Will stopping immigration cause labor shortages?

Yes, stopping immigration (or reducing it sharply to near-zero net levels) would cause or significantly worsen labor shortages in many sectors of the U.S. economy (and similar advanced economies), at least in the short-to-medium term, while slowing overall labor force and economic growth. This follows from demographics, the current composition of the workforce, and empirical evidence from economists, Federal Reserve analyses, and recent policy-driven slowdowns.[1]

Demographic Backdrop

The U.S. native-born working-age population (roughly ages 16–64) has been stagnating or heading toward decline due to low fertility rates (around 1.6, well below the 2.1 replacement level) and aging/retirements of the baby boom generation. Without immigration, the working-age population would have started shrinking years ago (e.g., around 2012 in some estimates), and prime-age labor force growth would turn negative in coming decades.[2]

Immigrants have driven most or all recent labor force growth. Foreign-born workers make up roughly 18–20% of the U.S. workforce (around 30+ million people). Net immigration has historically offset native demographic declines; zero or negative net immigration (as seen or projected in some recent periods with enforcement and reduced inflows) flattens or reverses labor force expansion.[3]

Analyses (e.g., from Barclays, Fed banks, CBO-related projections, and think tanks) show that sharp immigration reductions lower the “breakeven” monthly job growth needed to keep unemployment stable—potentially to near zero or negative—while constraining potential GDP growth. For instance, potential payroll growth could drop dramatically (e.g., from over 100,000/month toward low tens of thousands or less), and long-term workforce projections under restrictive policies show millions fewer workers (e.g., reductions of several million by the late 2020s and more by the 2030s).[4]

Sectoral Impacts and Evidence of Shortages

Immigrants are disproportionately concentrated in certain industries, so stopping inflows (or large-scale removals) hits those hardest:

Recent immigration slowdowns and enforcement have already coincided with reports of intensified shortages in these areas, weaker payroll growth, and businesses struggling to hire—without clear offsetting surges in native employment filling the gaps. Immigrants both supply labor and create demand (as consumers and entrepreneurs), so reductions shrink the economic “pie” rather than simply reallocating fixed jobs.[7]

Research consistently finds that immigration eases labor market tightness (e.g., by filling vacancies and moderating wage pressures in tight markets) and that immigrants often complement rather than fully substitute for natives. Studies of past reductions or deportations show limited or no broad gains in native employment/wages; in some cases, native jobs and output decline because businesses scale back or capital adjusts downward.[8]

Adjustments, Nuances, and Counterpoints

Economies do adjust over time:

However, these adjustments are neither instantaneous nor complete. Many of the jobs (physically demanding, seasonal, low-wage relative to alternatives, or location-specific) have chronically low native take-up even at higher wages. Shortages raise costs/prices (e.g., food, housing construction, services), reduce output/capacity, and can contribute to inflation in the near term while slowing long-run growth. Demographic pressures (fewer workers supporting more retirees) worsen fiscal strains on programs like Social Security.[9]

Some argue excessive reliance on immigration (especially low-skilled) can suppress productivity incentives or create other social costs, and that “stopping” illegal immigration while reforming legal pathways is preferable. Wage effects on the lowest-skilled natives are debated (some studies find modest short-run negative effects; the broader consensus is small or positive overall due to complementarities and demand). But the dominant economic view is that large reductions constrain growth more than they “help” native workers broadly.[10]

Bottom Line

Completely stopping immigration would cause labor shortages—most acutely and immediately in immigrant-reliant sectors—and reduce the economy’s productive capacity and growth potential amid ongoing native demographic decline. Partial or temporary slowdowns already show these effects. Sustainable policy typically involves controlled legal immigration aligned with labor needs (skilled and otherwise), enforcement against illegal entries, and domestic measures (training, automation, participation incentives) rather than abrupt zero inflows. Outcomes depend on the exact policy (legal vs. illegal, skilled vs. unskilled, scale/speed of change) and broader economic conditions, but the labor supply math is straightforward given current demographics and workforce composition.