Will stopping immigration cause labor shortages?

Yes — evidence from 2025-2026 strongly suggests reduced immigration causes labor shortages in specific sectors, though the full economic picture is more nuanced.

Real-world evidence from the current U.S. immigration crackdown

Since the Trump administration ramped up enforcement and restricted legal immigration pathways, multiple sectors have reported acute labor shortages:

Construction: The National Association of Home Builders reports that immigrants make up 34% of all construction workers. The industry now faces a severe crunch — the industry must attract approximately 349,000 net new workers in 2026 just to meet current demand, with that figure projected to rise to 456,000 in 2027. One contractor in Alabama saw half of his workers stop showing up to the site after an Immigration and Customs Enforcement raid on another site in Florida, nearly 230 miles away, afraid of facing the risk of deportation.

Agriculture: In agriculture, foreign-born workers comprise approximately 70% of the farm workforce nationwide. The situation got serious enough that the Trump administration's own Labor Department acknowledged in an October 2025 Federal Register filing that "near total cessation of the inflow of illegal aliens presents a sufficient risk of supply shock-induced food shortages" and that unemployed Americans "will not make themselves available in sufficient numbers, even at current wage levels, to fill the significant labor shortage in the agricultural sector."

Hospitality and food service: The Texas Restaurant Association said 47% of Texas restaurant operators currently have job openings that are difficult to fill, and 21% of those restaurants don't have enough employees to support the demand. More broadly, in a study of 1,000 small business owners, 56% in hospitality and food service said immigration policies were harming their industry.

Manufacturing: Even skilled manufacturing has been hit — at a GE Appliances plant in Louisville, over 125 employees lost their jobs due to canceled work permits, causing slowdowns and concerns about safety, while a Kraft Heinz facility in Holland has reportedly required extended overtime as remaining staff struggle to meet demand.

High-skilled tech/professional work: Restrictions aren't limited to low-wage sectors. 68% of companies expect to turn to nearshoring or offshoring in 2026 to address immigration barriers and domestic labour shortages, with technology and financial and professional services especially exposed because they rely heavily on specialised workers such as software engineers, data scientists, and consultants.

The economy-wide scale

Due to fewer workers in the labor force, the Trump administration's immigration policies would lead to a potential labor loss to the U.S. economy of approximately 19 million worker years by 2028 and 102 million worker years by 2035, according to one analysis. Data already shows this playing out: the Bureau of Labor Statistics household survey for February 2026 shows a decline of 596,000 foreign-born workers since January 2026, and a drop of 1,008,000 since a peak in March 2025.

Why it happens — the economic logic

A common misconception is that reducing immigration simply "frees up" jobs for native-born workers. One analysis frames it differently: the central misunderstanding is that reducing immigration does not reallocate jobs to U.S.-born workers — it reduces the overall size of the economy that creates those jobs. This is because immigrants often fill roles in industries with structural gaps — aging workforces, physically demanding jobs, or highly specialized skill needs — that native labor supply hasn't been filling regardless of wages offered. For example, in construction, alongside immigration-related pressures, the industry is facing a structural retirement wave — nearly 40% of skilled construction workers are now over the age of 45, and in the electrical trades, nearly one in five workers is older than 55. Training new native-born workers takes years: apprenticeship programs typically require five to seven years to produce fully skilled workers, leaving a growing gap as experienced workers exit the workforce faster than they can be replaced.

The counterargument

Not everyone agrees "labor shortage" is the right framing. Some researchers argue that what looks like a shortage is really just an unwillingness of employers to raise wages — Center for Immigration Studies analyst Jason Richwine has published work titled "There Is No Labor Shortage," arguing shortages are largely a function of wage-setting rather than an absolute lack of available workers. From this view, restricting immigration should eventually raise wages and pull in more native-born workers or push firms toward automation — though critics note this adjustment can take years and raises consumer prices in the meantime, as seen in the construction and food sectors above, where economists warn construction companies will face cost overruns from delays or have to hike wages to attract workers from competing companies... "Everything is going to be passed down to the consumer."

Bottom line

Based on current evidence, cutting off immigration flows is indeed producing real, measurable labor shortages in sectors like construction, agriculture, hospitality, and even some manufacturing and tech roles — driving up costs and, in some cases, cutting production. Whether this is a permanent structural problem or a temporary adjustment (met eventually by higher wages, automation, or domestic labor shifts) remains debated among economists, but the near-term disruption is well documented.