Will stopping immigration cause labor shortages?
Short answer: Yes, in many sectors — the evidence strongly points that way
Economic research and real-world data from the past few years consistently show that sharply reducing immigration tightens labor markets and creates shortages, particularly in specific industries — though the effects aren't uniform across the whole economy.
What the research shows
Historical evidence (2016–2021 immigration slowdown): A Kansas City Fed study found that industries that had a larger share of foreign-born workers in 2015 tended to experience more significant increases in job vacancy rates from 2016 to 2021, suggesting that reduced immigration exacerbated labor shortages. During that period, mean real earnings increased by 9 percent... consistent with increased labor shortages and more intense competition for workers, and the job vacancy rate increased from an average of 3.1 percent in 2011–15 to 4.6 percent in 2016–21, implying that about one in 20 jobs was unfilled.
A related Atlanta Fed paper found that the decline in low-skilled immigrant labor relates to subsequent wage increases for low-skilled workers, declining educational advancement by young US workers, and labor shortages in low-skilled jobs that can't be moved to other countries.
Current evidence (2025–2026)
Recent enforcement-driven declines in the immigrant workforce are producing similar, more immediate effects:
Why this happens
Economists point to a few mechanisms:
The counterargument / nuance
Not everyone agrees this is permanent or catastrophic. Some economists note that some economists are skeptical the U.S. will suffer a prolonged reduction in the immigrant labor force, noting "we didn't see net-out migration in Trump's first term," and that sustained net outflows "would cause all sorts of problems for businesses, for key sectors of the economy the president cares about, like construction" — suggesting policy may moderate before shortages become severe/permanent. Additionally, labor shortages can spur automation: in agriculture, reducing the availability of immigrants for agricultural work will increase labor costs and eventually lead to new technological innovations that improve farm labor efficiency, potentially offsetting some shortage effects over the long run — though this transition takes time and doesn't help short-term harvests or construction projects already underway.
Bottom line
The weight of evidence — from Federal Reserve research, government data, and current 2025-2026 reporting — indicates that stopping or sharply reducing immigration does cause labor shortages, especially in construction, agriculture, hospitality, and healthcare, where immigrants (including undocumented workers) fill a disproportionate share of jobs that are hard to fill domestically. These shortages tend to show up as longer project timelines, higher consumer prices, and wage pressure rather than simply opening up equivalent jobs for native-born workers.
Citations (19)
- Immigration Shortfall May Be a Headwind for Labor Supply - Federal Reserve Bank of Kansas City
Source excerpt: “However, industries that had a larger share of foreign-born workers in 2015 tended to experience more significant increases in job vacancy rates from ...”
- Immigration Shortfall May Be a Headwind for Labor Supply - Federal Reserve Bank of Kansas City
Source excerpt: “The first pair of bars shows that mean real earnings have increased by 9 percent from the 2011–15 period to the 2016–21 period, consistent with increa...”
- How an Immigration Slowdown Affects US Labor Market, Wages, Economy - Federal Reserve Bank of Atlanta
Source excerpt: “The paper, "Slowdown in Immigration, Labor Shortages, and Declining Skill Premia," relates the decline in low-skilled immigrant labor to sub...”
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “A shortage of skilled labor already costs the U.S. economy about $10.8 billion per year due to longer construction times and raises the price of new s...”
- More industries want Trump’s help hiring immigrant labor after farms get a break • Stateline
Source excerpt: “Trump migrant deportations could threaten states’ agricultural economies · In fiscal year 2025, which ended in September, there were about 209,000 H-2...”
- Immigration Enforcement and the US Agricultural Sector in 2025 | American Enterprise Institute - AEI
Source excerpt: “Fruit, vegetable, and horticultural (FVH) farms; dairies; and downstream agricultural processors like meat and fruit packers depend on unauthorized im...”
- U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “Many farms report difficulty finding enough workers during critical harvest periods, a challenge that has intensified in the first half of 2025 due to...”
- U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “Hotels and restaurants in major tourist destinations have long relied on immigrant labor, and the combined effects of increased deportations and reduc...”
- Immigration Enforcement and Its Economic Ripple Effects - WES
Source excerpt: “Recent economic data from the National ... impacted by reduced immigration—the unemployment rate for U.S.-born workers increased from 4.3 percent in J...”
- Immigration Enforcement and Its Economic Ripple Effects - WES
Source excerpt: “Recent economic data from the National Foundation for American Policy show that U.S.-born workers are negatively impacted by reduced immigration—the u...”
- How Tighter Curbs on Immigration Impact the U.S. Economy | Econofact
Source excerpt: “For instance, according to a Pew Research Center analysis, the total number of foreign-born persons living in the United States dropped by over 1.4 mi...”
- Immigrants Are Key to Filling US Labor Shortages, New Data Finds - American Immigration Council
Source excerpt: “The Bureau of Labor Statistics projects that the country will face · a shortage of 134,940 healthcare providers by 2036. ”
- How Tighter Curbs on Immigration Impact the U.S. Economy | Econofact
Source excerpt: “Other studies with different assumptions give estimates of a similar magnitude (here and here) Beyond the aggregate numbers, foreign workers make a pa...”
- Labor Shortages and the Immigration Shortfall | Econofact
Source excerpt: “Additionally, research focused on the high-skilled STEM jobs shows that they are responsible for creating a job-multiplier effect at the local level, ...”
- To lower inflation, America needs more immigration to alleviate national labor shortages - Fwd.us
Source excerpt: “Economists, including those at the Federal Reserve, have identified persistent worker shortages, and more specifically immigrant worker shortages, as ...”
- To lower inflation, America needs more immigration to alleviate national labor shortages - Fwd.us
Source excerpt: “When labor is in short supply relative to demand, employers offer higher wages, which are in turn passed on to consumers, leading to rising prices. ”
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “However, some economists are skeptical that the U.S. will suffer a prolonged reduction in the immigrant labor force. ”
- Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “"We didn't see net-out migration in [Trump's] first term," Strain said. "That'd cause all sorts of problems for businesses, for key sectors of the eco...”
- Immigration Enforcement and the US Agricultural Sector in 2025 | American Enterprise Institute - AEI
Source excerpt: “Reducing the availability of immigrants for agricultural work will increase labor costs and eventually lead to new technological innovations that impr...”