Will stopping immigration cause labor shortages?

Short answer: Yes, in many cases — especially in specific sectors and regions — though the overall economic picture is nuanced and debated.

The strongest evidence: real-world data from 2025–2026

Recent U.S. immigration restrictions provide a live case study. Strict immigration policies implemented in 2025 have sharply reduced net immigration flows, with some analyses indicating that for the first time in at least half a century more immigrants left the United States than entered. The results have shown up across multiple sectors:

•Agriculture: foreign-born workers account for roughly two-thirds of the hired crop labor force, and enforcement actions have led to slower hiring, higher reliance on the H-2A visa program, and reports of crops left unharvested or fields idled. The U.S. Labor Department itself warned in October 2025 that the Trump administration's immigration policies risk creating a labor shortage in the sector.

•Construction: immigrants represent roughly 30-36% of the construction workforce, and homebuilders report longer vacancy durations and project delays, exacerbating housing supply constraints.

•Healthcare: immigrants make up about one in six hospital workers, and reduced inflows have intensified staffing challenges in an already strained sector.

•Manufacturing: more than 20 percent of manufacturing workers are immigrants, many with specialized skills that will take years to replace. A concrete example: a 2025 enforcement action at a Hyundai facility in Georgia detained 475 workers—over 300 of them from Korea—disrupting construction of the state's largest economic development project.

This isn't just anecdotal — official labor force data back it up. The total U.S. labor force has fallen for three consecutive months, declining by 402,000 people from January to July 2025, to about 170.3 million. Fed Chair Jerome Powell himself noted that immigration policy is a factor behind the slowdown in labor supply, saying "the flow into our labor forces is just a great deal slower".

Does restricting immigration actually raise wages for native workers (the usual argument for cutting immigration)?

The evidence is mixed-to-negative so far:

•Early 2025–2026 data showed the opposite of the intended effect: the unemployment rate for U.S.-born workers increased from 4.3 percent in January 2025 to 4.7 percent in January 2026 rather than falling as predicted.

•Historically, the closest parallel — the 1920s U.S. immigration quotas — tells a similar story. Immigration decreased by over 80% after Congress closed the door on migration from Southern and Eastern Europe, and the expectation was that native-born workers' wages would increase — they didn't. Wages actually decreased in the labor markets most affected by the cuts, according to research by economic historian Ran Abramitzky's team. Instead, farms automated more quickly than anticipated, and the low-wage jobs did not return as native labor.

Broader macroeconomic effects

Beyond sector-specific shortages, reduced immigration slows overall economic growth:

•Immigration has accounted for almost half of U.S. labor force growth since 1995, so slowing it mechanically slows employment and GDP growth.

•A National Foundation for American Policy study found current policies could cut annual economic growth by almost one-third by 2035.

•Brookings estimates the effect on GDP growth has been between –0.2 percentage point (high scenario) and –0.3 percentage point (low scenario) in 2025, with effects of –0.1 to –0.3 percentage points expected in 2026.

•There are also inflationary knock-on effects: reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks. This has shown up concretely in food and housing prices.

Important nuances

1.Shortages vs. unemployment can coexist: A "shortage" in economics usually means employers can't find workers at prevailing wages — not that there are literally zero available workers. Economists distinguish this from general unemployment.

2.Automation can offset some shortages over time — as seen with 1920s-era farm automation — but this takes time and doesn't work for all tasks (e.g., elder care, specific skilled trades).

3.Deportations vs. simply reducing new immigration have different effects. Halting immigration is economically harmful but deportations are even more economically harmful — while halting immigration slows growth rates, widespread deportations are actively contractionary and lead to native-born job losses and supply chain snarls.

4.Demographics matter: Because of an aging native-born population and low birth rates, the U.S. will increasingly rely on immigration into the future to grow the national population and labor force, making the labor-shortage risk from restricted immigration likely to grow rather than shrink over time.

Bottom line

The weight of current economic evidence — from the Federal Reserve, Brookings, multiple economists, and real-time sector data — suggests that sharply curtailing immigration does tend to create labor shortages, particularly in sectors heavily reliant on immigrant labor (agriculture, construction, healthcare, hospitality, manufacturing), and that the hoped-for wage gains for native workers often fail to materialize as expected, both historically and in current data.

Citations (18)

1substack.comBlogs and newsletters
Immigration Restrictions and Labor Market Impacts
Source excerpt: “# Immigration Restrictions and Labor Market Impacts ## Labor supply effects: shortages in agriculture, construction, healthcare, and tech Strict immig...”
2substack.comBlogs and newsletters
Immigration Restrictions and Labor Market Impacts
Source excerpt: “In agriculture, foreign-born workers account for roughly two-thirds of the hired crop labor force, with undocumented workers comprising a substantial ...”
3cfr.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. ”
4substack.comBlogs and newsletters
Immigration Restrictions and Labor Market Impacts
Source excerpt: “Construction has similarly experienced tightened labor markets, where immigrants represent approximately 30 to 36 percent of the workforce in recent y...”
5substack.comBlogs and newsletters
Immigration Restrictions and Labor Market Impacts
Source excerpt: “Healthcare facilities, including hospitals and long-term care providers, depend on immigrant labor for roles ranging from nurses and physicians to sup...”
6wes.orgNonprofits and think tanks
Immigration Enforcement and Its Economic Ripple Effects - WES
Source excerpt: “### Sectors Most at Risk #### Manufacturing **Government data** show that more than 20 percent of manufacturing workers are immigrants, many of whom h...”
7wes.orgNonprofits and think tanks
Immigration Enforcement and Its Economic Ripple Effects - WES
Source excerpt: “A 2025 enforcement action at a Hyundai facility in Georgia detained 475 workers—over 300 of them from Korea—disrupting construction of the state’s lar...”
8cnbc.comNews and mediaquality 0.85
Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “The total U.S. labor force — including immigrants and native-born workers — has fallen for three consecutive months, according to BLS data. It has dec...”
9cnbc.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. "[B]ecause of ...”
10wes.orgNonprofits and think tanks
Immigration Enforcement and Its Economic Ripple Effects - WES
Source excerpt: “Recent **economic data** from the National Foundation for American Policy show that U.S.-born workers are negatively impacted by reduced immigration—t...”
11abcmoney.co.ukNot yet classified
The Immigration Economic Engine: Why Closing Borders is Triggering Massive Labor Shortages
Source excerpt: “Immigration to the United States decreased by over 80% after Congress closed the door on migration from Southern and Eastern Europe. The expectation w...”
12abcmoney.co.ukNot yet classified
The Immigration Economic Engine: Why Closing Borders is Triggering Massive Labor Shortages
Source excerpt: “Farms automated more quickly than anticipated. The low-wage jobs did not”
13econofact.orgAcademic
How Tighter Curbs on Immigration Impact the U.S. Economy
Source excerpt: “For instance, according to a Pew Research Center analysis, the total number of foreign-born persons living in the United States dropped by over 1.4 mi...”
14cfr.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...”
15brookings.eduNonprofits and think tanks
Macroeconomic implications of immigration flows in 2025 and 2026: January 2026 update
Source excerpt: “affected GDP growth in 2025 by between –0.2 percentage point (high scenario) and –0.3 percentage point (low scenario). For calendar year 2026, the eff...”
16equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability - Equitable Growth
Source excerpt: “- Reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks. ”
17equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability - Equitable Growth
Source excerpt: “In other words, halting immigration is economically harmful but deportations are even more economically harmful. While halting immigration slows growt...”
18cnbc.comNews and mediaquality 0.85
Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “will increasingly rely on immigration into the future to grow the national population and labor force, given demographic trends. ”