The GDP Question: What Happens to an Economy That Stops Growing Its Workforce

Allison Turbovsky on April 1, 2026

Immigration isn’t a cultural debate when you’re staring at a labor force chart.

There is a version of the immigration debate that lives in cable news segments and social media threads. Then there is the version that lives in Bureau of Labor Statistics data, Congressional Budget Office projections, and Federal Reserve research papers. This post is about the second version.

The core question is simple: What happens to U.S. economic output when the labor force stops growing?

The Demographic Math

The U.S. fertility rate sits at approximately 1.6 — well below the 2.1 replacement rate needed to sustain population without immigration. This has been the case since 2008, and the trend is accelerating as the population ages. The Congressional Budget Office’s January 2026 demographic outlook was blunt: starting in 2030, annual deaths will exceed annual births. Without immigration, the U.S. population begins shrinking after that point.

Between 2000 and 2022, foreign-born workers accounted for nearly three-quarters of all growth in the prime-age (25-54) civilian labor force, according to Census Bureau data. The number of U.S.-born people of prime working age barely changed over that 22-year period. In contrast, the foreign-born prime-age workforce grew by nearly 7 million.

This isn’t a future problem. It’s a present condition that immigration has been papering over for two decades.

The 2022-2024 Surge and Its Economic Signature

The immigration surge of 2022-2024 — driven largely by border arrivals and humanitarian entries — produced a measurable economic signature. CBO estimated that the surge would boost nominal GDP by $1.3 trillion (3.2%) by 2034 and by $8.9 trillion cumulatively over the 2024-2034 period. Total wages paid increased steadily, generating higher payroll and income tax revenue. On net, the surge was projected to reduce the federal deficit by $900 billion over the same period.

Immigrants during this period weren’t just filling jobs. They were generating consumer demand, paying rent, buying goods, and creating the kind of economic activity that sustains local businesses and tax bases.

The 2025-2026 Reversal

The current policy environment has sharply reversed that trajectory. Brookings researchers estimate that net migration was likely negative in 2025 — somewhere between -295,000 and -10,000 — for the first time in at least half a century. Census Bureau data shows net international migration dropping from 2.7 million in the year ending July 2024 to 1.3 million one year later, with projections of just 321,000 by mid-2026.

The macroeconomic implications are direct:

  • GDP growth drag: The National Foundation for American Policy estimates that current immigration policies would reduce average annual GDP growth from a projected 1.8% to 1.3% between FY2025 and FY2035. For 2026 specifically, the projected growth rate drops from 1.8% to 1.1%.
  • Consumer spending decline: Brookings estimates that reduced immigration will weaken consumer spending by $60-$110 billion combined over 2025-2026.
  • Employment growth stall: Breakeven employment growth — the number of jobs needed monthly to keep the unemployment rate stable — has fallen to 50,000 or fewer and could turn negative in 2026, according to Brookings.
  • Cumulative GDP loss: NFAP projects a cumulative reduction of $1.9 trillion in GDP from 2025-2028, equivalent to roughly $5,600 per person. Extended through 2035, the projected loss reaches $12.1 trillion.

The Dallas Federal Reserve’s structural model suggests GDP growth in 2025 was 0.75 to 1 percentage point lower than it would have been under previous immigration projections.

The Labor Force Gap Is Real

The effects aren’t evenly distributed. Sectors that rely heavily on immigrant labor are already feeling the squeeze. The Minneapolis Federal Reserve found that all 13 major sectors of the economy experienced employment growth declines, though the decline was spread across both high-immigrant and low-immigrant sectors — suggesting the effects extend beyond direct labor replacement into broader demand contraction.

The Peterson Institute for International Economics estimated that deporting between 1.3 and 8.3 million undocumented immigrants would reduce real GDP by as much as 7% by 2028 while significantly decreasing employment, increasing inflation, and driving down demand.

These aren’t advocacy numbers. These are projections from CBO, the Federal Reserve system, Brookings, and nonpartisan research institutes using standard macroeconomic models.

The Counterargument and Its Limits

Proponents of restriction argue that fewer immigrants means tighter labor markets, which should drive wages up for native-born workers. The data tells a more complicated story. The Minneapolis Fed found that real wage growth has actually slowed in 2025, particularly for low-income workers — the group theoretically most likely to benefit from reduced immigrant competition. This suggests that the demand contraction from fewer immigrants and consumers is outweighing any wage-tightening effect.

Economists broadly agree that lower migration levels do not ultimately lead to additional employment for U.S.-born workers. Immigrants are both producers and consumers — fewer immigrants means less consumer demand, which means fewer jobs overall.

What This Means for Strategic Planning

For employers, investors, and policymakers, the GDP question isn’t abstract. It translates directly into:

  • Workforce planning: Companies in labor-constrained sectors need contingency strategies that don’t assume immigration will fill gaps.
  • Real estate and development: Population growth drives housing demand, commercial development, and municipal revenue. Negative net migration means slower growth or contraction in affected markets.
  • Tax base sustainability: Social Security, Medicare, and local government budgets depend on a growing tax base. Fewer working-age immigrants means fewer contributors.
  • Investment thesis: Any economic development strategy — from venture capital to rural broadband — that assumes continued population growth needs to be stress-tested against current demographic realities.

The GDP question is, ultimately, a workforce question. And the workforce question is, at this point in American demographic history, an immigration question. Whether that makes people comfortable or not doesn’t change the math.

This is Part 2 of a 12-part series on the state of U.S. immigration — focused on process, economics, and what actually matters for the people making decisions.

How U.S. Immigration Actually Works: A Process Guide for 2026

Allison Turbovsky on March 31, 2026

Understanding the system before debating it.

The U.S. immigration system is not one system. It is a layered set of processes — each governed by different agencies, different timelines, and different eligibility criteria — that collectively determine who enters, who stays, and who becomes a citizen. Most public debate skips this entirely, which is why the discourse often generates more heat than light.

This post breaks down how the system actually functions in 2026, who the key agencies are, what the main pathways look like, and where the bottlenecks sit. If you employ foreign-born workers, advise clients on immigration matters, or simply want to understand the policy landscape before forming an opinion, this is your starting point.

The Three Core Agencies

U.S. Citizenship and Immigration Services (USCIS) handles benefit adjudication — green card applications, work permits, naturalization, asylum claims, and temporary status programs. If someone is applying for permission to stay or work, USCIS is the front door.

Customs and Border Protection (CBP) manages ports of entry and border enforcement. CBP officers make the initial determination about whether someone is admitted to the country, even if they already hold a valid visa.

Immigration and Customs Enforcement (ICE) handles interior enforcement — deportation proceedings, detention, worksite investigations, and compliance audits.

The Department of State runs consular processing overseas, issuing visas at U.S. embassies and consulates. The Department of Labor plays a gatekeeping role in employment-based immigration by certifying that hiring a foreign worker won’t adversely affect U.S. workers.

The Major Pathways

Immigration to the United States generally falls into four categories:

Family-based immigration accounts for the largest share of green cards issued each year. U.S. citizens can sponsor spouses, children, parents, and siblings. Lawful permanent residents can sponsor spouses and unmarried children. Wait times vary enormously — immediate relatives of citizens face no numerical cap, but sibling categories for nationals of high-demand countries can face backlogs of 20+ years.

Employment-based immigration uses a preference system (EB-1 through EB-5) that prioritizes extraordinary ability, advanced degrees, skilled workers, special immigrants, and investors. Most categories require a labor certification from the Department of Labor before USCIS will adjudicate the petition. The annual cap is 140,000 green cards, though unused family-based visas can roll over.

Humanitarian pathways include refugee resettlement, asylum, Temporary Protected Status (TPS), and various parole programs. Refugees are vetted and processed overseas before arrival. Asylum seekers apply either at the border (defensive) or from within the U.S. (affirmative). TPS is granted to nationals of countries experiencing armed conflict, natural disaster, or other extraordinary conditions.

Diversity Visa Lottery allocates up to 55,000 visas annually to nationals of countries with historically low immigration to the United States. As of late 2025, the DV-1 program has been paused by the administration.

Temporary (Nonimmigrant) Visas

The system also manages a massive volume of temporary entries — tourist visas (B-1/B-2), student visas (F-1, M-1), exchange visitor visas (J-1), and work visas (H-1B, H-2A, H-2B, L-1, O-1, TN, and others). Each category has its own eligibility requirements, duration limits, and renewal processes.

The H-1B program — the primary vehicle for employer-sponsored temporary skilled workers — operates on an annual cap of 65,000 visas plus 20,000 for advanced degree holders. The program has been subject to significant fee increases and policy changes in 2025-2026, including new biometric screening requirements and expanded social media vetting.

Where the Bottlenecks Are

The system’s dysfunction isn’t theoretical — it’s structural. Key pressure points include:

  • Processing backlogs: USCIS processes millions of applications annually with chronic staffing shortfalls and outdated technology. Average processing times for many petition types exceed 12-18 months.
  • Per-country caps: Employment-based green cards are subject to a 7% per-country limit, meaning nationals of India and China face wait times measured in decades for the same visa categories that nationals of other countries clear in months.
  • Visa bulletin lag: The State Department publishes a monthly Visa Bulletin that tracks which priority dates are currently being processed. For some categories, the bulletin hasn’t advanced meaningfully in years.
  • Congressional inaction: The last major legislative reform of the immigration system was the Immigration and Nationality Act of 1965. Comprehensive reform has failed repeatedly — in 2006, 2007, 2013, and beyond.

What Changed in 2025-2026

The current administration has layered significant executive actions on top of this existing framework. Expanded travel bans now affect 39+ countries. Enhanced vetting requirements including social media disclosure have been extended to H-1B applicants. A new USCIS Vetting Center centralizes screening operations. The One Big Beautiful Bill Act, signed July 4, 2025, allocated over $170 billion to border and immigration enforcement and introduced new mandatory fees on immigration applications — including a $100 asylum application fee and sharply increased Employment Authorization Document filing costs.

These changes don’t replace the underlying system — they add layers of friction to it. Understanding both the base architecture and the current policy overlay is essential for anyone making decisions that touch immigration.

Why This Matters for Economic Development

The immigration system is, at its core, a labor allocation mechanism. It determines which workers can enter the economy, at what skill levels, in which industries, and for how long. When the system moves efficiently, it fills gaps that the domestic labor market cannot. When it stalls or contracts, industries that depend on immigrant labor — agriculture, healthcare, technology, construction, hospitality — feel the effects directly.

In subsequent posts in this series, we’ll examine each of these dimensions in depth: the economic data, the process mechanics, the sector-specific impacts, and the strategic considerations for employers, investors, and policymakers navigating the current landscape.

This is Part 1 of a 12-part series on the state of U.S. immigration — focused on process, economics, and what actually matters for the people making decisions.