Will stopping immigration cause labor shortages?

Yes, in most well-documented cases, sharply curtailing immigration does produce labor shortages — particularly in specific sectors — though the overall picture has some nuance.

The Mechanism

Immigrants make up an outsized share of workers in certain physically demanding or lower-wage occupations that native-born workers are often reluctant to fill. Foreign workers make a particular contribution in low-wage, manual labor sectors of the economy where U.S. citizens typically prefer not to work, thus helping to relieve shortages and contain inflation. Immigrant workers account for 43 percent of farm workers, 30 percent of food production and processing workers, 28 percent of construction workers, 22 percent of workers in personal services, and 20 percent of workers in the leisure and hospitality sector. When that labor supply shrinks suddenly, employers in those industries can't easily find replacements.

Historical Evidence (COVID-era slowdown)

This isn't just theoretical — it's been observed directly. The presence of an immigrant workforce typically can help local communities mitigate sudden labor shortages, particularly in industries such as construction and hospitality. But as immigration decreased before and during the pandemic, these jobs remained largely unfilled, leading to extreme labor shortages and rising wages. Research from the Atlanta Fed found similar dynamics going back further: a paper relates the decline in low-skilled immigrant labor to subsequent wage increases for low-skilled workers, declining educational advancement by young US workers, and labor shortages in low-skilled jobs that can't be moved to other countries.

When immigration rebounded afterward, shortages eased: the reopening of borders in 2022 and easing of immigration policies brought a sizable immigration rebound, which in turn helped alleviate the shortage of workers relative to job vacancies.

Current Situation (2025–2026 U.S. Policy)

Recent immigration restrictions provide a live case study. Since the start of 2025, job growth in industries heavily reliant on undocumented labor has been weaker than the rest of the private sector, including the hotel, restaurant, construction, and health-care industries. Experts say the agricultural industry in particular—in which 68 percent of farm laborers for fiscal year 2021–22 were foreign-born—could suffer as the administration's immigration crackdown continues. In fact, the Labor Department warned in October 2025 that the Trump administration's immigration policies risk creating a labor shortage in the sector.

The scale of the pullback has been significant: the number of foreign-born workers declined by more than one million between January and August 2025, according to BLS data, and more recent data shows a decline of 596,000 foreign-born workers since January 2026, and a drop of 1,008,000 since a peak in March 2025.

Construction has been hit especially hard. The Associated Builders and Contractors estimated the U.S. must hire 349,000 more construction workers in 2026 to meet demand, compared to only 181,000 total jobs added across the entire economy in 2025. Agriculture is facing similar strain: farmers are shifting to the strained H-2A program, experiencing 25% higher demand and significant vetting delays, with domestic production potentially dropping 15-20% by mid-2026, which could increase grocery prices by up to 15%.

The Counterargument — and Why It's Contested

Supporters of restriction argue the opposite: that removing immigrant labor opens opportunities for native workers and raises wages. Administration officials, including Vice President JD Vance, have argued that limiting immigration will raise wages and create more job opportunities for U.S.-born workers, contending these workers are available to counter labor shortages — "There is no shortage of American minds and hands to grow our labor force."

However, economic research largely contradicts this in practice. Research analyzing recent enforcement actions found small positive short-run effects on native-born wages following large-scale removal of immigrant workers, but those short-term effects are reversed in every state in the long run, resulting in wage declines more than twice as large as any short-term gains. Separately, employers across many sectors have reported needing more workers than the domestic labor pool can currently provide — a mismatch suggesting reductions in the foreign-born workforce are not being offset by higher employment among U.S.-born workers, leaving persistent gaps in critical occupations.

Broader Economic Consequences

Beyond sector-specific shortages, economists warn of macroeconomic effects. Economists caution that a shrinking labor force could have long-term economic effects, as enforcement policies could decrease domestic goods and services production — potentially cutting annual economic growth by almost one-third by 2035, according to an October 2025 study by the National Foundation for American Policy.

Bottom Line

The weight of economic evidence — from the pandemic-era slowdown through the current 2025–2026 policy shifts — suggests that abruptly stopping or sharply reducing immigration does tend to cause real labor shortages, especially in agriculture, construction, hospitality, and healthcare, where immigrant workers are disproportionately represented. While it's theoretically possible for native workers to fill some gaps, real-world data so far shows this substitution happening slowly and incompletely, often resulting in unfilled vacancies, higher wages/costs passed to consumers, and slower sector growth rather than a smooth handoff to domestic labor.