Feb 17 (Reuters) – The recent drop in unauthorized immigration to the United States has slowed employment growth, particularly in construction and manufacturing, and those trends are likely to continue, new research from the San Francisco Federal Reserve published on Tuesday shows.
The study looked at the rapid rise in unauthorized immigrants beginning in 2021 and the slowdown that began in March 2024, and found that local job growth grew, and then shrank, in lockstep with those immigration trends. The findings could have important implications for the job market outlook and for housing affordability, given the ongoing crackdown on immigration during Donald Trump’s second term as president.
Revisions to jobs data published last week showed the U.S. economy added only 181,000 jobs in 2025, a fraction of the 1.459 million jobs added in 2024, the final full year of former President Joe Biden’s term. Economists have linked the slowdown to the sharp drop in immigration, but this latest study helps make that link concrete by its detailed analysis of unauthorized worker inflows and the impact on local labor markets.
“On average, places experiencing the biggest slowdowns in unauthorized immigration saw the biggest slowdowns in employment growth in construction, manufacturing, and other services,” wrote Fed economists Daniel Wilson and Xiaoqing Zhou. “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 has said the reduction in immigration will benefit American workers, and will help make housing more affordable by reducing demand for homes.
“U.S. employment growth is likely to face continued downward pressure as long as the ongoing declines in unauthorized immigrant worker flows continue,” the study’s authors wrote.
(Reporting by Ann Saphir; Editing by Andrea Ricci)
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