Immigration Surge Boosts US Labor Force, Crackdowns May Slow Growth

New research shows immigrant labor is fueling job creation, but policy shifts could dampen economic expansion.

Published on Feb. 22, 2026

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A new study from the Federal Reserve Bank of San Francisco found that the surge in foreign arrivals under the Biden administration is bolstering the U.S. economy, particularly in sectors like manufacturing and construction facing labor shortages. In contrast, the Trump administration's efforts to curb unauthorized immigration had a dampening effect on employment growth. The Congressional Budget Office also forecasts that slowing immigration will act as a drag on economic expansion in the coming decade.

Why it matters

Understanding the relationship between immigration and economic growth is crucial for businesses planning future expansion and investment. The influx of immigrant workers is helping to fill labor shortages in key industries, but policy shifts that restrict immigration could slow that growth.

The details

Researchers analyzed data on arrivals and departures of working-age immigrants across U.S. counties, finding that a 1% increase in the local unauthorized workforce raises local employment by 0.92%. This suggests immigrants are filling jobs that domestic workers are unwilling to take. The study compared the Biden administration's high entry period from 2021-2024 to the Trump administration's crackdown from 2024-2025, finding the latter reduced employment in industries facing labor shortages.

  • The study analyzed data from March 2021 to March 2024 under the Biden administration.
  • The study also looked at the period from March 2024 to March 2025 under the Trump administration.

The players

Federal Reserve Bank of San Francisco

The regional Federal Reserve bank that conducted the research on the impact of immigration on the U.S. labor force and economy.

Daniel Wilson

An economist at the Federal Reserve Bank of San Francisco and co-author of the study.

Xiaoquing Zhao

An economist at the Federal Reserve Bank of Dallas and co-author of the study.

Congressional Budget Office (CBO)

The non-partisan federal agency that provides budget and economic analysis to Congress, echoing the Fed's findings on the economic impact of slowing immigration.

Milton Friedman

The late economist whose views on the benefits of unauthorized immigration align with the study's conclusions.

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What’s next

The Congressional Budget Office predicts that slowing immigration will act as a drag on U.S. economic expansion over the next decade.

The takeaway

This research highlights the critical role immigrants play in filling labor shortages and fueling economic growth, underscoring the potential consequences of restrictive immigration policies for businesses and the broader economy.