Will stopping immigration cause labor shortages?

This is a well-established topic in economics, but let me check for current examples and data to ground the answer.## Short answer: Often yes, especially in the near term, particularly in specific sectors — but it's not automatic everywhere, and effects depend heavily on which workers, which industries, and how fast the change happens.

The mechanism

Immigrants make up a disproportionate share of workers in certain industries. About 34% of construction workers are immigrants, versus the 20% average across all sectors, and in trades like drywall installers or plasterers, the share is closer to 60%. When that labor supply is suddenly restricted, employers in those sectors can't easily replace workers, and gaps emerge.

Real-world evidence (U.S., 2025)

Current U.S. immigration enforcement is providing a live case study. Stricter border enforcement starting mid-2024, followed by increased deportations and other changes to immigration policy in 2025, have caused job growth in industries more reliant on unauthorized immigrants to be flat this year — including construction, hotels, restaurants, home health care, and several other industries in manufacturing, technology, and services.

Specific sector impacts include:

Why the effect can be severe: demographics compound it

This isn't just about removing existing workers — it also removes a key source of future labor growth. The US birth rate has been declining since 2007, and that's been a long-term trend that hasn't shown any signs of reversing. As one workforce expert put it, "for a very long time, we've been able to sort of soften the effects of that... because we've had a pretty steady or healthy amount of external in-migration." Immigrants had become an increasingly large share of the workforce — foreign-born workers made up 19.2% of the US workforce in 2024, the highest share since the agency began tracking in 1996. Cutting off that inflow removes a major buffer against an aging, slower-growing native population.

It's not universal — some economists see nuance

Not every economist views this purely negatively. A Dallas Fed labor economist noted that cracking down on illegal immigration specifically could be beneficial if paired with reform: the crackdown on illegal immigration could be a good thing if it leads to permanent solutions — "If you can stop undocumented immigration, then great." The concern is less about immigration itself and more about the lack of legal pathways/status — "Lack of permanent status is costly to migrants, employers, and the broader economy," since workers are "vulnerable to policy changes triggered by a change in administration, most recently the threat of mass deportations."

Comparative example: Canada

Canada offers a similar pattern showing how central immigration has become to labor supply. Given Canada's aging population, growth in both temporary and permanent immigration has been essential to supporting economic growth and responding to labor market shortages, and now contributes to nearly 100% of Canada's labor force growth. In sectors like agriculture, long-term labour shortages caused over 28,000 positions to go unfilled in 2022, and the gap in the sector between labour demand and supply is expected to reach 15% by 2030.

Bottom line

Stopping or sharply reducing immigration does tend to cause or worsen labor shortages in industries that are immigrant-heavy (construction, agriculture, hospitality, home health care, food processing) — especially in economies with aging native populations and declining birth rates. The effects show up as unfilled positions, slower job growth, wage inflation in affected trades, and downstream price increases for consumers. Whether this is a "problem" or a "correction" is debated — some argue it pressures wages up for native workers, while others argue it creates bottlenecks that raise costs and constrain economic growth in labor-scarce sectors. The size of the effect depends heavily on how much of a given industry's workforce is foreign-born and how quickly the labor supply is cut off versus phased down with alternatives (automation, wage increases, domestic recruitment) in place.