"I would say we lost a good third of our people," said Postville Mayor Bob Penrod. "It's a pretty substantial hit."
Businesses that had served the Hispanic community struggled or shuttered after the May 12 raid. The meatpacking plant scrambled to replace 700 workers -- at one point busing in the homeless from Texas.
"This has not created anything good for the community," said Father Paul Ouderkirk, a former pastor at St. Bridget's Church "It's created division, hurt, harm."
About a thousand protesters descended on Postville on Sunday, decrying the raid and calling for a change in federal immigration policies.
Postville, a town with about 2,200 residents, was pushed to the forefront of a national debate when federal immigration officials raided Agriprocessors - the biggest U.S. kosher meatpacking plant - in May in the largest raid of its kind in the United States. Most of those arrested were Guatemalan and Mexican nationals who lived in the area.
Sunday's protesters - many arriving by bus from the Twin Cities and Chicago - circled the streets of Postville on a route about a mile long. Some clutched banners and signs such as one that read, "United for immigrant and worker rights."
Rabbi Harold Kravitz of the Adath Jeshurun Congregation in Minnetonka, Minnesota, spoke when the rally paused near the driveway of Agriprocessors, on the outskirts of town.
Shouting into a portable microphone, he said the protesters wanted to stop the criminalization of people who come to the U.S. simply to make a living.
"People have come here from Minneapolis, Wisconsin, Chicago, New York and New Jersey ... because we care," Kravitz said.
The rally also drew about 75 anti-immigration protesters.
Claire Jamison, who said she'd traveled from Minneapolis, wore a hat emblazoned with a U.S. Border Patrol logo and held a sign reading "What would Jesus do? Obey the law."
"I'm just so fed up as an American. We have laws. Why can't they obey our laws?" Jamison said. "I empathize with those people, but they are not victims. They should not have even been here."
Most of the nearly 300 undocumented workers arrested are serving five months sentences for identity theft, but some 40 women along with their 90 children are still living in Postville, awaiting a court date. Unable to work, the families are completely dependent on St. Bridget's Catholic church for food, rent money and medical care. Maria Cruz is one of those women.
"They took my husband and left me with my three sons and I can't work," Cruz said. "It makes you feel humiliated and we didn't do anything bad, the only thing we did was come here to work."
Cruz has to wear a tracking bracelet 24 hours a day and cannot leave Iowa until her case comes to trial. Maria also told CBS News that after the raid, her last paycheck was missing 20 hours of overtime and she was not paid for two weeks of vacation time she had earned - money she desperately needs now.
Two Agriprocessor managers are facing indictment for assisting plant workers get fake identity cards. Now the federal Labor Department is investigating the plant for child labor violations; the equal Employment Oppotunity Commision is looking into sexual harrasment charges; and lawyers for the immigrants are working on a lawsuit over wage and hour violations. And over the years, there have been repeated charges of safety violations.
"The line behind us was dangerous, it was all sharp knives," Cruz said.
"It was the dirtiest, unsafest plant I've ever been in," Father Ouderkirk said.
Many of Ouderkirk's parishioners worked at Agriprocessors. He has toured the plant and says workers there were routinely mistreated.
"We're dealing with them -- we've seen them -- the kid without three fingers and the one with his hand missing, and when I was a pastor here I took how many people to the doctor with cuts," Ouderkirk said.
Agriprocessors denies employing underage workers, and would not discuss any pending litigation, but says it has begun to make changes in the plant.
"We have hired a compliance officer, that was reported to everybody, and I'm not going to get into the details, but I think it was reported, many new and improved systems," said Chaim Abraham with Adriprocessors.
Still, that's not enough for Fr. Paul.
"They have a responsibility to this whole community that they never lived up to," Ouderkirk said. "They painted a good picture, but their actions spoke a different story."