For Henry Garnica, a traumatic visit from immigration officials was just the beginning of the toughest months he has ever experienced as an entrepreneur.
On December 11, Mr. Garnica was at a meeting when he saw on his surveillance camera several suspicious-looking vehicles idling outside the convenience store he stopped in East St. Paul, Minnesota. He called his employees and asked them to lock the doors. When he arrived, more than a dozen officers surrounded him and demanded identification.
Mr. Garnica, a naturalized U.S. citizen born in Colombia, showed his passport. The agents demanded entry to the store, where several workers and customers waited nervously. They didn’t have a search warrant, so when a helicopter hovered overhead, he refused. Neighbors had gathered in support. After about 40 minutes, the officers left.
But in the weeks that followed, federal agents drove by every day looking for people to arrest, Mr. Garnica said, striking fear into the streets and streets of immigrant business owners and workers. Four of his ten workers disappeared because they were too afraid to come into the store. He keeps the door locked and only opens it for occasional customers. Sales are down 45 percent and his savings are dwindling.
“A lot of small businesses have closed,” Mr. Garnica said. “It’s not good for the economy, it’s not good for families, it’s not good for anyone.”
Operation Metro Surge, nearing its third month in Minnesota, has taken a heavy toll on commercial corridors populated by Latino businesses like Mr. Garnica’s CentroMex Grocery and Somali and Hmong shops and restaurants.
The damage doesn’t stop there. Although it will take some time for official data to become available, companies across the region have already reported sharp declines in sales. The city of Minneapolis estimates the cost at $20 million per week, and the city’s Convention and Visitors Bureau found that 72 percent of employers surveyed — including hotels, retailers and arts organizations — were dealing with canceled, postponed or reduced sales.
A housing development investor postponed closing the deal out of concern for the city’s prospects, said Erik Hansen, the city’s director of community planning and economic development.
“It was brutal,” Mr. Hansen said. “And that’s reflected not only in the freedom of movement in and around the city, but also in the business activity we’re seeing from downtown Minneapolis to neighborhoods and suburban communities.”
Of all the urban centers targeted by Immigration and Customs Enforcement in a year of aggressive deportation efforts, the Twin Cities region may be experiencing the most visible economic problems. But every one of them — from Chicago to Miami — has suffered damage.
“If there was a connection between rampant illegal immigration and a good economy, Biden would have had a booming economy,” a Department of Homeland Security spokesman said in response to a request for comment. “Removing these criminals from the streets makes communities safer for business owners and customers.”
Some business leaders who have not yet spoken out about cracking down on immigration are calling for a different approach.
A hurricane or a recession?
Whenever there is any kind of negative disruption in a region, economists try to understand what the economic impact might be. Natural disasters such as hurricanes are usually considered temporary. Economic activity is boosted: If you decided against partying or buying a couch during the storm, you’ll likely do so once the skies clear. Plus, a lot of money typically flows from the federal government and insurance companies, triggering a flood of reconstruction work that generates revenue.
A broader downturn like the Great Recession of 2008 has longer-lasting effects. That’s partly because there’s less money available in the rest of the economy – government budgets are tight and philanthropy is sparsely distributed.
Some consequences of the ICE disruption in Minneapolis could quickly disappear like a hurricane. Sarah Enrico owns a catering company that employs around 50 people. As federal agents sowed fear across the region, several clients postponed their events, including a $30,000 event for 280 people. Ms. Enrico had to cancel dozens of shifts and freeze or donate all the food she had already purchased.
Nevertheless, Ms. Enrico is confident that the events business will come back with full force, as it did after the Covid-19 pandemic subsided.
“There is a very obvious cause of the fear,” Ms. Enrico said. “Even after the pandemic, people were itching to have their wedding, have that event or be with people.”
Repairing other damage caused by the ICE operation will take more time.
Oscar Murcia came to St. Paul from El Salvador in 2000 and opened a restaurant and bakery called El Guanaco a few years later. He now has four locations where he primarily serves Latino customers with pupusas and tacos. As ICE activity intensified in December, traffic at the Minneapolis site dropped by 80 percent, prompting it to close. He has cut opening hours and staff in other stores and asked his landlords and bankers for relief on rent and loans.
Even if customers return, Mr Murcia will be missing some of his 64 employees – four of whom were arrested even though he said they had work permits and had pending asylum applications.
“It’s going to take a while to grow up again,” he said. “We have to start over, with half shift, maybe half staff.”
The Latino Economic Development Center, a nonprofit lender, found that only a fifth of its customers who responded to a survey were operating normally and half suffered “critical” damage. There was an eerie silence at Mercado Central, a hub for Latino businesses, and Karmel Mall, which has Somali restaurants and shops.
U.S.-born business owners are also affected, although their customers and workers are less at risk of deportation. Lindsey Johnston is co-owner of Francis Burger Joint, a vegan restaurant with locations in the north and south of the city. Every day they hear the whistles and honks that follow ICE convoys, and their coworkers often rush to join the monitors. One day, her chef was pepper-sprayed and held for six hours before being released without charge, forcing the restaurant to close.
“It’s haunting. Everyone is exhausted. Everyone is scared,” Ms Johnston said. Promotions the restaurant usually runs in January to attract customers feel inappropriate because no one wants to celebrate, Ms. Johnston said: “I’ve spoken to a lot of people who say, ‘Yeah, I spent money yesterday, and I can’t remember the last time I spent money.'”
All crises have one thing in common: the more intense they are and the longer they last, the greater the economic damage. Ryan Allen, associate dean for research at the University of Minnesota School of Public Affairs, has studied the region’s immigrant communities. He fears a tipping point that could result in lights being permanently dimmed in some commercial corridors if enforcement action doesn’t ease.
“For local businesses that have thin profit margins and are not well capitalized, it is difficult to estimate how many of them will survive if this continues for much longer,” Allen said.
Looking for help
For some parts of Minneapolis, the approach is like salt in an open wound. The unrest that erupted after the killing of George Floyd by a police officer in 2020 resulted in hundreds of millions of dollars in property damage. Perceptions of danger depressed activity for years, along with the ongoing impact of the pandemic.
During that time, however, the federal government provided communities with resources to keep them afloat — expanded unemployment insurance, forgivable business loans, stimulus checks and direct grants to local governments. This time, none of that seems to be on the way.
“The difference is that the federal government was on our side,” said Alma Flores, executive director of the Latino Economic Development Center. “In this case, I would be shocked if they said, ‘We’re going to help you with all this lost revenue.'”
Minnesota could get more help rebuilding than some other places. The Minneapolis Foundation, a nonprofit, has raised $3.5 million from major corporations to help small businesses, and 60 major Minnesota-based companies called for a “de-escalation” of tensions.
Grassroots initiatives such as donated food and crowdfunded rentals were equally effective. Ingrid Rasmussen is pastor of Holy Trinity Lutheran Church, a fixture in the Longfellow neighborhood of Minneapolis for more than a century. In the first two weeks of January, she spent her entire budget helping local businesses pay their bills.
“The need is so astronomical,” she said. “We could raise money for the next five years and never see the economic devastation we are seeing.”
Officials in Democratic-led states like Illinois and California have also stepped in to combat the effects of ICE raids. In Maine, the state Chamber of Commerce sent a letter to the state’s congressional delegation urging limits on aggressive immigration enforcement tactics.
In contrast, conservative states like Texas and Florida have enthusiastically cooperated with federal immigration authorities and enacted their own policies that destabilize immigrants and business owners. Tonantzin Carmona, a fellow at the Brookings Institution who has studied the economic impact of immigration enforcement, said that could increase the damage.
“They are exacerbating this problem,” Ms. Carmona said. “So there could be differences in what economic growth looks like in these places in a few years.”