For some workers, a new state licensing requirement could mean the difference between keeping their job, or losing it.

Earlier this year, the Texas Department of Licensing and Regulation, or TDLR, began implementing a rule rooted in a Clinton-era federal law that prohibits the approval of license applications to workers who cannot present documentation proving lawful residence in the U.S.

This change to the Texas Administrative Code will affect workers in the beauty industry, trades like HVAC and electrical, and any other service-related roles requiring TDLR-issued licenses.

This leaves many workers and businesses throughout South Texas who qualify to provide these services, from massage therapy to the towing industry, with an added barrier.

Regional lawmakers said because of the Rio Grande Valley’s proximity to Mexico, communities here need to prepare for services to get more expensive.

“It definitely affects opportunity. It definitely affects the economy. It definitely affects all aspects of life, especially for those of us who live along the Rio Grande border,” said State Rep. Terry Canales, D-Edinburg, who described the change as a “Trump-inspired initiative.”

The law from which the new TDLR requirement is inspired was penned in August 1996. It states that people who are not legally authorized to be in the U.S. are “not eligible for any State or local public benefit,” including professional and commercial licensing.

The 1996 law also defines these “public benefits” as retirement, welfare, assisted or public housing, post-secondary education, unemployment benefit, and food assistance, as well as grants and loans.

Notably, it also provided state flexibility, giving their governments the choice whether to allow those without citizenship “public benefits.

Now, decades later, under a tough-on-immigration administration, TDLR is applying the legislation, and Canales expects thousands of Texas-based workers to be impacted.

Meanwhile, this comes amid a similar shift taken by the Texas Department of Motor Vehicles, as it adopts a stricter identification process that also requires proof of legal status to register a vehicle. Canales foresees the automobile industry taking a big hit, simultaneously.

“That industry is going to suffer incredibly,” he said. “But now, all license businesses, where you require a license from TDLR, are going to be significantly affected, from nail techs to hairdressers, to anybody that falls under the purview of TDLR. You’re going to see a downward trend, and I think because of that, you’re going to see labor spikes.”

Harlingen Mayor Norma Sepulveda, an immigration lawyer with over 15 years of experience, echoed what Canales predicted regarding labor shortages and service inflation here in the Valley.

“If those individuals are now not going to be able to get the appropriate licenses to provide the services that they do, then those services are not going to be available to the consumer, and so prices are going to go up because there’s less opportunity and there’s more demand,” she said. “I think it’s basic economics that it’s going to impact our community, and it’s not going to be in a positive way.”

McAllen Mayor Javier Villalobos and Brownsville Mayor John Cowen didn’t immediately respond to request for comment.

When the TDLR publicly proposed the recent change to the Texas Administrative Code, the agency included a government required fiscal and economic summary drafted by a state policy analyst.

The limited-in-scope summary alleged that the new rule would not result in revenue changes for state and local governments, and estimated no foreseeable economic impact over the first five years. It also determined there would be no adverse effect on small businesses or rural communities.

However, the findings of this summary have been challenged by state legislators arguing that the requirement would affect hundreds of thousands of license holders, and have much broader impacts left unaddressed by the study.

The summary did not include analysis on the impacts on labor markets, household income, employment or consumer prices and focused narrowly on costs to government agencies, license applicants and businesses. There have been calls for a formal broader economic analysis on the newly implemented requirement, which has yet to happen.

If thousands of workers are to lose their eligibility, Canales says Valley communities should expect their everyday services to cost more.

“Texas already has labor shortages, especially because of ICE and a bunch of immigration efforts. This is only going to exacerbate the problem, and drive up prices of lots of services across the state,” he said.

In the meantime, Canales doesn’t see current license holders being grandfathered in either, come time for renewal, for which he is considering corrective legislation.

“I think they are going to face issues at renewal. I think that ultimately if you don’t meet that citizenship qualification, your license is theoretically gone,” he said. “People have invested in their companies. People have invested in their businesses. And we gave them that promise, and now the state of Texas is basically going back on its word, and is going to take their licenses from them.

“That’s an injustice across the board.”

On Tuesday, industry workers and trade institute leaders confronted TDLR board members in Austin, during the public comments section of their latest commission meeting.

They ensured that their voices were heard as they advocated for students who have spent hundreds of hours working toward their licenses as well as those who have held their licenses for decades.

One speaker, Irma Valdez, said, “A lot of people who have been working with TDLR have had their license for 25 or 30 years. They still contribute to society. They have bought properties. They have families. They depend on the TDLR licenses.”

Despite the industry pushback, Canales doesn’t see this recent rule change by TDLR as being the end of things.

“I think there are going to be more agencies across the board using these Trump-inspired regulations that are doing more damage than good,” he said.

Originally posted in MyRGV.com: https://myrgv.com/local-news/2026/03/25/new-licensing-requirement-creates-more-hurdles-for-undocumented-workers/