Will stopping immigration cause labor shortages?

Short answer: In many sectors and countries, yes — most economic evidence points to sharp immigration restrictions causing labor shortages, at least in certain industries, though the overall effect depends on which workers, which jobs, and how quickly native-born workers or automation can fill the gap.

The evidence from current U.S. experience (2025)

The U.S. is essentially running this experiment right now, and the data show real strain:

•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—where 68 percent of farm laborers were foreign-born—could suffer as the administration's immigration crackdown continues. The Labor Department warned in October 2025 that immigration policies risk creating a labor shortage in the sector, and the number of foreign-born workers declined by more than one million between January and August 2025.

•A Peterson Institute economist found job growth in immigrant-heavy industries like hotels, restaurants, construction, and home health aides has been flat since the start of 2025, with jobs growing at a 0% rate in July, compared to continued growth elsewhere.

•By sector: foreign-born workers comprise approximately 70% of the farm workforce nationwide, and many farms report difficulty finding enough workers during critical harvest periods, a problem intensified by increased interior enforcement, resulting in unharvested produce, more food waste, and higher costs. In construction, roughly 30% of workers are foreign-born nationally (around 40% in states like California and Texas), and enforcement activity near job sites, deportations, and fear-driven absences have contributed to staffing challenges.

•Real-world project impacts are already visible: 92% of construction firms report difficulty finding workers, and 45% say labor shortages are causing project delays. Construction on a new city hall in Raleigh, N.C. came to a standstill as immigration raids kept workers away.

Why this happens

Economists point to a few mechanisms:

1.Jobs natives won't take at current wages. Foreign workers make a particular contribution in low-wage, manual-labor sectors where U.S. citizens typically prefer not to work — immigrants account for 43% of farm workers, 30% of food production workers, 28% of construction workers, and 20% of leisure/hospitality workers.

2.Slow replacement by native labor. A COVID-era natural experiment is instructive: in the two years after the COVID shock, immigration disruption led to a shortfall of 1.65 million in the working-age immigrant population, a gap that was not filled by increasing employment of native-born workers.

3.Macro growth effects. A nonpartisan study found that current enforcement policies could decrease domestic production of goods and services, cutting annual economic growth by almost one-third by 2035. Separately, Fed-adjacent analysis projected that tighter immigration would reduce GDP growth in 2025 by 0.3–0.4 percentage points as potential employment growth falls from 140,000–180,000 jobs/month in 2024 to just 10,000–40,000 jobs/month in the second half of 2025.

The counterargument

Not everyone agrees shortages are the main outcome. Some administration officials argue restricting immigration simply shifts opportunity to native workers: Vice President JD Vance and others have argued that limiting immigration will raise wages and create job opportunities for U.S.-born workers, with the administration contending that "there is no shortage of American minds and hands to grow our labor force." This reflects a classic economic trade-off — restricting labor supply can raise wages for remaining workers in theory, but economists caution that a shrinking labor force could have long-term economic effects if native workers don't fill the gap quickly or at the volume needed.

Historical precedent

This isn't new. A Federal Reserve Bank of Atlanta paper on the pre-2020 slowdown in low-skilled immigration linked the decline in immigrant labor to subsequent wage increases for low-skilled workers, but also to labor shortages in low-skilled jobs that can't be relocated abroad. And in Canada, a different demographic story reinforces the same logic: given Canada's aging population, growth in both temporary and permanent immigration has been essential to supporting economic growth and responding to labour market shortages, now contributing to nearly 100% of Canada's labour force growth.

Bottom line

Stopping or sharply curbing immigration doesn't cause a shortage in every job uniformly — it hits hardest in specific sectors (agriculture, construction, hospitality, food processing, caregiving) where immigrants are concentrated and where native-born replacement has historically been slow or incomplete. The 2025 U.S. experience, real-time construction delays, farm labor warnings, and historical research after the 2007–2019 immigration slowdown and the COVID-era disruption all point in the same direction: restricting immigration flows tends to produce real, measurable labor shortages in immigrant-dependent industries, even if it may simultaneously push up wages for remaining workers in those fields.

Citations (16)

1cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “Since the start of 2025, job growth in industries heavily reliant on undocumented labor has been weaker than the rest of the private sector. These sec...”
2cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “Experts say the agricultural industry in particular—in which 68 percent [PDF] of farm laborers for fiscal year 2021–22 were foreign-born—could suffer ...”
3cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “The Labor Department warned in October 2025 that the Trump administration’s immigration policies risk creating a labor shortage in the sector. Nationw...”
4cnbc.comNews and mediaquality 0.85
Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “Job growth in those industries — such as hotels, restaurants, construction and home health aides — has been flat since the start of 2025, said Kolko. ...”
5forumtogether.orgNonprofits and think tanks
U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “**Agriculture** In agriculture, foreign-born workers comprise approximately 70% of the farm workforce nationwide. Many farms report difficulty finding...”
6forumtogether.orgNonprofits and think tanks
U.S. Workforce Challenges: How Immigration Enforcement Is Impacting the American Economy - National Immigration Forum
Source excerpt: “**Construction** Construction also relies heavily on immigrant workers. Approximately 30% of workers in the U.S. construction industry are foreign-bor...”
7agc.orgNonprofits and think tanks
Construction Workforce Shortages Are Leading Cause Of Project Delays As Immigration Enforcement Affects Nearly 1/3 Of Firms
Source excerpt: “92 Percent of Construction Firms Report Having a Hard Time Finding Workers to Hire, As 45 Percent of Firms Say Labor Shortages are Causing Project Del...”
8stateline.orgNews and media
More industries want Trump’s help hiring immigrant labor after farms get a break • Stateline
Source excerpt: “###### By: Tim Henderson - December 3, 2025 5:00 am Construction on a new city hall in Raleigh, N.C., was at a standstill Nov. 18 as word of immigrati...”
9econofact.orgAcademic
How Tighter Curbs on Immigration Impact the U.S. Economy
Source excerpt: “- **Beyond the aggregate numbers, foreign workers make a particular contribution in low-wage, manual labor sectors of the economy where U.S. citizens ...”
10econofact.orgAcademic
How Tighter Curbs on Immigration Impact the U.S. Economy
Source excerpt: “This was well demonstrated in the two years after the COVID 19 shock when COVID-related immigration disruption led to a shortfall of 1.65 million in t...”
11cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “The administration’s enforcement policies could decrease the amount of goods and services produced domestically—a major component of gross domestic pr...”
12econofact.orgAcademic
How Tighter Curbs on Immigration Impact the U.S. Economy
Source excerpt: “The analysis suggested that this shift would reduce GDP growth in 2025 by 0.3 - 0.4 percentage points as potential growth in employment is cut from 14...”
13cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “Some top administration officials, including Vice President JD Vance, have argued that limiting immigration will raise wages and create more job oppor...”
14cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “However, economists caution that a shrinking labor force could have long-term economic effects. ”
15atlantafed.orgGovernment
How an Immigration Slowdown Affects US Labor Market, Wages, Economy - Federal Reserve Bank of Atlanta
Source excerpt: “The paper, "Slowdown in Immigration, Labor Shortages, and Declining Skill Premia," relates the decline in low-skilled immigrant labor to subsequent wa...”
16canada.caGovernment
CIMM – Labour Shortages – November 25, 2024
Source excerpt: “Key Messages - Given Canada’s aging population, growth in both temporary and permanent immigration has been essential to supporting economic growth ...”