Will stopping immigration cause labor shortages?

Whether stopping or significantly reducing immigration causes labor shortages is a central question in modern economics. The short answer is yes, in the short term, stopping immigration historically leads to immediate labor shortages, particularly in specific industries.

However, economists, policymakers, and labor analysts hold differing views on the long-term consequences. The debate centers on whether these shortages cause lasting economic harm or whether they force a necessary market correction that benefits domestic workers.

1. The Argument That Stopping Immigration Causes Labor Shortages

Most mainstream economists and business associations argue that stopping immigration severely constrains the labor supply. This perspective is supported by several key points:

•Heavy Sector Reliance: Certain industries depend heavily on foreign-born labor. For example, in the United States, immigrants make up a disproportionate share of workers in agriculture, construction, hospitality, elder care, and food processing. When immigration slows, these sectors immediately face hiring difficulties, which can lead to unharvested crops, delayed construction projects, and understaffed service businesses.

•Demographic Decline: Most developed nations (including the U.S., Japan, and much of Western Europe) face aging populations and declining birth rates. Without immigration, the overall size of the labor force in these countries would flatline or shrink, making it difficult to sustain economic growth, fund social safety nets, and meet the demand for healthcare and elder care.

•Job Complementarity: Economists often point out that immigrant workers do not simply "take" jobs from native-born workers; they often complement them. For instance, a steady supply of immigrant construction laborers enables home-building companies to expand, which in turn creates higher-paying jobs for native-born managers, architects, contractors, and building supply manufacturers. When the supply of laborers dries up, those higher-tier jobs can also disappear.

•Inflationary Pressures: When companies cannot find enough workers, they must either scale back operations or compete for a limited pool of labor. This competition drives up wages, but because productivity has not necessarily increased, companies often pass these higher labor costs onto consumers, contributing to inflation.

2. The Argument That Restricting Immigration Corrects the Labor Market

Proponents of immigration restriction and some labor economists argue that labor "shortages" are actually a sign of a functioning market and can lead to positive structural changes:

•Wage Growth for Low-Skilled Workers: Restrictionists argue that an abundant supply of low-wage foreign labor keeps wages artificially low for domestic workers. If the supply of immigrant labor is cut off, employers are forced to raise wages, offer better benefits, and improve working conditions to attract native-born workers who are currently unemployed or out of the labor force.

•Incentive for Automation and Efficiency: When labor is cheap and plentiful, businesses have little incentive to invest in technology. A labor shortage forces companies to innovate. For example, a farm facing a shortage of hand-pickers might invest in automated harvesting machinery, which ultimately increases productivity and elevates the remaining jobs into higher-skilled, higher-paying technical roles.

•Drawing Marginalized Workers Back to the Labor Force: Proponents of lower immigration argue that a tight labor market draws historically marginalized or underemployed domestic populations—such as young people, workers without college degrees, or those with criminal records—back into the workforce because employers are forced to recruit more aggressively.

What Does the Economic Data Show?

Empirical studies of historical and recent immigration restrictions offer mixed but telling insights:

•Fleeting Wage Gains vs. Long-Term Contraction: Economic models (such as those by the National Bureau of Economic Research) suggest that while removing immigrant workers might provide a tiny, short-term bump in wages for certain native-born blue-collar workers, these gains are often temporary. In the long run, overall wages can actually decline because businesses scale back investment, start fewer new companies, and draw down capital in response to a shrinking customer base and labor force.

•The "Bracero" Program Lesson: A famous historical example occurred in 1964 when the U.S. ended the Bracero program, which brought hundreds of thousands of Mexican farmworkers to the country. Economists found that ending the program did not lead to higher wages or more jobs for American farmworkers; instead, farmers rapidly adopted automated harvesting technology for some crops (like tomatoes) and simply stopped growing others, reducing overall agricultural output.

•Recent Policy Impacts: Economists tracking labor markets during periods of sharp immigration declines (such as the drop during the COVID-19 pandemic or the enforcement-driven declines in late 2024 and 2025) note that job growth in highly immigrant-dependent fields flatlined rather than being replaced by native-born workers.

Conclusion

Stopping immigration does cause immediate labor shortages, particularly in physically demanding, lower-wage, or highly specialized sectors. Whether this is viewed as a crisis or an opportunity depends on economic philosophy:

•One side views these shortages as a major drag on economic growth, a driver of inflation, and a threat to aging societies.

•The other side views them as a necessary catalyst to end a reliance on low-wage labor, push up domestic wages, and force businesses to invest in productivity and automation.

Citations (10)

1americanprogress.orgNonprofits and think tanks
americanprogress.org
Backs: “However, economists, policymakers, and labor analysts hold differing views on the long-term consequences.”
2heritage.orgNonprofits and think tanks
heritage.org
Backs: “However, economists, policymakers, and labor analysts hold differing views on the long-term consequences.”
3cis.orgNonprofits and think tanks
cis.org
Backs: “The debate centers on whether these shortages cause lasting economic harm or whether they force a necessary market correction that benefits domestic workers.”
4piie.comNonprofits and think tanks
piie.com
Backs: “For example, in the United States, immigrants make up a disproportionate share of workers in agriculture, construction, hospitality, elder care, and food processing.”
5cfr.orgNonprofits and think tanks
cfr.org
Backs: “For example, in the United States, immigrants make up a disproportionate share of workers in agriculture, construction, hospitality, elder care, and food processing.”
6goldmansachs.comCompanies
goldmansachs.com
Backs: “When immigration slows, these sectors immediately face hiring difficulties, which can lead to unharvested crops, delayed construction projects, and understaffed service businesses.”
7reddit.comForums and Q&A
reddit.com
Backs: “Demographic Decline: Most developed nations (including the U.S., Japan, and much of Western Europe) face aging populations and declining birth rates.”
8equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “Without immigration, the overall size of the labor force in these countries would flatline or shrink, making it difficult to sustain economic growth, fund social safety nets, and meet the demand for healthcare and elder care.”
9americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “Job Complementarity: Economists often point out that immigrant workers do not simply "take" jobs from native-born workers; they often complement them.”
10forbes.comNews and mediaquality 0.83
forbes.com
Backs: “Inflationary Pressures: When companies cannot find enough workers, they must either scale back operations or compete for a limited pool of labor.”