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Claude Sonnet 5Oct 27, 2026anthropic/claude-sonnet-5-20260630

Will stopping immigration cause labor shortages?

YesSays it is contested

Will Stopping Immigration Cause Labor Shortages?

Yes — in most sectors and most of the available evidence, restricting immigration tends to worsen or create labor shortages, though the picture is more nuanced for wages and for a small subset of workers.

The Core Mechanism

Immigrants fill a disproportionate share of jobs in certain industries. The types of jobs likely to need the most workers in coming years are precisely those where immigrants make up a large percentage of the workforce: construction, with about 29% of its workforce foreign born, leisure and hospitality at 20%, and agriculture, also at 20%. When that labor supply is cut off, employers in these industries often cannot find replacement workers quickly enough.

Demographically, this problem is compounding: demographic projections show that, without immigration, the U.S. working-age population will not grow in the years ahead — the U.S. needs to increase immigration levels not only to make up for shortfalls but to ensure a growing labor supply for the rest of this decade.

What Recent Evidence Shows (2025–2026 U.S. Case)

The current U.S. immigration crackdown offers a real-time test case:

•Labor force effects: Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the overall U.S. labor pool, according to several economists. Moody's chief economist Mark Zandi called this shift "definitive."
•State-level comparison: Labor force growth has been "stagnant" in states like Texas and Florida with high immigrant arrests per capita, while "low-arrest" states have seen positive labor force growth in 2025, by contrast.
•Sector impact: Since the start of 2025, job growth in industries heavily reliant on undocumented labor has been weaker than the rest of the private sector, including hotel, restaurant, construction, and health-care industries. The Labor Department warned in October 2025 that these policies risk creating a labor shortage in agriculture, and nationwide, the number of foreign-born workers declined by more than one million between January and August 2025.
•Construction specifically: the U.S. must hire 349,000 more construction workers in 2026 to meet demand, while the U.S. added only 181,000 total jobs in 2025 — a gap that enforcement actions are widening. A key driver isn't just deportations but fear: "A lot of this is likely due to the public perception of ICE activity, and that people are a little bit more fearful than they have been in previous instances."
•Price effects: Shortages translate into costs — the American Farm Bureau predicts a 14.5% food price increase due to critical agricultural worker gaps.

Historical Precedent

This isn't a new pattern. Research on earlier immigration slowdowns found similar effects:

a protracted slowdown in low-skilled immigration from 2007 into the COVID-19 pandemic relates to subsequent wage increases for low-skilled workers, declining educational advancement by young U.S. workers, and labor shortages in low-skilled jobs that can't be moved to other countries, which fueled inflation and contributed to an unbalanced economy.

Similarly, Fed research found that while gradual inflows of immigrants have historically tended to loosen labor markets, the sharp drop in immigration between 2017 and 2021 helped fuel a strong tightening in labor market conditions, with slowing immigration leading to a 5.5 percentage point increase in the vacancy-to-unemployment ratio.

More recently, in industries and states that have struggled to fill positions, the arrival of immigrant workers has eased labor shortages and moderated wage growth, consistent with evidence that lower immigration levels increased job vacancies and drove wage growth.

The Counterargument / Nuance

It's not a universal consensus-free claim. Some officials argue restriction helps native workers: some top administration officials, including Vice President JD Vance, have argued that limiting immigration will raise wages and create more job opportunities for U.S.-born workers.

On wages specifically, economists are split: there is some debate about the effect of immigration on wages — researchers like Harvard's George Borjas have raised concerns about immigration's negative impact on the low-skilled labor pool, while others like economist Giovanni Peri have found that immigration has only a minimal effect on the wages of U.S.-born workers.

However, even researchers studying historical slowdowns caution that effects cut both ways over time — a tighter labor market for native low-skill workers early on offset the shortage of low-wage workers with immigrants, mostly from Mexico, in the 1980s and '90s before slowdowns reversed those gains.

Bottom Line

The weight of recent empirical evidence — from Federal Reserve research, economic consulting firms, and real-time 2025–2026 U.S. labor data — indicates that restricting immigration does tend to produce labor shortages, particularly in construction, agriculture, hospitality, and healthcare, and that these shortages show up as delayed projects, higher consumer prices, and slower overall job growth. The main counterargument is that native-born workers in directly competing low-skill segments may see modest wage gains, though mainstream economic research suggests this effect is smaller than the broader costs of labor shortages and reduced economic growth.

Citations (16)

  1. 1usnews.comNews and mediaquality 0.90
    The Labor Shortage Is Not Going Away and Economists Say Trump’s Proposals Will Make it Worse

    Source excerpt: “But what really matters most is that the types of jobs that are likely to need the most workers in the coming years are precisely those where immigran...”

    statistic, article, points to yes. Claim: Jobs needing most workers are in sectors with high immigrant shares: construction 29% foreign born, leisure and hospitality 20%, agriculture 20%.

  2. 2fwd.usNonprofits and think tanks
    To lower inflation, America needs more immigration to alleviate national labor shortages - Fwd.us

    Source excerpt: “##### The pandemic as preview for longer-term demographic challenges Demographic projections produced by Mason researchers show how demographic factor...”

    evidence, article, points to yes. Claim: Without immigration, the U.S. working-age population will not grow in coming years, per demographic projections.

  3. 3cnbc.comNews and mediaquality 0.85
    Trump immigration policy may be shrinking labor force, economists say

    Source excerpt: “Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the ov...”

    evidence, article, points to yes. Claim: Early evidence suggests administration policy is shrinking the immigrant labor force and contributing to a drawdown in the overall labor pool.

  4. 4cnbc.comNews and mediaquality 0.85
    Trump immigration policy may be shrinking labor force, economists say

    Source excerpt: “Labor force growth has been "stagnant" in states like Texas and Florida with high immigrant arrests per capita, he wrote in an Aug. 4 research note, c...”

    evidence, article, points to yes. Claim: Labor force growth is stagnant in high-arrest states like Texas and Florida, while low-arrest states saw positive growth in 2025.

  5. 5cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “Since the start of 2025, job growth in industries heavily reliant on undocumented labor has been weaker than the rest of the private sector. These sec...”

    evidence, article, points to yes. Claim: Since early 2025, job growth in industries reliant on undocumented labor has been weaker than the rest of the private sector.

  6. 6cfr.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. Nationw...”

    statistic, article, points to yes. Claim: Labor Department warned of agricultural labor shortage risk; foreign-born workers fell by over one million between January and August 2025.

  7. 7fortune.comNews and mediaquality 0.88
    Trump's immigration crackdown is worsening the construction labor shortage threatening build costs

    Source excerpt: “According to the Associated Builders and Contractors, a trade group, the U.S. must hire 349,000 more construction workers in 2026 in order to meet dem...”

    statistic, article, points to yes. Claim: The U.S. must hire 349,000 more construction workers in 2026 while only 181,000 total jobs were added in 2025.

  8. 8fortune.comNews and mediaquality 0.88
    Trump's immigration crackdown is worsening the construction labor shortage threatening build costs

    Source excerpt: ““A lot of this is likely due to the public perception of ICE activity, and that people are a little bit more fearful than they have been in previous i...”

    attribution, article, points to yes. Claim: Fear and perception of ICE activity are a likely driver of construction labor shortfalls.

  9. 9visaverge.comCommercial content
    2026 Labor Shortages: Business Groups Warn of Immigration Impact

    Source excerpt: “- The American Farm Bureau predicts fourteen point five percent food price increases due to critical agricultural worker gaps. ”

    statistic, article, points to yes. Claim: The American Farm Bureau predicts a 14.5% food price increase due to agricultural worker gaps.

  10. 10atlantafed.orgGovernment
    How an Immigration Slowdown Affects US Labor Market, Wages, Economy - Federal Reserve Bank of Atlanta

    Source excerpt: “The paper, "Slowdown in Immigration, Labor Shortages, and Declining Skill Premia," relates the decline in low-skilled immigrant labor to subsequent wa...”

    evidence, article, points to yes. Claim: Slowdown in low-skilled immigration from 2007 linked to wage increases, labor shortages in low-skilled jobs, and inflation.

  11. 11atlantafed.orgGovernment
    How an Immigration Slowdown Affects US Labor Market, Wages, Economy - Federal Reserve Bank of Atlanta

    Source excerpt: “Mandelman, Yang Yu of Shanghai Jiao Tong University, Francesco Zanetti of the University of Oxford, and Andrei Zlate of the Federal Reserve Board of G...”

    attribution, article, points to yes. Claim: Atlanta Fed research on immigration slowdown and labor shortages, authored by economists including Mandelman, Yu, Zanetti and Zlate.

  12. 12frbsf.orgGovernment
    The Role of Immigration in U.S. Labor Market Tightness - San Francisco Fed

    Source excerpt: “While gradual inflows of immigrants into the United States have historically tended to loosen labor markets, the sharp drop in immigration between 201...”

    statistic, article, points to yes. Claim: Sharp immigration drop in 2017-2021 helped tighten labor markets, raising the vacancy-to-unemployment ratio by 5.5 percentage points.

  13. 13kansascityfed.orgGovernment
    Rising Immigration Has Helped Cool an Overheated Labor Market - Federal Reserve Bank of Kansas City

    Source excerpt: “In industries and states that have struggled to fill positions, the arrival of immigrant workers has eased labor shortages and moderated wage growth.^...”

    evidence, article, points to yes. Claim: Immigrant arrivals eased labor shortages and moderated wage growth in industries and states struggling to fill positions.

  14. 14cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “Some top administration officials, including Vice President JD Vance, have argued that limiting immigration will raise wages and create more job oppor...”

    attribution, article, points to no. Claim: Vice President JD Vance and other officials argue limiting immigration will raise wages and create jobs for U.S.-born workers.

  15. 15cfr.orgNonprofits and think tanks
    How Does Immigration Affect the U.S. Economy?

    Source excerpt: “There is some debate about the effect of immigration on wages, however. Some researchers, such as Harvard University’s George Borjas, have raised conc...”

    attribution, article, neutral. Claim: Economists disagree on wage effects: Borjas sees negative impact on low-skilled workers, while Peri finds minimal effect.

  16. 16atlantafed.orgGovernment
    How an Immigration Slowdown Affects US Labor Market, Wages, Economy - Federal Reserve Bank of Atlanta

    Source excerpt: “He began with the drop in US birth rate that started around 1960 and continued for more than 20 years, fueling a shortage of low-wage workers that was...”

    evidence, article, neutral. Claim: Historical slowdowns cut both ways: tight markets helped native low-skill workers early before immigration offset shortages, then gains reversed.