Why It Matters
Slowing U.S. labor force growth could constrain economic expansion and complicate federal budget decisions as an aging population and declining immigration reduce the available workforce, according to a new Congressional Research Service (CRS) report. A slower-growing labor supply limits potential economic output unless offset by stronger productivity or investment, potentially weakening federal revenue growth and increasing pressure to finance Social Security and Medicare over the long term.
Congress and the Trump administration face intersecting choices on immigration levels, workforce training and entitlement programs, each of which can affect labor force participation, economic growth and federal finances. The findings also complicate how policymakers interpret employment data, as slower job creation may increasingly reflect a shrinking pool of available workers rather than weakening demand.
The Big Picture
The report identified population aging and declining net international migration as the primary drivers of slower labor force growth. Bureau of Labor Statistics data show that the 12-month labor force growth rate fell from negative 0.1% in January to negative 0.6% in September. However, after accounting for a technical adjustment to the data, the estimated rate declined from 0.5% to 0.2% over the same period.
Demographic change is a central driver. An aging population reduces the share of adults who are likely to participate in the workforce, while declining birth rates limit the number of new labor force entrants. Immigration has historically offset some of that demographic drag by adding working-age adults. Census Bureau estimates cited in the report show net international migration declining from 2.7 million people in 2024 to 1.3 million in 2025, with an earlier projection of 321,000 in 2026. The report cautions that the projection does not fully reflect subsequent immigration policy changes.
Declining labor force participation compounds these demographic pressures. The report noted that foreign-born workers accounted for 19.1% of the U.S. labor force in 2025 and generally participate at higher rates than native-born workers. The report also cites research suggesting that recent immigration enforcement policies may have discouraged some workers from participating in the labor market, particularly in industries heavily reliant on immigrant labor.
For Congress, the findings are relevant to debates over workforce training programs, legal immigration pathways and the long-term financing of Social Security and Medicare. The Congressional Budget Office projects that potential gross domestic product growth over the next decade will be 1.2 percentage points below its 1950-2025 average, largely because projected annual potential labor force growth will be one percentage point lower. Those projections illustrate how a smaller workforce could constrain economic growth and the federal government's future revenue capacity.
For the Trump administration, the findings intersect with immigration restrictions and enforcement policies that affect labor availability across industries. The report also highlights implications for interpreting monthly employment figures. Federal Reserve research estimates that the monthly employment growth needed to maintain a stable unemployment rate fell from approximately 155,000 jobs in 2023-2024 to 85,000 in 2025 and fewer than 10,000 in 2026, reflecting declining immigration and labor force growth.
The Bottom Line
The labor supply trajectory described by the report will inform economic assumptions underlying upcoming federal budget and appropriations decisions, although the report does not identify fiscal 2027 as a specific deadline or decision point. Slower workforce growth could constrain future economic output and federal revenue, making productivity gains, labor force participation, and immigration policy increasingly important to long-term fiscal planning.
Social Security and Medicare trustees' annual reports will provide another opportunity to assess how demographic and workforce trends affect the programs' financing. Meanwhile, Congress and the administration will need to distinguish between weak job growth caused by declining labor demand and slower hiring attributable to a smaller available workforce.
Access the Legis1 platform for comprehensive political news, data, and insights
Spot something wrong? Report an issue with this article
