Democratic-led states argue renewed federal labor and immigration enforcement is straining local economies built around high migration, according to letters, interviews, and reporting.
By yourNEWS Media Newsroom
Treasurers from 16 Democrat-led states are urging President Donald Trump to reduce federal immigration and labor enforcement, arguing that sanctuary city economies are suffering under renewed compliance with national laws governing labor, housing, civil rights, and fraud.
In a joint letter to Trump, the state treasurers warned that their governments are being forced to absorb new fiscal burdens as federal enforcement resumes. “We are now expected to absorb the fiscal consequences of [federal] enforcement activities,” the treasurers wrote in a letter reported by News From the States. “This is not acceptable.”
Treasurers from Massachusetts, New York, Illinois, Minnesota, and nine other states asked the administration to reduce enforcement actions that, they said, are destabilizing local economies. “We urge your administration to immediately scale back enforcement activities causing this harm and to ensure the economic stability our communities require,” the letter stated.
Bill Glahn, a policy analyst at the Center of the American Experiment in Minnesota, said the enforcement measures are exposing the underlying structure of sanctuary city economies, which he described as dependent on exemptions from federal law. “You create the sanctuary economy, and then the rug gets pulled out from under you,” Glahn said. “The federal government will no longer send you those billions that you’re given to the fraudsters, and the government pulls out those illegal immigrants because they don’t belong there. Now they’re not there to collect welfare money, and they’re not there to spend the money that they [used to] get, and the whole house of cards will collapse.”
The renewed enforcement coincides with Trump’s broader push toward a productivity-based economic model centered on trade, innovation, and automation. In an August interview with Breitbart News, Trump said labor shortages would be addressed through efficiency and robotics. “We’re going to need robots … to make our economy run because we do not have enough people,” Trump said. “So we have to get efficient … it’s going to be robotically … It’s going to be big. Then, somebody is going to have to make the robots.”
That approach contrasts with what critics describe as the Democratic strategy of large-scale migration to supply low-wage labor, often referred to as Extraction Migration.
Supporters of sanctuary policies argue the model fuels local economies, while critics say it disadvantages American workers. In Minneapolis, for example, rising demand has driven median annual rents to $16,500 in 2024 amid average incomes of $52,000. According to a report cited by the National Low Income Housing Coalition, roughly three full-time minimum wage jobs are required to afford a two-bedroom apartment in the city.
The economic tension was highlighted in a New York Times article on Minneapolis headlined “‘It’s Been Brutal’: Twin Cities Economy Suffers Under ICE Crackdown.” The article described business owners struggling after immigration enforcement intensified. Henry Garnica, a grocery store owner in East St. Paul, told the newspaper that four of his 10 workers stopped coming to work out of fear. “Sales are down 45 percent, and my savings are dwindling,” he said. “Many small businesses have shut down.”
The same article quoted Oscar Murcia, owner of the El Guanaco restaurant chain in St. Paul, who said traffic at one location fell 80 percent, forcing him to close it. He said four of his 64 employees were detained despite having work permits and pending asylum applications.
Glahn said such accounts illustrate how some businesses had come to rely on exemptions from federal enforcement. He also argued sanctuary policies generate significant revenue for government agencies, particularly school systems. “But for this wave [of migrants], they would be closing elementary schools in Minneapolis,” Glahn said, adding that per-pupil state funding creates incentives to enroll migrant students while increasing costs for bilingual education and other services.
Concerns about the sanctuary city model have also emerged outside Minnesota. In Maine, intensified immigration enforcement in January led to business disruptions, according to reporting by the Bangor Daily News. A migrant grocer identified as Maria told the paper her store closed for 10 days during the ICE surge. “Nobody is coming. Nobody. Everyone is scared. They don’t want to go out,” she said.
A survey of 245 businesses by the Greater Portland Council of Governments found nearly half reported revenue losses, employee absenteeism, transportation issues, and reduced productivity, the Bangor Daily News reported.
Minneapolis Mayor Jacob Frey publicly criticized the enforcement actions, writing in a February 3 post on X, “This massive ICE presence has also been horrible for Minneapolis business. We need ICE to leave so our economy can get reignited.”
As federal enforcement continues, the debate over sanctuary city policies has intensified, with state officials warning of economic fallout while the Trump administration signals it will continue applying national labor and immigration laws uniformly across states and cities.
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