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Claude Sonnet 5Oct 12, 2026anthropic/claude-sonnet-5-20260630

Will stopping immigration cause labor shortages?

Short answer: Yes, in many cases—and this is already happening

There's strong real-world evidence right now that restricting immigration causes labor shortages, particularly in specific sectors. Here's what the data shows:

Current evidence (2025–2026, U.S.)

Since the Trump administration's immigration crackdown began, economists have documented clear effects on the labor force. Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the overall U.S. labor pool, according to several economists. Fed Chair Jerome Powell himself cited this as a factor: Last month, Jerome Powell, chair of the Federal Reserve, cited immigration policy as a factor behind the slowdown in the labor supply.

The numbers are stark: the number of foreign-born workers declined by more than one million between January and August 2025, BLS data shows.

Which sectors are hit hardest

The effect isn't uniform—it concentrates in industries that rely heavily on immigrant labor:

•Construction: new data has confirmed economists' concern that the Trump administration's immigration crackdown has led to fewer jobs in critical industries, particularly construction, reifying fears of labor shortages, delays, and ultimately passed-down costs. One trade group said the industry needs 349,000 more construction workers in 2026 in order to meet demand. A September 2026 survey found worker shortages are the top reason for construction project delays, with the Association of General Contractors citing both demand for data-center construction workers and tougher immigration enforcement as contributing causes.
•Agriculture: 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. The Labor Department warned in October 2025 that the Trump administration's immigration policies risk creating a labor shortage in the sector.
•Hospitality, restaurants, healthcare: 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.
•Manufacturing: Even unionized, documented workplaces feel ripple effects — workers at factories in Michigan and Kentucky say recent immigration crackdowns are driving labor shortages, with over 125 employees at one Louisville plant losing jobs due to canceled work permits, and a Kraft Heinz facility requiring extended overtime as remaining staff struggle to meet demand.

Why this happens — the economic logic

This isn't just a current-events anomaly; it's consistent with longer-run research:

1.Demographics: native-born U.S. households are having fewer children and the baby boom generation is aging out of the job market — absent immigration, such dynamics would cause a long-term shrinking of the U.S. population and labor force.
2.Historical precedent: A Kansas City Fed study of the 2016–2021 period found that the decline in immigration and coincident increase in labor market tightness suggests industries that depend more heavily on foreign-born workers may have difficulty filling job openings, and that industries with a larger share of foreign-born workers tended to experience more significant increases in job vacancy rates.
3."Multiplier effect": Immigrant labor shortages can spill over to native workers too — reduced immigration is likely to affect even those industries that do not depend on foreign-born workers, because immigrants are more likely to fill jobs that allow other individuals to join the labor force.
4.Macroeconomic projections: A Peterson Institute analysis estimated that deporting between 1.3 and 8.3 million undocumented immigrants would reduce U.S. real GDP by as much as 7 percent by 2028 while significantly decreasing U.S. employment, increasing inflation, and driving down demand. Separately, a National Foundation for American Policy study found current enforcement policies could cut annual economic growth by almost one-third by 2035.

The counterargument

Not everyone agrees labor shortages are the inevitable or main outcome. Some top 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. There's also research suggesting immigration can suppress wages for some native-born groups — a Center for Immigration Studies analysis found labor force participation among U.S.-born men aged 25-54 without a high school diploma declined, with one researcher arguing immigration suppressed wages and made it harder for native-born men without college degrees to find jobs. The theory here is that fewer immigrant workers means employers must raise wages and improve conditions to attract native-born workers, which could eventually pull some discouraged workers back into the labor force — though critics argue this is slow, doesn't apply to jobs natives won't take, and causes short-term disruption (unharvested crops, delayed construction, higher consumer prices) before any wage benefits materialize.

Bottom line

The weight of current evidence—from the Federal Reserve, Labor Department, and multiple research institutions—points toward restricting immigration causing real, measurable labor shortages in immigrant-dependent sectors (construction, agriculture, hospitality, food processing) in the short-to-medium term, with knock-on effects on prices and GDP growth. Whether this is a net negative depends heavily on one's view of trade-offs between wage growth for native workers versus overall economic output and consumer prices—but shortage is not really in dispute as an empirical outcome; it's visible in vacancy data and sector reports right now.

Citations (17)

  1. 1cnbc.comNews and mediaquality 0.85
    Trump immigration policy may be shrinking labor force, economists say

    Source excerpt: “Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the ov...”

  2. 2cnbc.comNews and mediaquality 0.85
    Trump immigration policy may be shrinking labor force, economists say

    Source excerpt: “Last month, Jerome Powell, chair of the Federal Reserve, cited immigration policy as a factor behind the slowdown in the labor supply. ”

  3. 3cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “Nationwide, the number of foreign-born workers declined by more than one million between January and August 2025, BLS data shows. ”

  4. 4fortune.comNews and mediaquality 0.88
    Trump's immigration crackdown is worsening the construction labor shortage threatening build costs

    Source excerpt: “New data has confirmed economists’ concern that the Trump administration’s immigration crackdown has led to fewer jobs in critical industries, particu...”

  5. 5ctmirror.orgNot yet classified
    Aging workforce, immigration crackdown are depleting skilled labor

    Source excerpt: “Worker shortages are the top reason for construction project delays, a September survey by the Association of General Contractors of America found. ”

  6. 6ctmirror.orgNot yet classified
    Aging workforce, immigration crackdown are depleting skilled labor

    Source excerpt: “The association cited both the demand for workers building data centers and tougher immigration enforcement as contributing causes for the shortage. ”

  7. 7cfr.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 ...”

  8. 8cfr.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. ”

  9. 9cfr.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...”

  10. 10cornell.eduAcademic
    US workers say Trump’s immigration crackdown is causing labor shortages: ‘A strain on everybody’

    Source excerpt: “US workers say Trump’s immigration crackdown is causing labor shortages: ‘A strain on everybody’ Workers at factories in Michigan and Kentucky say rec...”

  11. 11cnbc.comNews and mediaquality 0.85
    Immigration is 'taking pressure off' the job market and U.S. economy, expert says

    Source excerpt: “## Why immigration is a 'net benefit for the economy' The problem is that native-born U.S. households are having fewer children and the baby boom gene...”

  12. 12kansascityfed.orgGovernment
    Immigration Shortfall May Be a Headwind for Labor Supply - Federal Reserve Bank of Kansas City

    Source excerpt: “Finally, the fourth pair of bars shows that the ratio of unemployed persons to vacant jobs decreased by more than 50 percent between the two periods, ...”

  13. 13kansascityfed.orgGovernment
    Immigration Shortfall May Be a Headwind for Labor Supply - Federal Reserve Bank of Kansas City

    Source excerpt: “Reduced immigration is likely to affect even those industries that do not depend on foreign-born workers. Immigrants are more likely to fill jobs that...”

  14. 14cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “The Peterson Institute for International Economics, meanwhile, estimated [PDF] in 2024 that deporting between 1.3 and 8.3 million undocumented immigra...”

  15. 15cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “This could cut annual economic growth by almost one-third by 2035, according to an October 2025 study [PDF] by the nonpartisan National Foundation for...”

  16. 16cfr.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...”

  17. 17cnbc.comNews and mediaquality 0.85
    Immigration is 'taking pressure off' the job market and U.S. economy, expert says

    Source excerpt: “## When immigration may not be 'such a good deal' A Center for Immigration Studies analysis of Census Bureau data found that labor force participation...”