July Jobs Report Casts New Warning On Immigration And Worker Declines

Forbes

21 hours ago

The July jobs report reveals a worrisome decline in the U.S. labor force, driven by the Trump administration's immigration policies. Labor force and productivity growth determine U.S. economic growth, which is crucial for achieving higher standards of living. Immigrants play key roles in the labor force and productivity growth. The drop in the foreign born and overall U.S. labor force signals problems for businesses and the U.S. economy. Donald Trump expressed his displeasure with the July jobs report by firing the Bureau of Labor Statistics commissioner.
Immigration Policy And The July Jobs Report
The Bureau of Labor Statistics household survey shows a decline of 1.2 million foreign-born workers between January and July 2025, and a drop of 1.7 million since its peak in March 2025, according to an analysis from the National Foundation for American Policy. The study explains that such a decline presents problems for the U.S. economy because immigrants have accounted for over half of American labor force growth in each of the last three decades.
The July numbers show that the decline in immigrant workers has contributed to the decline in the U.S. labor force. 'The total seasonally adjusted labor force (including both U.S.-born and foreign-born individuals) has declined by 402,000 since January 2025 and by 793,000 since its peak in April 2025,' according to the NFAP analysis.
There is no evidence that having fewer immigrants in the labor force has increased the proportion of U.S.-born individuals seeking employment. 'Labor force participation for the U.S. born aged 16 and older declined slightly from 62.3% in July 2024 to 62.0% in July 2025.' That is not surprising, given that the U.S.-born labor force participation rate is already at or near all-time highs across all age groups, even for U.S.-born individuals under age 25 once one includes attending school.
An Immigration Policy Designed To Lower The Labor Supply
Donald Trump and White House Deputy Chief of Staff Stephen Miller set a goal of reducing the labor supply in the United States by arresting and detaining immigrant workers, ending lawful work status for individuals on humanitarian parole and Temporary Protected Status and restricting legal immigration. The legal immigration restrictions, which have received less press attention, include blocking the entry of more than 100,000 refugees and imposing a travel ban on nationals from 19 countries.
Trump and Miller, presenting a zero-sum view of the economy, argued that the administration's immigration actions would produce more economic opportunities for U.S.-born individuals. However, that has not happened.
The U.S.-born unemployment rate is up, while the labor force participation rate is down. The unemployment rate for U.S.-born workers increased from 4.3% in January to 4.7% in July 2025.
'Slow growth in jobs can be caused by a low availability of workers,' said labor economist Mark Regets, a senior fellow at NFAP. 'While the total number of people in the labor force is up since January, which is partly because more people usually work in the summer, the seasonally adjusted labor force dropped since January and over the last month.'
A 2024 analysis for the Peterson Institute for International Economics by George Mason University economics professor Michael Clemens predicted that if the Trump administration tried to remove immigrant workers from the labor force, it would fail to produce a jobs bonanza for U.S. workers. Why does deporting unauthorized immigrants harm U.S. workers? 'The answer is that the U.S. labor market is more complex than the cartoon economy in the minds of some politicians, who think that business owners faced with a loss of immigrant workers will simply hire native [U.S.-born] workers to replace them,' according to Clemens.
'Business owners hit by sudden reductions to labor supply invest less in new business formation,' notes Clemens. 'They invest their capital in other industries and in technologies that use lower-skill labor less intensively, reducing demand for U.S. workers too. . . . And in a one-two punch, the disappearance of migrant workers also dries up local demand at grocery stores, leasing offices, and other nontraded services.' According to Clemens, the 'demand for all workers overwhelms the reduction in the supply of foreign workers' and most U.S. workers will be worse off.
Beyond the numbers, the Trump administration's policies, such as workplace raids and abrupt ends to legal status, disrupt businesses. That also limits growth. 'When federal agents raided Glenn Valley Foods in Omaha, Neb., they arrested about 75 of the meat processor's workers, roughly half of the production line,' reports the Wall Street Journal. 'The following day, the plant was operating at about 15% of capacity, and a skeleton crew strained to fill orders. Chief Executive Gary Rohwer can't see a future that doesn't include immigrant workers. 'Without them, there wouldn't be an industry.''
'I represent hospitals in New Jersey, and the termination of parole programs is visibly exacerbating the already serious labor shortage problem in healthcare,' said Rosanna M. Fox of Lepore Taylor Fox LLP. 'With the termination of parole (for Haitians and others) and TPS for Venezuelans, and with the uncertainty facing other parole programs, healthcare organizations are scrambling for ways to replace workers who lost work authorization in an already tight market and on very short notice.'
The July jobs report was not good news. 'U.S. employers added a disappointing 73,000 jobs in July as payroll growth slowed,' reported Paul Davidson of USA Today. 'Even more concerning: Job gains for May and June were revised down by a whopping 258,000.'
As with much economic news, some have wondered what it means for the Federal Reserve's interest rate policy, believing that slow job growth should mean a loosening of monetary policy and lower interest rates.
'But if the slow job growth is caused by a falling labor supply, lowering interest rates in an attempt to stimulate the U.S. economy is the wrong policy,' said Mark Regets. 'A loss of workers is a supply shock. We learned the hard way in the 1970s that we cannot stimulate ourselves out of a supply shock because that creates stagflation and economic misery for many Americans.'