Moody’s Economist Mark Zandi Says US Job Market Is Struggling for Native-Born Workers Too, Challenging Case for Tighter Immigration

Moody’s Analytics Chief Economist Mark Zandi said Sunday that the U.S. job market is struggling for both foreign-born and native-born workers, challenging the argument that fewer immigrant workers would create more jobs and higher wages for Americans born in the U.S.

In a series of posts on X, Zandi said employment and labor force participation are weak for both groups, while unemployment among native-born workers has been trending higher and is now above the rate for foreign-born workers. He said the expected gains in native-born wages from tighter immigration policy have not materialized, at least so far.

Zandi cited a chart showing the 12-month moving average of the unemployment rate for foreign-born and native-born workers, using seasonally unadjusted data. The chart lists the U.S. Bureau of Labor Statistics and Moody’s Analytics as sources and shows native-born unemployment rising above the foreign-born rate in 2026.

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… pic.twitter.com/9v8EZAmLD3

— Mark Zandi (@Markzandi) August 10, 2026

The argument comes as the U.S. labor market shows signs of a shrinking worker pool. Labor force participation fell to 61.4% in July, while the unemployment rate dropped to 4.1% even as employers shed 23,000 jobs. The foreign-born labor force has also declined by roughly 500,000 over the past year, adding to concerns about a shrinking worker pool.

Immigration Squeeze

Economist Laura Ullrich has argued that weaker job growth may increasingly reflect a shrinking supply of workers rather than a lack of employer demand. Her research projects the U.S. labor force could shrink by about 5.9 million workers, or 3.7%, between 2025 and 2032, with Baby Boomer retirements and lower immigration driving much of the decline. Her analysis also found demographics could have a larger effect on the labor market than AI.

The changing supply of foreign-born workers is particularly relevant as immigration slows. Foreign-born workers tend to be younger and have higher labor force participation rates, meaning lower immigration can reduce the number of workers available to employers.

Zandi said firms losing immigrant workers cannot necessarily replace them by simply offering higher wages because there may not be enough native-born workers available to fill those positions. Instead, businesses can operate at reduced capacity, including shorter hours, closed dining rooms, thinner menus and longer lead times. He outlined the labor-supply problem in a follow-up post.

The immigration debate also extends to highly skilled workers. Billionaire investor Bill Ackman has argued that the U.S. risks losing foreign talent by making it difficult for people educated at American universities to remain in the country. Employment-based visa caps and backlogs have left highly skilled workers from countries including India and China waiting years for permanent residency.

Zandi said businesses ultimately respond to labor shortages through prices. When companies cannot find enough workers, they can reduce capacity and raise prices until demand falls enough to match constrained supply. He described the mechanism in another post.

There is also a reason for caution before interpreting the decline as widespread worker discouragement. Guy Berger, director of economic research at the Burning Glass Institute, told The Washington Post, "The things that would make me really worried about labor force exits aren’t showing up. People aren’t telling us, ‘I want a job but can’t find one.”

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Shutterstock/ Piotr Swat