Will stopping immigration cause labor shortages?

Stopping immigration — would it trigger labor shortages? I'll pull the latest research on how immigration shapes workforce supply.

Yes - according to most economic and demographic research, a complete or sharp reduction in immigration would worsen labor shortages, particularly in the U.S. context, though the size and timing of the effects are debated.

1. Why economists expect shortages if immigration stops

Demographics: An aging, slow-growing native workforce

The U.S. is aging and birth rates are low, so native-born workforce growth is already slowing:

•The projected 3.5% growth of the U.S. workforce between 2025 and 2035 is nearly one-third less than the prior decade, driven by declining birth rates, an aging population, and restrictive immigration policies

•Fertility rates and current immigration projections are not enough to sustain population growth, and "Without a proactive immigration strategy, the U.S. risks severe labor shortages"

•Immigrants, on average, are more likely to be of prime working age than native-born Americans, and research notes "immigration will soon become the primary mechanism keeping the population and the labor force growing. Without it, the U.S. will not just be facing a tighter labor market, but a shrinking one."

Recent data illustrates this:

•"Without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking" and "The prime-age labor force grew in large part because of immigration"

•The Federal Reserve Bank of San Francisco found that without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025

•One-fifth of the workforce is heading to retirement, with the share over 55 doubling from 10% to 21% in two decades

A similar warning was made in Canada, where a Bank of Canada report warned that slower population growth — caused by immigration cuts — plus an aging population could lead to labour shortages and higher inflation

Projected labor force losses under lower immigration

Models linking CBO and independent projections show large reductions:

•The CBO projects that reduced immigration will shrink the labor force by 15 million jobs by 2035

•The National Foundation for American Policy projects the cumulative reduction could reach 6.8 million workers by 2028 and 15.7 million by 2035, enough to lower the annual economic growth rate by almost a third

•More detail: By 2028, the projected workforce could be reduced by 6.8 million workers, and by 2035, that number could reach 15.7 million fewer workers

•The CBO now projects average annual labor-force growth of just 0.4 percent between 2026 and 2029, compared with an average 1.6 percent during the four years following the pandemic, and adds 2.4 million fewer employees in the next decade than its year-ago estimate

Effect on monthly job growth

Brookings models say a sudden plunge in immigration will dampen employment and push sustainable monthly job growth well below historical norms—perhaps to 20,000–50,000 or even negative territory in 2026

Analysis of late 2025 similarly finds with declining immigration, the sustainable pace of monthly job growth has dropped to between 20,000 and 50,000 jobs, and could turn negative in 2026, compared to hundreds of thousands per month from 2022-2024 when immigration was strong

2. Which sectors are most exposed

Reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks. Sectors that rely heavily on immigrant labor are most cited:

•Agriculture and Food Production: The Department of Labor itself admitted the immigration crackdown risks a "labor shortage exacerbated by the near total cessation of the inflow of illegal aliens"

•Construction: An industry already facing labor shortages just lost a significant portion of its workforce, with over 20% of the construction workforce at 55 years or older

•Healthcare: Hospitals rely heavily on immigrant workers, and the $100,000 H-1B visa fee is disrupting healthcare recruiting in specialty positions

•Hospitality, Eldercare, and Retail: Non-citizens comprise approximately 13% of the home-care workforce, and hospitality/retail are among industries facing existing labor shortages where the pipeline of workers has been shut off

Longer-term, the old-age dependency ratio — the 65-and-older population divided by the 18- to 64-year-old population — is projected to rise sharply as the population ages, increasing pressure on younger workers

3. Would stopping immigration help native-born workers find jobs or raise wages?

Proponents of restrictions argue immigrants take jobs and suppress wages:

•Job Displacement: Some argue that immigrants take jobs away from native-born citizens, leading to unemployment and wage suppression

•Economic arguments against immigration often take two forms – immigrants either suppress the wages of workers, or immigration creates higher unemployment

Most peer-reviewed economic research finds little support for that in the aggregate:

•Years of economic research shows that immigration has little to no negative effect and even some positive effect on employment for native-born workers

•A study by the Levy Economics Institute found immigration has no effect on the availability of jobs for unemployed citizens

•Immigrants and native-born workers are often complements, not close substitutes. A native-born engineer, architect, plumber, or electrician would find fewer work opportunities if immigrant construction laborers were deported

The "lump of labour" fallacy is frequently cited to explain this: jobs are not a fixed pie. They are a product of demand, productivity, capital investment and the overall size of the economy. Remove workers and the economy shrinks

Recent empirical work on enforcement found the opposite of the intended effect:

•For every 1,000 immigrant men arrested by ICE, the employment of U.S.-born men in the affected area declined by 0.54%. Wages for those who kept their jobs did not rise

•When enforcement actions remove workers, employers typically respond not by hiring citizens to fill the gap, but by cutting operations, delaying projects, and reducing hiring altogether — shrinking the labor supply and employers' revenue

•The Secure Communities enforcement surge between 2008-2014 was found to reduce the employment share of native-born workers, with harms concentrated among workers in sectors that relied on immigrant labor.

Models therefore project that restricting immigration is contractionary: Both restrictions in immigration are contracting output, aggregate consumption, and the capital stock, because they remove productive labor, and a mass deportation could permanently shrink the U.S. economy by as much as 6 percent

4. Nuances and mitigating factors

•Not all labor shortages are caused by immigration alone. Changing demographics like aging and retiring workers, border controls, demands for better pay and flexible working, and low labor-force participation also drive shortages

•Stopping immigration ≠ automatically more jobs for natives. Because immigrants are also consumers, renters, taxpayers, and business owners — with $299 billion in spending power in 2023 — removing them reduces demand for goods and services at the same time as it reduces supply

•Adaptations are possible but slow and costly: Employers may raise wages, automate, or invest in training, and telehealth and AI diagnostics may offset labor shortages in the long term — but studies note those adjustments take months or years, and in the meantime projects stall and waitlists grow.

In summary, most forecasts conclude that stopping immigration would not solve labor shortages but worsen them, especially given an aging population and declining birth rates. Because many industries already rely on immigrant workers to meet their labor needs, policies that hinder immigration will only exacerbate ongoing shortages.

Citations (3)

1shglawpa.comNot yet classified
The Hidden Economic Cost: How Immigration Policy Is Quietly Reshaping the American Economy
Backs: “The National Foundation for American Policy projects the cumulative reduction could reach 6.8 million workers by 2028 and 15.7 million by 2035, enough to lower the annual economic growth rate by almost a third. More detail: By 2028, the projected workforce could be reduced by 6.8 million workers, and by 2035, that…”
2equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability
Backs: “Analysis of late 2025 similarly finds with declining immigration, the sustainable pace of monthly job growth has dropped to between 20,000 and 50,000 jobs, and could turn negative in 2026, compared to hundreds of thousands per month from 2022-2024 when immigration was strong. 2. Which sectors are most exposed. Reduced…”
3ainvest.comNot yet classified
The lump of labour
Backs: “The "lump of labour" fallacy is frequently cited to explain this: jobs are not a fixed pie. They are a product of demand, productivity, capital investment and the overall size of the economy.”