Will stopping immigration cause labor shortages?

[1][2][3][4]Yes, stopping or sharply curtailing immigration is likely to cause or worsen labor shortages in many sectors of the U.S. (and similar developed economies), particularly given current demographics, though the effects would vary by industry, skill level, region, and time horizon, and the economy would partially adjust through higher wages, prices, automation, and other means.[2]

Demographic Backdrop

The U.S.-born working-age population (roughly 18-65) has slowed dramatically and has been shrinking in recent years, especially among non-college-educated workers. This stems from aging (Baby Boomers retiring), below-replacement fertility, and related trends. Labor force participation rates among natives have not risen enough to offset this. Immigration has been the primary driver of U.S. labor force growth for decades—accounting for the large majority in recent periods (e.g., over 80% in some estimates from 2019-2024). Without it, the working-age population would have begun contracting earlier, and potential employment growth would be far lower.[1]

Federal Reserve and other analyses indicate that net migration drops (from peaks near 2-2.7 million annually to hundreds of thousands or near-zero/negative) reduce the “break-even” level of monthly job growth consistent with stable unemployment—from well over 100,000 to potentially under 10,000-70,000. This raises risks of labor crunches, slower GDP growth (e.g., potential growth falling toward 1.4-1.6%), and tighter markets as aging intensifies.[2]

Sector-Specific Evidence and Recent Trends

Immigrants (foreign-born) are overrepresented in certain occupations: often 20-40%+ of workers in construction/trades (e.g., ~30-35% overall, over half in some roles like drywall/painting), agriculture/farm work, food processing, leisure/hospitality, personal care/home health, and some manufacturing. Many of these involve physically demanding, lower-wage, or seasonal work that natives fill at lower rates due to preferences, location, skills, or demographics.[5]

High-skilled immigration (e.g., STEM, healthcare) also fills gaps where domestic supply lags, supporting innovation and firm growth.

Economic Mechanisms and Research Findings

Standard models and evidence show immigration expands labor supply but also demand (immigrants buy goods/services and start businesses). Immigrants and natives are often imperfect substitutes or complements: natives may upgrade occupations (e.g., to supervisory roles), firms expand output or invest more, and specialization occurs. Many studies (including recent national-level analyses using improved methods) find immigration has small positive or near-zero average effects on native wages/employment overall, and often positive effects for less-educated natives via complementarity (estimates around +2.6% to +3.4% wage boost for non-college natives from 2000-2023 flows in some work). Job creation and firm formation rise in tight markets with immigration.[4]

Stopping inflows (or large deportations) reverses this: vacancies persist or grow in immigrant-heavy sectors, output falls or costs/prices rise (e.g., construction, food, care services), and growth slows. A Leontief-style production view (fixed proportions of complementary labor types) fits post-pandemic data where immigration eased shortages and damped wage pressures in affected industries.[8]

Historical parallels:

Nuances, Adjustments, and Counterpoints

In summary, evidence from demographics, recent slowdowns, sector data, econometric studies, and history indicates that abruptly stopping immigration would cause or intensify labor shortages in key areas, constrain economic expansion, and raise costs, even if some native workers see localized wage or employment benefits. Gradual, selective policies combined with domestic workforce measures can better balance supply needs against other concerns. Long-term projections consistently show immigration as a major mitigator of aging-driven labor force stagnation in the U.S. and peer countries.