Will stopping immigration cause labor shortages?

Yes, stopping or sharply reducing immigration is likely to cause or worsen labor shortages in many sectors, constrain overall labor force and economic growth, and fail to significantly boost employment or wages for native-born workers on net—though effects vary by industry, skill level, time horizon, and policy details. This is supported by demographic trends, economic studies, and recent real-world evidence from sharp immigration slowdowns.[1]

Demographic Reality and Labor Force Growth

Developed economies like the US face aging populations and low fertility rates. The native-born working-age population (roughly 16-64) has stagnated or begun shrinking in many places; without immigration, the US working-age population would likely have started declining around 2012.[2]

Immigrants (and their children) have driven most labor force growth for decades, contributing both low- and high-skilled workers. They make up roughly 15-20% of the US labor force and higher shares in key sectors: ~30% in construction, substantial portions in agriculture, hospitality/food services, healthcare/caregiving, and trades. A near-halt in net migration (as seen in estimates of near-zero or negative net migration in 2025) reduces potential monthly job growth dramatically—e.g., Barclays analysts projected "potential" nonfarm private payroll growth falling from over 100,000/month toward under 10,000 or near zero, slowing potential GDP growth.[1][3]

Federal Reserve analyses confirm lower immigration weighs on prime-age labor force growth and lowers the "breakeven" employment level needed to keep unemployment stable.[4]

Evidence from Recent Reductions and Studies

In periods of reduced immigration (e.g., post-2007 slowdown in low-skilled inflows, pandemic border restrictions, and 2025+ enforcement/deportation increases):

Meta-analyses and major reviews (e.g., National Academies) generally find small average effects of immigration on native wages/employment—often near zero overall, with possible modest negative effects concentrated on prior immigrants or the least-educated natives in the short run, offset by complementarities, occupational upgrading by natives, capital adjustment, and demand effects. Some recent work finds positive wage/employment effects for less-educated natives due to these channels.[10][11]

Internationally, aging societies (Japan, South Korea, parts of Europe) have expanded immigration pathways precisely to address shortages amid demographic decline.[12]

Counterarguments and Caveats

Restrictionist perspectives (e.g., Center for Immigration Studies) argue that "labor shortages" often reflect employers' reluctance to raise wages, improve conditions, or train natives rather than absolute scarcity. There is a large pool of working-age natives (especially less-educated men) outside the labor force due to disability, opioids, criminal records, welfare incentives, or cultural factors. Reducing immigration could eventually raise wages/conditions enough to draw some back in, encourage automation, or shift production—though evidence from recent crackdowns shows limited short-term native gains, and higher wages raise consumer prices (e.g., food, housing, care).[5]

Markets do adjust: wages rise in tight segments, firms innovate or relocate, and participation can respond over longer periods. Complete, permanent zero immigration is extreme and rare historically. Selective high-skilled immigration, temporary worker programs (e.g., H-2), or internal reforms (training, childcare, reducing barriers to work) can mitigate shortages without open borders. Effects differ: high-skilled immigrants often complement strongly and boost innovation/productivity; low-skilled fill essential but less-desired roles.

Bottom line: Abruptly stopping immigration will cause noticeable labor shortages and slower growth in the near-to-medium term, especially where immigrants concentrate, because natives are imperfect substitutes and demographics are unfavorable. It does not reliably deliver large employment/wage windfalls to natives overall. Sustainable approaches typically involve managed legal immigration responsive to labor needs, alongside policies to raise native participation and productivity. Long-run outcomes depend on how capital, technology, education, and fiscal systems adapt.