Will stopping immigration cause labor shortages?

Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in many sectors of advanced economies like the U.S., primarily due to demographic trends, though markets adjust in complex ways and effects are uneven. Immigrants have long been a key driver of labor force growth amid slowing native-born population growth from low fertility and aging. Abrupt stops reduce labor supply faster than demand adjusts in immigrant-heavy industries, leading to unfilled jobs, slower employment growth, higher costs/prices, and constrained economic output. However, this is not a simple zero-sum game; immigrants also create demand and jobs, and natives do not always substitute perfectly.[1]

Demographic and Labor Force Context

Native-born working-age populations in the U.S. and similar countries are stagnating or shrinking due to fertility rates below replacement. Immigration has offset this:

•Foreign-born workers make up ~19-20% of the U.S. workforce and have driven a large share (often half or more) of recent labor force growth. Native-born labor force growth has been much slower.[2]

•Without immigration, the U.S. working-age population would have begun shrinking earlier (e.g., analyses suggest as early as ~2012). Recent Census and Fed estimates show sharp drops in net migration (e.g., from millions annually to near zero or negative in some projections for 2025+), reducing sustainable non-inflationary job growth from ~100k-170k/month to as low as 10k-50k/month or near zero.[3]

•Aging intensifies this: retirements outpace native entrants, and participation rates among natives have limits. Global talent shortages are projected (e.g., tens of millions by 2030).[4]

Recent U.S. slowdowns (policy-driven reductions in legal/illegal entries plus deportations) already correlate with weaker payroll growth, rising vacancies in key sectors, and tighter labor markets that sustain wage pressures even with modest job gains.[5]

Sector-Specific Shortages

Immigrants disproportionately fill roles in agriculture (often 40%+ of crop workers, many unauthorized), construction (~25-30%+ laborers), hospitality/food services, landscaping, cleaning, manufacturing, and parts of healthcare/home care. Natives often show lower willingness or geographic mobility for these jobs, especially lower-skilled, physically demanding, or seasonal ones.[6]

•Crackdowns have led to reports of shortages in restaurants, hotels, farms, and construction, with businesses struggling to hire, reducing service quality/output, or closing.[7]

•Studies of high-immigration periods (e.g., 2021-2024 surge) find immigration fills vacancies, reduces shortages, and can dampen excessive wage growth in tight markets via complementarities (immigrants and natives often perform complementary tasks). Textbook models without these features fail to match data.[8]

•Restrictions (e.g., H-2B visa lotteries or historical Bracero program exclusion) show firms reduce production, investment, and profits when losing access to immigrant labor; effects on native employment are often zero or negative overall (especially rural), due to low substitutability and scale effects—firms shrink rather than simply swap workers.[9]

Broader Economic Effects and Adjustments

•Growth and jobs: Lower immigration slows potential GDP growth (estimates of 0.2-0.4+ percentage points annually in near term; larger cumulative effects). Immigrants boost employment (e.g., ~0.4 jobs per migrant in recent surges via demand and firm expansion) and entrepreneurship/innovation. Removing them shrinks the economic pie more than it redistributes jobs. Recent data after crackdowns show native-born unemployment sometimes rising or participation falling, not surging employment.[10]

•Wages: Immigration can modestly depress wages for closest native substitutes (low-skilled, per some studies like Borjas: ~3-4% wage drop per 10% supply increase in skill groups), while raising overall native income slightly via cheaper goods/services and complementarities. Stopping it may raise some low-skilled wages short-term but often leads to higher consumer prices, reduced output, and automation/capital substitution rather than large native hiring booms. Historical 1920s quotas and Chinese Exclusion Act did not broadly raise native wages/employment as hoped; adjustments included internal migration, skill shifts, or industry contraction, with mixed or negative wage effects in exposed areas.[11]

•Critiques of "shortages": Some argue there is no true shortage—just employers unwilling to raise wages enough to attract natives (e.g., millions of non-employed lower-skilled natives exist). Higher wages, better conditions, training, or automation can help fill gaps. Fiscal/local budget effects or housing pressures from immigration are real trade-offs. However, demographics make pure native solutions insufficient long-term without major participation increases or longer working lives, which have practical limits.[12]

Nuances and Caveats

Effects depend on the type of immigration stopped (high- vs. low-skilled; legal vs. unauthorized), speed of change, and other policies (e.g., education, automation incentives, temporary worker programs). High-skilled immigration often has clearer net positives for innovation/productivity. Complements (e.g., immigrant laborers enabling more native supervisors/trades) mean shortages can cascade. Europe and places like Japan/South Korea face similar pressures and have gradually opened more pathways amid aging.[13]

In short, stopping immigration does not free up a fixed pool of jobs for natives in a frictionless way. It tightens labor supply amid structural demographic headwinds, causing shortages (especially sectoral), slower growth, and adjustment costs—while potentially benefiting some competing natives via higher wages. Most mainstream economic analyses conclude net costs outweigh localized gains for the broader economy. Policy responses often focus on managed legal pathways tailored to labor needs rather than abrupt halts.

Citations (13)

1deloitte.comCompanies
https://www.deloitte.com/us/en/insights/topics/economy/spotlight/us-immigration-impact-us-economy.html
Backs: “However, this is not a simple zero-sum game; immigrants also create demand and jobs, and natives do not always substitute perfectly.”
2econofact.orgAcademic
https://econofact.org/immigration-and-waning-us-labor-force-growth
Backs: “Foreign-born workers make up ~19-20% of the U.S. workforce and have driven a large share (often half or more) of recent labor force growth. Native-born labor force growth has been much slower.”
3reuters.comNews and mediaquality 1.00
https://www.reuters.com/markets/us/us-migrant-halt-may-wipe-potential-job-growth-2025-06-24/
Backs: “Recent Census and Fed estimates show sharp drops in net migration (e.g., from millions annually to near zero or negative in some projections for 2025+), reducing sustainable non-inflationary job growth from ~100k-170k/month to as low as 10k-50k/month or near zero.”
4fortune.comNews and mediaquality 0.88
https://fortune.com/article/does-america-have-aging-population-immigration-deportations-six-day-work-week/
Backs: “Global talent shortages are projected (e.g., tens of millions by 2030).”
5yahoo.comNews and mediaquality 0.69
https://finance.yahoo.com/economy/articles/barclays-sees-lasting-labor-market-212235263.html
Backs: “Recent U.S. slowdowns (policy-driven reductions in legal/illegal entries plus deportations) already correlate with weaker payroll growth, rising vacancies in key sectors, and tighter labor markets that sustain wage pressures even with modest job gains.”
6wsj.comNews and mediaquality 0.80
https://www.wsj.com/economy/immigration-workers-labor-market-b277548f
Backs: “Natives often show lower willingness or geographic mobility for these jobs, especially lower-skilled, physically demanding, or seasonal ones.”
7washingtonpost.comNews and mediaquality 0.82
https://www.washingtonpost.com/opinions/2026/04/14/immigration-crackdown-causes-massive-shortages-unskilled-labor/
Backs: “Crackdowns have led to reports of shortages in restaurants, hotels, farms, and construction, with businesses struggling to hire, reducing service quality/output, or closing.”
8lse.ac.ukAcademic
https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussion-Papers-2026/CFMDP2026-04-Paper.pdf
Backs: “Studies of high-immigration periods (e.g., 2021-2024 surge) find immigration fills vacancies, reduces shortages, and can dampen excessive wage growth in tight markets via complementarities (immigrants and natives often perform complementary tasks). Textbook models without these features fail to match data.”
9aeaweb.orgAcademic
https://pubs.aeaweb.org/doi/pdfplus/10.1257/app.20250049
Backs: “Restrictions (e.g., H-2B visa lotteries or historical Bracero program exclusion) show firms reduce production, investment, and profits when losing access to immigrant labor; effects on native employment are often zero or negative overall (especially rural), due to low substitutability and scale effects—firms shrink…”
10forbes.comNews and mediaquality 0.83
https://www.forbes.com/sites/stuartanderson/2026/02/22/new-research-finds-reducing-immigration-does-not-help-us-workers/
Backs: “Recent data after crackdowns show native-born unemployment sometimes rising or participation falling, not surging employment.”
11princeton.eduAcademic
https://economics.princeton.edu/working-papers/the-effects-of-immigration-on-the-economy-lessons-from-the-1920s-border-closure/
Backs: “Historical 1920s quotas and Chinese Exclusion Act did not broadly raise native wages/employment as hoped; adjustments included internal migration, skill shifts, or industry contraction, with mixed or negative wage effects in exposed areas.”
12cis.orgNonprofits and think tanks
https://cis.org/Report/There-No-Labor-Shortage
Backs: “However, demographics make pure native solutions insufficient long-term without major participation increases or longer working lives, which have practical limits.”
13mixedmigration.orgNonprofits and think tanks
https://mmr2025.mixedmigration.org/mmr/2025/labour-shortages-and-anti-immigration-stances/
Backs: “Europe and places like Japan/South Korea face similar pressures and have gradually opened more pathways amid aging.”