Will stopping immigration cause labor shortages?
Yes, stopping or severely restricting immigration causes widespread labor shortages.
There is a strong consensus among economists that reducing the flow of immigrants—or deporting existing foreign-born workers—directly results in labor deficits. The effects of these shortages are felt at both the industry level and across the broader macroeconomic landscape.
A breakdown of how stopping immigration impacts the labor market, the economics behind it, and the arguments of those who support restrictions reveals several key dynamics.
1. Key Industries Affected
Immigrant labor is highly concentrated in specific sectors that keep daily life functioning. When immigration is halted, these sectors struggle because there are rarely enough domestic workers willing or available to fill the void:
2. The Economics: Why Native-Born Workers Don’t Just "Fill the Gap"
Proponents of restricting immigration often argue that stopping foreign labor will automatically create job opportunities for native-born citizens. However, economic research reveals that the labor market does not function as a simple trade-off due to two major concepts:
Complementarity vs. Substitution
Most immigrants do not compete directly with native-born workers for the exact same jobs; rather, their labor is complementary.
The "Lump of Labor" Fallacy
This is the incorrect assumption that there is a fixed "pie" of jobs in an economy, and that if an immigrant takes a job, a native-born worker loses one.
In reality, immigrants are also consumers. They rent apartments, buy groceries, purchase cars, and pay taxes. This spending increases aggregate demand, which prompts businesses to expand and hire more workers. Removing immigrants removes consumers, which shrinks the overall size of the economy, leading to business closures and higher unemployment even among native-born citizens.
3. Demographic Pressures
The U.S. and many other developed nations are facing aging populations and declining birth rates. As the "Baby Boomer" generation retires, the domestic-born working-age population is shrinking relative to retirees.
Without immigration to replenish the workforce with younger, tax-paying individuals, countries face severe demographic-driven labor shortages. This also threatens the long-term solvency of social safety nets like Social Security and Medicare, which rely on active workers paying payroll taxes to fund benefits for retirees.
4. The Counterargument: What Pro-Restriction Economists Say
Those who advocate for halting or heavily restricting immigration point to potential micro-level benefits:
The Mainstream Rebuttal: While limiting immigration may modestly boost wages for a very small segment of native-born workers (such as high school dropouts), studies consistently find that these gains are heavily outweighed by the negative economic shocks. The resulting labor shortages drive up prices, cause supply-chain bottlenecks, fuel inflation, and lower overall Gross Domestic Product (GDP).
Citations (13)
- cfr.org
Backs: “There is a strong consensus among economists that reducing the flow of immigrants—or deporting existing foreign-born workers—directly results in labor deficits. The effects of these shortages are felt at both the industry level and across the broader macroeconomic landscape.”
- equitablegrowth.org
Backs: “There is a strong consensus among economists that reducing the flow of immigrants—or deporting existing foreign-born workers—directly results in labor deficits. The effects of these shortages are felt at both the industry level and across the broader macroeconomic landscape.”
- forumtogether.org
Backs: “When immigration is halted, these sectors struggle because there are rarely enough domestic workers willing or available to fill the void: Agriculture: In the U.S., approximately 70% of farmworkers are foreign-born.”
- forbes.com
Backs: “Halting immigration stalls infrastructure projects, slows down home building, and exacerbates housing affordability crises. Hospitality and Caregiving: Restaurants, hotels, eldercare, and healthcare assistance heavily rely on foreign-born labor.”
- econofact.org
Backs: “Economists warn this hampers domestic innovation, scientific research, and long-term productivity.”
- bipartisanpolicy.org
Backs: “Substitution. Most immigrants do not compete directly with native-born workers for the exact same jobs; rather, their labor is complementary. For example, employing lower-skilled immigrant labor in construction allows a construction firm to expand.”
- americanimmigrationcouncil.org
Backs: “Substitution. Most immigrants do not compete directly with native-born workers for the exact same jobs; rather, their labor is complementary. For example, employing lower-skilled immigrant labor in construction allows a construction firm to expand.”
- cmsny.org
Backs: “This expansion, in turn, creates higher-paying, native-born jobs in management, accounting, sales, and heavy machinery operation. If the lower-skilled labor is removed, the company cannot scale, causing project cancellations and the loss of those native-born management jobs.”
- facebook.com
Backs: “If the lower-skilled labor is removed, the company cannot scale, causing project cancellations and the loss of those native-born management jobs. The "Lump of Labor" Fallacy”
- economicshelp.org
Backs: “This spending increases aggregate demand, which prompts businesses to expand and hire more workers. Removing immigrants removes consumers, which shrinks the overall size of the economy, leading to business closures and higher unemployment even among native-born citizens.”
- fabricegrinda.com
Backs: “Wage Growth for Low-Skilled Workers: Some economists argue that restricting the supply of low-skilled labor forces employers to compete for domestic workers by raising wages. Incentive to Automate: When labor is cheap and abundant, businesses have less incentive to innovate.”
- stlouisfed.org
Backs: “Wage Growth for Low-Skilled Workers: Some economists argue that restricting the supply of low-skilled labor forces employers to compete for domestic workers by raising wages. Incentive to Automate: When labor is cheap and abundant, businesses have less incentive to innovate.”
- hbs.edu
Backs: “Supporters of restrictions argue that labor shortages force companies to invest in technology and automation (such as robotic harvesting in agriculture), boosting productivity in the long run. Reduction of Local Fiscal Strain: Opponents of high immigration levels argue that while immigrants contribute federally, they…”