Trump’s grand plan to put American workers first may be backfiring as U.S.-born unemployment rises and wage growth stalls

President Trump campaigned on the promise of reviving the American Dream, vowing to take jobs away from immigrants and curb their wages. However, recent data suggests this policy may be backfiring. The Census Bureau reported a historic drop in net international migration, falling from a peak of 2.7 million in 2024 to an estimated 321,000 by mid-2026. Brookings Institute claims this could lead to negative net migration this year.

Economists predict that this change has helped keep the U.S. unemployment rate steady at 4.1%, with foreign-born unemployment even falling below native-born unemployment in October 2025. According to Moody’s chief economist Mark Zandi, the immigrant labor force is shrinking due to Trump's policies, contributing to the lower unemployment among the demographic. However, the rise in native-born unemployment is more complex and multifaceted.

A significant factor is the decline in labor demand, meaning U.S.-born workers now make up a larger portion of the workforce and are affected more by changing demand. Additionally, immigrant workers typically occupy sectors such as construction, trucking, and health care, where they earn 85.7% of what native-born workers earn. Native-born workers find these jobs less appealing due to their difficulty, physical demands, and the fact that they haven't held these roles for decades.

The societal mindset is also a factor, as native-born workers are not accustomed to or interested in these jobs. Societal framing and the lack of infrastructure and support in remote areas further deter native-born workers from taking on these roles. Despite the White House's claim that the plan is working, data from the New York Fed supports the idea that only certain industries, like public administration and construction, have seen wage growth.

Overall, the labor market trade-off is expected to lead to stagflation, with rising prices and reduced growth due to supply-side shocks.