Will stopping immigration cause labor shortages?

Short answer: Yes—and it's already happening

Based on economic evidence, especially from the current U.S. immigration crackdown, restricting immigration substantially does cause labor shortages, particularly in sectors that rely heavily on immigrant labor. Here's what the evidence shows:

The mechanism

Immigrants aren't just workers who fill jobs—they're also consumers who create demand for jobs. As one economics writer put it, "reducing immigration does not reallocate jobs to U.S.-born workers — it reduces the overall size of the economy that creates those jobs." Immigrants also often play a "complementary" role: fewer immigrants generally leads to less growth, which can disincentivize a workplace from hiring in general, since immigrants fulfill a complementary role in the workplace, meaning their jobs necessitate roles to support their work that may be more likely to be held by U.S.-born workers.

Real-world evidence from 2025-2026

Scale of the pullback: The Trump administration's crackdown on illegal and legal immigration has exacerbated America's worker shortage, with nearly 3 million people leaving the U.S. in 2025. Nationwide, the number of foreign-born workers declined by more than one million between January and August 2025.

Agriculture is hit hardest: The agricultural industry could suffer as the immigration crackdown continues, since 68 percent of farm laborers for fiscal year 2021–22 were foreign-born. Remarkably, even the government's own Labor Department has acknowledged this. The Trump administration itself admits that the immigration crackdown is causing labor shortages on the farm, with the Labor Department stating in a Federal Register filing that "the near total cessation of the inflow of illegal aliens combined with the lack of an available legal workforce results in significant disruptions to production costs and threatens the stability of domestic food production and prices." One analysis projects this could drive a 14.5% increase in food and beverage prices from 2024 to 2028.

Construction: The U.S. must hire 349,000 more construction workers in 2026 in order to meet demand, according to the Associated Builders and Contractors. An industry economist warned: "If the supply of immigrants is cut off, as it seems to be with the borders effectively closed these days, I think it will get much harder for the construction industry to fill positions."

Manufacturing: Concrete examples are emerging on factory floors. Workers at factories in Michigan and Kentucky say immigration crackdowns are driving labor shortages—at a GE Appliances plant in Louisville, over 125 employees lost their jobs due to canceled work permits, causing slowdowns and safety concerns, while a Kraft Heinz facility has required extended overtime as remaining staff struggle to meet demand.

Elder care and services: In Boston, a provider of independent living communities and long-term elder care has fired 60 immigrant workers since January 2025, with the prospect of firing more due to TPS terminations. In Florida, businesses are facing an "economic crisis" as customers disappear and workers are harder to find.

Even skilled/tech labor is affected: It's not just low-wage work—restrictions on legal skilled immigration are also causing problems. One report found 68% of companies expect to turn to nearshoring or offshoring in 2026 to address immigration barriers and domestic labour shortages.

The counterargument

Some officials argue restricting immigration helps native workers rather than causing shortages. 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 that these workers are available to counter labor shortages. However, economists have pushed back on this. UC Davis economist Giovanni Peri noted: "These industries have very tight labor markets, so being very restrictive and aggressive on immigration is not going to give Trump that economic growth and success that he wants." He added that this could result in rising prices for food, housing and tourism.

The demographic angle

Beyond short-term sector shortages, there's a structural issue: without adequate immigration pathways, the United States faces slower population growth or potential decline, a shrinking workforce, and increased fiscal pressure on social insurance programs—many economists note that immigration is one of the most effective tools for maintaining a stable ratio of workers to retirees.

Bottom line

The evidence from the current U.S. experience strongly suggests that sharply reducing immigration does cause labor shortages—especially in agriculture, construction, hospitality, elder care, and even skilled tech fields—rather than simply opening up jobs for native-born workers at similar wages. The effects tend to ripple through the economy via higher prices, slower growth, and complementary job losses, rather than a clean one-to-one substitution of native workers for immigrant ones.