Tighter immigration is yielding new data on an old debate.
By James CarterJune 16, 2026 5:42 pm ET
A construction site in Alabama, July 14, 2025. megan smith/Reuters
The consensus in Washington held for years that immigration enforcement didn’t impact the wallets of ordinary Americans. Wages, housing costs and job competition were all shaped by larger forces. Border policy was a legal and a cultural question. Its economics were more or less neutral.
As a deputy assistant secretary of the Treasury and later deputy undersecretary of labor in the George W. Bush administration, I worked on, among other things, immigration policy. Concerns about wage pressure were often acknowledged, then set aside as statistically insignificant. The academic literature gave little reason to do otherwise. But now the data has become much clearer and the old consensus harder to defend.
As a free-market economist, I believe in the power of human capital to drive growth. Immigration, done right, makes America more productive, dynamic and prosperous. But free markets work best when they operate within rules.
In recent years, those rules haven’t been consistently enforced. The result is a market distortion that holds down wages for those Americans most exposed to labor competition from unauthorized workers, increases demand for housing without a corresponding increase in supply and undermines the legal immigration system that serves everyone’s interests. Enforcement isn’t antimarket. Correcting distortions is what markets require.
As enforcement has intensified, labor supply in immigrant-intensive sectors has tightened. In fiscal 2025, southwest border apprehensions fell to their lowest level since 1970, an 84% decline from the prior year, and the Brookings Institution estimates that between 210,000 and 405,000 people left voluntarily.
Bureau of Labor Statistics data show a corresponding tightening in labor markets. In April 2026, the construction job openings rate stood at 3%, and accommodation and food services recorded a 4.5% openings rate. At the same time, quits in accommodation and food services were 4%, more than double the national quit rate of 1.9%.
The Federal Reserve’s Beige Book describes a labor market characterized by difficulty filling positions, with the June 2026 national summary emphasizing a “low-hire, low-fire” environment. The August 2025 Beige Book also noted that “half of the Districts . . . reported a reduction in the availability of immigrant labor.”
For much of the 2010s, pay in lower-skill occupations lagged behind while professional salaries pulled away. As immigration enforcement has increased, that gap has narrowed.
Take construction, which relies heavily on immigrant labor. Wages in the sector grew at roughly 2.5% annually between 2010 and 2017. Now BLS data shows construction wages growing at 3.1% through the first quarter of 2026—above the sector’s pre-enforcement baseline, even as broader private-sector wage growth cooled to 3.4%.
Housing is more complicated, which advocates of immigration enforcement should acknowledge. A 2024 study by Troup Howard, Mengqi Wang and Dayin Zhang found that heightened enforcement reduced residential construction workforces in affected counties, resulting in fewer homes built and higher prices.
But demand is shifting too. A recent Federal Reserve working paper finds that unauthorized immigration accounted for roughly 30% of house-price growth and 20% of rent growth in the average metro area between 2021 and 2024. As that demand eases, so should price pressure. Zillow reports national mortgage costs at their best level since August 2022, with affordability expected to improve in 49 of the 50 largest metros by year’s end.
Critics argue that any economic gains from enforcement are swamped by costs: higher food and construction prices, reduced growth and disruption to industries built on immigrant labor.
ICE statistics show roughly 443,000 deportations in fiscal 2025—a significant increase but well short of the million-a-year scenarios critics typically model against. More fundamentally, those critiques often overlook the accumulated costs of underenforcement.
For years, many economists treated enforcement as economically irrelevant and dismissed concerns about wage competition. Harvard economist George Borjas was a notable exception. His research documents the mechanism directly: Immigration redistributes income from workers who compete with immigrants to the employers who hire them, with those at the bottom of the skill distribution bearing the largest losses.
Increasing the number of workers in lower-skill labor markets puts downward pressure on wages. That dynamic coexisted with a long-term decline in labor-force participation among less-educated men, including a Brookings analysis showing a 4.4-point decline among prime-age men without a college degree between 2000 and 2015.
Working-class Americans in high-immigration labor markets were told for years that the downward pressure they noticed in their paychecks wasn’t happening. The evidence is now moving in their direction, even if it doesn’t settle every question.
The debate over immigration will never be settled by slogans. It should be informed by the understanding that when labor markets tighten, prices and wages respond. That isn’t ideology but simple supply and demand.
Mr. Carter is a principal with Navigators Global. He served as a deputy assistant Treasury secretary (2002-06) and a deputy undersecretary of labor (2006-07).
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