President Donald Trump‘s stringent immigration policies have resulted in a significant decline in the U.S. labor force, impacting various sectors and potentially contributing to inflation, experts warn.
US Job Growth Slows As Immigrant Workforce Drops Sharply
The U.S. labor force has seen a decline of over 1.2 million immigrants from January to July, as per preliminary Census Bureau data analyzed by the Pew Research Center. This figure encompasses both legal and undocumented residents. Immigrants account for nearly 20% of the U.S. workforce, representing 45% of those in farming, fishing, and forestry, 30% of construction workers, and 24% of workers in the service sector, reported AP News.
These losses come at a time when the overall immigrant population in the U.S. is declining for the first time, following a peak of 14 million in 2023. The reasons for this decline are not entirely clear, but it is believed to be due to a combination of voluntary departures, underreporting, and immigration enforcement actions. Meanwhile, illegal border crossings have sharply declined under Trump’s policies.
Experts warn that this decline in immigrant workers is having a significant impact on the U.S. job market. Pia Orrenius, a labor economist at the Federal Reserve Bank of Dallas, noted that immigrants usually account for at least half of U.S. job growth. She added, “That has had a huge impact on the ability to create jobs.”
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Immigration Crackdown Could Drive Inflation And Supply Shocks
The decline in the immigrant labor force is not a new concern. Earlier in June, Deutsche Bank warned that the ongoing immigration crackdown and subsequent decline in numbers were causing a more severe negative supply shock to the economy than the tariffs imposed by Trump.
This was further supported by the Moody’s Chief Economist, who stated that the immigration policies could potentially cause inflation to rise from the current 2.5% to almost 4% by the start of the next year.
Trump’s immigration policies have also sparked a debate on the fundamental role of immigrants in the U.S. economy. In a recent podcast, Anthony Scaramucci emphasized that the U.S. was built by “risk-taking immigrants” and will never be a country where everyone is safe and happy.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
