A dramatic slowdown in unauthorised immigration to the United States is now being linked to a sharp cooling in job creation, according to fresh research published by the San Francisco Federal Reserve.
The findings arrive at a politically charged moment, as President Donald Trump advances an aggressive immigration enforcement agenda during his second term.
Revised labour data shows that overall job additions in 2025 have fallen nearly 88 per cent compared to the previous year, marking a striking decline that economists are now examining through the lens of migration patterns.
From Immigration Surge To Sudden Slowdown
The San Francisco Fed study traces the rise in unauthorised immigration beginning in 2021, followed by a notable deceleration starting in March 2024, reported Business Standard.
Researchers found that employment growth in local labour markets tended to rise when inflows increased and weakened as those flows diminished.
The study focused on what economists refer to as “unauthorised immigrant worker flows” (UIWF), comparing changes in these flows with employment trends across sectors and regions.
“On average, places experiencing the biggest slowdowns in unauthorised immigration saw the biggest slowdowns in employment growth in construction, manufacturing, and other services,” wrote Fed economists Daniel Wilson and Xiaoqing Zhou.
The connection appears particularly strong in labour-intensive industries that have historically relied on migrant workers.
Construction And Housing Supply Under Pressure
Among the sectors most affected, construction stands out.
“The effect for the construction sector is particularly notable, because it suggests that falling UIWF (unauthorised immigrant worker flows) in recent months could be slowing residential construction and hence slowing down the growth of housing supply,” the economists wrote.
At a time when housing affordability remains a pressing concern across many US cities, the prospect of slower residential construction adds another layer to an already complex market dynamic. If labour availability tightens, project timelines can lengthen, and supply constraints may intensify.
Manufacturing and certain service segments have also recorded weaker employment momentum in areas that experienced sharper immigration declines.
The 2025 Jobs Data In Context
The scale of the slowdown is significant. Revised employment figures published last week indicate that the US economy added 181,000 jobs in 2025. That is sharply lower than the 1.459 million jobs added in 2024, the final full year of former President Joe Biden’s term.
While job growth naturally fluctuates with economic cycles, economists have increasingly pointed to immigration as one factor influencing labour market dynamics. The San Francisco Fed report does not argue that immigration is the sole driver of employment growth, but it highlights a measurable correlation between worker inflows and hiring trends in specific sectors.
“US employment growth is likely to face continued downward pressure as long as the ongoing declines in unauthorised immigrant worker flows continue,” the authors wrote.
The implication is not necessarily one of long-term structural decline, but rather that labour market conditions may remain subdued if worker supply continues to contract.
Defining ‘Unauthorised’ Immigration
The term “unauthorised” immigrants refers to individuals who entered the United States without formal admission under immigration law. Federal authorities typically encounter such individuals at ports of entry, along the border, or within the country.
Many receive a “Notice To Appear” in immigration court, allowing them to apply for asylum or challenge removal. Historically, most have been permitted to remain in the country while their cases are adjudicated, a process that can take at least a year and often several years.
These individuals often enter the workforce during this period, particularly in industries facing persistent labour shortages.
President Donald Trump’s administration argues that stricter enforcement will protect American workers and help ease housing demand pressures.
Supporters of these measures say they are necessary to restore border control and strengthen domestic labour markets. Critics contend that aggressive enforcement risks disrupting industries that rely heavily on migrant labour and may create prolonged legal uncertainty for long-settled migrants, students and workers.
