At first glance, the Trump administration’s approach to immigration and employment appears to be straightforward arithmetic: the removal of a segment of the workforce necessitates that employers rely on the remaining labor pool within the United States to fill those vacancies. However, that is not the situation at hand. American workers, regardless of citizenship, are experiencing a deceleration in wage growth, a reduction in job openings, and an increase in the unemployment rate. The situation reveals a multitude of intricate factors that are contributing to the continued sidelining of unemployed Americans. The primary factor is a decline in overall demand resulting from the expulsion of individuals from the United States and the cessation of new immigrant entries. “In President Trump’s first year in office, all job growth went to American-born workers while job growth declined for foreign-born workers,” White House spokeswoman Taylor Rogers stated. According to data, one million new jobs were allocated to native-born workers, whereas foreign employment experienced a decline of 100,000 during Trump’s first year. “The President continues to fulfill his commitment to prioritize American workers,” Rogers stated.
In the previous year, data indicate that between 200,000 and over 1 million immigrants in the United States ceased employment. The decrease occurred as the Trump administration intensified deportations and conducted raids in various locations, including car factories and Home Depot parking lots, targeting individuals who had entered the country unlawfully. However, despite the exodus of immigrants from the workforce, the unemployment rate for native-born Americans remained unchanged. The rate increased to 4.7% in January, up from 4.1% the previous year, as indicated by Wednesday’s jobs report. This figure surpasses the overall unemployment rate of 4.3%, as well as the 4.6% rate for foreign-born workers. Meanwhile, January’s average hourly earnings for private-sector workers exhibited a slower increase compared to the previous year. According to Stan Veuger, the expulsion of individuals from the country resulted in a diminished workforce and a reduced consumer base for the goods and services generated by that workforce. “As net migration decreases and deportations from the interior increase, the impact extends beyond the loss of workers; it also affects the demand side,” Veuger stated. “You are experiencing a decline in clientele among enterprises that employ labor.” Even when jobs are not completely eliminated due to the immigration crackdown, it does not necessarily imply an increase in employment for those who remain.
In certain sectors, there is not an immediate influx of native-born workers seeking employment, even among those who are currently without jobs, noted Joe Brusuelas. “Immigrants are willing and able to do jobs that the overwhelming majority of our native-born population are simply not willing to do,” he stated. Agriculture, for instance, depends on a workforce that is predominantly comprised of foreign-born individuals. In 2023, approximately 25% of the agricultural workforce comprised unauthorized immigrants, as indicated by an analysis. “It’s about a mixture of preferences, skills and advanced education among the native-born population that works against oversimplified ideas about creating artificial scarcity via labor supply that automatically preferences domestic-born workers,” Brusuelas stated in an interview. Tariffs are influencing employment as well. “Trump’s trade policy, and even more importantly, trade policy uncertainty, is putting downward pressure on those industries,” stated Wendy Edelberg.
In light of the volatility surrounding Trump’s tariff rate adjustments, employers have exhibited reluctance in expanding their workforce. In certain industries, layoffs have become necessary, partly due to the increased costs associated with tariffs. Manufacturing has experienced a significant downturn over the past year, resulting in the layoff of nearly 100,000 workers. Firms are facing increased costs for raw materials such as steel and aluminum, which are subject to a 50% tariff. Customers have also delayed orders in response to elevated costs. Native-born American workers are facing challenges from employers seeking automated solutions, such as AI, to address these pressures. The pursuit of enhanced productivity through AI has contributed to Amazon’s two significant rounds of layoffs in recent months. Moreover, it is certainly not the sole enterprise. The Federal Reserve’s Beige Book, which compiles business anecdotes from the 12 regional banks, highlights a case from the Boston Fed regarding an IT services firm that “paused hiring plans as it considered using AI instead.” The Atlanta Fed observed a broader influence, stating, “several contacts described accelerating the use of AI to increase productivity and to manage head count.”