Experts are trying to estimate how Trump’s immigration policy will affect the US labor market. Indeed, it is the million-dollar question! According to analysts at Wells Fargo, recent efforts by the White House to curb immigration have contributed to a slowdown in employment. This arouses serious concern among economists.
Recent data reveals that the number of foreign workers in the US declined by 150,000 over the past four months. It sharply contrasts the same period in 2024, when the number of foreign workers increased by 186,000.
An 88% drop in border crossings compared to last year, along with the closure of previously available pathways for temporary stay in the US, has choked off the flow of new workers. Meanwhile, the average rate of deportations has remained relatively stable compared to Biden’s administration. However, a rise in immigration-related detentions suggests that deportations may increase in the coming months.
The fierce immigration raids have sparked widespread protests, with demonstrations erupting from Los Angeles to Chicago, New York, and other major cities nationwide.
Immigration has emerged as a central political issue, especially since undocumented immigrants and those on temporary visas make up a substantial portion of the US population. According to Wells Fargo analysts, the post-COVID inflow of such individuals helped ease the labor shortage in the US, particularly in agriculture, construction, and service sectors.
“Nearly halting immigration and sluggish domestic population growth will keep the potential labor pool historically constrained. Deportations will have a moderate impact. As a result, hiring difficulties — once seen as a post-pandemic anomaly or a late-2010s blip — will increasingly be viewed as the new normal,” analysts suggest.
This labor supply contraction could coincide with weaker labor demand. Wells Fargo forecasts that the US unemployment rate will peak at around 4.5% in 2025. In the recent NFPs, the US jobless rate stood at 4.2% in May of this year.
