Will stopping immigration cause labor shortages?

Yes, stopping or severely restricting immigration is widely expected to cause and exacerbate labor shortages. However, the severity of these shortages, the long-term adjustments businesses make, and the impact on native-born workers are subject to debate among different economic schools of thought.

An overview of the mainstream economic consensus, the counterarguments, and the historical evidence explains the relationship between immigration and labor shortages.

1. The Mainstream Economic View: Why It Causes Shortages

The overwhelming consensus among economists is that a sudden halt or significant reduction in immigration leads to immediate and persistent labor shortages.

•Shrinking Workforce Growth: In many developed nations, including the United States, native-born populations are aging, and birth rates are declining. Immigrants account for a massive share of workforce growth. Without them, the overall pool of available workers shrinks, leaving jobs unfilled.

•High-Vulnerability Sectors: Certain critical industries rely heavily on foreign-born labor. For example, immigrants make up a disproportionate share of workers in agriculture, construction, hospitality, food processing, and healthcare (especially elder and home care). Halting immigration quickly starves these sectors of vital labor, leading to unharvested crops, delayed infrastructure projects, and understaffed care facilities.

•Economic Complementarity: A common misconception is that immigrants directly compete with native-born workers for the same jobs. In reality, economic research shows that native-born and foreign-born workers are highly complementary. For example, hiring immigrant laborers allows a construction company to expand, which in turn creates higher-paying, communication-intensive jobs (such as managers, accountants, and supervisors) for native-born workers. When immigrant labor vanishes, those businesses often scale back or close entirely, which can paradoxically increase unemployment among native-born workers.

•Inflation and Supply Chain Snarls: When companies cannot find workers, production drops. The resulting shortage of goods and services—combined with the high costs of trying to recruit from a depleted labor pool—drives up prices, contributing to inflation.

2. The Restrictionist View: The Case for Stopping Immigration

Proponents of restricting immigration, along with some labor economists, argue that "labor shortages" are often misunderstood and that stopping immigration can yield positive economic adjustments:

•Forcing Wage Increases: Restrictionists argue that a "labor shortage" is simply a shortage of workers willing to work at low wages. Without a steady supply of cheap immigrant labor, businesses are forced to raise wages, offer better benefits, and improve working conditions to attract native-born workers who were previously sidelined.

•Incentivizing Automation and Efficiency: When labor is cheap and plentiful, businesses have little incentive to innovate. If immigration is cut off, companies are forced to invest in capital, technology, and automation. For example, agricultural companies may adopt robotic harvesters, and builders may use modular construction techniques, boosting long-term productivity.

•Relieving Strain on Public Resources: Some argue that halting immigration reduces demand-side pressures on local housing markets, schools, healthcare systems, and public infrastructure, which can lower the overall cost of living for residents.

3. What Historical and Recent Data Show

Real-world scenarios have provided economists with natural experiments to test these theories:

•The 1920s Quotas: In the 1920s, the U.S. implemented strict quotas that cut immigration by over 80%. Economic historians found that this did not lead to higher wages for native-born workers. Instead, in rural areas, it accelerated automation, while in urban areas, it pushed industries toward higher-skilled manufacturing, ultimately leading to a slight decline in native-born earnings due to reduced overall economic dynamism.

•The COVID-19 Pandemic (2020–2021): Border closures and visa backlogs during the pandemic resulted in about 2 million fewer working-age immigrants in the U.S. than expected. This drop-off was a primary driver of the severe labor shortages and subsequent inflation that plagued sectors like hospitality, retail, and construction during the post-pandemic recovery.

•Recent Tightenings (2025–2026): Following a surge in interior enforcement and the termination of some legal work pathways, researchers noted that a decline in the foreign-born workforce quickly tightened labor conditions in agriculture and construction. Rather than benefiting native-born workers, the national unemployment rate for U.S.-born workers actually ticked upward (from 4.3% to 4.7%) during periods of sharply reduced immigration, as companies scaled back their investment and hiring plans.

Conclusion

Stopping immigration will almost certainly cause immediate and disruptive labor shortages, particularly in agriculture, construction, healthcare, and services. While it may push some businesses to invest in automation or raise wages in select low-skilled roles in the short term, the broader economic consensus warns that the long-term trade-offs include higher inflation, reduced business expansion, and slower overall economic growth.

Citations (14)

1equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “Yes, stopping or severely restricting immigration is widely expected to cause and exacerbate labor shortages.”
2econofact.orgAcademic
econofact.org
Backs: “Yes, stopping or severely restricting immigration is widely expected to cause and exacerbate labor shortages.”
3bakerinstitute.orgNonprofits and think tanks
bakerinstitute.org
Backs: “Shrinking Workforce Growth: In many developed nations, including the United States, native-born populations are aging, and birth rates are declining.”
4frbsf.orgGovernment
frbsf.org
Backs: “Immigrants account for a massive share of workforce growth.”
5wes.orgNonprofits and think tanks
wes.org
Backs: “Without them, the overall pool of available workers shrinks, leaving jobs unfilled.”
6forumtogether.orgNonprofits and think tanks
forumtogether.org
Backs: “For example, immigrants make up a disproportionate share of workers in agriculture, construction, hospitality, food processing, and healthcare (especially elder and home care).”
7princeton.eduAcademic
princeton.edu
Backs: “Economic Complementarity: A common misconception is that immigrants directly compete with native-born workers for the same jobs.”
8cepr.orgNonprofits and think tanks
cepr.org
Backs: “Economic Complementarity: A common misconception is that immigrants directly compete with native-born workers for the same jobs.”
9americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “In reality, economic research shows that native-born and foreign-born workers are highly complementary.”
10bushcenter.orgNonprofits and think tanks
bushcenter.org
Backs: “For example, hiring immigrant laborers allows a construction company to expand, which in turn creates higher-paying, communication-intensive jobs (such as managers, accountants, and supervisors) for native-born workers.”
11forbes.comNews and mediaquality 0.83
forbes.com
Backs: “When immigrant labor vanishes, those businesses often scale back or close entirely, which can paradoxically increase unemployment among native-born workers.”
12equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “The resulting shortage of goods and services—combined with the high costs of trying to recruit from a depleted labor pool—drives up prices, contributing to inflation.”
13econofact.orgAcademic
econofact.org
Backs: “The COVID-19 Pandemic (2020–2021): Border closures and visa backlogs during the pandemic resulted in about 2 million fewer working-age immigrants in the U.S. than expected. This drop-off was a primary driver of the severe labor shortages and subsequent inflation that plagued sectors like hospitality, retail, and…”
14lse.ac.ukAcademic
lse.ac.uk
Backs: “This drop-off was a primary driver of the severe labor shortages and subsequent inflation that plagued sectors like hospitality, retail, and construction during the post-pandemic recovery. Recent Tightenings (2025–2026): Following a surge in interior enforcement and the termination of some legal work pathways,…”