Will stopping immigration cause labor shortages?

Short answer: Yes, in many sectors—and real-world evidence is already showing it

The evidence strongly suggests that sharply reducing immigration does tend to cause or worsen labor shortages, particularly in specific industries, though the effect on overall wages for native workers is much smaller than restrictionists often claim.

What's happening right now (U.S., 2025)

Recent immigration enforcement has provided something close to a natural experiment:

Why this happens: demographics make immigration load-bearing

The deeper structural issue is demographic. Without immigration, working-age population growth is likely to be negative through at least 2040, given recent and current birth rates, population aging, and current age-specific mortality rates. Native-born population growth alone isn't filling the gap: according to Bloomberg data, the native-born US population ages 16 through 64 has been flat since 2016 and now declining, and it's immigration that's carrying the working-age population.

Economist Jason Furman has pointed to this directly: monthly job gains have fallen significantly below prior trends precisely because immigration previously filled the gap left by slow native-born population growth and retirements.

The counterargument: wage gains for native workers are small

The "cutting immigration helps native workers" theory doesn't hold up well empirically. Comprehensive reviews, including the 2017 National Academies report, conclude that the long-term impact of immigration on the wages and employment of native-born workers overall is very small. Similarly, economist Giovanni Peri has found that immigration has only a minimal effect on the wages of U.S.-born workers. And rather than creating opportunity, enforcement has sometimes done the opposite: a National Bureau of Economic Research study found that for every ICE arrest, six likely undocumented male workers stop working, with employment declining among U.S.-born men with less education in areas with high ICE arrests, as businesses scale back.

Economic costs beyond "shortages"

Reduced labor supply also shows up as inflation and lost growth:

Important nuance

It's not a simple story. Some economists argue AI/automation could offset future shortages, and others note that immigration alone can delay demographic problems and soften their impact, but immigration cannot indefinitely prop up a system when each generation is smaller than the last. Historically, similar disruptions occurred before: Tight restrictions would almost certainly create labor force disruptions that would threaten some companies' survival, as seen with the 1882 Chinese Exclusion Act.

Bottom line: Stopping or sharply reducing immigration doesn't necessarily help native workers much on wages, but it reliably causes labor shortages in immigrant-heavy sectors (agriculture, construction, hospitality, health care/caregiving), drives up prices in those sectors, and — given an aging, slow-growing native-born workforce — undermines long-run economic growth.