Will stopping immigration cause labor shortages?

Yes — evidence strongly suggests reducing immigration causes labor shortages, especially in specific sectors

Both economic theory and current real-world data point to labor shortages as a likely consequence of sharply reducing immigration, though the severity varies by industry and skill level.

The Basic Mechanism

Immigration has accounted for almost half of U.S. labor force growth since 1995, and slower labor force growth would negatively impact employment and GDP growth. This is largely because immigration has historically been an important driver of U.S. population growth, particularly as fertility rates of native-born Americans declined, so immigrants have made up a growing share of the nation's workers.

Modeling by FWD.us found that under a zero-immigration scenario where immigration stopped for the next two decades, the U.S. working-age population would shrink 11% by 2040, and even under a low-immigration scenario, the working-age population would remain relatively flat, leaving it at a level the economy cannot sustain during a period of labor shortages and long term as the population ages into retirement.

Real-World Evidence (2025 U.S. Immigration Crackdown)

The current U.S. experience offers a live case study. Since 2025, increased enforcement has produced measurable effects:

Construction: The construction industry, where more than a quarter of workers are foreign-born, has long struggled to find enough workers, and industry officials say Trump's immigration crackdown is making it worse. One builder noted enforcement actions "can only have one effect on the cost of building a home, and that's to raise it."

Agriculture: Even the administration's own Labor Department acknowledged that the immigration crackdown is causing labor shortages on the farm that could translate into higher prices at the supermarket, citing "the near total cessation of the inflow of illegal aliens combined with the lack of an available legal workforce." The Labor Department also found that its experience with the H-2A visa program demonstrates "a persistent and systemic lack of sufficient numbers of qualified, eligible and interested American workers to perform the kinds of work that agricultural employers demand."

Broader economic impact: A Brookings-linked analysis found enforcement actions led to labor disruptions for some businesses, causing them to reduce operating hours, delay expansion, freeze hiring, or in some cases lay off staff or shut down.

Price effects: The cost of food in restaurants increased 3% between December 2024 and September 2025, while hotel and motel room costs rose 2.6% in that same period — effects tied partly to labor shortages in immigrant-heavy service sectors.

Macroeconomic projections: A National Foundation for American Policy study found current policies will lower the projected average annual economic growth rate to 1.3% from 1.8% between fiscal year 2025 to fiscal year 2035.

Important Nuances

It's not uniform across all sectors. The effect concentrates in industries where immigrants are heavily represented — 65 percent of the agriculture workforce in California consists of immigrants, and Alaska and Nebraska have similar figures in their seafood and meat processing industries. Sectors with fewer immigrant workers would see smaller effects.

Wages could rise, but with tradeoffs. Some administration 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 these workers are available to counter labor shortages. However, economists caution that a shrinking labor force could have long-term economic effects, since enforcement policies could decrease domestic production of goods and services — a major GDP component.

Native workers often don't fill the gap. In sectors like construction and farming, these industries have historically faced difficulty attracting and retaining U.S.-born workers for physically demanding or irregular-hour jobs, so the decline in immigrant labor has intensified existing shortages and limited production capacity.

Timing matters. One labor economist suggested the crackdown could ultimately 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. This is a great time to work on comprehensive immigration reform."

Bottom Line

The weight of current evidence — from government data, industry reports, and economic studies — indicates that sharply curtailing immigration does produce labor shortages, particularly in agriculture, construction, hospitality, and health care, sectors where immigrant workers are disproportionately represented and native-born replacement labor has been slow to materialize. Whether this is a net negative depends on your view of tradeoffs like wage growth for native workers versus higher prices, slower GDP growth, and reduced business capacity.