Sharp drop in foreign-born workers raises concerns over US economic growth

The US economy is grappling with a sharp decline in foreign-born workers , raising concerns among economists that restrictive immigration policies are weighing on job creation and overall growth.

A new analysis by the National Foundation for American Policy (NFAP), based on Bureau of Labor Statistics (BLS) data, found that the number of foreign-born workers in the US has fallen by 1.1 million since January 2025, the start of the Trump administration, and by 1.5 million since a peak in March 2025. By contrast, between 2014 and 2024, the foreign-born labour force grew by an average of 652,000 workers annually.

Overall nonfarm payroll employment increased by only 22,000 in August, a figure many analysts see as evidence of weakening job growth. “It is wrong to assume that shrinking immigration helps U.S. workers when job growth slows,” said labour economist Mark Regets, senior fellow at NFAP. “Immigrants both create demand for goods and services and boost productivity alongside US-born workers. The loss of immigrant workers and consumers is a major cause of slow job growth.”

Immigration policies driving the decline: The NFAP report attributes the drop to a combination of policy moves, including stepped-up deportations, the ending of humanitarian parole and Temporary Protected Status programs, and curbs on legal immigration such as the block on up to 125,000 refugee admissions. These measures have also created a chilling effect, discouraging immigrants who might otherwise have sought to enter or remain in the US. While deportations remain lower than historic highs, immigrant arrests and detentions are at record levels, pulling many workers out of the labor force .

Without labor force growth, NFAP warns, US economic expansion is likely to remain subdued through 2025 and 2026. A smaller workforce also risks creating supply bottlenecks, potentially fueling inflation and constraining the Federal Reserve’s ability to ease monetary policy. Fed Chair Jerome Powell has previously credited foreign-born workers with helping reduce inflationary pressures during the post-Covid recovery.

Given current policy trajectories, NFAP projects that the foreign-born labor force will continue to contract into 2026, with ripple effects across industries ranging from technology to healthcare and construction. “Immigration has always been central to America’s labor market dynamism,” said Regets. “Reversing that trend now risks undercutting economic growth when the country can least afford it.”