Will stopping immigration cause labor shortages?

Stopping immigration would reshape the labor market — I'll look at current evidence on shortages and workforce impacts.

Yes, according to most labor economists and Federal Reserve research - stopping immigration completely would likely worsen and prolong labor shortages in the U.S., though the effects would be uneven across industries and regions.

Why most economists expect shortages to worsen

1. The U.S. workforce is already shrinking for demographic reasons

In 2019, approximately 78.5% of the foreign-born population was of working age (18-64), compared to 59.2% of the native-born population, meaning immigrants disproportionately replenish the labor force.

Recent data highlights the gap: there were 11.3 million job openings in February 2022 but fewer than 6.3 million unemployed individuals still actively looking for work, and there were about 2 million fewer working-age immigrants compared to pre-pandemic trends by the end of 2021.

2. Recent immigration declines coincided with tighter labor markets

Federal Reserve Bank of Kansas City found:

> U.S. labor markets are currently experiencing unprecedented labor shortages. Reduced immigration flows in recent years have contributed to these labor supply shortages and tightened labor markets

The net number of international migrants declined steadily from 2016 to 2021, with an estimated 3.4 million fewer immigrants entering than if the pre-2016 trend had continued.

Indicators of tightening include:

Federal Reserve policymakers have argued that immigration, which slowed during the pandemic, could help ease a shortage of workers that's pushed job vacancies to an all-time high.

3. Industries that rely heavily on immigrants would be hit hardest

Industries that had a larger share of foreign-born workers in 2015 tended to experience more significant increases in job vacancy rates from 2016 to 2021, including construction, leisure and hospitality, and other services.

More broadly, sectors that heavily rely on immigrant workers include agriculture, food services, health care, transportation and construction.

The Bipartisan Policy Center notes:

> Boosting immigration can help mitigate the labor challenges facing the industry, as it would increase labor supply... Conversely, policies that seek to restrict levels of job-seeking immigrants will likely exacerbate labor shortages, especially when considering the decline in labor force participation among native-born workers

Reduced supply of direct-care workers also has a multiplier effect: the reduced supply of immigrants and subsequent increase in the cost of direct-care services has likely led some workers to exit the labor force to replace these lost services. Research finds a greater share of low-skilled immigrant workers increases the number of hours worked by high-skilled native women by lowering childcare prices, so immigration may facilitate more workers entering the labor market.

Recent analysis notes a sharp decline in immigration is keeping a lid on the unemployment rate even as the economy slows, with the workforce shrinking in part because of the biggest back-to-back decline in foreign-born workers since 2020. Economists describe the shrinking pool of available labor as a potential "speed limit" for the economy - if labor demand picks up, shortages could be revealed.

Even as pandemic-related restrictions wane, the demand for immigrant workers will likely continue to exceed supply in the absence of broader changes in immigration policy, and industries that depend on immigrant workers may continue to experience labor shortages.

Does restricting immigration help native-born workers instead?

The common political argument is that reducing immigration will mean more jobs and higher wages for native-born workers, but analyses find:

> There is simply no evidence that immigration drives up the U.S. unemployment rate or that it drives down wages for American workers

The impact of immigration on the wages of native-born workers overall is very small when examined over a decade, with negative impacts most likely for prior immigrants or native-born workers without a high school degree. A Fed paper notes previous studies show a nonpositive relationship between immigration and wages - as immigration declines, wages rise as reduced labor supply drives employers to raise wages - but that wage pressure also leads to higher prices and reduced competitiveness.

Could shortages be avoided without immigration?

Stopping immigration would not automatically cause a shortage in every occupation, but would make filling jobs harder unless offset by:

Researchers note there were more job openings than unemployed workers since 2018, and even if every unemployed worker found a job, there would still be 5 million jobs left unfilled, suggesting the domestic pool alone is insufficient to meet demand at current levels.

In short: stopping immigration would not create shortages out of nowhere - demographic trends and low birth rates already point to them - but almost all empirical studies find it would make existing shortages worse, raise hiring costs and prices, and slow GDP growth, particularly in agriculture, construction, hospitality, and health care.