Will stopping immigration cause labor shortages?

Short answer: Often yes, especially in certain sectors — but it's nuanced and debated among economists.

There's substantial real-world evidence from the current U.S. experience (2025–2026), where immigration enforcement intensified and net migration collapsed:

The evidence pointing to labor shortages

Current sector-specific shortages are documented. The Federal Reserve's own regional surveys found supply tensions: the Federal Reserve's Beige Book from October 2025 identified labour supply tensions in agriculture, construction, hospitality and manufacturing associated with changes in migration policy, with explicit mentions of hiring difficulties, delays in certain projects and wage pressures in specific regional markets.

Agriculture is hit hard. In agriculture, foreign-born workers comprise approximately 70% of the farm workforce nationwide, and many farms report difficulty finding enough workers during critical harvest periods, a challenge that has intensified in 2025 due to increased interior enforcement. This causes a significant share of edible produce going unharvested, increasing food waste, lowering yields, and raising costs for producers.

Construction and hospitality are also squeezed. About 34% of construction workers are immigrants, versus the 20% average across all sectors — and in trades like drywall installers or plasterers, the share is closer to 60%. Hotels and restaurants in major tourist destinations have long relied on immigrant labor, and the combined effects of increased deportations and reduced migration have made staffing significantly more difficult, resulting in reduced capacity and higher operating costs.

Job growth has slowed disproportionately in immigrant-heavy industries. Job growth among industries that rely more heavily on undocumented immigrants has been "significantly weaker" than in the rest of the private sector — industries such as hotels, restaurants, construction and home health aides saw flat job growth since the start of 2025, with 0% growth in July.

This pattern repeated history. During a previous immigration slowdown (2016–2021), the flow of foreign workers to the U.S. economy declined since 2016 due to restrictive policies, further worsened by COVID-19 travel restrictions, bringing immigration to historic lows. Research found industries with a larger share of foreign-born workers in 2015 tended to experience more significant increases in job vacancy rates from 2016 to 2021 — for example, construction and leisure and hospitality had above-average foreign worker shares and above-average vacancy rate increases.

The counterargument: it's not that simple

Not all economists agree the shortfall is the main driver of recent labor market weakness. The Minneapolis Fed found that declining net immigration accounts for 40 to 60 percent of the recent drop in U.S. job growth, while states and sectors with more unauthorized workers actually saw relatively higher payroll growth, and real wage growth was slowing more for low-income workers despite lower competition from immigrant labor — suggesting weak overall labor demand (not just reduced supply) explains much of the slowdown too. Similarly, a Spanish research note concluded while there is currently no widespread labour shortage or any significant impact on overall wages, the effects are already visible in certain sectors and regions where the percentage of foreign labour is higher.

The longer-term demographic angle

Beyond short-term sector shortages, there's a structural concern: without new immigration, the U.S. working-age population ages 16 to 64 would have started to decline in 2012, and past immigration has prevented the U.S. working-age population—and in turn the labor force—from declining; continued reductions in immigration would dampen labor force growth going forward, since native birth rates alone aren't high enough to sustain the workforce.

Bottom line

Stopping or sharply reducing immigration doesn't cause a shortage in every job or sector — overall unemployment can remain low, and weak demand can mask some effects. But it reliably creates concentrated shortages in specific industries that have historically depended heavily on immigrant labor — agriculture, construction, hospitality, food processing, and caregiving — leading to higher costs, unfilled positions, and in agriculture's case, crop losses. Over the longer run, given aging demographics and low native birth rates, sustained reductions in immigration are likely to shrink the overall labor force and slow economic growth, even if short-term effects are debated.