Trump Immigration Policy Could Cause Pandemic-Like Labor Shortages

President Donald Trump’s policies could recreate a shortage that hurt the economy during the pandemic and its aftermath: that of labor.

Trump’s crackdown on immigration since January has driven down the number of people entering the U.S. to work, and could even send the flow of immigrants into the negative for the first time in decades, according to several recent analyses by economists. That could lead to labor shortages, especially in industries like construction and agriculture, where immigrants, both legal and otherwise, do a large percentage of the work.

“The hiring challenges that seemed like an anomaly following the pandemic and even in the late 2010s could increasingly feel like the norm,” Sarah House and Nicole Servi, economists at Wells Fargo Securities, wrote in a commentary.

The analyses shed light on the economic impact of Trump’s immigration policies, which include more enforcement of border crossings, travel bans, restrictions on foreign students at American universities, highly publicized deportations, and ICE raids on worksites to round up laborers.

The spending bill passed by Republicans in the House of Representatives would give the Trump administration more resources to carry out those policies, quintupling spending on immigration enforcement to $185 billion, according to an analysis by the Economic Policy Institute think tank.

Data Shows Immigration Downturn

The foreign-born workforce is already dwindling, according to Wells Fargo’s analysis of survey data from the Bureau of Labor Statistics. The foreign-born workforce shrank by an average of 150,000 people each month in the last four months, compared to an increase of 186,000 per month at the same time last year.

That’s significant because immigrants have become increasingly important to the economy in recent decades. Immigrants, both legal and illegal, make up 19% of the workforce, up from 11% in the late 90s, according to the Wells Fargo analysis. As the native-born population has aged, employers have increasingly relied on immigrants, who tend to be younger, to fill jobs: 36% of native-born people were aged 25-54, compared to 55% of immigrants.

Other experts believe Trump’s immigration policies will have an even more profound effect on the labor force. The U.S. could actually see more immigrants leave the country than enter it this year, according to a forthcoming paper by economists at the centrist Brookings Institution think tank, the Washington Post reported Monday. That would be the first time the U.S. experienced net negative immigration in 50 years.

A return to pandemic-like labor shortages could seriously impact the economy. At the height of worker shortages in mid-2022, employers had a hard time filling positions, with more than two open jobs for every unemployed worker, according to the Bureau of Labor Statistics. That ratio has since fallen to 1.2 to 1, thanks partly to the immigrant surge during the Biden administration.

A serious reduction in immigrant labor would result in “sharp increases in the prices of food and housing, tamping down households’ purchasing power,” researchers led by Celine McNicholas, director of policy and government affairs at the EPI, wrote in April.

Trump’s Turnaround

Trump himself seemingly acknowledged some of those risks last week when he said “changes are coming” to his immigration policies.

Immigration and Customs Enforcement had been directed to temporarily halt raids at farms, restaurants, and hotels, CBS reported over the weekend, citing unnamed sources.

“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” Trump posted on social media last week.