In its October Southwest Economy report, “Slower Immigration, Population Growth Weigh on Texas Job Gains,” the Dallas Fed attributed a substantial share of the state’s cooling employment growth to weaker population and immigration inflows. 

“Slower immigration and population growth explain roughly half of the decline in Texas job growth this year,” the bank wrote. 

The analysis added that firms “report increased difficulty hiring and retaining foreign-born workers amid changing immigration policies,” a trend the authors warned may be understated because the survey does not directly sample construction firms.

Third-Party Confirmation 

New workforce data from the American Immigration Council underscores why the sector is under pressure. In its 2022 Texas industry profile on the state’s construction workforce, the organization found that immigrants accounted for about 40% of its workers statewide, significantly higher than their 17.2% share of the overall Texas population. 

The report states that “immigrants play a vital role" in the Texas construction sector,” particularly in metropolitan regions where employers rely heavily on both permanent and temporary foreign-born labor to meet demand.

Federal labor statistics and demographic data reinforce the structural nature of the challenge. In the U.S. Bureau of Labor Statistics' 2024 Foreign-Born Workers Summary, the agency noted that immigrants made up 19.2% of the U.S. civilian labor force and were “more likely than native-born workers to be employed in natural resources, construction and maintenance occupations.” That national pattern is amplified in Texas.

To understand where the pressures are most acute, U.S. Census American Community Survey microdata provides metro-level detail: Houston, Dallas–Fort Worth and San Antonio consistently rank among the highest U.S. concentrations of foreign-born construction workers. 

These same regions anchor Texas’ largest capital programs, including major highway expansions, water and wastewater upgrades, transit extensions, petrochemical construction and utility-scale energy projects. The overlap between high project volume and high reliance on immigrant labor deepens industry vulnerability as inflows slow.

The Dallas Fed’s analysis indicates the challenge predates recent government policy shifts. International migration plummeted during 2020 and 2021 and has not rebounded to pre-pandemic levels, constraining growth of the state’s working-age population despite robust economic expansion. Still, the reasons are not pandemic-driven alone.

“Changes in federal immigration policy have contributed to fewer new arrivals,” the bank wrote, noting that Texas’ traditional population growth engines weakened just as employer demand intensified across construction and related sectors.

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Real-World Consequences

These macroeconomic shifts are being felt on jobsites. Contractors say maintaining stable crews has become increasingly difficult as subcontractors struggle to replace experienced workers who have left the labor force or relocated. 

Firms report raising wages, relying on extended overtime, and, in some cases, importing labor from neighboring states to keep pace with commitments. 

The result is added uncertainty for public owners advancing multi-year programs—uncertainty that compounds existing pressures from inflation, permitting delays and materials lead times.

The statewide implications are significant. With major transportation, water, industrial, and energy projects underway simultaneously, Texas contractors face a narrower labor pipeline at a time when project schedules are already compressed. 

The combination of slower migration, higher turnover, and elevated hiring competition is beginning to influence bid strategies, risk pricing, and staffing plans across the sector.

Economists warn the imbalance could persist. The Dallas Fed expects Texas job growth to remain below historical norms unless immigration and population gains accelerate. 

BLS projections similarly show continued national reliance on foreign-born workers in construction and maintenance occupations, suggesting Texas—more dependent on immigrant labor than most states—may face deeper and longer-lasting constraints.

For construction firms and project owners, the workforce challenge has long been more than an abstract demographic shift; it is a material factor affecting project delivery. 

With immigration inflows unlikely to return to previous levels in the near term, workforce pressure is poised to become an increasingly decisive variable in how Texas builds in the years ahead.