Will stopping immigration cause labor shortages?

Whether halting immigration causes labor shortages depends heavily on a country's demographics, economic structure, and which sectors are examined. Here's a nuanced breakdown:

The Case For Labor Shortages

Demographic math matters. In countries with aging populations and low birth rates, immigration has been a primary driver of workforce growth. When immigration flows stop, the working-age population can shrink as retirements outpace the entry of native-born young workers into the labor force.## Short Answer: Yes, in Most Cases—Especially in Specific Sectors

The evidence strongly suggests that sharply curtailing immigration does create labor shortages, particularly in certain industries, though the broader economic picture is more nuanced than a simple "yes/no."

Evidence from the Real-World U.S. Case (2025-2026)

The U.S. has essentially run this experiment in real time under renewed immigration restrictions. The results are informative:

Scale of the labor force effect: The United States experienced negative net migration in 2025 for the first time in at least decades, with estimated net flows of –295,000 to –10,000 for the year. In recent years, growth in the U.S.-born working-age population has been weak, and nearly all growth in the labor force has stemmed from immigration flows.

Sector-specific shortages are real and measurable:

Broader economic evidence: Research from the Minneapolis Fed found that all 13 major sectors of the economy experienced declines in employment growth, with construction, transportation and warehousing, leisure and hospitality, manufacturing, business services, and retail employing 78% of unauthorized workers. Projections suggest the Trump administration's immigration crackdown could reduce the U.S. workforce by 6.8 million people by 2028 and by 15.7 million by 2035.

The Counterargument

Not everyone agrees labor shortages are the main story. The White House has argued that limiting immigration will raise wages and create job opportunities for U.S.-born workers, contending these workers are available to counter shortages, with no shortage of "American minds and hands." Some economists, like Giovanni Peri, have found that immigration has only a minimal effect on the wages of U.S.-born workers—suggesting the reverse (restriction boosting wages) might also be limited.

Interestingly, Minneapolis Fed research complicates the "shortage" narrative somewhat: the share of workers employed has declined while those not in the labor force has increased, rather than a clean shift toward unemployed natives filling vacant immigrant jobs—a sign of a generally discouraging hiring market rather than simple shortage-driven opportunity.

Why Shortages Are Likely in Specific Sectors

Several factors explain why certain industries are hit hardest:

Bottom Line

Stopping or sharply reducing immigration doesn't necessarily create a shortage of jobs overall, but it does create genuine labor supply shortages in specific, immigrant-concentrated sectors—agriculture, construction, hospitality, healthcare, and manufacturing—especially in the short-to-medium term. The disconnect between where native-born workers want to work and where the economy needs labor means restriction tends to produce higher costs, project delays, and reduced output in those industries rather than a smooth reallocation of native workers into vacant immigrant jobs. Whether this constitutes a "shortage" in the economy-wide sense is more contested, but at the sectoral level, the real-world 2025-2026 U.S. experience provides fairly clear evidence that it does.