Study Projects Major Economic Slowdown from Immigration Restrictions, Threatening Labor Force and GDP Growth

Immigration Crackdown Could Cost Millions of Workers and Trillions in Economic Output

A comprehensive analysis from the National Foundation for American Policy reveals that current immigration policies could reduce the U.S. workforce by 15.7 million workers and slash economic growth by nearly one-third over the coming decade. The study examines the far-reaching consequences of restrictions on both legal and illegal immigration pathways, painting a concerning picture for American economic competitiveness.

Immigration Crackdown Could Cost Millions of Workers and Trillions in Economic Output
Dual Impact: Legal and Illegal Immigration Restrictions
Policy Mechanisms Driving Workforce Reduction
Economic Consequences Extend Beyond Labor Numbers
Sector-Specific Impacts and Talent Pipeline Concerns
Administration Perspective and Counterarguments
Broader Economic Contributions at Risk

The projected workforce reduction represents one of the most significant labor contractions in modern American history, with immediate effects already visible in current employment data. According to the Bureau of Labor Statistics, the foreign-born workforce has already declined by 1.1 million workers since the beginning of the administration through August.

Dual Impact: Legal and Illegal Immigration Restrictions

The study distinguishes between policies affecting legal versus illegal immigration, with both contributing significantly to the projected workforce shortfall. By 2028, changes to legal immigration policies would account for 2.8 million fewer workers, while restrictions on illegal immigration would reduce the workforce by an additional 4 million.

“With the U.S.-born population aging and growing at a slower rate, immigrants have become an essential part of American labor force growth,” the report emphasizes. This dependency has increased dramatically in recent years, with immigrant workers accounting for 84.7% of labor force growth between 2019 and 2024.

Policy Mechanisms Driving Workforce Reduction

The analysis considers multiple immigration policy changes including:

Reduced refugee admissions and temporary protected status terminations
Travel restrictions affecting 19 countries
Limitations on work authorization for international students
New financial barriers for H-1B visa applicants

These measures collectively restrict both high-skilled and essential workers across numerous sectors. The NFAP study provides detailed methodology behind these projections., according to market trends

Economic Consequences Extend Beyond Labor Numbers

The ripple effects of these policies extend throughout the economy. The Congressional Budget Office had previously projected that removing 290,000 immigrants between 2026 and 2029 could create labor shortages and drive inflation. The NFAP study goes further, projecting that immigration restrictions will lower the average annual economic growth rate from 1.8% to 1.3% between fiscal years 2025 and 2035.

Mark Regets, labor economist and senior fellow at NFAP, challenges the assumption that reducing immigration benefits U.S. workers. “Immigrants both create demand for the goods and services produced by U.S.-born workers and work alongside them in ways that increase productivity for both groups,” he notes in the report.

Sector-Specific Impacts and Talent Pipeline Concerns

The agriculture industry has already acknowledged potential “labor shortage exacerbated by the near total cessation of the inflow of illegal aliens,” according to a Department of Labor filing. However, the talent squeeze extends far beyond agriculture.

Technology companies relying on H-1B visas face significant disruption from new $100,000 fees, affecting major employers like Amazon, Microsoft and Meta. The policies also threaten hundreds of thousands of immigrant workers in information technology, education, and health services.

Nan Wu, research director at the American Immigration Council, warns that the full impact may be even greater than projected. “Given the unprecedented scale of these actions, it’s difficult to quantify the chilling effect they may have on immigrants who might otherwise choose to move to or remain in the United States,” Wu told Fortune.

Administration Perspective and Counterarguments

The White House maintains a different view, emphasizing untapped domestic labor potential. “Over one in ten young adults in America are neither employed, in higher education, nor pursuing some sort of vocational training,” White House spokeswoman Abigail Jackson stated, referencing a July 2024 CNBC analysis. “There is no shortage of American minds and hands to grow our labor force.”, as comprehensive coverage

However, current labor force participation rates don’t support this optimism. The participation rate for U.S.-born workers aged 16 and older actually declined slightly to 61.6% in August from 61.7% last year, despite the reduction in immigrant workers.

Broader Economic Contributions at Risk

According to American Immigration Council research, individuals from the 19 countries affected by travel bans represent significant economic contributions. Households led by recent arrivals from these nations earned $3.2 billion in household income, paid $715.6 million in taxes, and held $2.5 billion in spending power.

These immigrants have been particularly important in sectors facing chronic labor shortages, including hospitality, construction, retail trade, and manufacturing. The combination of reduced workforce numbers and lost economic activity creates a dual challenge for economic growth.

As the debate continues, the study suggests that the long-term economic consequences of immigration restrictions may outweigh any perceived short-term benefits, potentially reshaping American economic trajectory for years to come.