The durability of this low-immigration era remains uncertain. (Courtesy: Reuters)
The United States is witnessing one of the sharpest declines in immigration in modern history, reversing from a record surge just two years ago to what some experts believe could be a net outflow this year. Tighter border enforcement, stepped-up deportations, and a climate of fear among foreign workers are driving the trend. While the short-term effect has kept unemployment low at 4.2 percent, economists warn the long-term consequences could be damaging for growth, the Wall Street Journal reported.
Short-term stability in jobs data
Federal Reserve Chair Jerome Powell recently described the labour market as in “a curious kind of balance.” Demand for workers has slowed, but unemployment has not risen because fewer people are entering the labour force. Immigration has historically supplied much of that workforce, and its abrupt halt means slumping job creation does not translate into higher unemployment. Between May and July, the economy added just 106,000 jobs—its weakest stretch since the pandemic—yet joblessness remained steady.
Long-term risks for growth
Immigrants are now responsible for most of the growth in both the US population and the labour supply. Economists note that without them, the capacity for job creation shrinks dramatically. Apollo Chief Economist Torsten Slok estimates that with zero net immigration, the US could sustainably add only 24,000 jobs per month, compared with an average of 155,000 from 2015 to 2024. This translates directly into lower long-term output, smaller tax revenues, and potentially larger budget deficits.
Evidence of a crackdown
The Trump administration has championed the slowdown, with US Homeland Security Secretary Kristi Noem claiming that 1.6 million unauthorized immigrants have left the country in her first 200 days. Critics dispute that figure, citing unreliable data from household surveys and warning of undercounting caused by immigrants avoiding official questionnaires. Still, deportations and voluntary departures appear to be on the rise, pushing net migration into negative territory for the first time in decades.
Pressure on key industries
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The sectors most affected are those heavily reliant on immigrant labour. Agriculture, construction, hospitality, and landscaping all draw a significant share of their workers from noncitizens, including many without legal authorization. The Agriculture Department estimates 42 percent of crop workers lack documentation. A decline in their numbers threatens to disrupt food supply chains, raise costs, and create bottlenecks in industries already facing worker shortages.
A demographic time bomb
Unlike in the 1960s, when low immigration was offset by the entry of baby boomers into the workforce, today’s America faces a demographic squeeze. Fertility rates are near record lows, and the Congressional Budget Office projects that deaths will outpace births by 2033, seven years earlier than expected. Without new immigrants, the US population will begin to contract, reducing consumer demand and weakening the fiscal base needed to support retirees. Economists expect Trump’s immigration policies to subtract 0.2 percentage point from growth in 2025 and 0.3 point in 2026.
Looking ahead
The durability of this low-immigration era remains uncertain. Migrants stranded in Latin America may attempt to reenter once US policies shift, and some analysts believe net immigration could stabilize at half a million annually. But if the current downturn persists, the US risks becoming a slower, older, and less dynamic economy. As economist Tara Watson noted, “Certainly economies can function with very low population growth. There’s just less dynamism and less income per capita usually in the long run.”