Will stopping immigration cause labor shortages?
The St. Louis Fed study found no evidence that immigration shortfalls caused post-pandemic labor market tightness, while the ANU study, CNBC and other sources link reduced immigration to labor shortages.
Will Stopping Immigration Cause Labor Shortages?
The evidence—both from economic research and from what's happening in the U.S. right now—suggests that sharply reducing immigration does tend to cause or worsen labor shortages, especially in specific sectors, though the effect isn't uniform across the whole economy.
Current Real-World Evidence (2025-2026)
The U.S. is essentially running this experiment right now. Under the Trump administration's immigration crackdown, the White House has stated that the United States may have negative net migration to the U.S. in 2025 for the first time in over 50 years. The effects have been significant: nearly 3 million people left the U.S. in 2025, with 2.2 million "self-deported" and about 675,000 removed by law enforcement, according to the Department of Homeland Security.
Sector-specific impacts have been pronounced:
What Economists Say
Mainstream economic opinion largely supports the shortage thesis. Economists have said a sustained reduction in the immigrant labor force would be a concern for the U.S. economy, because it will increasingly rely on immigrants to fuel population and labor force growth given demographic trends like baby boomer retirements and lower fertility rates. Moody's chief economist Mark Zandi called the trend "definitive," saying "there's no debate what's going on there."
Academic research backs this up over a longer horizon: a study on the pre-pandemic immigration slowdown found that a steady decline in low-skilled immigration beginning with the 2007 Great Recession was associated with labor shortages in low-skilled service occupations and a decline in the skill premium. That same model found lower immigration leads to higher wages for low-skilled workers and higher consumer prices, and the decline in the skill premium discourages training of native workers, persistently reducing aggregate productivity.
The Counter-Argument
Not everyone agrees. The current administration argues the opposite: some officials, including Vice President JD Vance, have argued that limiting immigration will raise wages and create more job opportunities for U.S.-born workers, contending that native-born workers are available to counter labor shortages, with a White House spokesperson stating "there is no shortage of American minds and hands to grow our labor force."
There's also a notable academic counterpoint from the COVID era. A St. Louis Fed study examining the pandemic-era immigration shortfall found no evidence to support the hypothesis that immigration shortfalls caused the tight post-pandemic labor market—the immigration deficit had largely recovered by February 2022, just as tightness was increasing, and states/industries most affected by restrictions didn't show larger tightness increases.
Bottom Line
The relationship isn't a simple universal law—it depends heavily on:
So: in specific, immigrant-dependent sectors and in an aging economy like the U.S., yes—stopping or sharply cutting immigration is currently producing real, documented labor shortages. Economy-wide, the picture is a bit more contested, with some economists finding weaker or no causal links in past episodes.
Citations (15)
- Or search: cornell.edu
Source excerpt: “The White House has stated that the United States may have negative net migration to the U.S. in 2025 for the first time in over 50 years. ”
evidence, article, points to yes. Claim: The White House stated the U.S. may have negative net migration in 2025 for the first time in over 50 years.
- Opinion | Immigration crackdown causes massive shortages of unskilled labor - The Washington Post
Source excerpt: “Nearly 3 million left the U.S. in 2025, according to the Department of Homeland Security. The agency says that 2.2 million “self-deported” while some ...”
statistic, article, points to yes. Claim: Nearly 3 million people left the U.S. in 2025, with 2.2 million self-deported and about 675,000 removed, per DHS.
- U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “Agriculture In agriculture, foreign-born workers comprise approximately 70% of the farm workforce nationwide. Many farms report difficulty finding eno...”
statistic, article, points to yes. Claim: Foreign-born workers are about 70% of the farm workforce, and many farms report difficulty finding enough workers.
- U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “Because agricultural production is highly time-sensitive, shortages often result in a significant share of edible produce going unharvested, increasin...”
evidence, article, points to yes. Claim: Time-sensitive agricultural production means shortages leave produce unharvested, increasing food waste and raising costs.
- How Immigration Enforcement Policy is Disrupting Construction Hiring in 2025 -
Source excerpt: “Construction depends on immigrant labor more than most sectors. In many metros, one in three workers in the trades is foreign born. ”
statistic, article, points to yes. Claim: In many metros, one in three trades workers in construction is foreign born.
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “The construction industry, which already suffers from labor shortages, is at risk of wage inflation, for example, according to a Bank of America Insti...”
evidence, article, points to yes. Claim: The construction industry is at risk of wage inflation, with wage growth approaching 8%, nearly double the national average.
- US workers say Trump’s immigration crackdown is causing labor shortages: ‘A strain on everybody’
Source excerpt: “At a GE Appliances plant in Louisville, over 125 employees lost their jobs due to canceled work permits, causing slowdowns and concerns about safety. ...”
evidence, article, points to yes. Claim: A GE Appliances plant lost over 125 employees to canceled work permits, causing slowdowns; a Kraft Heinz plant needed extended overtime.
- U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “Approximately one-third of hotel and lodging staff nationwide are immigrants, with the highest concentrations in labor-intensive roles, such as housek...”
statistic, article, points to yes. Claim: About one-third of hotel and lodging staff are immigrants, making staffing harder amid deportations.
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “If a reduction in the immigrant labor force is sustained, such a trend would be a concern for the U.S. economy, those experts have said or written. Th...”
attribution, article, points to yes. Claim: Economists say a sustained reduction in the immigrant labor force would concern the U.S. economy given demographic trends.
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “The downward shift in the immigrant labor force in recent months is "definitive," said Mark Zandi, chief economist at Moody's. "There's no debate what...”
attribution, article, points to yes. Claim: Moody's Mark Zandi called the downward shift in the immigrant labor force 'definitive' with 'no debate'.
- Slowdown in Immigration, Labor Shortages, and Declining Skill Premia
Source excerpt: “Slowdown in Immigration, Labor Shortages, and Declining Skill Premia Icon of open book, ANU We document a steady decline in low-skilled immigration ...”
evidence, article, points to yes. Claim: A study found declining low-skilled immigration since 2007 was associated with labor shortages in low-skilled service occupations.
- Slowdown in Immigration, Labor Shortages, and Declining Skill Premia
Source excerpt: “Lower immigration leads to higher wages for low-skilled workers and higher consumer prices. Importantly, the decline in the skill premium discourages ...”
evidence, article, points to yes. Claim: Lower immigration raises low-skilled wages and consumer prices, and the lower skill premium discourages native training, reducing productivity.
- How Does Immigration Affect the U.S. Economy? | Council on Foreign Relations
Source excerpt: “Since returning to office in 2025, President Donald Trump has reversed many of his predecessor’s policies and followed through on a campaign promise t...”
attribution, article, points to no. Claim: Officials such as JD Vance argue limiting immigration will raise wages and create more opportunities for U.S.-born workers.
- How Does Immigration Affect the U.S. Economy? | Council on Foreign Relations
Source excerpt: “The administration has contended that these workers are available to counter labor shortages. “There is no shortage of American minds and hands to gro...”
attribution, article, points to no. Claim: The White House says native-born workers can counter shortages: 'no shortage of American minds and hands'.
- The Effect of COVID-19 Immigration Restrictions on Post-Pandemic Labor Market Tightness
Source excerpt: “We find no evidence to support the hypothesis that the immigration shortfalls caused the tight labor market, for two main reasons. First, while the im...”
evidence, article, points to no. Claim: A St. Louis Fed study found no evidence that pandemic-era immigration shortfalls caused the tight post-pandemic labor market.