Will stopping immigration cause labor shortages?
Sources on sector shortages and long-term labor force losses (Fortune, CFR, Forbes) conflict with Goldman Sachs, the Dallas Fed and wage data suggesting modest or offset macro effects.
Yes — evidence from 2025-2026 shows immigration restrictions have caused real labor shortages in specific sectors, though the broader economic picture is more nuanced.
Sector-specific shortages are documented
Construction: New data has confirmed economists' concern that the Trump administration's immigration crackdown has led to fewer jobs in critical industries, particularly construction. In one striking example, half of a construction crew's workers stopped showing up to a site after an Immigration and Customs Enforcement raid on another site 230 miles away, afraid of facing the risk of deportation. Industry data shows nearly 40% of skilled construction workers are now over age 45, and apprenticeship programs typically require five to seven years to produce fully skilled workers, leaving a growing gap — meaning immigration cuts compound an existing structural shortage. The National Association of Home Builders reports that immigrants make up 34% of all construction workers.
Agriculture: The agricultural industry could suffer as the crackdown continues, since 68% of farm laborers for fiscal year 2021–22 were foreign-born, and the Labor Department warned in October 2025 that immigration policies risk creating a labor shortage in the sector.
Manufacturing: Workers at factories in Michigan and Kentucky say immigration crackdowns are driving labor shortages — at a GE Appliances plant in Louisville, over 125 employees lost their jobs due to canceled work permits, causing slowdowns, while a Kraft Heinz facility required extended overtime as remaining staff struggled to meet demand.
Aggregate labor force data confirms decline
The size of the foreign-born labor force has declined by about 1.2 million people since January, to 32.1 million total people by July. A separate analysis found this decline represents a reduction of more than 1.4 million foreign-born workers compared to labor force growth expected in government estimates, versus the roughly 1.3 million more foreign-born workers assumed by the CBO and Social Security Administration.
Longer-term projections are more severe: a study found Trump administration policies on legal and illegal immigration would reduce the projected number of workers by 6.8 million by 2028 and 15.7 million by 2035, with people entering the workforce not fully making up for job losses.
But it's not a simple story — several complicating factors
1. U.S.-born workers aren't filling the gap. Despite fewer immigrant workers, the labor force participation rate for U.S.-born workers aged 16 and older actually ticked lower to 61.6% from 61.7% the prior year rather than rising to absorb the slack.
2. Complementary jobs disappear too. Immigrants fulfill a complementary role in the workplace — their jobs necessitate support roles more likely held by U.S.-born workers. For example, at a construction site, fewer laborers means fewer electricians and managers needed on site. This means immigration cuts can reduce jobs for native-born workers too, not just create vacancies for them.
3. Reduced demand offsets some shortage effects. Removing immigrant workers also removed consumer spending, which economists say offset much of the expected labor shortage effect. Wage data reflects this: hourly earnings in 41 immigrant-reliant industries rose just 3.5% year-over-year in February, below the 3.8% increase for all workers — the opposite of what a true shortage would predict (wages should rise faster where labor is scarce).
4. Some economists argue effects are modest overall. Goldman Sachs Research concluded the impact from reduced immigration on wage growth and inflation should be modest now that the US labor market is back in balance, and estimated the slower pace of immigration would contribute 30-40 basis points less to potential GDP growth than the 2023-2024 pace, but just 5 basis points less than the pre-pandemic pace.
5. Macro data is mixed. The Dallas Fed found that the breakeven rate of employment growth actually went negative during summer/fall 2025, meaning the economy can shed jobs without increasing the jobless rate — suggesting the overall labor market absorbed reduced immigration without major disruption, even as specific sectors struggled.
Bottom line
The honest answer is it depends on the sector and timeframe. Labor-intensive industries with high shares of foreign-born workers — construction, agriculture, meatpacking, hospitality — are experiencing genuine, well-documented shortages with real economic costs (project delays, lost output, higher costs). But at the macro level, the picture is muddied by simultaneous demand destruction (fewer immigrant consumers spending money), automation/productivity gains, and the fact that native-born workers haven't rushed in to fill vacated jobs. Economists at institutions like Peterson Institute and NFAP warn of larger long-term GDP and labor force effects, while others (Goldman Sachs, some Fed economists) see more limited macro impact given where the labor market started from.
Citations (18)
- Trump's immigration crackdown is worsening the construction labor shortage threatening build costs | Fortune
Source excerpt: “New data has confirmed economists’ concern that the Trump administration’s immigration crackdown has led to fewer jobs in critical industries, particu...”
evidence, article, points to yes. Claim: Immigration crackdown has led to fewer jobs in critical industries, particularly construction.
- Trump's immigration crackdown is worsening the construction labor shortage threatening build costs | Fortune
Source excerpt: “He told Reuters that half of his workers stopped showing up to the site after an Immigration and Customs Enforcement raid on another site in Florida, ...”
evidence, article, points to yes. Claim: Half of a construction crew stopped showing up after an ICE raid on another site far away.
- Construction Labor Shortage 2026: ICE Raids, Retirements, 500K Jobs Gap
Source excerpt: “Nearly 40% of skilled construction workers are now over the age of 45, and in the electrical trades, nearly one in five workers is older than 55. ”
statistic, article, points to yes. Claim: Nearly 40% of skilled construction workers are over 45, compounding an existing structural shortage.
- Construction Labor Shortage 2026: ICE Raids, Retirements, 500K Jobs Gap
Source excerpt: “Apprenticeship programs typically require five to seven years to produce fully skilled workers, leaving a growing gap as experienced workers exit the ...”
evidence, article, points to yes. Claim: Apprenticeships take five to seven years to produce skilled workers, leaving a growing gap.
- Construction Labor Shortage 2026: ICE Raids, Retirements, 500K Jobs Gap
Source excerpt: “The National Association of Home Builders reports that immigrants make up 34% of all construction workers ... ”
statistic, article, points to yes. Claim: Immigrants make up 34% of all construction workers, per the National Association of Home Builders.
- How Does Immigration Affect the U.S. Economy? | Council on Foreign Relations
Source excerpt: “Experts say the agricultural industry in particular—in which 68 percent [PDF] of farm laborers for fiscal year 2021–22 were foreign-born—could suffer ...”
statistic, article, points to yes. Claim: 68% of farm laborers in fiscal 2021–22 were foreign-born; agriculture could suffer from the crackdown.
- How Does Immigration Affect the U.S. Economy? | Council on Foreign Relations
Source excerpt: “The Labor Department warned in October 2025 that the Trump administration’s immigration policies risk creating a labor shortage in the sector. ”
attribution, article, points to yes. Claim: Labor Department warned in October 2025 that immigration policies risk creating an agricultural labor shortage.
- US workers say Trump’s immigration crackdown is causing labor shortages: ‘A strain on everybody’
Source excerpt: “US workers say Trump’s immigration crackdown is causing labor shortages: ‘A strain on everybody’ Workers at factories in Michigan and Kentucky say rec...”
evidence, article, points to yes. Claim: Factory workers in Michigan and Kentucky say crackdowns drive labor shortages, including at GE Appliances and Kraft Heinz.
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “The size of the foreign-born labor force has declined by about 1.2 million people since January, to 32.1 million total people in July, BLS data shows....”
statistic, article, points to yes. Claim: Foreign-born labor force declined about 1.2 million since January to 32.1 million by July.
- New Research Finds Reducing Immigration Does Not Help U.S. Workers
Source excerpt: ““This decline, though smaller than reported in earlier months, represents a reduction of more than 1.4 million foreign-born workers compared to the la...”
statistic, article, points to yes. Claim: Decline represents over 1.4 million fewer foreign-born workers than government estimates assumed.
- trump immigration policies slash workforce 080300557
Source excerpt: “The Trump administration’s policies aimed at legal and illegal immigration would reduce the projected number of workers by 6.8 million by 2028 and 15....”
statistic, article, points to yes. Claim: Trump policies would reduce projected workers by 6.8 million by 2028 and 15.7 million by 2035.
- trump immigration policies slash workforce 080300557
Source excerpt: “labor force by 2028, 2.8 million would be due to changes in legal immigration policies, while 4 million would result from policies on illegal immigrat...”
statistic, article, points to yes. Claim: Labor force losses split between legal immigration changes and illegal immigration policies.
- Trump's immigration crackdown is worsening the construction labor shortage threatening build costs | Fortune
Source excerpt: “Immigrants fulfill a complementary role in the workplace, meaning their jobs necessitate roles to support their work that may be more likely to be hel...”
evidence, article, points to no. Claim: Immigrants' complementary roles mean cuts also reduce jobs for native-born workers, not just create vacancies.
- The Immigration Crackdown Was Supposed to Boost Wages But the Data Has a Different Story
Source excerpt: “Removing immigrant workers also removed consumer spending, which economists say offset much of the expected labor shortage effect. ”
evidence, article, points to no. Claim: Lost immigrant consumer spending offset much of the expected labor shortage effect.
- The Immigration Crackdown Was Supposed to Boost Wages But the Data Has a Different Story
Source excerpt: “A WSJ analysis of Labor Department figures found that hourly earnings in 41 immigrant-reliant industries rose just 3.5% year-over-year in February, be...”
statistic, article, points to no. Claim: Earnings in 41 immigrant-reliant industries rose 3.5%, below the 3.8% for all workers, opposite of shortage prediction.
- How will declining immigration impact the US economy? | Goldman Sachs
Source excerpt: “The impact from reduced immigration on wage growth and inflation should be modest now that the US labor market is back in balance, according to Goldma...”
attribution, article, points to no. Claim: Goldman Sachs concluded impact on wage growth and inflation should be modest.
- How will declining immigration impact the US economy? | Goldman Sachs
Source excerpt: “In their baseline estimate, the GDP impact from changes in immigration is likely to be limited: The slower pace of immigration would contribute 30-40 ...”
statistic, article, points to no. Claim: Slower immigration contributes 30-40 bps less to potential GDP growth than 2023-24 pace, but only 5 bps less than pre-pandemic.
- Immigration Crackdown Shifts U.S. Labor Market Dynamics - Dallas Today
Source excerpt: “› · According to a report from Dallas Fed economists, the breakeven rate of employment growth - the number of net new jobs needed each month to keep t...”
evidence, article, points to no. Claim: Dallas Fed found breakeven employment growth went negative, suggesting the labor market absorbed reduced immigration.