Will stopping immigration cause labor shortages?

Stopping immigration and labor shortages — I'll gather recent research to weigh the evidence.

Short answer: Yes, according to most economists, demographic and labor market research - stopping immigration entirely would cause and worsen labor shortages, and even sharply reducing it has already been linked to shortages.

The debate is about how large the effect is, and whether per-capita income would suffer much.

1. Immigration is now the main source of labor force growth

•In 2023, immigrants constituted 18.6% of the U.S. civilian labor force

•Immigrants accounted for 84.7% of labor force growth since 2019

•Without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking

•The U.S. had 2 million fewer working-age immigrants at the end of 2021 than it would have had if pre-pandemic trends continued

Researchers and labor market analysts conclude:

> “Put simply, 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.”

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

2. What models project if immigration stops or falls sharply

Workforce size:

•Under a zero-immigration scenario where immigration stopped for the next two decades, the U.S. working-age population would shrink 11% by 2040

•Under a low-immigration scenario, the U.S. working-age population would remain relatively flat

•Without these new arrivals, the number of immigrants of working age would decline by 17.6 million by 2035, as would the total projected U.S. working-age population, which would fall to 165.6 million

•The National Foundation for American Policy (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

Another analysis estimated:
> These policies ... have reduced the labor force by an estimated 6.8 million workers by 2028, with 4 million attributed to crackdowns on undocumented immigration and 2.8 million linked to changes in legal immigration rules

Demographic cliff:

The Congressional Budget Office (CBO) projects:

•Starting in 2044, CBO projects that natural population increase (births minus deaths) will turn negative. Without net immigration, our population would then start shrinking

•With recent enforcement measures and reduced immigration, Deaths are projected to exceed births starting in 2031—two years earlier than prior forecasts

•CBO now expects the labor force to have 5.2 million more people in 2033 than the agency projected last year. Most of that increase results from additional foreign nationals

The underlying reason is aging: fertility rates and current immigration projections are not enough to sustain population growth. ... Without a proactive immigration strategy, the U.S. risks severe labor shortages

3. Which sectors are most affected

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

Other research found:

•Industries such as construction, leisure and hospitality, and other services ... had an above average share of foreign workers in 2015 and experienced an above average increase in job vacancy rates from 2016 to 2021 when immigration was reduced

•A recent industry-led survey of construction firms found that 45% reported project delays attributable to ICE-related labor shortages, and one in five reported that subcontractors had lost staff directly due to fear of enforcement

•Nearly half of the missing 2 million would have been college educated, and so they say this is a very substantial loss of skilled workers

•For a lack of workers is holding back business, especially in the sectors of the economy with a traditionally high percentage of immigrant labor

Broader macro effect: A sudden plunge in immigration reduces the labor force available to fill jobs ... will dampen employment, GDP, and consumer spending and push sustainable monthly job growth well below historical norms—perhaps to 20,000–50,000 or even negative territory in 2026

4. Nuance and counter-arguments

Not all analysts agree that a smaller economy means worse outcomes for natives:

The American Enterprise Institute, reviewing a Penn Wharton Budget Model that found the economy would be 2 percent smaller in 2040 with halved immigration and have 4.6 million fewer jobs, argued:

> Of course the economy is going to be smaller with fewer immigrants. But that could be the case even if reducing immigration did not reduce the income of a single person in the U.S. Nearly as inevitably, fewer immigrants means a smaller number of workers here. But that doesn’t mean that anyone in the country would lose a job (or fail to get one) because of the reduction in immigration

That model also found:

> the domestic worker participation rate won’t increase enough to fill the jobs that would have been held by immigrants who are no longer allowed in the country

— implying some increase in native participation, but not full replacement — and that per-capita GDP would be 0.3 percent lower in 2040 with lower immigration, which the authors called a trivial number.

Other economists note potential offsets:

•Higher wages for low-skilled native workers if labor supply tightens, though the long-run effect of immigration on wages of native-born workers overall is very small in National Academies research

•Employers may substitute labor with technology, and the extent of wage increase may be limited by the ability of employers to substitute labor with technology

•Historically, termination of the Bracero Program in 1964 led to the automation of tomato picking, an example cited by those arguing cheap immigrant labor delays mechanization.

However, recent data after the 2025 immigration crackdown has been cited as evidence against the replacement theory:

> “The US-born labor force participation rate has dropped,” said Mark Regets, a senior fellow at the National Foundation for American Policy... “So if we’ve had a big withdrawal of immigrants from the labor force, we don’t see any sign of the US-born workers getting more employment because of that.”

5. Bottom line

•Stopping immigration entirely would mechanically shrink the workforce, because population growth from births alone is already below replacement and projected to turn negative. That would reduce the pool of prime-age workers and make labor shortages worse, especially in agriculture, construction, hospitality, health care and elder care where immigrant share is high.

•Reducing immigration does not automatically create jobs for native-born workers on a one-for-one basis; studies show the impact of immigrant labor on the wages of native-born workers is low, and that immigrant workers often complement native workers and contribute to firm growth and firm formation, with no negative impact on wages of natives when labor markets are tight.

•The economic tradeoff is therefore: lower immigration may raise wages in some low-wage markets and reduce competition, but it also shrinks the workforce, consumer base and productive capacity in industries that rely heavily on immigrant labor, raises long-term risk of a shrinking population and slower GDP growth, while leaving per-capita GDP effects relatively small (0.3% in one model).

Citations (2)

1marketplace.orgNews and mediaquality 0.67
As labor shortage persists, fewer immigrants means fewer workers
Backs: “Without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking. The U.S. had 2 million fewer working-age immigrants at the end of 2021 than it would have had if pre-pandemic trends continued”
2aei.orgNonprofits and think tanks
Take a Closer Look at This Immigration Statistic
Backs: “But that could be the case even if reducing immigration did not reduce the income of a single person in the U.S. Nearly as inevitably, fewer immigrants means a smaller number of workers here. But that doesn’t mean that anyone in the country would lose a job (or fail to get one) because of the reduction in immigration”