Moody’s Economist Mark Zandi: Strict immigration policies necessarily does not mean more and better job opportunities for native-born workers

Moody’s Analytics chief economist Mark Zandi recently said that the strict immigration policies do not necessarily translate into more or better job opportunities for native-born workers. In a series of posts shared on social media platform X (formerly known as Twitter) Zandi argued that both foreign-born and native born workers has been trending higher and now exceeds the rate for foregin-born workers, undermining claims that tighter immigration boosts wages and employment for US-born workers. “The job market is struggling — and not just for foreign-born workers. Native-born workers are having a tough go of it, too. It wasn’t supposed to be this way, according to proponents of stiffer immigration policy. Fewer immigrant workers meant more jobs and higher wages for the native-born,” wrote Zandi.

Mark Zandi feel that job market is weak across groups

Zandi cited Bureau of Labor Statistics data showing the 12-month moving average of unemployment rates, with native-born unemployment rising above foreign-born levels in 2026. Labor force participation fell to 61.4% in July, while employers shed 23,000 jobs even as the unemployment rate dropped to 4.1%. The foreign-born labor force has also declined by about 500,000 workers over the past year, raising concerns about a shrinking pool of available labor.“Not so. It’s admittedly difficult to cut through the noise in the data, but while employment and labor force participation are moribund for both groups, unemployment among native-born workers has been trending upward and is now higher than that of foreign-born workers,” posted Zandi.

Immigration Squeeze

According to a report Benzinga, economist Laura Ullrich has argued that weaker job growth reflects a shrinking supply of workers rather than reduced demand. Her research projects the U.S. labor force could shrink by 5.9 million workers between 2025 and 2032, driven by Baby Boomer retirements and lower immigration. Foreign-born workers, who tend to be younger with higher participation rates, play a critical role in sustaining labor supply.Zandi said businesses losing immigrant workers cannot simply replace them by offering higher wages, as there may not be enough native-born workers available. Instead, firms may reduce capacity — shortening hours, closing dining rooms, limiting menus, or extending lead times.“Moreover, the view that stiffer immigration policy and fewer immigrant workers would lead to larger pay increases for native-born workers does not appear to have materialized, at least not yet. That’s likely because many firms that lose immigrant workers know that simply offering higher wages will not necessarily attract enough native-born workers. So instead, they operate at reduced capacity: shorter hours, closed dining rooms, thinner menus, and longer lead times. The market then clears through prices. Businesses raise prices until demand falls enough to match constrained supply.That’s a stagflationary supply shock — higher prices, weaker output, and no clear gains for native-born workers,” concluded Zandi.