Will stopping immigration cause labor shortages?

Stopping immigration would reshape the labor market — I'll pull the latest data on whether it would trigger shortages.

Yes, according to most recent economic and demographic research, stopping immigration would cause and worsen labor shortages - especially in the US, Canada, UK and other aging economies.

It would not create a one-for-one replacement of jobs for native-born workers.

1. Immigrants are now the main driver of labor force growth

•Foreign-born workers account for about 19% to 19.2% of the U.S. civilian labor force in recent data and about 19% or close to 31 million workers as of 2024.

•Despite comprising only 19 percent of the labor force, foreign-born workers have consistently accounted for half of labor force growth each year.

•Foreign-born individuals have a higher labor force participation rate than native-born individuals.

Without that inflow, the underlying demographics point to shrinkage:

•Demographics in the United States have changed substantially, and without new immigration, the U.S. working-age population ages 16 to 64 would have started to decline in 2012.

•The Federal Reserve Bank of San Francisco similarly found that without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025.

•Without immigration, prime-age labor force growth will likely continue to slow and turn negative around 2042.

•Without immigration, the prime-age U.S.-born labor force was projected to grow at a rate that is 0.8 percentage point lower than earlier Congressional Budget Office forecasts.

Two forces are currently shaping the U.S. labor market: an aging population, with larger cohorts reaching retirement, and the recent decline in net immigration, which together reduce labor force growth.

The median age in the United States increased from 32.9 in 1990 to 39.1 in 2024, shifting composition toward older workers with much lower participation rates. Canada is seeing the same pattern, with median age rising from 26 in 1971 to over 40 in 2026.

The Bank of Canada warns that slower population growth — caused by immigration cuts — plus an aging population could lead to labour shortages and higher inflation.

In the UK, the National Institute of Economic and Social Research (NIESR) estimated such stagnation would leave GDP 3.6% smaller by 2040 than under official projections, because stopping migration shrinks the future workforce far more abruptly than it curtails corporate investment.

2. Recent slowdown already shows the effect

•Between 2024 and 2025, net migration dropped 77 percent because of policy changes.

•In 2025, net migration fell to 515,000 people, with estimates suggesting it was between –295,000 and –10,000.

•Evidence shows that a slowdown in immigration accounts for 40 to 60 percent of the recent drop in U.S. job growth.

•The Federal Reserve Bank of Kansas City notes that breakeven employment growth - the jobs needed each month to keep unemployment stable - fell from 150,000 jobs in the CBO January 2024 projection to 126,000 in January 2025, and to 77,000 jobs by September 2025 after revising down immigration's contribution. When immigration is netted out, breakeven falls to just 29,000 jobs.

That explains why weak payroll numbers in 2025 (79,000 in July, 22,000 in August) did not necessarily mean weak labor demand - the labor supply itself shrank.

The effect is amplified by enforcement-related "chilling": In California, a surge in immigration worksite raids led to a 3.1% drop in the state's total workforce from May to June 2025, with noncitizen workforce participation falling by 7.2% in that same period.

3. Shortages are concentrated in sectors with chronic vacancies

Multiple federal and independent analyses find foreign-born workers concentrate in industries with persistent worker shortfalls like farming, construction, and long-term care.

Specific shares:

•Immigrants make up nearly 20% of the U.S. workforce, including 45% of farmworkers, 30% of construction workers, 24% of service workers, and 43% of home health aides.

•Nationally, 15.6% of all nurses and 27.7% of all health aides are immigrants.

•25.3% of workers in the agriculture industry overall and 54.3% of graders and sorters of agricultural products are immigrants, and one in four workers in construction were immigrants in 2022.

Recent National Foundation for American Policy (NFAP) research found:

> Recent NFAP research shows reducing immigrant labor worsens shortages, raises costs, and disproportionately affects Latino workers and essential services.

> When immigrant workers leave the workforce, native-born employees do not automatically fill those roles

> Industries such as healthcare, home care, and agriculture face intensified staffing gaps as immigration declines. NFAP senior fellow Mark Regets notes that “a severe drop in immigrant workers does not translate into more opportunities for U.S.-born employees—it creates real shortages that affect essential services.”

Immigration alleviates these shortages by helping fill vacancies and dampening wage growth during the high-immigration period of 2021-2024.

Without it, models predict project delays, higher wages to attract remaining workers, and higher consumer prices in construction and agriculture, where unauthorized workers make up about 19% of construction and nearly one quarter of farm labor nationally.

4. Does it help U.S.-born workers?

The stated goal of curbing immigration is often to protect native workers, but recent data does not support that trade-off:

•Despite a substantial drop in foreign-born workers, the U.S.-born unemployment rate has increased from 3.7% to 4.1% over the past year.

•A CU Boulder study found heightened immigration enforcement during the second Trump administration has not expanded job opportunities for U.S.-born workers and is associated with a reduction of employment for U.S.-born men with no more than a high school degree.

Closing the labor supply also reduces consumer demand - immigrants are major contributors to both production and spending. Reduced immigration is estimated to weaken consumer spending by $60–$110 billion combined over 2025 and 2026, which dampens revenue for retail, restaurants and other sectors.

5. Nuance: Could shortages be avoided?

•Short-term: After initial labour shortages, which might boost productivity, automation could offset some gaps, and slower population growth could ease pressure on housing and infrastructure. Wages would likely rise in scarce occupations as employers compete for fewer workers.

•Long-term: By 2075, however, decades of below-replacement fertility would create a deeper problem. Foreign-born workers accounted for 19.1 percent of the U.S. civilian labor force in 2025 - removing that share without replacement means the overall workforce shrinks altogether.

•Participation rate argument: Some researchers note a large share of working-age American men are out of the labor force (over 21% today vs 11.3% in 1960), suggesting domestic supply could theoretically be mobilized. However, participation among native-born remains lower than foreign-born, and activation would require major policy changes in training, wages, childcare, and health.

Bottom line: In aging economies with low birth rates, stopping immigration does not simply tighten the labor market - it shrinks it. The U.S. breakeven jobs number is now about half what it was two years ago because of demographics and immigration decline, and sectors that already face chronic vacancies (healthcare, agriculture, construction, hospitality, long-term care) would experience the most acute shortages, higher costs, and longer wait times.

1.[Declining Immigration, Aging Population Reducing Breakeven Employment Growth

•Federal Reserve Bank of Kansas City](https://www.kansascityfed.org/research/economic-bulletin/declining-immigration-and-an-aging-population-are-reducing-breakeven-employment-growth/)

Citations (3)

1kansascityfed.orgGovernment
Declining Immigration, Aging Population Reducing Breakeven Employment Growth - Federal Reserve Bank of Kansas City
Backs: “It would not create a one-for-one replacement of jobs for native-born workers. 1. Immigrants are now the main driver of labor force growth”
2ainvest.comData and tools
Structural Labor Supply Shock: The Macroeconomic Impact of a Shrinking Workforce
Backs: “working-age population would have started shrinking in 2012, not 2025. Without immigration, prime-age labor force growth will likely continue to slow and turn negative around 2042. Without immigration, the prime-age U.S.-born labor force was projected to grow at a rate that is 0.8 percentage point lower than earlier…”
3parriva.comCompanies
Immigration Labor Impact: NFAP Study Challenges Job Myths
Backs: “25.3% of workers in the agriculture industry overall and 54.3% of graders and sorters of agricultural products are immigrants, and one in four workers in construction were immigrants in 2022. Recent National Foundation for American Policy (NFAP) research found: Recent NFAP research shows reducing immigrant labor…”