New Fed report proves Milton Friedman and Joe Biden understood something vital about immigration—and explains why growth may sputter under Trump

Fortune

by Shawn Tully

February 22, 2026

AI-Generated Deep Dive Summary

A new Federal Reserve report reveals that Milton Friedman’s economic theory—immigration boosts labor force and economic growth—is supported by President Biden’s open border policies, which have significantly increased the number of foreign workers in key industries like manufacturing and construction. The study, conducted by researchers at the San Francisco Fed and Dallas Fed, analyzed unauthorized immigration trends during the Trump administration's crackdown (2024–2028) and Biden’s more permissive era (2021–2023). It found that while Trump’s restrictions reduced unauthorized immigration, it also led to labor shortages in sectors already struggling with worker shortages, potentially slowing economic growth. The researchers collected data on arrivals and departures of working-age immigrants across all U.S. counties. They matched this with employment data from the U.S. Census Bureau, focusing on clusters of counties where workers commute for jobs. By estimating the number of working-age adults not encountered by federal agents, they isolated the impact of immigration on local employment. Their analysis showed that unauthorized immigrants typically settled in areas with existing communities from their home countries, creating a multiplier effect in local labor markets. The study concluded that an increase in the local workforce equal to 1% of employment raised overall local employment by 0.92%. This suggests that new workers filled critical gaps in industries needing expansion, such as construction during a housing shortage or tech sectors building essential AI data centers. While some might attribute job growth to local economic booms, the study highlights how immigration directly addresses labor shortages, enabling industries to expand and create new jobs. This matters for business because labor availability is a key driver of economic growth. The report underscores that restricting immigration can lead to unintended consequences like reduced employment in critical sectors. As the U.S. faces challenges such as housing shortages and rising construction costs, maintaining a balanced immigration policy could help stabilize these industries and support long-term economic resilience. For businesses reliant on manufacturing, construction, or tech infrastructure, this research provides valuable insights into how immigration policies can impact their workforce and growth prospects.

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Originally published on Fortune on 2/22/2026