Fed report highlights economic effects of ICE surge as businesses struggle to replace workers at home
Go Deeper.
Create an account or log in to save stories.
Like this?
Thanks for liking this story! We have added it to a list of your favorite stories.
Economic activity across the Upper Midwest has declined.
That’s according to testimonials summarized in the latest Beige Book. It's a report published by the Federal Reserve eight times a year that collects anecdotes about current economic conditions across the country.
Business owners in rural areas attribute it to a struggling farm economy, while those in urban areas say they’ve seen declines not just from rising costs but also from decreasing foot traffic, fueled by fears of encountering immigration enforcement agents.
Impacts from ICE presence
“We don't see a lot of our Latino customers. Those are our regulars,” said Milissa Silva, CEO and co-owner of El Burrito Mercado, a Mexican and Latino grocery in St. Paul that outlets such as Eater once called a ‘mini-empire.’
Turn Up Your Support
MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all.
Over the last couple of months, Silva said she’s seen fewer and fewer customers pass by and has lost about 20 employees. She said that’s out of fear of immigration enforcement.
Those fears were shared by many businesses, said Erick Garcia Luna, an economist with the Federal Reserve Bank of Minneapolis, who helped write the Beige Book for the Fed’s ninth district, which includes states like Minnesota and the Dakotas.
Garcia Luna added that several businesses, including a Minnesota landscaping company referenced in the Beige Book, said they were struggling with workers staying home.
“They were in the process of trying to find workers that were, in their mind, more reliable,” Garcia Luna said. “But they were having a very hard time hiring people who could fill those roles.”
Silva said she’s had to cut down her store’s hours to compensate for the lack of employees and declining revenue. And while she said they haven’t had to undergo any financial restructuring, she doesn’t think others will be so lucky.
“I really believe we're not all going to make it,” Silva said. “It's sad. It's so sad as a Minnesotan, as an entrepreneur.”
Garcia Luna said many minority and women business enterprises have similarly lost economic activity stemming from immigration enforcement activity. Some have had to temporarily close. And these financial pressures have led some businesses to request loan modifications.
“That tells you that perhaps some of the effects from having to close and having reduced operations are perhaps … trickling into their inability to pay for rent, their inability to meet their financial responsibilities,” Garcia Luna said.
Silva said that, for now, she remains optimistic about her business’s future. But, she said, her outlook could change if current economic conditions remain the same in the coming months.
"We're, as a family, having conversations about ‘What does the business look like if this trend [continues]? If it's this low,’" she said.
Higher costs also weigh on businesses
“In the last few weeks, we noticed an overall decline in most sectors: construction, manufacturing, services,” said Garcia Luna.
Many of these businesses had to contend with higher input costs. Manufacturing firms saw a rise in the price of materials such as aluminum, for example, which he said was partly due to tariffs.
Higher input costs have also impacted agricultural producers, who’ve had to contend with increasing fertilizer prices and a weakening farm economy.
Minnesota’s new paid family and medical leave legislation also concerned some businesses as a new cost pressure, Garcia Luna added. However, the rising expense that most firms were concerned about was insurance, which he said has seen a dramatic price increase over the years.
“If you're a business and are also faced with this increased cost on top of input prices, on top of wage increases to attract labor, that's putting pressure on many of these firms,” Garcia Luna said.
