Trump Policy Shrinks Immigrant Labor, US Economy Concerned

Economists Mark Zandi of Moody's and Nancy Vanden Houten of Oxford Economics confirm this "definitive" and "dramatic" downward shift. A J.P. Morgan analysis shows foreign-born worker participation fell 1.2 percentage points, compared to 0.3 percentage points for native-born workers.

Jed Kolko, a senior fellow at the Peterson Institute, notes job growth in immigrant-heavy industries like hotels, restaurants, construction, and home health aides has been flat since early 2025, while the rest of the private sector slowed to a 0.6% pace in July. Matthew Martin of Oxford Economics links stagnant labor force growth in high-arrest states such as Texas and Florida to increased immigrant arrests, which have tripled nationwide since 2024 to over 1,100 per day.

Federal Reserve Chair Jerome Powell cited immigration policy as a factor in the labor supply slowdown. A sustained decline in the labor force poses significant concerns for U.S. economic growth, productivity, and tax revenue for programs like Social Security, as the Congressional Budget Office projects population shrinkage without immigration starting in 2033.

The construction industry, with 34% immigrant workers, faces wage inflation, with average wage growth approaching 8% in July, nearly double the national average, according to a Bank of America Institute report. Michael Strain of the American Enterprise Institute expresses skepticism about a prolonged reduction, noting no net-out migration occurred in Trump's first term.