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Grok 4.5Oct 12, 2026x-ai/grok-4.5-20260708

Will stopping immigration cause labor shortages?

Yes, stopping (or sharply restricting) immigration is likely to cause or significantly exacerbate labor shortages in many sectors and slow overall labor force and economic growth, particularly in the short-to-medium term. This is supported by demographic trends, recent policy experiences, historical episodes, and economic research. Effects are not uniform across all jobs or workers, and markets adjust over time (via higher wages, automation, internal migration, reduced output, or offshoring), but adjustments are imperfect, costly, and incomplete—especially for physically demanding, low-skill, or location-specific roles that natives often avoid.[1]

Demographic Reality

Developed countries like the US face aging populations and below-replacement fertility. The native-born working-age population has stagnated or begun shrinking in recent years. Immigrants have driven the large majority (often 80%+) of recent US labor force growth.[2][3]

Without immigration, "potential" monthly nonfarm payroll growth could fall dramatically (e.g., estimates from near 100k+ toward under 10k–60k or even near zero/negative in some projections), constraining GDP growth. Similar pressures exist in Europe, South Korea, and elsewhere. Global talent shortages are projected in the tens of millions by 2030.[1][4]

Recent Evidence from Restrictions and Slowdowns

In the US around 2025–2026, sharp drops in net migration (potentially negative for the first time in decades due to enforcement, deportations, and policy changes) coincided with:

•Slower job growth and tighter labor markets in immigrant-heavy sectors.
•Rising or non-falling unemployment and falling labor force participation among US-born workers in some data—not the employment boom for natives that restriction advocates often predict.
•Acute shortages reported in construction (immigrants ~30% of workforce, higher in residential/trades), agriculture (high shares of unauthorized crop workers), manufacturing, hospitality, landscaping, caregiving/home health, and skilled trades. Employers note difficulty replacing workers; some projects delay or costs rise.[5][6][7]

Studies of unauthorized immigration flows find near one-for-one effects on employment growth in affected industries; slowdowns reduce overall employment (not just shift it to natives). Firm-level evidence from H-2B visa lotteries (low-skill temporary visas) shows that restricting access shrinks production, investment, and profits, with very low substitutability between immigrant and US workers. Effects on US employment are zero or positive from more immigrants (especially in rural areas).[8][9]

South Korea’s sudden halt of its low-skilled guest worker program (EPS) during COVID border closures provides a clean natural experiment: the EPS workforce shrank ~22%. Firms more dependent on these workers saw higher closure rates (especially low-productivity ones), revenue/production losses, and no meaningful increase in new native hiring. Surviving firms’ Korean workers experienced wage declines due to occupational downgrading into lower-skill tasks previously done by immigrants—indicating complementarity rather than pure substitution. Firms demanded more guest workers.[10][10]

Historical Precedents

•Chinese Exclusion Act (1882): Banned Chinese laborers. It cut Chinese labor supply ~64% (skilled and unskilled). Contrary to aims of protecting white/native workers, it also reduced white male labor supply (~28%), lowered their occupational incomes/job quality, cut manufacturing output ~62%, reduced the number of manufacturing establishments (54–69%), and slowed Western US economic development through at least 1940. Skilled Chinese and white workers appear complementary; remote areas suffered more. Local mining was a partial exception.[11][12]
•1920s US national-origins quotas: Dramatically cut immigration from Southern/Eastern Europe. Results are mixed across studies. Some find faster wage growth for low-skilled laborers in more-exposed local markets/industries due to scarcity (wage elasticity estimates implying gains of several percent). Others find no overall wage/employment gains (or declines) for US-born workers; urban areas replaced immigrants partly via internal migrants (including higher-skilled natives) and unrestricted inflows (Mexico/Canada); rural areas shifted to capital/automation (e.g., farming); some immigrant-intensive sectors contracted; natives sometimes experienced occupational downgrading. Black workers saw relative gains in some analyses via the Great Migration. Productivity growth suffered in more-affected areas in certain studies.[13][14][15]

Why Shortages Occur (and Why Natives Don't Fully Fill Gaps)

•Imperfect substitution/complementarity: Immigrants and natives often have different skills, language, education, willingness for certain tasks (e.g., repetitive physical labor, night shifts, remote/agricultural work), or geographic mobility. Immigrants fill niches that enable natives to specialize in higher-productivity roles. Removing them can lower native productivity/wages via downgrading or firm contraction.[16]
•Demand creation: Immigrants consume goods/services and start businesses, expanding the economic "pie" and creating jobs.
•Native preferences and frictions: Many Americans (especially younger or college-educated) avoid certain jobs even at higher wages. Labor force participation, relocation costs, training lags, and other barriers limit rapid filling of gaps. Higher wages can help at the margin and raise costs/prices for consumers, but do not eliminate shortages quickly.
•Sector concentration: Shortages hit hardest where immigrant shares are high and capital substitution is hard (caregiving, some construction/agriculture, food processing).

Broader research (including national-level analyses) typically finds immigration has small/zero average effects on native wages (or positive for less-educated natives via complementarity in recent decades) and can raise native employment rates. Large-scale removals shrink the economy (GDP estimates of multi-percentage-point hits in extreme scenarios), with limited lasting native wage gains after capital adjusts downward.[17][16]

Nuances and Adjustments

Stopping immigration entirely is an extreme counterfactual. Targeted reductions, enforcement focused on criminals, or shifts toward high-skill immigration have different (often milder) effects than blanket halts or mass deportations of workers already in the labor force. Legal temporary/guest worker programs calibrated to shortages can mitigate issues without full permanent settlement.

Markets do adapt: automation (where feasible), higher native participation or wages drawing some workers, reduced scale of production, or imports. These take time, raise costs (contributing to inflation in housing, food, care), and may leave permanent output losses or lower living standards growth. Productivity and innovation can also suffer if high-skill inflows or entrepreneurship drop.

Other policies matter: improving education/training, reducing barriers to work, housing/infrastructure to support mobility, and cultural factors influencing job attractiveness. Fiscal/net fiscal impacts of immigration vary by skill/education and are debated separately from pure labor supply.

In summary, the weight of evidence from economics, history, and current data indicates that abruptly stopping immigration causes labor shortages—especially acute ones in key sectors—while failing to deliver broad employment or wage booms for natives. It constrains growth in aging societies. Gradual, selective, or market-responsive immigration (legal pathways matching labor needs) better balances supply with demand than sudden stops.

Citations (17)

  1. 1reuters.comNews and mediaquality 1.00
    https://www.reuters.com/markets/us/us-migrant-halt-may-wipe-potential-job-growth-2025-06-24/

    Backs: “Effects are not uniform across all jobs or workers, and markets adjust over time (via higher wages, automation, internal migration, reduced output, or offshoring), but adjustments are imperfect, costly, and incomplete—especially for physically demanding, low-skill, or location-specific roles that natives often avoid.”

  2. 2fortune.comNews and mediaquality 0.88
    https://fortune.com/2025/10/21/trump-immigration-policy-jobs-workforce-american-workers-gdp-growth/

    Backs: “Immigrants have driven the large majority (often 80%+) of recent US labor force growth.”

  3. 3business-standard.comNews and mediaquality 0.62
    https://www.business-standard.com/amp/immigration/immigration-fall-from-2-million-to-515-000-may-shrink-us-labour-force-fed-125112000258_1.html

    Backs: “Immigrants have driven the large majority (often 80%+) of recent US labor force growth.”

  4. 4fortune.comNews and mediaquality 0.88
    https://fortune.com/article/does-america-have-aging-population-immigration-deportations-six-day-work-week/

    Backs: “Global talent shortages are projected in the tens of millions by 2030.”

  5. 5bloomberglaw.comNews and media
    https://news.bloomberglaw.com/immigration/immigration-crackdown-fails-to-deliver-jobs-for-us-born-workers

    Backs: “Employers note difficulty replacing workers; some projects delay or costs rise.”

  6. 6forbes.comNews and mediaquality 0.83
    https://www.forbes.com/sites/stuartanderson/2026/02/22/new-research-finds-reducing-immigration-does-not-help-us-workers/

    Backs: “Employers note difficulty replacing workers; some projects delay or costs rise.”

  7. 7ctmirror.orgNot yet classified
    https://ctmirror.org/2026/10/08/aging-workforce-immigration-crackdown-are-depleting-skilled-workers/

    Backs: “Employers note difficulty replacing workers; some projects delay or costs rise.”

  8. 8aeaweb.orgAcademic
    https://pubs.aeaweb.org/doi/pdfplus/10.1257/app.20250049

    Backs: “Effects on US employment are zero or positive from more immigrants (especially in rural areas).”

  9. 9aeaweb.orgAcademic
    https://www.aeaweb.org/articles?id=10.1257/app.20250049

    Backs: “Effects on US employment are zero or positive from more immigrants (especially in rural areas).”

  10. 10nber.orgAcademic
    https://www.nber.org/digest/202606/what-happens-when-flow-immigrant-workers-suddenly-stops

    Backs: “Surviving firms’ Korean workers experienced wage declines due to occupational downgrading into lower-skill tasks previously done by immigrants—indicating complementarity rather than pure substitution. Firms demanded more guest workers.”

  11. 11hbs.eduAcademic
    https://www.library.hbs.edu/working-knowledge/history-check-how-barring-immigrants-backfired-in-1880s-america

    Backs: “Skilled Chinese and white workers appear complementary; remote areas suffered more. Local mining was a partial exception.”

  12. 12cato.orgNonprofits and think tanks
    https://www.cato.org/research-briefs-economic-policy/impact-chinese-exclusion-act-economic-development-western-united

    Backs: “Skilled Chinese and white workers appear complementary; remote areas suffered more. Local mining was a partial exception.”

  13. 13kansascityfed.orgGovernment
    https://www.kansascityfed.org/Research%20Working%20Papers/documents/9135/rwp22-12cohenbiddle.pdf

    Backs: “Productivity growth suffered in more-affected areas in certain studies.”

  14. 14princeton.eduAcademic
    https://economics.princeton.edu/working-papers/the-effects-of-immigration-on-the-economy-lessons-from-the-1920s-border-closure/

    Backs: “Productivity growth suffered in more-affected areas in certain studies.”

  15. 15aeaweb.orgAcademic
    https://www.aeaweb.org/articles?id=10.1257/app.20200807

    Backs: “Productivity growth suffered in more-affected areas in certain studies.”

  16. 16cepr.orgNonprofits and think tanks
    https://cepr.org/voxeu/columns/revisiting-immigrations-effect-us-wages-and-employment

    Backs: “Removing them can lower native productivity/wages via downgrading or firm contraction.”

  17. 17cepr.orgNonprofits and think tanks
    https://cepr.org/publications/dp20949

    Backs: “Large-scale removals shrink the economy (GDP estimates of multi-percentage-point hits in extreme scenarios), with limited lasting native wage gains after capital adjusts downward.”