Will stopping immigration cause labor shortages?

Stopping immigration raises labor-shortage concerns — I'll gather the latest data on workforce, aging, and sector impacts.

In short: Yes - in most advanced economies with aging populations and low birth rates, stopping immigration would very likely cause or worsen labor shortages - though the size and timing depends on country, sector, and whether productivity or native labor force participation rises to offset it.

1. Aging population means native workforce is shrinking

•Slowing labor force growth is the product of aging, retiring baby boomers and declining birth rates.

•For most of the past half-century Baby Boomers drove workforce expansion, but as they retire immigrants will play primary role in future growth of working-age population.

•The largest segment of working-age adults - those born in U.S. whose parents also were born in U.S. - is projected to decline from 2015 to 2035, reduction of 8.2 million.

•Without positive net migration, the U.S. population is projected to begin shrinking by about 2040.

Pew Research Center projections illustrate:

> The projections indicate that 17.6 million new immigrants will be added to the working-age population by 2035, offsetting the aging or death of other working-age immigrants. Without them, the number of working-age immigrants would decline by 2035 and the total U.S. working-age population would drop by almost 8 million (or more than 4%).

And:

> Without these new arrivals, the number of immigrants of working age would decline by 17.6 million by 2035, as would the total projected U.S. working-age population, which would fall to 165.6 million.

The total working-age population would drop by almost 8 million from 2015 level.

2. Economic models: less immigration = slower growth and smaller labor force

> The economy expands with growth in the labor force and its productivity. Due to the retirement of baby boomers and population aging in general, immigration will play an even larger role in workforce growth going forward than it has in the past. Absent offsetting increases in productivity growth, less immigration will, therefore, translate directly into slower gross domestic product growth.

Dallas Fed estimates:

> 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.

Also:

> Though much of the rhetoric surrounding the immigration issue focuses on jobs for American workers, most economists agree that lower migration levels do not ultimately lead to additional employment for U.S.-born workers... the main effect of reduced immigration is simply a smaller economy.

One estimate cited recently:

> Immigration restrictions may reduce the U.S. labor force by 2.1 million people, which could cause upward wage pressure and push inflation higher.

Net immigration has declined significantly and is on track to be near zero for 2025.

3. Evidence that lower immigration already worsened shortages

•Research from the Federal Reserve Bank of Kansas City found that

> of immigrant workers has eased labor shortages and moderated wage growth. ... previous work showing that lower immigration levels increased job vacancies and drove wage growth

•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, suggesting that reduced immigration exacerbated labor shortages.

•Fed officials argued:

> Immigration, which slowed during the pandemic, could help ease a shortage of workers in the U.S. that’s pushed job vacancies to an all-time high

4. Sectoral effects are uneven but acute in labor-intensive industries

> 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.

> “Abruptly losing a significant share of these workers could be very disruptive for many of these industries,” ... There could be temporary production bottlenecks, shortages, and price increases.

Labor Department example for agriculture:

> A 10 percent decline in the agricultural workforce would result in a 4.2 percent reduction in farm output and a 5.5 percent decline in farm revenue ... resulting in shortages of agricultural commodities that cannot be supplemented with imports in the near-term.

Other research notes tightness is especially pronounced in labor-intensive industries, like truck driving, agriculture, and home care.

Health care and construction show similar patterns, with pandemic immigration restrictions noted as exacerbating construction and health care labor shortages that raised home prices and delayed projects.

5. International comparisons - Japan and UK

> In Japan, where immigration has historically been limited, the aging population and the shrinking workforce have driven the need to expand migrant labor, particularly for lowskilled jobs.

Japan introduced the Specified Skilled Worker Visa System in 2019 to address shortages, after reports that bankruptcies caused by staff shortages doubled between 2016 and 2017.

The UK after Brexit similarly saw increased demand for fruit pickers and home care workers.

Will stopping immigration always cause a shortage?

•In a slack labor market with high unemployment, the short-run effect may be less visible, because immigrants both supply labor and demand goods and services. Economists often describe the "lump of labor fallacy" - more workers also create more demand and induce capital investment.

•Over the long run, in countries with below-replacement fertility and rising retirements, stopping immigration removes the main source of working-age population growth. Without offsetting productivity gains through automation, longer working lives, or higher participation, GDP growth slows and employers struggle to fill jobs, especially low-wage, physically demanding, or geographically isolated jobs that native workers have exited.

Therefore, most economic research concludes stopping immigration would not create more jobs for natives, but would make the economy smaller and make labor shortages more likely and persistent, particularly in agriculture, construction, hospitality, health/ elder care, and STEM sectors.

Citations (3)

1dallasfed.orgGovernment
Without immigration, U.S. economy will struggle to grow
Backs: “In short: Yes - in most advanced economies with aging populations and low birth rates, stopping immigration would very likely cause or worsen labor shortages - though the size and timing depends on country, sector, and whether productivity or native labor force participation rises to offset it. 1. Aging population…”
2pewresearch.orgNonprofits and think tanks
Immigration projected to drive potential U.S. labor force growth through 2035 | Pew Research Center
Backs: “Aging population means native workforce is shrinking. Slowing labor force growth is the product of aging, retiring baby boomers and declining birth rates. For most of the past half-century Baby Boomers drove workforce expansion, but as they retire immigrants will play primary role in future growth of working-age…”
3goldmansachs.comCompanies
How will declining immigration impact the US economy?
Backs: “that’s pushed job vacancies to an all-time high. 4. Sectoral effects are uneven but acute in labor-intensive industries. 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.”