Will stopping immigration cause labor shortages?
Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in many sectors and slow overall labor force and economic growth, especially in countries with aging populations and low native fertility like the US, Canada, and much of Europe—though markets adjust over time via wages, technology, participation rates, and internal shifts, and effects vary by skill level and sector.[1]
Demographic and Labor Force Context
In the US and similar developed economies, native-born working-age population growth has slowed or turned negative due to low birth rates and aging. Immigration has been the primary driver of labor force expansion for decades. Without it, the working-age population would have begun shrinking years earlier.[2]
Recent sharp slowdowns (e.g., net migration dropping from ~2 million+ annually toward near-zero or negative in the mid-2020s amid policy changes) have already reduced potential payroll growth dramatically. Economists (e.g., at Barclays and Fed banks) project monthly private job growth capacity falling from over 100,000 toward under 10,000–70,000, weighing on GDP growth (potentially to 1.4–1.6% range). Foreign-born workers make up ~19% of the US labor force and higher shares in key industries.[1]
Similar warnings appear in Canada after immigration cuts, with businesses reporting recruitment struggles amid retirements.[3]
Sector-Specific Impacts
Immigrants are heavily concentrated in certain roles:
Fed and other research finds near one-for-one links between unauthorized immigrant worker flows and local/industry employment growth (strongest in construction/manufacturing). Slowdowns reduce overall employment rather than simply shifting jobs to natives.[6]
Recent US data post-crackdown show rising unemployment and falling participation among US-born workers in some periods, alongside business complaints of unfilled roles—suggesting mismatch rather than a simple "jobs freed up" dynamic.[7]
Wage and Employment Effects on Natives
Economic consensus is nuanced and contested:
"Labor shortage" is partly definitional: it means unfilled vacancies at prevailing wages/conditions. Higher pay, better conditions, training, or automation can draw more natives or reduce need, but many roles remain hard to fill domestically due to location, seasonality, physical demands, or preferences. Complete stops amplify demographic pressures without quick native supply responses (mobility has declined; older/non-college workers less mobile).
Broader Economic Adjustments and Trade-offs
In short: Stopping immigration does not create a large pool of "freed" jobs that natives eagerly take at current terms; it more often produces genuine shortages in immigrant-reliant sectors, constrains growth amid demographic decline, and yields only modest/targeted wage gains for some natives (with costs elsewhere). Economies adapt, but not costlessly or instantly. Outcomes depend on the scale/speed of the stop, accompanying policies (training, automation incentives, family support), and whether high- vs. low-skill flows are targeted. Evidence from recent slowdowns and historical episodes supports this over a simple "natives take the jobs and wages soar" narrative.
Citations (11)
- https://www.reuters.com/markets/us/us-migrant-halt-may-wipe-potential-job-growth-2025-06-24/
Backs: “Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in many sectors and slow overall labor force and economic growth, especially in countries with aging populations and low native fertility like the US, Canada, and much of Europe—though markets adjust over time via wages,…”
- https://econofact.org/immigration-and-waning-us-labor-force-growth
Backs: “Without it, the working-age population would have begun shrinking years earlier.”
- https://businessday.ng/world/article/canadian-business-leaders-say-immigration-cuts-is-causing-labor-shortages/
Backs: “Similar warnings appear in Canada after immigration cuts, with businesses reporting recruitment struggles amid retirements.”
- https://stateline.org/2026/10/08/aging-workforce-immigration-crackdown-are-depleting-skilled-workers/
Backs: “Shortages have intensified with enforcement and aging journeymen, delaying projects and raising costs. Natives have not fully filled gaps.”
- https://www.piie.com/publications/working-papers/2026/effect-low-skill-immigration-restrictions-us-firms-and-workers
Backs: “Restrictions lead to contraction; substitution with US workers is low (elasticity ~0.8–2.0), and native employment is unaffected or reduced (especially rural).”
- https://www.frbsf.org/wp-content/uploads/el2026-05.pdf
Backs: “Slowdowns reduce overall employment rather than simply shifting jobs to natives.”
- https://news.bloomberglaw.com/immigration/immigration-crackdown-fails-to-deliver-jobs-for-us-born-workers
Backs: “Recent US data post-crackdown show rising unemployment and falling participation among US-born workers in some periods, alongside business complaints of unfilled roles—suggesting mismatch rather than a simple "jobs freed up" dynamic.”
- https://doi.org/10.3386/w32389
Backs: “Recent work estimates 2000–2019 immigration raised less-educated native wages ~1.7–2.6%.”
- https://gborjas.scholars.harvard.edu/_publications/for-a-few-dollars-less
Backs: “High-skill immigration tends to be more complementary/beneficial.”
- https://voxeu.org/article/impact-immigration-barriers-native-workers
Backs: “1920s US quotas (sharply cutting European immigration) had mixed results—some low-skill wage gains in exposed markets, but overall natives saw little/no broad wage boost; urban areas replaced immigrants with internal migrants (including Black Southerners in the Great Migration) and unrestricted sources…”
- https://www.nber.org/digest/202611/immigration-and-productivity-growth-oecd
Backs: “Some studies link immigration positively to productivity/GDP per worker.”