Will stopping immigration cause labor shortages?

Whether stopping immigration causes labor shortages is a well-established economic question I can address without needing current news, but let me check if there are recent relevant developments worth considering.# Yes, Reducing Immigration Does Cause Labor Shortages — The Evidence Is Now Extensive

Both economic theory and real-world data from the 2025-2026 U.S. immigration crackdown show that cutting off immigration flows creates genuine labor shortages, particularly in specific sectors. Here's what the evidence shows:

Direct Evidence from the Current U.S. Crackdown

The Trump administration's 2025 immigration enforcement surge has produced a real-time case study. The foreign-born population, which stood at roughly 53.3 million in January 2025, declined to about 51.9 million by June — nearly 1.5 million fewer people in just six months. The effects rippled through the labor force: approximately 1.2 million foreign-born workers left the labor force as a result.

Notably, even the administration's own Labor Department has acknowledged this risk. In an October 2025 regulatory filing, officials warned that "the current and imminent labor shortage exacerbated by the near total cessation of the inflow of illegal aliens, increased enforcement of existing immigration law, and global competitiveness pressures... presents a sufficient risk of supply shock-induced food shortages." The filing went further, stating plainly that "the Department does not believe American workers currently unemployed or marginally employed will make themselves readily available in sufficient numbers to replace large numbers of aliens no longer entering the country."

Sector-by-Sector Impact

Agriculture is especially vulnerable. Foreign-born workers comprise approximately 70% of the farm workforce nationwide, and many farms report difficulty finding enough workers during critical harvest periods, a challenge that has intensified in the first half of 2025 due to increased interior immigration enforcement. Research cited by the Labor Department found that even a 10% decrease in the agricultural workforce can result in a 4.2% drop in fruit and vegetable production and a 5.5% decline in farm revenue.

Construction faces similar strain. The construction industry, where more than a quarter of workers are foreign-born, has long struggled to find enough workers, and industry officials say the crackdown is making this worse. Concretely, construction companies have shed 10,000 jobs since May. One analysis found the 10 states with the highest concentration of undocumented immigrants in the construction industry saw a 0.1% drop in construction employment at a time when other states saw a 1.9% increase.

Hospitality shows a similar pattern — the labor force rising just 0.2% in June 2025, compared to 1.5% in June 2024. Overall, restaurants, construction and landscaping businesses have lost a combined 315,000 immigrant workers through August 2025, more than any other industries.

Healthcare is also affected, as roughly 1.2 million immigrants work in health care, including more than 25 percent of physicians, 16 percent of nurses, and 28 percent of home health aides.

Why American Workers Don't Simply Fill the Gap

The core argument for immigration restriction — that it opens jobs for native-born workers — hasn't played out as predicted. A key reason is that reducing immigration does not reallocate jobs to U.S.-born workers — it reduces the overall size of the economy that creates those jobs. Research reinforces this: a National Bureau of Economic Research study found that for every ICE arrest, six likely undocumented male workers stop working, with employment also declining among U.S.-born men with less education in areas with high numbers of ICE arrests, as businesses scale back and reduce demand for all workers.

Historical research backs this pattern too. Federal Reserve analysis of a prior immigration slowdown found that this migration slowdown tightened local labor markets modestly, raising the ratio of job vacancies to unemployed workers 5.5 percentage points between 2017 and 2021, and that while gradual inflows of immigrants into the United States have historically tended to loosen labor markets, the sharp drop in immigration between 2017 and 2021 helped fuel a strong tightening in labor market conditions.

Economic Consequences Beyond Jobs

The labor shortages translate into broader economic costs. The nonpartisan National Foundation for American Policy projected this could cut annual economic growth by almost one-third by 2035. One economic analysis projects a 14.5% increase in food and beverage prices from 2024 to 2028 as a result of current policies.

Important Nuances

It's worth noting some complexity in the research:

Bottom line: The evidence strongly supports that stopping or sharply reducing immigration does cause labor shortages, especially in sectors like agriculture, construction, hospitality, and caregiving where immigrant workers are concentrated and native-born workers have not filled the gap at current wages. These shortages tend to show up as higher prices, delayed projects, and reduced output rather than simply as new jobs for native workers.