Will stopping immigration cause labor shortages?
Yes, sharply reducing or stopping immigration is likely to cause or significantly worsen labor shortages in many sectors and slow overall labor force growth, particularly in developed economies like the U.S. with aging populations and low native birth rates—though markets can partially adjust over time via higher wages, automation, internal migration, or reduced output. This is not a simple zero-sum issue; evidence from economics, demographics, and recent policy changes supports this conclusion, while acknowledging debates over wages, fiscal impacts, and the definition of "shortage."[1]
Demographic Drivers
In the U.S. (and similarly in Europe, Australia, and other rich countries), the native-born working-age population (roughly 18-65) has slowed dramatically or begun shrinking due to the retirement of baby boomers, smaller younger cohorts, and fertility rates below replacement (~2.1 births per woman). Without immigration, the U.S. working-age population would have started declining as early as around 2012. Immigrants have been the primary source of labor force growth for decades, contributing substantially to both high-skilled and lower-skilled segments.[1]
Projections from sources like the San Francisco Fed, CBO, and others indicate that sharp drops in net migration (e.g., from ~2 million recently to ~500,000 or negative) reduce potential monthly payroll growth dramatically—from over 100,000 to potentially under 10,000–60,000—and could lead to flat or negative labor force growth in coming years. This weighs on potential GDP growth.[2][3]
Recent Evidence from Reductions
Recent U.S. policy shifts reducing net migration and increasing enforcement/deportations have coincided with:
Similar warnings appear in Australia (migration cuts expected to worsen shortages in hospitality, farming, tourism) and Europe (SMEs reporting skill shortages amid demographic decline).[4][8]
Historical Lessons
Past restrictions provide mixed but cautionary evidence:
Adjustments occur (capital substitution, tech, higher native participation in some roles), but they are incomplete, costly, and can reduce overall economic activity.
Counterarguments and Nuances
Critics (e.g., some restrictionist analyses) argue there is no true "labor shortage"—only a shortage of workers willing to accept current wages/conditions—and that millions of underemployed or non-participating natives (especially less-educated) could fill roles if pay rose. Higher immigration can suppress wages for competing low-skilled natives in the short run (though many studies find small, zero, or positive effects overall due to complementarity and demand creation), raise housing costs, and impose fiscal burdens depending on skill/education levels and generations.[11]
Markets do adjust: Wages rise in tight sectors, attracting some natives or prompting automation/offshoring. Long-term productivity and innovation matter more than headcount alone. High-skilled immigration has clearer net benefits for growth and native opportunities; low-skilled fills essential but often less popular roles. Abrupt "stopping" all immigration (legal + illegal, skilled + unskilled) is more disruptive than managed, selective, or temporary pathways. Temporary programs or legal expansions targeted at shortages can mitigate issues without permanent settlement.
Bottom Line
Stopping immigration would almost certainly tighten labor markets further in the near-to-medium term, particularly for non-college roles and high-demand services, leading to slower growth, higher costs for goods/services, and challenges for businesses—especially amid structural aging. It would not automatically deliver large, sustained employment or wage gains for natives across the board. Long-run adaptation is possible but involves trade-offs (e.g., higher prices, slower expansion, greater reliance on tech). Policy debates often hinge on balancing labor needs, wages for vulnerable natives, fiscal impacts, cultural factors, and enforcement of legal pathways rather than a binary "open vs. closed." Evidence consistently shows immigration as a key buffer against demographic labor force stagnation in advanced economies.
Citations (11)
- https://econofact.org/immigration-and-waning-us-labor-force-growth
Backs: “This is not a simple zero-sum issue; evidence from economics, demographics, and recent policy changes supports this conclusion, while acknowledging debates over wages, fiscal impacts, and the definition of "shortage."”
- https://www.reuters.com/markets/us/us-migrant-halt-may-wipe-potential-job-growth-2025-06-24/
Backs: “Projections from sources like the San Francisco Fed, CBO, and others indicate that sharp drops in net migration (e.g., from ~2 million recently to ~500,000 or negative) reduce potential monthly payroll growth dramatically—from over 100,000 to potentially under 10,000–60,000—and could lead to flat or negative labor…”
- https://www.business-standard.com/amp/immigration/immigration-fall-from-2-million-to-515-000-may-shrink-us-labour-force-fed-125112000258_1.html
Backs: “Projections from sources like the San Francisco Fed, CBO, and others indicate that sharp drops in net migration (e.g., from ~2 million recently to ~500,000 or negative) reduce potential monthly payroll growth dramatically—from over 100,000 to potentially under 10,000–60,000—and could lead to flat or negative labor…”
- https://www.straitstimes.com/asia/australianz/australian-migration-cuts-to-take-heavy-toll-on-economy-with-worker-shortages-expected
Backs: “Businesses report higher vacancies, wage pressures, reduced capacity/hours, and higher prices.”
- https://news.bloomberglaw.com/immigration/immigration-crackdown-fails-to-deliver-jobs-for-us-born-workers
Backs: “Businesses report higher vacancies, wage pressures, reduced capacity/hours, and higher prices.”
- https://www.forbes.com/sites/stuartanderson/2026/02/22/new-research-finds-reducing-immigration-does-not-help-us-workers/
Backs: “Little clear boost to native-born employment or participation; in some data, native unemployment has risen while foreign-born employment fell, and natives have not fully filled the gaps due to skill mismatches, location, preferences for certain jobs, or lower mobility.”
- https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussion-Papers-2026/CFMDP2026-04-Paper.pdf
Backs: “Models and data from high-immigration periods show immigration relieving shortages and dampening excessive wage/price spikes.”
- https://mmr2025.mixedmigration.org/mmr/2025/labour-shortages-and-anti-immigration-stances/
Backs: “Similar warnings appear in Australia (migration cuts expected to worsen shortages in hospitality, farming, tourism) and Europe (SMEs reporting skill shortages amid demographic decline).”
- https://www.library.hbs.edu/working-knowledge/history-check-how-barring-immigrants-backfired-in-1880s-america
Backs: “Reduced available workers, leading to lower manufacturing output, fewer establishments, and declines in some native skilled/managerial jobs rather than broad gains.”
- https://economics.princeton.edu/working-papers/the-effects-of-immigration-on-the-economy-lessons-from-the-1920s-border-closure/
Backs: “Native wages did not broadly rise and sometimes fell; effects were uneven.”
- https://cis.org/Report/There-No-Labor-Shortage
Backs: “Higher immigration can suppress wages for competing low-skilled natives in the short run (though many studies find small, zero, or positive effects overall due to complementarity and demand creation), raise housing costs, and impose fiscal burdens depending on skill/education levels and generations.”