The recent immigration policies from the Trump administration are increasingly weighing down the already struggling labor market, according to economists. The job growth figures expected from the Labor Department on August 1 will likely reflect this trend.
Forecasts from Bloomberg suggest that the U.S. added approximately 109,000 jobs in July—significantly lower than June’s 147,000. This declining figure is part of a continuing trend, with the monthly average standing at around 130,000 for this year.
A dwindling pool of job candidates is a critical factor here. Key industries heavily reliant on foreign-born workers—like agriculture, construction, restaurants, and food production—are feeling the effects as overall demand for jobs remains tepid due to uncertainties surrounding Trump’s tariffs.
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This year has noticed stagnation in food production employment, which had surged after the pandemic, according to figures from the Labor Department. Conversely, construction jobs increased by merely 35,000 in the first half of 2025, a stark decline from 104,000 during the same period last year.
Capital Economics highlighted, “The impact of this immigration crackdown is becoming more severe on the labor supply.”
What’s Going On With Labor Force Participation?
The U.S. labor force—which encompasses people looking for work—shrunk by 130,000 in June, tallying a total decline of 364,000 since January. That places the participation rate for adults at a low 62.3%, the weakest level we’ve seen since December 2022.
While retirements of baby boomers play a part in this constriction, economist Dante DeAntonio of Moody’s Analytics argues that the challenges posed by immigration are overshadowing other factors.
Data shows that detentions by Immigration and Customs Enforcement (ICE) escalated from around 15,000 a month in 2024 to close to 40,000 by early June. Deportations have also surged, increasing from an annualized rate of 400,000 to roughly 600,000, as per Goldman Sachs. Additionally, roughly 100,000 immigrants are voluntarily leaving the U.S. each year, as indicated by research from the same firm.
As a contrast, the government allowed about 300,000 migrants entry for asylum and humanitarian reasons in May and June—a significant drop from last year’s influx of 1 to 2 million. Overall, more than a million foreign-born individuals have exited the labor market over the last four months. In May alone, a striking 5.4 million people stopped working altogether, according to data from Moody’s.
July potentially brought worsened implications due to the Supreme Court’s recent decision to rescind a prior order protecting migrants from immediate deportation without the chance to prove claims of harm in their countries.
Challenges Ahead for U.S. Businesses
Many immigrants have lost their “temporary protected status,” a crucial policy stemming from safety complications in their countries. This loss severely impacts various industries where immigrant labor is predominant, with many foreigners doing essential yet unskilled work in roles such as dishwashing and factory logistics.
Amy Peck, a lawyer in Omaha at Jackson Lewis, reports that the result is visible: companies are losing substantial portions of their workforce. To cope with these challenges, some restaurants are closing earlier or merging locations, while manufacturers are slashing shifts to adjust, frustratingly finding creative haven with reduced staff levels. “It’s a dire situation,” Peck mentions.
Impact of Immigrants on Labor Dynamics
What we are witnessing represents a significant reversal of fortunes. From 2019 to 2024, immigrants accounted for a staggering 88% of the U.S. labor market growth, as per the National Foundation for American Policy. This influx helped manage the worker shortages from pandemic fallout, keeping reinvestment and lower inflation in play.
Is Immigration to the U.S. Dropping?
While the U.S. saw a net immigration range of 2.6 million to 3.3 million between 2022 and 2024, there’s been a stabilization to only about 500,000 leaves annually, as indicated by the Congressional Budget Office and Goldman Sachs. This shift stands in contrast to the roughly 900,000 immigrants prior to the pandemic.
As of June, foreign-born individuals comprised 19.1% of the labor force, slipping from 19.8% in March.
Analysts warn that companies in those affected industries face dire challenges in retrieving lost workers. A study by Moody’s economist Marisa DiNatale emphasizes that this situation might elevate inflation, as businesses inevitably escalate salaries to retain workers and balance out labor costs.
Ultimately, shortcomings in the immigrant labor pool may reduce the nation’s potential economic growth from 2% to 1%, she predicts.
The current trends present a confusing narrative in America’s employment scene. Much of the construction, hospitality, and agricultural fields are grappling to find talent, thrown by immigration restrictions—while in professional sectors, employees are struggling to tentatively find jobs as hiring slows and the economy seems unstable.
Taking this altogether hints that all these job seekers might make it seem like demand is dipping, helping keep the unemployment rate balance from 4.2% to an unusually low 4.1% last June.
Despite flagging growth in jobs, a stable unemployment rate might lead the Fed to postpone interest rate cuts. However, DeAntonio foresees that substantial drops in job growth may force policymakers to reconsider, even if unemployment figures feel stable.
This post was originally published by USA TODAY: How Trump’s Immigration Policies Are Impacting Job Growth in July
