Some sectors of the U.S. economy may face significant impacts if legal immigration slows under tighter policies next year, Goldman Sachs (GS, Financials) said in a note released over the weekend.
With illegal immigrants already accounting for around 4.4% of the work force, the company said that net immigration to the United States drastically dropped in 2024 from 3 million in 2023. Some industries, such landscaping and private home services (20%), agricultural cultivation (17%), food processing (15%), and building (13%), have this significantly greater rate.
Goldman Sachs said that in some sectors, including landscaping, crop production, and food processing, where reliance on immigrant labor is especially strong, immigrants—both authorized and illegal—make up a much larger share of the workforce. Any decrease in authorized immigration would thus have a major impact on these sectors.
Goldman Sachs estimates that unauthorized immigrant workers make around 20% less in hourly pay than approved immigrant workers born in the United States in comparable positions. Although there are other contributing reasons, this pay differential does not always mean that authorized personnel get precisely 20% more. A good amount of the difference is real. The company observed that firms would probably have to pay more salaries to compensate for lost significant portions of their illegal workers.
The statement also underlined worries over the financial fallout from stricter immigration laws. Particularly in labor-intensive sectors, a drop in the immigrant labor supply might cause more labor shortages and higher company expenses. Goldman Sachs projects that sectors like hospitality, construction, and agriculture—which rely most on immigrant labor—may show the most noticeable impacts.
The Pew Research Center estimates that 13.7% of the U.S. population in 2023 will be immigrants, who are vital in filling low-wage, labor-intensive positions frequently less appealing to native-born people. Recent years have seen especially clear evidence of this dependence on immigrant labor as the epidemic and changing workforce dynamics cause labor shortages in companies all throughout the United States.
Goldman Sachs also pointed out that an immigration slowdown might have more general effects on economic development, especially in areas with fast aging populations where labor force participation is already dropping. Reducing immigration will aggravate workforce issues in certain areas, therefore influencing production and development.
