MCALLEN, Texas - Mike Willis, executive director of the South Texas Manufacturers Association, says the federal government policy towards undocumented immigrants is having an impact on the economy.
“The crackdown on illegal immigration is beginning to tighten the labor market in some sectors, especially construction, hospitality, and agriculture. This may lead to a further tightening of the overall labor market, depending on the rate of future job creation,” Willis said.
Willis made his comments when reviewing the latest labor market information report from Texas Workforce Commission.
TWC’s report covers August, 2025.
“Nationwide, the manufacturing industry has lost a total of 3,000 jobs since December 2024. In Texas, the manufacturing industry lost 3,400 jobs in August, which puts the state down by a total of 5,700 net manufacturing jobs so far this year,” Willis said.
“Over the past 12 months, Texas has lost 7,000 mfg. jobs and gained 18,500 construction jobs. In Calendar Year 2024, we added a total of 21,600 manufacturing jobs, so manufacturing job creation has clearly continued to slow in Texas this year.
Willis also gave an overall view of the Rio Grande Valley scene.
“The RGV manufacturing industry was stable, with no change shown for August, according to TWC. They show an estimated 14,200 employed here. The ‘Government’ category, which is primarily public education (K-12 thru University level) and law enforcement, lost an estimated 200 jobs in August.”
Willis continued: “We lost 3,300 jobs in June when school let out, which is the normal cycle. I expect we will see about 3,000 job gains show up in this sector in the September report, reflecting their returns to work from the summer break, which should reduce the RGV unemployment rates at that time.”
Willis also looked at labor costs and trends:
“Currently, average wage increases across the USA are tracking fairly steadily this year. For August the average was 3.7% year-over-year, down from 4.1% in January, per the Federal Jobs Report. In 2024 the average rate of wage increases was 4.0%, so it looks like we are settling in at a 4% rate for the long term, barring a serious economic downturn,” Willis said.
“For those of you working on compensation plans for 2026 4% is probably a safe number, but some occupations with high demand have a lot of competition for labor and will likely require higher incentives to help recruitment & retention - like Industrial Machinery Mechanics, Tooling, Machinists, Forklift Drivers, and even Machine Operators, from what I have heard.”
Willis said job-hopping ‘churn’ continues to slow down as well generally as the economy cools off.
“We have around 500,000 fewer private sector job openings now from the 6.9 million reported in January 2025.”
Willis continued:
“The crackdown on illegal immigration is beginning to tighten the labor market in some sectors, especially construction, hospitality, and agriculture. This may lead to a further tightening of the overall labor market, depending on the rate of future job creation.”
Willis added: “We are also seeing in the USA, the beginnings of headcount reductions due to increased efficiencies from the use of AI in some industries. This new technology will likely impact the overall employment picture as well going forward, as more companies figure out how to utilize it to increase efficiency and reduce labor requirements.”
