Will stopping immigration cause labor shortages?

Stopping immigration — will labor shortages follow? I'll examine the latest research on workforce and demographic impacts.

Yes, according to most current economic and demographic research — stopping immigration entirely would likely cause labor shortages, and significantly reduce overall labor force growth - though the severity depends on sector, region, and time horizon.

1. The U.S. labor force is already structurally dependent on immigration

•Foreign-born workers accounted for about a fifth of the US labor market in 2024 and immigrants accounted for 84.7% of labor force growth since 2019

•Without new immigration, the U.S. working-age population ages 16 to 64 would have started to decline in 2012. The Federal Reserve Bank of San Francisco found similarly that without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025

•Native-born labor supply growth has flattened due to a fertility rate around 1.6 births per woman, below the 2.1 replacement threshold. The estimated native-born population of 16-year-olds peaked in 2023 and is expected to decline through at least 2040

•The native-born working-age population is estimated to decline by 740,000 between 2024 and 2025. Our NIM estimate for 2025 — even without accounting for further reductions from deportations — is not large enough to offset this decline

New data indicate that net migration will be close to half a million people in 2025, down from 2.2 million in 2024. Analysts project baseline 2025 NIM to be close to 500,000, less than one-fourth its size in 2024.

Models estimate the impact of continued restrictions:

•The Trump administration's policies on illegal and legal immigration would reduce the projected number of workers in the United States by 6.8 million by 2028 and by 15.7 million by 2035. NFAP forecasts a 6.8 million reduction in the U.S. workforce by 2028 and 15.7 million by 2035 driven by tightened legal and illegal immigration policies

•Economically, weaker immigration could reduce annual GDP growth by 0.3–0.4% ($70.5–$94 billion). Brookings estimates that net negative migration lowered GDP growth by 0.2 to 0.3 percentage points in 2025

> "Without it, the U.S. will not just be facing a tighter labor market, but a shrinking one."

2. Shortages would be most acute in specific sectors

Analysts across the spectrum agree immigration curbs have measurably tightened labor supply in specific sectors

The U.S. labor market faces a growing crisis as restrictive immigration policies exacerbate shortages in sectors reliant on immigrant workers—construction, agriculture, and healthcare. With immigrant workers comprising 25% of construction labor, 66% of agriculture workers, and 15–28% of healthcare staff

•Construction: 40% of workers in Texas and California are foreign-born. Labor shortages have delayed projects, increasing costs by $10.8 billion annually, and a 2024 study estimates 19,000 fewer single-family homes were built in 2024 due to workforce gaps

•Agriculture: 47% of its workforce lacks work authorization. Ending TPS programs stripped 528,000 workers of authorization, worsening harvest delays

•Healthcare: Immigrants made up 24% of workers in residential care settings such as assisted living, 21% of workers in nursing facilities, and 32% to 40% of workers in home care in 2023

•The labor shortages are concentrated in agriculture, construction, healthcare and hospitality, producing missed harvests, delayed construction, staffing gaps

This labor force contraction has created acute shortages in sectors reliant on immigrant labor, such as retail, logistics, and healthcare

The government itself has acknowledged this: The Trump administration itself admits that the immigration crackdown is causing labor shortages on the farm, with the Labor Department stating "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"

3. Why stopping immigration doesn't simply mean more jobs for native workers

The counter-argument is that less immigration reduces competition and forces employers to raise wages or automate.

There is some evidence for the automation effect:

> Some have argued that the availability of cheaper immigrant labor harms productivity by delaying automation in certain industries. In a 2001 study, Martin said that the termination of the Bracero Program for Mexican guest-workers in 1964 led to the automation of tomato picking

However, most recent research finds:

•Reduced immigration means higher labor costs. This implies reduced output, and thus reduced demand for native labor, even if businesses partially substitute native for immigrant labor

•Reduced immigration can therefore be "lose-lose," hurting native workers and businesses, in addition to harming immigrants

•In many sectors, immigrants entered low-wage jobs only after pay and conditions had been degraded to such a degree that US-born workers exited the occupations — suggesting many native workers are not available or willing to fill those jobs at current wages and conditions without major structural changes.

4. Bottom line

•Short-term (1-3 years): Stopping immigration would almost certainly tighten labor supply and worsen shortages in agriculture, construction, hospitality, and long-term care, leading to project delays, reduced harvests, higher consumer prices, and slower monthly job growth.

•Medium-to-long-term (5-20 years): Without immigration, the total working-age and prime-age labor force is projected to shrink, because native births are insufficient to replace retiring baby boomers. Combining the recent decline in immigration with the demographic slowing of working-age population growth has important implications for economic growth. On the supply side, it reduces the labor force and hence potential labor supply

Mitigation is possible through automation (AI-driven machinery, autonomous tractors, telemedicine), increased labor force participation (women, older workers), offshoring, and wage increases — but those adjustments are slow, costly, and uneven across sectors. Companies are turning to automation to fill gaps, but it cannot fully replace labor-intensive care and field work in the near term.

Citations (2)

1frbsf.orgGovernment
Immigration and Changes in Labor Force Demographics - San Francisco Fed
Backs: “Foreign-born workers accounted for about a fifth of the US labor market in 2024 and immigrants accounted for 84.7% of labor force growth since 2019”
2ainvest.comNot yet classified
Immigration Policy and Labor Shortages: Navigating Sector Vulnerabilities and Tech-Driven Opportunities
Backs: “labor market faces a growing crisis as restrictive immigration policies exacerbate shortages in sectors reliant on immigrant workers—construction, agriculture, and healthcare.”