Drop in Unauthorized Immigration Slows Job Growth, SF Fed Paper Finds

Research shows construction and manufacturing sectors hit hardest by decline in unauthorized workers.

Published on Feb. 20, 2026

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A new study from the San Francisco Federal Reserve has found that the recent drop in unauthorized immigration to the United States has slowed employment growth, particularly in the construction and manufacturing sectors. The research links the slowdown in job creation to the sharp decline in unauthorized immigrant worker flows, which began in March 2024 after a rapid rise in 2021.

Why it matters

The findings could have significant implications for the job market outlook and housing affordability, given the ongoing crackdown on immigration during the Trump administration's second term. The study suggests that as long as the decline in unauthorized immigrant workers continues, U.S. employment growth is likely to face continued downward pressure.

The details

The study looked at the rise in unauthorized immigrants beginning in 2021 and the subsequent slowdown that started in March 2024. It found that local job growth grew and then shrank in lockstep with those immigration trends. The impact was particularly notable in the construction sector, suggesting that falling unauthorized immigrant worker flows could be slowing residential construction and housing supply growth.

  • The rapid rise in unauthorized immigration began in 2021.
  • The slowdown in unauthorized immigration started in March 2024.
  • Revisions to jobs data published last week showed the U.S. economy added only 181,000 jobs in 2025, a fraction of the 1.459 million jobs added in 2024.

The players

San Francisco Federal Reserve

The regional Federal Reserve bank that conducted the research on the impact of unauthorized immigration on job growth.

Donald Trump

The former U.S. president whose administration has implemented a crackdown on immigration, which the study suggests is contributing to the slowdown in employment growth.

Joe Biden

The former U.S. president whose term ended in 2024, during which the rapid rise in unauthorized immigration occurred.

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What they’re saying

“On average, places experiencing the biggest slowdowns in unauthorized immigration saw the biggest slowdowns in employment growth in construction, manufacturing, and other services.”

— Daniel Wilson, Fed Economist (Reuters)

“The effect for the construction sector is particularly notable, because it suggests that falling UIWF (unauthorized immigrant worker flows) in recent months could be slowing residential construction and hence slowing down the growth of housing supply.”

— Xiaoqing Zhou, Fed Economist (Reuters)

“U.S. employment growth is likely to face continued downward pressure as long as the ongoing declines in unauthorized immigrant worker flows continue.”

— Daniel Wilson and Xiaoqing Zhou, Fed Economists (Reuters)

What’s next

The findings of this study could prompt further research and analysis on the long-term economic impacts of changes in unauthorized immigration patterns.

The takeaway

This study highlights the significant role that unauthorized immigrant workers have played in supporting employment growth, particularly in key sectors like construction and manufacturing. As the crackdown on immigration continues, the resulting decline in unauthorized worker flows is likely to have ongoing negative consequences for the U.S. job market and housing affordability.