The Trump administration’s aggressive immigration policies are casting a long shadow over the U.S. economy, with the July 2025 jobs report expected to reveal a sharp slowdown in employment growth.
Economists forecast the U.S. added just 109,000 jobs in July, a significant drop from 147,000 in June and well below the 2025 monthly average of 130,000, according to Bloomberg’s survey of forecasters.
The decline is largely attributed to a shrinking labor force driven by intensified immigration enforcement, which is hitting industries like agriculture, construction, hospitality, and food manufacturing the hardest.
The U.S. labor force contracted by 130,000 in June, with a total decline of 364,000 since January 2025, pushing the labor force participation rate to a low of 62.3%, the weakest since December 2022.
A key driver is the Trump administration’s immigration crackdown, which has ramped up detentions and deportations.
Immigration and Customs Enforcement (ICE) detentions have surged from 15,000 per month in 2024 to nearly 40,000 in June 2025, while deportations have climbed to an annualized rate of 600,000, up from 400,000 earlier this year, according to Goldman Sachs.
Additionally, voluntary departures by immigrants have reached a yearly rate of 100,000, further depleting the workforce.
The foreign-born labor force, which accounted for 88% of U.S. labor force growth from 2019 to 2024, has contracted by over 1 million workers in the past four months, per Capital Economics.
In May, a record 5.4 million workers left the labor force entirely, Moody’s Analytics reported, citing Labor Department data.
This reversal comes after net immigration dropped to 500,000 annually from a high of 2.6 to 3.3 million between 2022 and 2024, compared to a pre-pandemic rate of 900,000, according to the Congressional Budget Office and Goldman Sachs.
Industries in Crisis: Labor Shortages Hit Hard
Industries reliant on foreign-born workers are reeling.
Food manufacturing employment has stagnated in 2025 after sharp post-pandemic gains, while construction payrolls grew by only 35,000 in the first half of 2025, down from 104,000 in the same period last year.
Restaurants are closing early or consolidating locations, and manufacturers are cutting shifts to cope with reduced workforces, according to Amy Peck, a lawyer at Jackson Lewis in Omaha, Nebraska.
“Even at higher wages, some jobs are not attractive to American workers,” Peck noted, pointing to roles like dishwashing and factory floor work.
Moody’s economist Marisa DiNatale warned that replacing these workers is “difficult or impossible” for some companies, driving up wages and, consequently, prices.
This trend could fuel inflation, with potential annual economic growth projected to fall from 2% to 1% due to immigration-related labor shortages.
Economic Uncertainty Looms
The labor market presents a stark dichotomy.
In blue-collar sectors like construction, hospitality, and agriculture, employers face severe worker shortages due to immigration restrictions.
Meanwhile, white-collar sectors are seeing reduced hiring as businesses grapple with economic uncertainty tied to Trump’s tariffs and broader policy shifts, according to Moody’s economist Dante DeAntonio.
Despite these challenges, the unemployment rate dipped to a historically low 4.1% in June from 4.2%, as the smaller pool of job seekers offsets weaker demand.
This dynamic complicates the Federal Reserve’s decision-making.
While Capital Economics suggests a stable unemployment rate may delay interest rate cuts in 2025, DeAntonio argues that a continued drop in job gains could push the Fed to act, even if unemployment remains steady.
Policy Shifts and Economic Consequences
The Trump administration’s policies, including the revocation of temporary protected status for many immigrants, have accelerated labor force declines.
A recent Supreme Court ruling lifting a requirement for migrants to demonstrate harm before deportation to third countries has likely intensified July’s deportation numbers, Capital Economics noted.
These policies mark a sharp departure from the 2019-2024 period, when immigrants alleviated pandemic-related labor shortages that drove inflation.
As businesses struggle to adapt, the broader economic outlook grows increasingly uncertain.
The combination of reduced labor supply and potential inflationary pressures could reshape the U.S. economy, challenging the administration’s promise of robust growth.
Also Read: MTG Now Pushes for Citizen-Only Census and Strict Voter Requirements
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About The Author
I was a dishwasher and I’m a white woman, but that was when I was a lot younger. There are some aspects that are difficult, mainly taking out the trash, which is heavy work. Other than that, it’s more fun than washing dishes at home. Other than that, I was shocked at how much food people leave uneaten on their plates. I wondered why they didn’t take it home to eat later, like I do.