Will stopping immigration cause labor shortages?

Whether stopping immigration will cause labor shortages is a central question in modern economics, with two primary, competing perspectives.

The mainstream economic consensus is that stopping or severely restricting immigration would cause immediate and widespread labor shortages, particularly in specific sectors, and would drag down economic growth. However, immigration restrictionists and some labor economists argue that "labor shortages" are a misnomer, and that restricting foreign labor would instead force healthy market adjustments, such as higher wages for domestic workers and increased automation.

1. The Mainstream Consensus: Stopping Immigration Will Cause Severe Shortages

Most economists, business associations, and central banks argue that immigration is a crucial driver of workforce growth and that halting it creates severe labor deficits. Their arguments rely on several key factors:

•Heavy Reliance in Key Sectors: Immigrants make up a disproportionate share of the workforce in critical industries. For example, in the United States, foreign-born workers comprise approximately 70% of the agricultural workforce, as well as massive shares of the construction, hospitality, eldercare, and food processing industries. Restricting immigration directly starves these fields of labor, leading to unharvested crops, delayed infrastructure projects, and understaffed care facilities.

•Demographic Realities (Aging Populations): Most developed nations (such as the U.S., Japan, and much of Western Europe) are facing declining birth rates and rapidly aging populations. Without immigrants to replenish the workforce, there simply are not enough native-born workers to replace retiring Baby Boomers, leaving a structural deficit in the labor pool.

•Complementarity vs. Substitution: Mainstream economic research indicates that immigrant and native-born workers are generally "complementary" rather than direct competitors. For instance, hiring foreign-born agricultural or construction laborers allows companies to expand, which in turn creates higher-paying, native-dominated management, logistics, and professional roles. Removing foreign labor can cause a contraction that actually reduces employment opportunities for native-born workers.

•Economic Contraction and Inflation: Real-world studies of immigration crackdowns have shown that labor supply constraints lead to higher prices for consumer goods (like food and housing) and overall slower GDP growth.

2. The Alternative Perspective: Stopping Immigration Will Force Market Adjustments

Proponents of restricting immigration (such as researchers at the Center for Immigration Studies) argue that the concept of a "labor shortage" in a free-market economy is a myth. They argue that stopping immigration would resolve itself through the following market mechanisms:

•Rising Wages for Domestic Workers: Restrictionists argue that a "labor shortage" is actually just a shortage of cheap labor. If employers cannot import foreign workers to do low-wage jobs, they will be forced by market dynamics to raise wages, improve working conditions, and offer better benefits to attract native-born workers who had previously opted out of those industries.

•Incentive to Automate: When labor is cheap and abundant, businesses have little incentive to invest in technology. Proponents of immigration limits argue that restricting the labor supply forces companies to adopt labor-saving technologies (such as robotic harvesting in agriculture or automated kiosks in hospitality). Over time, this increases overall productivity per worker.

•Drawing from Underutilized Domestic Labor Pools: Tight labor markets pressure employers to recruit and train domestic populations that are historically underemployed or left out of the workforce, including younger workers, the formally incarcerated, veterans, or those without college degrees.

Summary

Ultimately, whether stopping immigration causes a "labor shortage" depends on the timeframe and the industry:

•In the short-to-medium term, stopping immigration almost certainly causes acute labor shortages in industries like agriculture, healthcare, and construction, leading to supply chain disruptions, unfulfilled jobs, and inflation.

•In the long term, the economy would adapt, but that adaptation would likely involve structural shifts: higher labor costs (wages), accelerated automation, and potentially a smaller overall economic footprint compared to a high-immigration scenario.

Citations (12)

1wes.orgNonprofits and think tanks
wes.org
Backs: “The mainstream economic consensus is that stopping or severely restricting immigration would cause immediate and widespread labor shortages, particularly in specific sectors, and would drag down economic growth.”
2equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “The mainstream economic consensus is that stopping or severely restricting immigration would cause immediate and widespread labor shortages, particularly in specific sectors, and would drag down economic growth.”
3cis.orgNonprofits and think tanks
cis.org
Backs: “However, immigration restrictionists and some labor economists argue that "labor shortages" are a misnomer, and that restricting foreign labor would instead force healthy market adjustments, such as higher wages for domestic workers and increased automation.”
4newsweek.comNews and mediaquality 0.82
newsweek.com
Backs: “However, immigration restrictionists and some labor economists argue that "labor shortages" are a misnomer, and that restricting foreign labor would instead force healthy market adjustments, such as higher wages for domestic workers and increased automation.”
5americanprogress.orgNonprofits and think tanks
americanprogress.org
Backs: “The Mainstream Consensus: Stopping Immigration Will Cause Severe Shortages. Most economists, business associations, and central banks argue that immigration is a crucial driver of workforce growth and that halting it creates severe labor deficits.”
6forumtogether.orgNonprofits and think tanks
forumtogether.org
Backs: “For example, in the United States, foreign-born workers comprise approximately 70% of the agricultural workforce, as well as massive shares of the construction, hospitality, eldercare, and food processing industries.”
7immresearch.orgNot yet classified
immresearch.org
Backs: “Restricting immigration directly starves these fields of labor, leading to unharvested crops, delayed infrastructure projects, and understaffed care facilities.”
8apo-tokyo.orgNot yet classified
apo-tokyo.org
Backs: “Demographic Realities (Aging Populations): Most developed nations (such as the U.S., Japan, and much of Western Europe) are facing declining birth rates and rapidly aging populations.”
9americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “Substitution: Mainstream economic research indicates that immigrant and native-born workers are generally "complementary" rather than direct competitors.”
10govinfo.govGovernment
govinfo.gov
Backs: “The Alternative Perspective: Stopping Immigration Will Force Market Adjustments. Proponents of restricting immigration (such as researchers at the Center for Immigration Studies) argue that the concept of a "labor shortage" in a free-market economy is a myth.”
11iaproject.orgNot yet classified
iaproject.org
Backs: “Rising Wages for Domestic Workers: Restrictionists argue that a "labor shortage" is actually just a shortage of cheap labor.”
12forbes.comNews and mediaquality 0.83
forbes.com
Backs: “In the long term, the economy would adapt, but that adaptation would likely involve structural shifts: higher labor costs (wages), accelerated automation, and potentially a smaller overall economic footprint compared to a high-immigration scenario.”