What to Know Wednesday: Immigration Crackdowns Are Driving Up Grocery Costs—And Shrinking the U.S. Workforce

New reports show that restrictive immigration policies are not only reshaping the labor market but also making everyday essentials, like groceries, more expensive for American families. At the same time, the loss of foreign-born workers is leaving critical shortages in both entry-level and high-skilled industries.

The Data: A Shrinking Immigrant Labor Force

• 1.2 million fewer immigrant workers: Since January 2025, the foreign-born labor force has dropped by 1.2 million workers, falling to 32.1 million. During the same period, the total U.S. labor force shrank by 402,000 people (Bureau of Labor Statistics).

 

• Participation declines faster for immigrants: Immigrant labor force participation fell 1.2 percentage points in the past year, compared with just 0.3 points for U.S.-born workers (J.P. Morgan).

 

• Regional disparities: States with aggressive enforcement, like Texas and Florida, have seen flat labor force growth, while states like California and New York, with less aggressive enforcement, continue to add workers (Oxford Economics).

 

• Industry reliance: Construction, hospitality, restaurants, and home health care—sectors heavily dependent on immigrant workers—have recorded zero job growth in 2025 (Peterson Institute for International Economics).

How This Hits Your Wallet:

Rising Grocery BillsLabor shortages caused by deportations and visa restrictions ripple directly into food production and distribution. Fewer farmworkers, truck drivers, and food service employees mean higher costs passed to consumers.

• Grocery prices are climbing: According to the USDA’s Economic Research Service, grocery prices (food-at-home) rose 2.2% year-over-year as of July 2025, compared to 2.0% in April.

 

• Inflation persists: The Bureau of Labor Statistics reported food-at-home prices up 2.3% year-over-year in June, showing that even as overall inflation cools, grocery costs remain sticky.

 

• Family budgets strained: The Yale Budget Lab warns tariffs and labor shortages could raise the average annual grocery bill by $2,600–$4,900 per family, depending on household size and food preferences.

When combined with housing shortages—already adding $2,600 to the price of a new home (Home Builders Association)—these labor gaps are directly eroding household budgets.

Not Just Low-Wage Jobs at Risk

The narrative that immigration only affects “low-income” or “entry-level” jobs is misleading. Foreign-born workers also make up significant portions of high-skilled industries that drive innovation and support community health:

• Healthcare: Nearly 1 in 4 physicians in the U.S. is foreign-born (Association of American Medical Colleges). Many rural hospitals and urban health systems rely heavily on immigrant doctors, nurses, and caregivers. Deportations and visa slowdowns worsen already severe staffing shortages.

 

• Technology: Immigrants account for about 25% of STEM workers and are disproportionately represented in artificial intelligence, engineering, and biotech (National Foundation for American Policy). With the U.S. facing global competition in these fields, losing this workforce undermines growth and innovation.

 

• Entrepreneurship: Immigrant entrepreneurs have founded more than 45% of Fortune 500 companies, from Google to Tesla. Restricting pathways for immigrants limits future job creation and competitiveness.

Why It Matters

• Immigrants keep the economy running: With baby boomers retiring and U.S. birth rates low, immigration is essential to fill jobs across industries.

 

• Shortages drive inflation: Empty roles in farming, trucking, food service, healthcare, and technology create bottlenecks that raise costs for everyone.

 

• Broader risks to growth: Federal Reserve Chair Jerome Powell has warned that slower immigration flows are a drag on economic expansion and threaten long-term stability.

Final Note

The numbers are clear: immigration is not just a policy debate—it is central to the affordability of daily life and the future of U.S. competitiveness. From grocery store shelves to hospital staffing to high-tech innovation, restrictive immigration policies have consequences that reach every household.