Will stopping immigration cause labor shortages?

Yes, stopping or sharply reducing immigration is likely to cause or exacerbate labor shortages in many sectors and constrain overall labor force and economic growth, particularly in economies with aging populations and low birth rates like the United States. This is supported by recent data from immigration slowdowns, historical precedents, demographic trends, and the broad economic consensus. Effects are not uniform—shortages hit hardest in immigrant-heavy industries—and economies adjust over time via higher wages (and prices), automation, reduced output, or capital investment, but these adjustments often come with slower growth and do not fully “free up” jobs for native-born workers in a simple zero-sum way.[1]

Recent Evidence from Immigration Reductions

In the U.S., sharp drops in net migration (including near-halts in unauthorized inflows and increased deportations/enforcement around 2025) have already slowed labor supply. Economists at Barclays estimated that “potential” non-farm private payroll growth could fall to under 10,000 per month (from over 100,000) due to halted migrant inflows combined with aging, weighing on GDP growth. Federal Reserve analyses similarly noted that without immigration, the working-age population would have begun shrinking earlier, and recent crackdowns reduced prime-age labor force growth.[2][1]

Businesses report acute shortages in construction (where immigrants are ~25–35% of workers overall, and much higher—over 50%—in trades like drywall, roofing, and painting), agriculture, hospitality/tourism, and some healthcare support roles. Enforcement has led to workers staying home out of fear, project delays, and higher costs. Native-born unemployment has not fallen as a result (and has sometimes risen), while labor force participation for natives has not surged to fill gaps. Job growth has slowed, particularly in immigrant-reliant industries, and analyses find little evidence that restrictions deliver employment gains for U.S.-born workers. Similar warnings have come from Australia amid planned migration cuts.[3][4][5][6]

Immigrants (foreign-born) make up roughly 18–19% of the U.S. labor force and have higher participation rates (especially men). They are overrepresented in service occupations, construction/maintenance, production/transportation, farming, and certain healthcare roles (e.g., significant shares of health aides and nurses in some states). They also contribute substantially to skilled areas and entrepreneurship.[7][8]

Demographic Reality

Native-born working-age populations in the U.S. and many developed countries are stagnating or shrinking due to low fertility and aging (Baby Boomers retiring). Immigration has accounted for a large share—often half or more—of labor force growth in recent decades. Congressional Budget Office (CBO) projections have repeatedly shown that higher immigration expands the labor force, boosts GDP (e.g., trillions over a decade from recent surges via more workers and demand), and supports revenues, while sharp reductions slow these. Without it, labor force growth slows dramatically, limiting sustainable job creation and potential output.[9][10]

Historical Precedents

These cases show that large sudden restrictions create shortages and disrupt production more than they boost native employment/wages in a straightforward manner.

Economic Consensus on Mechanisms

The National Academies of Sciences, Engineering, and Medicine (comprehensive review) found little evidence that immigration significantly reduces overall native employment. Long-term wage effects on natives overall are very small; any negatives concentrate on prior immigrants or native high-school dropouts (closest substitutes). High-skilled immigration often has positive effects via complementarity. Immigration expands GDP and long-run growth.[15]

Immigrants and natives are imperfect substitutes: they often have different skills, language, networks, or willingness for certain jobs (e.g., physically demanding, seasonal, or location-specific work that many natives avoid even at higher wages). Immigrants create demand (for housing, goods, services) and jobs through spending and business formation; they can raise productivity of natives via complementarity (e.g., low-skilled support enabling higher-skilled work). Scale effects (firms expand) often dominate pure substitution. Studies of visa lotteries (e.g., H-2B) find that access to immigrant workers expands firm employment, output, and profits, with neutral or positive effects on native employment.[16][17]

Recent research on post-pandemic immigration surges shows it helped fill vacancies and moderated wage pressures/shortages in a way consistent with complementarities. Conversely, slowdowns reduce employment growth (nearly one-for-one in some estimates for unauthorized flows in construction/manufacturing) without clear native gains.[18][19]

Caveats and Adjustments

In summary, labor markets are not a fixed pie of jobs. Immigrants expand the economy while filling niches that support broader activity. Abruptly stopping immigration, especially amid demographic decline, reliably produces shortages in key sectors, slower labor force and GDP growth, and limited benefits for native employment—consistent with theory, history, and current data. Targeted, well-managed immigration (legal pathways responsive to labor needs) is the more common policy recommendation from economists to address shortages while managing other challenges. Countries facing similar aging trends (Europe, East Asia, etc.) confront the same dynamics.