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Trump immigration policy may be shrinking labor force, economists say

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12 months ago

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People in Tijuana, Mexico, look though the U.S.-Mexico border wall at Border Field State Park on Aug. 17, 2025 in Imperial Beach, California.

Kevin Carter | Getty Images News | Getty Images

Early evidence suggests that White House policy is reducing the size of the immigrant labor force, in turn contributing to a recent drawdown in the overall U.S. labor pool, according to several economists.

CNBC spoke with a range of economists from financial firms, economic research institutions and think tanks, and also reviewed recent research notes and analyses that economists have published on immigration and the job market.

If a reduction in the immigrant labor force is sustained, such a trend would be a concern for the U.S. economy, those experts have said or written.

That’s because the economy will increasingly rely on immigrants to fuel population and labor force growth given demographic trends among the U.S.-born populace, like retirements among baby boomers and lower fertility rates, they said.

The downward shift in the immigrant labor force in recent months is “definitive,” said Mark Zandi, chief economist at Moody’s.

“There’s no debate what’s going on there,” Zandi said.

‘Signs are mounting’

President Donald Trump has pursued an immigration agenda that he’s referred to as “very aggressive.”

The White House has sought to expand and expedite deportations, end birthright citizenship and restrict access to asylum, among other actions, for example. Many measures are being challenged in court.

The Trump administration is also readying a rule to end the lottery for H-1B visas — temporary work visas for college graduates in “specialty” fields like architecture, law and tech — and adopt a selection process that favors higher-wage earners.

Available data makes it hard to track what’s happening to immigration flows and the immigrant labor pool in real time, economists said.

Some point to Bureau of Labor Statistics data as one signal.

The size of the foreign-born labor force has declined by about 1.2 million people since January, to 32.1 million total people in July, BLS data shows. (Some government data distinguishes between “foreign-born” and “native-born” workers — or, immigrants versus those born in the U.S.)

Nancy Vanden Houten, lead economist at Oxford Economics, cited the data in an Aug. 1 research note.

“[S]igns are mounting that the foreign-born labor force is shrinking due to the Trump administration’s immigration policies,” she wrote.

The U.S. labor force includes all people age 16 and older who are actively working or looking for work.

The BLS’ reported decline in the foreign-born labor force has been “very dramatic” and larger than expected, said Stephen Brown, deputy chief North America economist at Capital Economics.

In July, the labor force participation rate had declined 0.3 percentage point for native-born workers compared with a year earlier, but had fallen by a much larger 1.2 percentage points for foreign-born workers, according to a J.P. Morgan analysis.

“[M]any immigrants appear to be leaving the labor force, wrote David Kelly, chief global strategist at J.P. Morgan Asset Management.

White House spokesperson Abigail Jackson said in an emailed statement that the Trump administration is committed to helping U.S. employers “ensure they have the legal workforce they need to be successful.”

“There is no shortage of American minds and hands to grow our labor force, and President Trump’s agenda to create jobs for American workers represents this Administration’s commitment to capitalizing on that untapped potential while delivering on our mandate to enforce our immigration laws,” Jackson wrote.

‘Significantly weaker’ job growth

Some economists say the BLS data on the foreign-born and native-born labor force segments isn’t a reliable gauge of near-term trends, due to various quirks in how it’s collected and reported.

Trump questioned the accuracy of BLS statistics and fired the bureau’s chief in August after a monthly report showed unexpectedly weak job growth.

But there’s other evidence that economists point to that also suggests the immigrant labor pool is shrinking.

For example, job growth among industries that rely more heavily on undocumented immigrants has been “significantly weaker” than in the rest of the private sector, said Jed Kolko, a senior fellow at the Peterson Institute for International Economics and former undersecretary for economic affairs at the U.S. Department of Commerce during the Biden administration.

Job growth in those industries — such as hotels, restaurants, construction and home health aides — has been flat since the start of 2025, said Kolko. In July, jobs grew at a 0% rate in immigrant-heavy industries, he found.

Meanwhile, job growth has slowed in the rest of the private sector — a roughly 0.6% pace in July — but the deceleration wasn’t as stark, he said.

Kolko analyzed federal data to calculate the three-month average annualized rate of employment growth in respective industries.

[S]igns are mounting that the foreign-born labor force is shrinking due to the Trump administration’s immigration policies.

Nancy Vanden Houten

lead economist at Oxford Economics

Matthew Martin, senior U.S. economist at Oxford Economics, found an additional link between immigration policy and its impact on the labor force.

Labor force growth has been “stagnant” in states like Texas and Florida with high immigrant arrests per capita, he wrote in an Aug. 4 research note, citing Immigration and Customs Enforcement data.

“States such as Texas and Florida have seen more intense crackdowns than California, New York, and New Jersey,” Martin wrote. The “low-arrest” states have seen positive labor force growth in 2025, by contrast, he wrote.

“The data show that while the foreign-born labor force in low arrest-to-population states has increased since the beginning of the year, the labor force in high-arrest states flatlined,” he wrote.

Labor force growth is ‘a great deal slower’

Vans leave an agricultural facility where U.S. federal agents and immigration officers carried out an operation, as U.S. federal agents stand guard , in Camarillo, California, U.S., July 10, 2025.

Daniel Cole | Reuters

Nationwide, immigrant arrests have more than tripled since 2024, to more than 1,100 per day through mid-June, wrote Martin, citing ICE data.

Last month, Jerome Powell, chair of the Federal Reserve, cited immigration policy as a factor behind the slowdown in the labor supply.

“[B]ecause of immigration policy really, the flow into our labor forces is just a great deal slower,” Powell said during a news conference on July 30.

The total U.S. labor force — including immigrants and native-born workers — has fallen for three consecutive months, according to BLS data. It has declined by 402,000 people from January to July, to about 170.3 million, the BLS reported.

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Arrests and deportations, fear of showing up to the workplace, and fewer flows of immigrants into the U.S. may be playing a role, economists said.

Two programs that have given roughly 1.8 million immigrants from troubled countries the temporary right to live and work in the U.S. are being phased out this year, wrote Kelly of J.P. Morgan. This change in status may reduce labor supply by more than 1 million workers, he wrote, citing J.P. Morgan research.

Of course, a decline in the labor supply isn’t only a function of immigration.

Fed's Mary Daly: Job market is not precariously weak, but it is softening

For example, unemployed people discouraged by the difficulty of finding a job right now may opt to sit on the sidelines instead of looking for work, meaning they wouldn’t be counted in the labor force, said Brown of Capital Economics.

The White House has also taken steps that it says will boost employment among immigrants who are in the U.S. legally.

The Department of Labor established the Office of Immigration Policy in June, which the administration has said will streamline the process to secure temporary and permanent work visas, for example. Trump also signed an executive order in April seeking to support high-paid, skilled trade jobs.

Why a shrinking labor force is a concern

A U.S. Customs and Border Protection (CBP) Border Patrol agent stands at Border Field State Park with the U.S.-Mexico border wall in the background on Aug. 17, 2025 in Imperial Beach, California.

Kevin Carter | Getty Images News | Getty Images

Growth in the labor force is one of the “key” things determining how fast the U.S. economy can expand and how productive companies are, for example, Vanden Houten of Oxford Economics said in an interview.

A sustained decline in the size of the labor force — which is far from being assured — would be a concern, said Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank.

“If we want the type of economic growth that we historically consider successful, then the demographic reality is that we’re going to have to increase inflows of immigrants,” Strain said. “There’s no real way around that.”

Without immigration, the population would shrink starting in 2033, partly because fertility rates are projected to remain low, according to the nonpartisan Congressional Budget Office.

[B]ecause of immigration policy really, the flow into our labor forces is just a great deal slower.

Jerome Powell

chair of the Federal Reserve

Additionally, a smaller labor pool might put pressure on employers to raise wages to attract talent, potentially exacerbating inflation, and would bring in less tax revenue to fund programs like Social Security, economists said.

The construction industry, which already suffers from labor shortages, is at risk of wage inflation, for example, according to a Bank of America Institute report published Tuesday.

Average wage growth in July approached 8% in the construction industry, nearly double the national average, according to the report.

“Immigration actions could potentially deepen workforce shortages, drive up costs and create serious financial risks for contractors,” the Bank of America report said.

Construction workers build a new home in Altadena, California on August 15, 2025.

Mario Tama | Getty Images

About 34% of construction workers are immigrants, versus the 20% average across all sectors, the report said. In trades like drywall installers or plasterers, the share is closer to 60%, it said.

A shortage of skilled labor already costs the U.S. economy about $10.8 billion per year due to longer construction times and raises the price of new single-family homes by about $2,600, on average, according to a joint analysis published in June by the Home Builders Institute, the National Association of Home Builders and the University of Denver.

However, some economists are skeptical that the U.S. will suffer a prolonged reduction in the immigrant labor force.

The Trump administration’s plan likely isn’t to have “net-out migration,” Strain said.

“We didn’t see net-out migration in [Trump’s] first term,” Strain said. “That’d cause all sorts of problems for businesses, for key sectors of the economy the president cares about, like construction, and I’d be surprised if that’s where we end up.”

“But who knows?” he added.

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$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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6 days ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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1 week ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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Personal Finance

Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

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2 weeks ago

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August 1, 2026

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As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

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