Will stopping immigration cause labor shortages?

Short answer: Yes, in many sectors and regions — the evidence strongly suggests reduced immigration causes or worsens labor shortages, at least in the short to medium term.

Why this happens

1. Immigrants fill specific labor niches that native-born workers don't readily fill

Immigrants are concentrated in both high- and low-skill sectors that face chronic worker shortages. Immigrants make up 23 percent of all workers, and supply a large number of workers in industries with a more mixed or primarily low-skilled workforce, including construction, food service, and agriculture where they represent approximately one-fifth of all workers. In sectors like agriculture, immigrants have taken these jobs since U.S. workers prefer not to, given the arduous working conditions, and the agricultural industry now has a chronic labor shortage that only increased migration can alleviate.

2. Real-world evidence confirms this

When immigration enforcement tightened in Arizona, harsh anti-immigrant laws reduced the state's undocumented worker population by 40 percent between 2007 and 2012, resulting in decreased economic output and a 2 percentage point increase in the unemployment rate for low-skilled native-born White men in the state. More broadly, a reduction in immigration is associated with a reduction in native-born employment and wages for native-born and incumbent immigrant workers alike, with studies finding reduced hourly wages and earnings for all U.S. citizens, including foreign-born residents.

The Federal Reserve Bank of Kansas City found similar patterns: 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. This also drove up labor costs — reduced immigration appears to have increased wage pressures in industries with higher shares of foreign-born workers, with industries having an above-average share of foreign-born workers experiencing more considerable earnings growth, suggesting that the reduced supply of foreign labor caused employers to raise wages to attract workers.

3. Currently affected industries

Analysis of recent enforcement trends shows: the effects of declining immigrant labor are most pronounced in industries that heavily depend on these workers — agriculture, construction, food processing, transportation, hospitality, caregiving, and certain manufacturing segments have all reported tighter labor conditions, reduced staffing, and increased challenges in meeting production and business needs. Specifically in construction, approximately 30% of workers in the U.S. construction industry are foreign-born, and in some states, such as California and Texas, the share rises to around 40%.

4. Native workers don't fully fill the gap

A key finding is that domestic labor doesn't simply substitute in: even as the number of foreign-born workers has declined, American workers are often unable to make up the difference, with employers across various industries reporting increased difficulty in finding qualified workers.

5. Macroeconomic and demographic stakes

Immigration has accounted for almost half of U.S. labor force growth since 1995, so slower labor force growth would negatively impact employment and GDP growth. This matters even more given demographic trends: the decline in the immigrant workforce lowers the number of taxpaying workers at a time when the United States is experiencing rapid growth in its retiree population.

6. The counterargument and its limits

Proponents of restriction argue that fewer immigrant workers means less competition and higher wages for native workers — but while this is frequently claimed, empirical evidence paints a more nuanced and generally modest picture, with comprehensive reviews like the 2017 National Academies report concluding that the long-term impact of immigration on wages and employment of native-born workers overall is very small. So while some wage gains for native workers in affected sectors can occur, they tend to be modest and are often outweighed by broader shortages, higher prices, and slower growth.

Bottom line

The weight of economic evidence — from historical case studies (Arizona), pandemic-era disruptions, and recent enforcement-driven declines — indicates that cutting immigration tends to create or deepen labor shortages, particularly in agriculture, construction, hospitality, food processing, and caregiving, and increasingly in healthcare and manufacturing in regions with low immigrant workforce shares. These shortages typically translate into higher prices, project delays, and only modest wage gains for native workers, rather than a clean one-for-one replacement of immigrant labor by domestic workers.