Will stopping immigration cause labor shortages?

Yes

Stopping immigration would reshape the labor market — I'll survey current research on whether it would trigger shortages.

Yes, most economic research concludes that stopping immigration would worsen labor shortages, especially in the medium to long term, though the effect varies by sector, region, and time horizon.

1. Demographics make immigration critical for labor supply

Slowing labor force growth is driven by the aging of the U.S. population, retiring baby boomers and declining birth rates.

•The Federal Reserve Bank of San Francisco finds that without new immigration, the U.S. working-age population ages 16 to 64 would have started to decline in 2012, and that past immigration has prevented the U.S. working-age population and, in turn, the labor force from declining.

•The Federal Reserve Bank of Dallas notes the economy expands with growth in the labor force and its productivity and that due to the retirement of baby boomers and population aging in general, immigration will play an even larger role in workforce growth going forward.

•Without immigration, working-age population growth is likely to be negative through at least 2040.

The level of immigration needed to sustain growth is about 1 million per year:

> Historically, NIM estimates adjusted for age average around 1 million individuals per year. This level of immigration was sufficient to keep the working-age population growing.

Recent estimates illustrate the shortfall: The Dallas Fed estimated net international migration declined from more than 1 million in 2016 to just fewer than 600,000 in 2019. The San Francisco Fed projects baseline 2025 net international migration to be close to 500,000, less than one-fourth its size in 2024, which is not large enough to offset an estimated 740,000 decline in the native-born working-age population between 2024 and 2025.

Long-run projections show large effects:

> if immigration to the U.S. continued at 2016 levels, the labor force would grow at a 0.45 percent annual rate from 2016 to 2060... With a 30 percent decline in legal immigration, the workforce would grow 0.30 percent annually... A 50 percent decline in legal immigration would cut the growth rate by more than half, from 0.45 to 0.19 percent, and by 2060, there would be about 20 million fewer workers than in the base case.

And structural trends mean immigration is one of few mitigations:

> The aging U.S. workforce, declining birth rates and the retirement of baby boomers are immovable structural trends that will continue to suppress labor force growth in the long run. ... Immigration offers an option to mitigate such a restraint.

2. Short-term labor market tightness

Studies of the recent immigration cycle link lower immigration to tighter labor markets:

•The Federal Reserve Bank of San Francisco found that slowing immigration led to a 5.5 percentage point increase in the vacancy-to-unemployment ratio, while the strong rebound in immigration in 2022 contributed a 6 percentage point reduction in the V-U ratio.

•The Kansas City Fed noted the arrival of immigrant workers has eased labor shortages and moderated wage growth.

•Conversely, T. Rowe Price analysis warns immigration restrictions may reduce the U.S. labor force by 2.1 million people, which could cause upward wage pressure and push inflation higher. Specifically, ending protections and removing about 3.5 million immigrants would cut the labor supply by more than 1.5 million people, for a combined total reduction of approximately 2.1 million workers.

3. Sector-specific shortages are most acute

Demand for immigrant workers will likely continue to exceed supply in the absence of broader changes in immigration policy, and as a result, industries and regions that depend on immigrant workers may continue to experience labor shortages.

Historically, immigrant-intensive sectors include:

•agriculture, food services, health care, transportation

•agriculture, food processing, and restaurants have historically relied on immigrant labor

•Immigrants other than visa and green card holders account for 4%-5% of the total US workforce, and they make up 15%-20% in some industries, such as crop production, food processing, and construction

4. Nuances and caveats

Immigration affects both supply and demand. Brookings notes that immigration does not just add to labor supply but to demand as well, so businesses experience a reduction in net immigration both as a reduction in labor supply and as a reduction in demand for their goods and services. This is why effects on inflation are likely small even if effects on potential employment are large.

Recent research on enforcement in 2025 also suggests stopping or reversing immigration does not automatically create jobs for U.S.-born workers:

•Areas that experienced particularly large increases in Immigration and Customs Enforcement arrests saw a decline in work among US-born male workers... The researchers also saw no evidence that employers increased wages to attract US-born workers to fill roles.

•ICE surges reduce the employment rate of likely undocumented immigrants who remain in the U.S. by 1.3 percentage points, with negative employment spillovers to U.S.-born male workers, whose employment rate fell by 0.6 percentage points.

•When even a small number of workers are detained, stop showing up for work, or become difficult to recruit and retain, employers find themselves unable to operate at normal capacity. Firms respond by reducing hours, delaying expansion, reducing output, freezing hiring, or in some cases, closing their business outright.

Earlier work found immigration enforcement reduced construction employment for American-born workers and slowed homebuilding enough to raise new-home prices.

Bottom line

Stopping immigration entirely would not create a large pool of unemployed native-born workers to fill gaps. Given declining native-born working-age population, most models show it would lead to a shrinking labor force, persistent vacancies in low-wage, labor-intensive and high-skill sectors, slower GDP growth, and potentially higher wage and price pressures in those sectors. Mitigation through higher native-born labor force participation, automation, or offshoring is possible but research suggests it is insufficient to fully offset the demographic drag without immigration.

Citations (4)

1dallasfed.orgGovernment
Without immigration, U.S. economy will struggle to grow
Backs: “Yes, most economic research concludes that stopping immigration would worsen labor shortages, especially in the medium to long term, though the effect varies by sector, region, and time horizon. 1. Demographics make immigration critical for labor supply”
evidence, article, points to yes. Claim: Aging, retiring baby boomers and slowing labor force growth make immigration critical to workforce growth; without it the economy struggles to grow.
2frbsf.orgGovernment
Immigration and Changes in Labor Force Demographics - San Francisco Fed
Backs: “Slowing labor force growth is driven by the aging of the U.S. population, retiring baby boomers and declining birth rates. The Federal Reserve Bank of San Francisco finds that without new immigration, the U.S.”
statistic, article, points to yes. Claim: Without new immigration the working-age population would have begun declining in 2012; 2025 net migration near 500,000 cannot offset a 740,000 native-born working-age decline.
3troweprice.comCompanies
How U.S. immigration changes could impact inflation and the Fed | T. Rowe Price
Backs: “The Federal Reserve Bank of San Francisco found that slowing immigration led to a 5.5 percentage point increase in the vacancy-to-unemployment ratio, while the strong rebound in immigration in 2022 contributed a 6 percentage point reduction in the V-U ratio. The Kansas City Fed noted the arrival of immigrant workers…”
statistic, article, points to yes. Claim: Immigration restrictions may cut the U.S. labor force by about 2.1 million, creating upward wage pressure and potentially higher inflation.
4brookings.eduNonprofits and think tanks
Beyond arrests: How ICE enforcement depressed local employment in 2025 | Brookings
Backs: “Areas that experienced particularly large increases in Immigration and Customs Enforcement arrests saw a decline in work among US-born male workers... The researchers also saw no evidence that employers increased wages to attract US-born workers to fill roles. ICE surges reduce the employment rate of likely…”
evidence, article, points to yes. Claim: ICE enforcement surges reduced employment among immigrants and U.S.-born men, with no evidence employers raised wages to attract U.S.-born workers.