Will stopping immigration cause labor shortages?

Leans yesSays it is contested

Short answer: Often yes — especially in specific sectors and regions — but the overall picture is nuanced and depends on demographics, the sector, and how labor demand responds.

The case for "yes, it causes shortages"

Sector-specific effects are well documented. When immigration flows slow sharply, industries that rely heavily on foreign-born labor tend to feel it first and hardest:

•Agriculture: in which 68 percent of farm laborers for fiscal year 2021–22 were foreign-born—could suffer as the administration's immigration crackdown continues. Immigrant workers account for 43 percent of farm workers... A substantial portion of these jobs are filled by undocumented workers—for example, 42 percent of crop workers are undocumented because of limits on the H2A temporary visa program for farm workers and the lack of interest by U.S.-born workers.

•Construction: The construction industry is already facing a shortfall of 500,000 workers, according to Harvard research. Nearly 29 percent of construction workers are immigrants, and ongoing policy changes create uncertainty and risk further labor losses. A Bank of America Institute report noted that average wage growth in July approached 8% in the construction industry, nearly double the national average... "Immigration actions could potentially deepen workforce shortages, drive up costs and create serious financial risks for contractors".

•Demographic/aging workforce: Harvard economist Marco Tabellini argues sudden new immigration restrictions could considerably damage the country's ability to adjust to an aging labor force that is expected to shrink dramatically in the coming years... Immigrants can help maintain the workforce by replacing aging workers.

Recent U.S. evidence: Since 2025 immigration enforcement intensified, job growth in industries heavily reliant on undocumented labor has been weaker than the rest of the private sector. These sectors include the hotel, restaurant, construction, and health-care industries. The Labor Department warned in October 2025 that the Trump administration's immigration policies risk creating a labor shortage in the sector. Nationwide, the number of foreign-born workers declined by more than one million between January and August 2025. A National Bureau of Economic Research study found for every ICE arrest, six likely undocumented male workers stop working.

The counterargument: immigration can also create its own demand, offsetting the fix

A more surprising body of research — particularly from Canada — complicates the simple story:

•The expanding pool of immigrant workers certainly helped employers fill their job openings by increasing the labour supply. But this increase in workers also boosted consumption and investment, thus driving up labour demand. So while rising immigration eased labour shortages for businesses that hired newcomers, the overall increase in economic activity that it enabled also intensified competition in other sectors.

•The net result in Canada: There is no evidence that more immigration has reduced economy-wide labour shortages; in fact, it likely has made them more severe, according to that analysis.

•Similarly, a C.D. Howe study concluded the macroeconomic evidence from this study indicates that, on balance, the increase in demand generated by immigration has more than likely outpaced the additional supply.

This means the relationship isn't simply "more immigrants = fewer shortages" or "fewer immigrants = more shortages" at the whole-economy level — immigrants are both workers and consumers, so they add to labor demand even as they add to labor supply.

What about wages for native workers?

The core argument for restricting immigration is that it should boost wages for native-born workers by reducing competition. The evidence here is weak:

•Comprehensive reviews, including the 2017 National Academies of Sciences, Engineering, and Medicine report The Economic and Fiscal Consequences of Immigration, conclude that the long-term impact of immigration on the wages and employment of native-born workers overall is very small.

•Economist Giovanni Peri found that immigration has only a minimal effect on the wages of U.S.-born workers.

•Recent U.S. data actually shows the opposite of the intended effect: U.S.-born workers are negatively impacted by reduced immigration—the unemployment rate for U.S.-born workers increased from 4.3 percent in January 2025 to 4.7 percent in January 2026, according to the National Foundation for American Policy.

Broader economic costs

Beyond specific labor shortages, reduced immigration flows are linked to slower growth and higher prices:

•The administration's enforcement policies could decrease the amount of goods and services produced domestically... This could cut annual economic growth by almost one-third by 2035, according to an October 2025 study by the nonpartisan National Foundation for American Policy.

•Early evidence suggests the recent expansion in immigration enforcement has worsened inflation in product categories more reliant on immigrant labor while failing to produce promised employment and wage gains for native-born workers... labor supply constraints in deportation-impacted industries is contributing to soaring prices for some products and services.

Bottom line

Stopping or sharply curbing immigration tends to cause real, visible shortages in specific sectors — agriculture, construction, hospitality, caregiving, and health care in particular — where immigrant labor makes up a large share of the workforce and native-born workers have historically been reluctant to fill the gap. It's also likely to be especially disruptive for aging societies that rely on immigration to offset shrinking native-born working-age populations.

However, at the whole-economy level, the effect is less clear-cut: some research (especially from Canada) suggests that immigration simultaneously increases labor demand (through spending, housing needs, etc.), meaning more immigration doesn't necessarily eliminate shortages — and conversely, less immigration doesn't automatically translate into abundant jobs for native workers, since that demand-side effect shrinks too. Most mainstream economic research finds immigration has only a small effect on native wages/employment, so the promised "wage gains" from restricting immigration tend not to materialize strongly, while the shortage, price, and growth costs tend to be more immediate and measurable.

Citations (16)

1cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “Experts say the agricultural industry in particular—in which 68 percent [PDF] of farm laborers for fiscal year 2021–22 were foreign-born—could suffer ...”
statistic, article, points to yes. Claim: 68 percent of farm laborers in fiscal 2021–22 were foreign-born, so agriculture could suffer from the immigration crackdown.
2econofact.orgAcademic
How Tighter Curbs on Immigration Impact the U.S. Economy
Source excerpt: “** Immigrant workers account for 43 percent of farm workers, 30 percent of food production and processing workers, 28 percent of construction workers,...”
statistic, article, points to yes. Claim: Immigrant workers account for 43 percent of farm workers and large shares of other sectors' workforces.
3wes.orgNonprofits and think tanks
The Economic Impact of Immigration Enforcement - WES
Source excerpt: “#### Construction The construction industry is already facing a shortfall of 500,000 workers, according to Harvard **research**. Nearly 29 percent of ...”
statistic, article, points to yes. Claim: Construction already faces a 500,000-worker shortfall; nearly 29 percent of construction workers are immigrants.
4cnbc.comNews and mediaquality 0.85
Trump immigration policy may be shrinking labor force, economists say
Source excerpt: “Average wage growth in July approached 8% in the construction industry, nearly double the national average, according to the report. "Immigration act...”
statistic, article, points to yes. Claim: Construction wage growth approached 8% in July, and immigration actions could deepen workforce shortages and raise costs.
5hbs.eduAcademic
Economics and Global Commerce
Source excerpt: “Sudden new immigration restrictions could considerably damage the country’s ability to adjust to an aging labor force that is expected to shrink drama...”
attribution, article, points to yes. Claim: Marco Tabellini argues sudden restrictions could damage the ability to adjust to an aging, shrinking labor force.
6cfr.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 2025, job growth in industries reliant on undocumented labor has been weaker than the rest of the private sector.
7cfr.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...”
evidence, article, points to yes. Claim: The Labor Department warned of labor shortage risk, and foreign-born workers fell by over one million between January and August 2025.
8forbes.comNews and mediaquality 0.83
America Is Shrinking Its Workforce At The Worst Possible Time
Source excerpt: “A new National Bureau of Economic Research study found that for every ICE arrest, six likely undocumented male workers stop working. ”
statistic, article, points to yes. Claim: An NBER study found each ICE arrest leads six likely undocumented male workers to stop working.
9cdhowe.orgNot yet classified
Why More Immigration Didn’t Solve Canada’s Labour Shortages
Source excerpt: “# Why More Immigration Didn’t Solve Canada’s Labour Shortages ### Files The expanding pool of immigrant workers certainly helped employers fill their ...”
evidence, article, neutral. Claim: Immigrant workers helped fill vacancies but also boosted consumption and investment, raising labour demand in Canada.
10cdhowe.orgNot yet classified
Why More Immigration Didn’t Solve Canada’s Labour Shortages
Source excerpt: “There is no evidence that more immigration has reduced economy-wide labour shortages; in fact, it likely has made them more sev”
evidence, article, points to no. Claim: No evidence that more immigration reduced economy-wide labour shortages in Canada; it likely made them more severe.
11cdhowe.orgNot yet classified
The Immigration Paradox: How an Influx of Newcomers Has Led to Labour Shortages
Source excerpt: “The macroeconomic evidence from this study indicates that, on balance, the increase in demand generated by immigration has more than likely outpaced t...”
evidence, article, points to no. Claim: Demand generated by immigration has more than likely outpaced the additional supply.
12substack.comBlogs and newsletters
Immigration Restrictions and Labor Market Impacts
Source excerpt: “Comprehensive reviews, including the 2017 National Academies of Sciences, Engineering, and Medicine report The Economic and Fiscal Consequences of Imm...”
attribution, article, neutral. Claim: The 2017 National Academies report concluded immigration's long-term effect on native-born wages and employment is very small.
13cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “Others, such as economist Giovanni Peri, have found [PDF] that immigration has only a minimal effect on the wages of U.S.-born workers. ”
attribution, article, neutral. Claim: Giovanni Peri found immigration has only a minimal effect on U.S.-born workers' wages.
14wes.orgNonprofits and think tanks
The Economic Impact of Immigration Enforcement - WES
Source excerpt: “Recent **economic data** from the National Foundation for American Policy show that U.S.-born workers are negatively impacted by reduced immigration—t...”
statistic, article, points to yes. Claim: U.S.-born unemployment rose from 4.3 percent to 4.7 percent as immigration fell, per the National Foundation for American Policy.
15cfr.orgNonprofits and think tanks
How Does Immigration Affect the U.S. Economy?
Source excerpt: “The administration’s enforcement policies could decrease the amount of goods and services produced domestically—a major component of gross domestic pr...”
evidence, article, points to yes. Claim: Enforcement policies could cut domestic output and annual economic growth by almost one-third by 2035.
16equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability - Equitable Growth
Source excerpt: “Early evidence suggests the recent expansion in immigration enforcement has worsened inflation in product categories more reliant on immigrant labor w...”
evidence, article, points to yes. Claim: Enforcement has worsened inflation in immigrant-reliant product categories without delivering employment or wage gains for native-born workers.