Will stopping immigration cause labor shortages?

Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in many sectors, particularly in the short to medium term, given current demographic trends—though effects vary by sector, skill level, time horizon, and policy details, and the economy can partially adjust via wages, internal migration, automation, and other means.[1]

Demographic and Labor Force Context

The U.S.-born working-age population is stagnating or shrinking due to low fertility rates (below replacement for decades) and aging (Baby Boomers retiring). Immigration has driven the large majority of recent U.S. labor force growth—often nearly all of it in recent years—and a high share of prime-age (25–54) workforce expansion over decades. Foreign-born workers make up roughly 18–20% of the U.S. labor force and higher shares in specific industries (e.g., large portions of agriculture, construction, hospitality/food services, and care work).[2]

Analyses of recent sharp drops in net migration (e.g., from millions annually to near-zero or negative in some estimates for 2025–2026) project sustainable (“breakeven”) monthly job growth falling to very low levels (tens of thousands or even negative), far below prior paces of 100,000+. This weighs on GDP growth (estimates of 0.2–0.4+ percentage point annual reductions depending on the cut), consumer spending, and fiscal sustainability (fewer workers supporting retirees via taxes/Social Security).[3]

Evidence from Sudden Stops and Restrictions

Immigrants often concentrate in physically demanding, seasonal, location-specific, or lower-wage jobs that many natives avoid even at higher pay (evidence from farm labor recruitment efforts). They can complement natives rather than purely substitute.

Adjustments, Trade-offs, and Counterpoints

Labor markets are not fixed. Shortages can:

Trade-offs include: Higher consumer prices (food, housing construction, services, care), reduced selection/availability, firm exits or slower expansion (especially smaller ones), weaker innovation/productivity in high-skill areas if skilled immigration falls, and faster aging-related fiscal strains. Complete or abrupt stops amplify short-term shocks; gradual changes with complementary policies (training, childcare to boost native participation, targeted visas) mitigate them. High-skilled immigration has particularly strong positive effects on innovation, entrepreneurship, and growth; low-skilled fills different gaps but with more fiscal/distributional debates.[8]

Critics of high immigration argue it can suppress wages for prior low-skilled workers (some evidence of modest effects, especially for earlier immigrants or dropouts), reduce incentives for employer investment in productivity/conditions, strain housing/infrastructure/public services locally, and that “shortages” often reflect unwillingness to pay market-clearing wages. Some view heavy reliance on immigrant labor for certain jobs as a “lazy” path versus structural reforms. Aggregate studies (National Academies and meta-analyses) generally find small overall wage effects on natives (neutral to slightly positive on average; modest negatives concentrated in specific groups), with immigrants expanding the economic pie.[9]

Bottom Line

In today’s low-fertility, aging context, stopping immigration would cause labor shortages (or intensify existing ones) in agriculture, construction, hospitality, healthcare/caregiving, and parts of manufacturing/services, slow overall employment and GDP growth, and raise costs—without reliably delivering large net employment/wage gains to U.S.-born workers across the board. Historical and international episodes support this, though economies adapt over time via prices, tech, and reallocation, and 1920s-style restrictions had some wage/tightening benefits amid different conditions. Effects depend heavily on how immigration is stopped (legal vs. unauthorized, skilled vs. unskilled, abrupt vs. phased) and accompanying policies. Targeted, legal pathways for shortage occupations can address gaps with fewer downsides than either open flows or near-total stops. Data and models from sources like CBO, Brookings, NBER, Fed banks, and academic studies consistently highlight immigration’s outsized role in sustaining U.S. labor supply and growth under current demographics.