Will stopping immigration cause labor shortages?

Whether stopping immigration will cause labor shortages is a central question in modern economics. The consensus among mainstream economists is that stopping or drastically reducing immigration causes immediate, acute labor shortages—particularly in specific sectors. However, proponents of immigration restriction argue that the economy will eventually adapt through wage increases and automation.

1. Why Stopping Immigration Causes Labor Shortages (The Mainstream Economic View)

Most economists and business groups argue that a sudden halt to immigration severely disrupts the labor market for several key reasons:

•Demographic Realities: In the United States and many other developed nations, the native-born population is aging, and fertility rates are declining. Without immigration, the workforce would naturally shrink, making it mathematically impossible to sustain current levels of economic output and job growth.

•High Concentration in Vital Industries: Foreign-born workers make up a massive percentage of specific, essential industries. For example, immigrants make up approximately:

•39.8% of building/grounds cleaning and maintenance workers.

•38.5% of farming, forestry, and agricultural workers.

•34.3% of construction and extraction workers.

•26.7% of computer and mathematical workers.

A sudden halt to immigration leaves these roles vacant because there are not enough native-born workers willing or available to do them.

•The "Complementarity" Effect: Economists point out that immigrant and native-born workers rarely compete directly for the same jobs; instead, they complement each other. For example, if a construction company cannot hire immigrant laborers to lay concrete, it cannot proceed with building projects. As a result, native-born plumbers, electricians, and project managers also lose work or face layoffs because the overall project is delayed or canceled.

•Real-World Precedents:

•During the COVID-19 pandemic (2020–2021), administrative halts and border closures resulted in about 2 million fewer working-age immigrants in the U.S. than expected. This drop-off was widely cited by economists as a major driver of the severe post-pandemic labor shortages and subsequent inflation.

•Studies on state-level immigration crackdowns (such as in Arizona or Florida) have consistently shown that when the supply of foreign-born labor shrinks, agricultural crops spoil in the fields, housing construction slows down, and business revenue drops.

2. The Counter-Argument: Market Adaptation and Wage Growth

Proponents of restricting immigration, along with some labor economists, argue that "labor shortages" are not permanent, but rather a temporary friction that forces positive economic adjustments:

•Wage Increases for Native Workers: Proponents argue that a "labor shortage" is often just a shortage of cheap labor. If employers can no longer hire low-wage foreign workers, they are forced to compete for domestic workers by offering higher wages, better benefits, and improved working conditions. This can help pull marginalized or low-income native-born workers back into the labor force.

•Incentive to Automate: When labor is cheap and plentiful, businesses have little reason to invest in expensive machinery. Restricting immigration increases labor costs, which incentivizes businesses to invest in technology and process innovation (e.g., robotic fruit pickers, automated bricklayers, or digital checkout systems). In the long run, this increases productivity per worker, which is the primary driver of rising living standards.

•Reduction in Overall Demand: Immigrants are not just workers; they are also consumers who buy food, rent apartments, and use public services. If immigration stops, the overall population growth slows, which also reduces the demand for goods and services. Over time, this lower demand naturally reduces the number of job vacancies, stabilizing the labor market at a smaller size.

The Economic Transition: A Painful Adjustment

While the economy would theoretically adapt to a zero-immigration scenario over many years, economists warn that the transition period would be highly disruptive:

1.Stagflationary Pressures: Raising wages rapidly to attract domestic workers drives up the cost of goods and services. In industries like eldercare, childcare, and agriculture, these costs cannot easily be absorbed, leading to high inflation for consumers.

2.Limits to Automation: Many jobs cannot be automated with current technology. You cannot easily automate home health aides, hotel housekeepers, or certain delicate agricultural harvests.

3.Economic Contraction: Rather than raising wages or automating, some businesses—especially in farming or manufacturing—may simply go out of business or offshore their operations to countries where labor is available. This results in a smaller overall economy (lower GDP).

Conclusion

Yes, stopping immigration will cause immediate and severe labor shortages, particularly in construction, agriculture, healthcare, and hospitality. While restrictionists point out that this would eventually force employers to raise wages and invest in automation, mainstream economic data suggests that this transition would be accompanied by a shrinking economy, higher inflation, and significant business disruptions.

Citations (14)

1equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “The consensus among mainstream economists is that stopping or drastically reducing immigration causes immediate, acute labor shortages—particularly in specific sectors. However, proponents of immigration restriction argue that the economy will eventually adapt through wage increases and automation.”
2shrm.orgNonprofits and think tanks
shrm.org
Backs: “The consensus among mainstream economists is that stopping or drastically reducing immigration causes immediate, acute labor shortages—particularly in specific sectors. However, proponents of immigration restriction argue that the economy will eventually adapt through wage increases and automation.”
3policyarena.orgNot yet classified
policyarena.org
Backs: “However, proponents of immigration restriction argue that the economy will eventually adapt through wage increases and automation.”
4cis.orgNonprofits and think tanks
cis.org
Backs: “However, proponents of immigration restriction argue that the economy will eventually adapt through wage increases and automation.”
5americanprogress.orgNonprofits and think tanks
americanprogress.org
Backs: “Without immigration, the workforce would naturally shrink, making it mathematically impossible to sustain current levels of economic output and job growth. High Concentration in Vital Industries: Foreign-born workers make up a massive percentage of specific, essential industries.”
6americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “The "Complementarity" Effect: Economists point out that immigrant and native-born workers rarely compete directly for the same jobs; instead, they complement each other. For example, if a construction company cannot hire immigrant laborers to lay concrete, it cannot proceed with building projects.”
7econofact.orgAcademic
econofact.org
Backs: “During the COVID-19 pandemic (2020–2021), administrative halts and border closures resulted in about 2 million fewer working-age immigrants in the U.S. than expected. This drop-off was widely cited by economists as a major driver of the severe post-pandemic labor shortages and subsequent inflation.”
8cmsny.orgNonprofits and think tanks
cmsny.org
Backs: “This drop-off was widely cited by economists as a major driver of the severe post-pandemic labor shortages and subsequent inflation. Studies on state-level immigration crackdowns (such as in Arizona or Florida) have consistently shown that when the supply of foreign-born labor shrinks, agricultural crops spoil in the…”
9forbes.comNews and mediaquality 0.83
forbes.com
Backs: “Studies on state-level immigration crackdowns (such as in Arizona or Florida) have consistently shown that when the supply of foreign-born labor shrinks, agricultural crops spoil in the fields, housing construction slows down, and business revenue drops.”
10reddit.comForums and Q&A
reddit.com
Backs: “Wage Increases for Native Workers: Proponents argue that a "labor shortage" is often just a shortage of cheap labor. If employers can no longer hire low-wage foreign workers, they are forced to compete for domestic workers by offering higher wages, better benefits, and improved working conditions.”
11cfr.orgNonprofits and think tanks
cfr.org
Backs: “Reduction in Overall Demand: Immigrants are not just workers; they are also consumers who buy food, rent apartments, and use public services. If immigration stops, the overall population growth slows, which also reduces the demand for goods and services.”
12goldmansachs.comCompanies
goldmansachs.com
Backs: “While the economy would theoretically adapt to a zero-immigration scenario over many years, economists warn that the transition period would be highly disruptive: 1.”
13bakerinstitute.orgNonprofits and think tanks
bakerinstitute.org
Backs: “In industries like eldercare, childcare, and agriculture, these costs cannot easily be absorbed, leading to high inflation for consumers. 2.”
14reddit.comForums and Q&A
reddit.com
Backs: “Economic Contraction: Rather than raising wages or automating, some businesses—especially in farming or manufacturing—may simply go out of business or offshore their operations to countries where labor is available. This results in a smaller overall economy (lower GDP).”