Federal Reserve Study Links Immigration Decline to Slower Job Growth Nationwide

A new Federal Reserve study reveals that declining unauthorized immigration has contributed to slower employment growth across the United States, especially in construction and manufacturing sectors. The research shows local job markets expanded and contracted alongside immigration patterns between 2021 and 2024.

A new study from the San Francisco Federal Reserve reveals that declining unauthorized immigration has contributed to slower job growth across the United States, with construction and manufacturing sectors hit particularly hard.

The research, released Tuesday, examined the surge in unauthorized immigration that started in 2021 and its subsequent decline beginning in March 2024. Researchers discovered that local employment patterns closely mirrored these immigration fluctuations, with job growth rising and falling alongside worker inflows.

These findings carry significant weight as the nation grapples with stricter immigration enforcement under President Donald Trump’s second administration, potentially affecting both employment prospects and housing costs.

Recent government data revisions revealed the U.S. economy generated just 181,000 new jobs in 2025, a dramatic decrease from the 1.459 million positions created in 2024 during former President Joe Biden’s final year in office. While economists have previously connected this downturn to reduced immigration, the Federal Reserve analysis provides concrete evidence through its comprehensive examination of unauthorized worker movements and their effects on regional job markets.

Federal Reserve economists Daniel Wilson and Xiaoqing Zhou noted in their findings: “On average, places experiencing the biggest slowdowns in unauthorized immigration saw the biggest slowdowns in employment growth in construction, manufacturing, and other services.” They emphasized the construction sector’s vulnerability, stating: “The effect for the construction sector is particularly notable, because it suggests that falling UIWF (unauthorized immigrant worker flows) in recent months could be slowing residential construction and hence slowing down the growth of housing supply.”

The Trump administration maintains that reducing immigration will create opportunities for American workers while making housing more accessible by decreasing home demand.

The study’s authors concluded: “U.S. employment growth is likely to face continued downward pressure as long as the ongoing declines in unauthorized immigrant worker flows continue.”