Will stopping immigration cause labor shortages?

Stopping immigration's effect on labor shortages is debated — I'll pull recent data on how immigration shapes the workforce.

Yes, according to most current economic research, substantially stopping or sharply reducing immigration would likely cause or worsen labor shortages, and eventually shrink the total workforce - though the size and timing of the effect is debated.

1. Why economists expect shortages

Immigration is now the primary driver of U.S. labor force growth.

•Immigrants "are integral to" economic growth and increased immigration increases the labor force, enhances productivity, and grows the economy

•In 2023, immigrants constituted 18.6% of the U.S. civilian labor force, filling critical roles in industries with unmet demands

•The number of native-born workers is shrinking, and research notes "immigration will soon become the primary mechanism keeping the population and the labor force growing. Without it, the U.S. will not just be facing a tighter labor market, but a shrinking one."

•Foreign-born workers accounted for about a fifth of the US labor market in 2024

Aging demographics amplify this: The U.S. population is aging and immigrants are more likely to be of prime working age than native-born Americans.

If net immigration falls sharply, models project:

•A sudden plunge in immigration reduces the labor force available to fill jobs that businesses expect to fill, which will dampen employment, GDP, and consumer spending and push sustainable monthly job growth well below historical norms

•Reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks

•One analysis estimates Trump administration policies on illegal and legal immigration would reduce the projected number of workers in the United States by 6.8 million by 2028

•A mass deportation on the scale advocated could permanently shrink the U.S. economy by as much as 6 percent by contracting labor markets

Recent evidence is consistent with that link:

•The San Francisco Fed looked at the Biden-era spike in unauthorized immigration starting in 2021 and a slowdown period from March 2024 to March 2025, and found that the labor market moved in tandem with immigration flows. In fact, areas of the country that recently experienced the largest slowdowns in unauthorized immigration also saw the largest slowdowns in employment growth

•COVID-related immigration disruption led to a shortfall of 1.65 million in the working-age immigrant population, a gap that was not filled by increasing employment of native-born workers

•Manufacturing.net reported the Labor Department itself said in an Oct. 2 filing in the Federal Register, "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"

2. Which sectors are most affected

Research describes the effect as sector-specific, not uniform across the economy.

Tightened immigration controls are directly linked to growing labor shortages in key sectors of the U.S. economy

Industries repeatedly cited as most vulnerable:

•Agriculture, hospitality, manufacturing, and — the San Francisco Fed emphasized — construction

•Labor shortages grow in agriculture, construction, healthcare, food service, and transportation sectors

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

Studies also find complementary rather than substitution effects: immigrants often work in jobs that are complementary to native-born workers. A 2014 paper found both low- and high-skilled native-born workers saw higher employment rates due to an immigration influx, and deportations during the Great Depression were found to decrease native-born employment. A Brookings-related study found immigration enforcement reduced construction employment for American-born workers and slowed homebuilding.

International example: Research on Japan shows Japan's labor shortages have resulted from a restrictive labor immigration policy.

3. The counter-argument: Wages and domestic supply

Not all economists and policy groups agree there is a true shortage.

•Heritage Foundation argues illegal immigrants' willingness to work for below-market pay drags down wages for domestic workers, deterring those who would otherwise seek such positions, and that if construction jobs paid higher wages, more Americans would likely pursue those positions.

•The Center for Immigration Studies argued: "There is no evidence of a labor shortage, especially at the bottom end of the labor market. If there was, wages, benefits, and employment should all be increasing fast, the opposite of what has been happening."

•That view points to a large pool of potential domestic workers: 22 million adult natives (18 to 64) with a high school degree or less are unemployed or not in the labor force, suggesting shortages could be solved by raising pay and improving recruitment and working conditions, rather than by immigration.

Some recent experience challenges that substitution hypothesis: A study of Korea's guest worker programme found firms hit harder by the migrant labour shock did not ramp up domestic hiring – and some closed, and that migrant positions were not quickly filled by native workers at prevailing wages.

Similarly, research on the "bracero exclusion" in 1964 found removing nearly half-a-million Mexican agricultural workers did not result in the promised boost to native-born farm wages and employment; jobs were either replaced by machines or eliminated.

4. Bottom line

•Stopping immigration completely or deporting large numbers: Broad consensus in peer-reviewed economics is that this would reduce total labor supply, create acute shortages in immigrant-intensive, often physically demanding or care-related sectors, raise costs and prices there, and reduce overall GDP and tax revenue. The effect is larger than a simple 1-for-1 job swap because native workers often do not fill those specific jobs at current wages and conditions.

•Modestly reducing legal immigration: Effects would be smaller and more gradual, but still contractionary relative to baseline due to demographic aging and low U.S. fertility. Tighter curbs are linked to slower job growth, not higher native employment.

•Wage adjustment: Over a longer horizon, higher wages could draw some additional native workers into those occupations, as the Heritage/CIS argument notes, but evidence from the U.S., Japan and Korea suggests adjustment is incomplete, slow, and often involves automation, reduced output, or business closures rather than full replacement.

In short, halting immigration slows growth rates and attenuates opportunity for native-born workers, while widespread deportations are actively contractionary and lead to native-born job losses and supply chain snarls.

Citations (4)

1equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability
Backs: “Yes, according to most current economic research, substantially stopping or sharply reducing immigration would likely cause or worsen labor shortages, and eventually shrink the total workforce - though the size and timing of the effect is debated. 1. Why economists expect shortages. Immigration is now the primary…”
2marketplace.orgNews and mediaquality 0.67
Job growth, immigration are directly related, new Fed study argues
Backs: “In 2023, immigrants constituted 18.6% of the U.S. civilian labor force, filling critical roles in industries with unmet demands”
3heritage.orgNonprofits and think tanks
Cracking Down on Illegal Immigration Would Raise Wages for Lower-Income Americans
Backs: “3. The counter-argument: Wages and domestic supply. Not all economists and policy groups agree there is a true shortage. Heritage Foundation argues illegal immigrants' willingness to work for below-market pay drags down wages for domestic workers, deterring those who would otherwise seek such positions, and that if…”
4cis.orgNonprofits and think tanks
The H-2B Visa Program and a "Shortage" of American Workers
Backs: “The Center for Immigration Studies argued: "There is no evidence of a labor shortage, especially at the bottom end of the labor market.”