productivity is simultaneously damping labor demand.
Data from the U.S. Census Bureau shows that net international migration peaked at 2.7 million in 2024 before plummeting to 1.3 million in 2025. Projections indicate that this figure could drop to just 321,000 by 2026. Furthermore, the Brookings Institution found that the Dallas-Fort Worth area experienced a staggering 52% decrease in net immigration during this period, equating to over 65,000 fewer arrivals compared to the previous year.
Brookings’ analysis attributes the economic deceleration partly to the hardline immigration policies instituted during Donald Trump’s administration, which included cutting refugee programs, suspending asylum claims, and halting green card processing.
The Brookings report further suggests that lower immigration levels do not necessarily create additional jobs for U.S. citizens. Instead, they can shrink the overall economy by diminishing the number of consumers and providers, ultimately hindering national economic growth.
Torres remarked that while business activity in Texas has slowed recently, heightened geopolitical tensions could exacerbate the situation. For instance, recent reports highlighted escalating tensions in the Strait of Hormuz, where Iran seized two ships, raising alarm over a crucial global oil passage. Higher oil prices might boost Texas’s economic activity if they remain stable, according to Torres.
The sectors experiencing the most job growth currently include information technology, professional services, and manufacturing. Conversely, industries such as trade and transportation, oil and gas, as well as other services, have seen substantial job losses. Although Texas’s job growth stalled in 2025, it still outperformed many other states.
The Dallas area was the only major metropolitan region in Texas to register a slight job increase, with employment up by 0.1% in February. In contrast, Austin’s workforce decreased by 3.3%, while Fort Worth, El Paso, and Houston also recorded declines of 1.6%. Notably, the overall unemployment rate decreased across nearly all areas, except for Houston, during the same period.
