A historic drop in U.S. immigration is reshaping the labor market at the same time employers are adjusting hiring plans and investing more heavily in automation. The shift is national in scope, but it is being felt most clearly in industries that have long depended on foreign-born workers, including construction, transportation, caregiving, and other labor-intensive fields.
Census data show the scale of the immigration decline
The clearest benchmark came on January 27, 2026, when the U.S. Census Bureau said net international migration had fallen sharply from a recent high. In its annual population release, the bureau reported migration dropped from 2.7 million in the year ending June 2024 to 1.3 million in the year ending June 2025, and said current trends point to roughly 321,000 by July 2026. That projection, widely cited in subsequent economic coverage, frames the scale of the change now moving through the labor market.
Brookings Institution researchers have gone further in separate 2026 analysis, estimating the United States may already have experienced negative net migration in 2025. Their January update said net flows could range from negative 295,000 to negative 10,000, adding that continued negative migration in 2026 is likely if policy conditions remain in place. While Census and Brookings use different methods, both point to a far smaller inflow of workers than employers had been operating with just two years earlier.
That decline matters because foreign-born workers remain concentrated in several sectors where employers have struggled to recruit enough staff. The Bureau of Labor Statistics reported in its 2025 annual foreign-born worker release that immigrant workers were more likely than native-born workers to be employed in natural resources, construction, maintenance, transportation, and service jobs. The same report said median weekly earnings for foreign-born full-time wage and salary workers were $1,059 in 2025, or 85.7% of the $1,236 earned by native-born workers.
What is confirmed at the local level is that slower immigration is affecting population growth and labor supply across many metro areas, though the effects are not uniform. Brookings reported this spring that the immigration slowdown contributed to weaker population growth in major metropolitan areas, and Census has separately said most counties still posted positive net international migration even as totals declined. That means local employers may face tighter hiring pools without every market showing outright population loss.
What is not yet known in many communities is the full industry-by-industry effect on vacancies, wages, and output. No single federal release has provided a comprehensive local roster of which counties or metro areas are experiencing the largest labor shortfalls tied directly to the decline from 2.7 million to 321,000. The available data instead show broad patterns: slower growth, reduced labor force expansion, and pressure on sectors that historically relied on newly arrived workers.
Federal Reserve reporting suggests some areas are already adjusting in different ways. In the New York Fed’s May 2026 Beige Book summary, contacts said technology and AI were reshaping staffing decisions, in some cases reducing hiring needs while creating demand for different skills. That does not mean AI is replacing all missing labor, but it does show employers are responding to labor constraints with technology as well as wage offers and recruiting changes.
Economists cited by Fortune and other outlets have tied the immigration slowdown first to federal policy and then to a mismatch in the jobs available. Mark Zandi of Moody’s said native-born workers do not automatically move into many of the physically demanding, lower-paid, or remote jobs long filled by immigrants, especially at current wage levels. That helps explain why lower immigration has not produced a simple one-for-one substitution in the labor market.
Federal Reserve Bank of New York researchers added another layer in a May 26, 2026 analysis of wage inflation. They found most industries have seen wage growth slow since 2022, but construction and mining have remained stronger than the broader economy. The researchers said that pattern could reflect sustained demand tied to AI data center construction, and that reduced immigration may also be contributing because construction has historically relied on immigrant labor.
For residents and consumers, the practical takeaway is that labor shortages may not disappear simply because immigration falls. Some employers may raise pay, trim hiring plans, delay expansion, or adopt more technology, including AI-enabled systems, to keep operating with fewer available workers. Brookings said weaker immigration is likely to weigh on employment growth, GDP, and consumer spending, while the Census Bureau’s January release made clear that the migration slowdown is now a central part of the country’s economic picture.