Will stopping immigration cause labor shortages?

Will stopping immigration trigger labor shortages? I'll pull the latest research on how immigration shapes the workforce.

Stopping immigration would very likely cause - and according to most recent data already is causing - labor shortages, especially given current U.S. demographics. The degree depends on how completely and how long immigration is stopped, and on offsetting factors like automation and wage adjustments.

1. Yes, broad economic consensus: less immigration = smaller labor force

> The United States faces a near-term structural contraction in its civilian labor force — a first in modern economic history. The cause is a convergence of Baby Boomer retirements, below-replacement birth rates, and a sharp reduction in net immigration under restrictive federal policy since 2025.

Why demographics make immigration critical now:

•Native-born labor supply growth has flattened, a result of a fertility rate — around 1.6 births per woman — that has sat below the 2.1 replacement threshold for over fifteen years.

•Net migration historically offset this, adding working-age people directly into the labor pool.

•Without offsetting migration, the workforce contracts on a sustained basis.

•Implication: "without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking. The prime-age labor force grew in large part because of immigration".

Recent scale of decline:

•Net migration dwindled from 2.7 million in 2024 to an expected 321,000 in 2026 according to U.S. Census Bureau estimates.

•Goldman Sachs analysis shows net migration has fallen 80% from the historical baseline, plunging from an average of about 1 million people per year in the 2010s to just 200,000 projected for 2026.

•Data shows the foreign-born labor force has declined by about 1.2 million people since January.

•From January to July 2025, more than 1.2 million immigrants left the U.S. workforce, worsening sector shortages.

> Reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks.

Labor shortages in key industries including health care and construction have plagued the U.S. economy since the COVID-19 pandemic, in large part due to a decline in immigration during the pandemic.

Projections if restrictions continue:

•Analysis projects policies have reduced the labor force by an estimated 6.8 million workers by 2028.

•The foreign-born workforce decline is a confirmed drawdown contributing to that contraction.

•A mass deportation on the scale advocated could permanently shrink the U.S. economy by as much as 6 percent by contracting labor markets.

•Social Security operates with roughly 2.7 active workers per beneficiary today. Under negative net-migration scenarios, CBO projects this ratio falling toward 2.1 by 2035.

2. Sectoral impact is uneven - most severe where immigrants are concentrated

Immigrants fill both low-skilled jobs that complement native-born U.S. workers and high-skilled jobs where domestic supply falls short of demand.

Sectors most dependent:

•With immigrant workers comprising 25% of construction labor, 66% of agriculture workers, and 15–28% of healthcare staff.

•Specific industries rely heavily on immigrant talent. Agriculture leads this dependency, with foreign-born workers comprising 73% of the agricultural labor force.

•Agriculture's labor crisis is acute: 47% of its workforce lacks work authorization.

•Healthcare's immigrant workforce—15% of nurses and 27% of aides—faces similar pressures.

Consequences already reported: enforcement actions in 2025–2026 produced reported labor shortfalls, unfinished harvests, and slowed construction projects. Labor shortages have delayed projects, increasing costs by $10.8 billion annually and a 2024 study estimates 19,000 fewer single-family homes were built in 2024 due to workforce gaps.

3. Why native workers do not simply fill the gap

Proponents say fewer immigrants will translate into more economic opportunities for native-born workers, but research finds the opposite:

•Economic research shows immigration has little to no negative effect and even some positive effect on employment for native-born workers.

•Immigrants and native-born workers frequently work in jobs that are complementary, supporting employment for those workers rather than taking away opportunities.

•People create jobs as well as fill them; there are not a set number of jobs which, when filled, will disappear.

•There is little evidence that closed borders are boosting employment for US-born workers. That squeeze coincided with a rise in joblessness among the native-born.

•A recent analysis puts the total number of jobs eliminated by the offensive at 668,000. Of the 668,000 jobs lost, an estimated 51,000-297,000 would have been held by American-born workers.

•Removing immigrant workers tends to lower, not raise, native-born employment and wages. Deportation shrank the pie rather than redistributing it.

•A reduction in immigration is associated not only with a reduction in native-born employment but also a reduction in wages for native-born and incumbent immigrant workers alike.

Historical examples:

•The deportations of Mexican immigrants during the Great Depression were found to decrease native-born employment.

•The "bracero exclusion" in 1964, which removed nearly half-a-million Mexican agricultural workers, did not result in the promised boost to native-born farm wages and employment. Instead, jobs were either replaced by machines or eliminated entirely.

4. Counter-arguments and nuances

Not all economists agree shortages will be permanent or catastrophic, and adjustment mechanisms exist:

•Automation / capital substitution: Theory predicts firms replace labor with automation as labor costs rise. In practice, that substitution is slow and uneven. Elder care, skilled trades, and seasonal harvesting currently resist automation at any near-term cost. Many industries that rely on immigrant labor cannot automate or offshore the work.

•Wages and domestic recruitment: Some argue stopping unskilled immigration forces employers to raise wages, expand training, and bring underutilized domestic workers into the workforce, though evidence suggests when workers disappear, employers do not instantly replace them with native-born workers at higher pay. Employers who cannot fill them cut output, automate where they can, relocate, close, or raise prices.

•Lag effect: Oxford Economics notes the crackdown on unauthorized immigration has the potential to tighten labor market conditions, but our analysis shows this has yet to unfold. Lags between migration and joining the labor market mean the impact of slowing migration is delayed but not postponed indefinitely.

> Most mainstream forecasters describe the enforcement-first approach as having imposed real, avoidable costs: sectoral labor shortfalls, accelerated entitlement strain, and inflation in essential services, for wage gains are too narrow and too slow to offset those costs.

Bottom line

In an economy with an aging population, below-replacement fertility, and already tight labor markets, stopping immigration would not create a surplus of jobs for natives — it would shrink the total labor supply. Shortages would be most acute in agriculture, construction, hospitality, and healthcare elder-care, lead to higher prices, delayed housing and infrastructure, and lower overall GDP, while doing little to improve native-born employment or wages in the short to medium term. Over the very long term, higher wages could incentivize some automation and domestic labor force participation, but research suggests that transition would be slow, costly, and incomplete.

Citations (3)

1linkedin.comSocial media and video
MACROECONOMIC POLICY DEEP DIVE
Backs: “The United States faces a near-term structural contraction in its civilian labor force — a first in modern economic history. The cause is a convergence of Baby Boomer retirements, below-replacement birth rates, and a sharp reduction in net immigration under restrictive federal policy since 2025.”
2equitablegrowth.orgNonprofits and think tanks
Economic research shows immigration is good for U.S. workers, the economy, and affordability
Backs: “Implication: "without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking. The prime-age labor force grew in large part because of immigration". Recent scale of decline:”
3ainvest.comNot yet classified
Immigration Policy and Labor Shortages: Navigating Sector Vulnerabilities and Tech-Driven Opportunities
Backs: “Immigrants fill both low-skilled jobs that complement native-born U.S. workers and high-skilled jobs where domestic supply falls short of demand. Sectors most dependent:”