For decades, demographers and economists have warned of the economic consequences of aging populations and falling birth rates in the United States. And while we may have accepted the reality of demographic change, we’ve been slow to address it at the national level.
Increasingly, that reality is easy to see. Across the country, hospitals struggle to hire staff to provide adequate care; contractors take on fewer projects, increasing the cost of living and decreasing housing affordability; and assisted living facilities turn away prospective residents because there aren’t enough workers to care for them.
Historically, immigration has cushioned the impact of population decline. Over the past two decades, immigration has been the primary driver of labor force growth, keeping essential businesses staffed and economies thriving.
Immigraton’s Role in Workforce Growth
Now that buffer is eroding. Communities are feeling the impact of immigration enforcement and curtailed legal immigration. A Brookings Institution analysis found that reduced immigration nearly halved population growth in the U.S. and reduced it in most states. The Congressional Budget Office’s long-term budget outlook projects that without intervention, slower population growth, combined with an aging population, will drag down U.S. economic growth over the next 30 years. Without immigration, the U.S. population will begin to shrink as soon as 2033. Recent studies found that U.S.-born workers have not benefited from the decline of immigrants in the workforce, and instead, their unemployment rate rose from January 2025 to January 2026.
Policies at the federal level have many downstream economic consequences. Lawmakers at the state level have a front row seat to the impacts and seek to find solutions. They know that there is underutilized talent in their communities—internationally trained health care professionals, engineers, and teachers who are working survival jobs while employers can’t find qualified candidates. That’s why states are making strides in formalizing structural changes and treating immigrant integration not as an optional social program, but as an economic imperative.
State Level Innovation
Their progress is real. Facing a nationwide physician shortage projected to reach 86,000 by 2036, 27 states and territories have passed legislation to streamline licensure attainment for internationally trained physicians (ITPs). Despite having years of training and experience, ITPs often work outside their field entirely or repeat years of U.S. residency training to get licensed to work in the U.S. In Utah, which passed legislation to streamline licensure processes across professions, the state received 2,600 inquiries from internationally trained professionals, the majority from outside the state—demonstrating that removing barriers doesn’t just retain talent, it can recruit it.
Other states have addressed the language barriers that keep workers underemployed. Colorado’s career-aligned English program, developed in partnership with EnGen, served more than 4,000 English language learners across 73 cities, with 94 percent of participants reporting improved confidence in the workplace, enhancing their ability to contribute.
Addressing Barriers and Building Infrastructure
States have also invested in coordination through coalitions, roundtables, and formalized offices, such as Offices of New Americans, to align business, education, government, and community organizations around the shared goal of connecting immigrant talent to good work.
When states treat integration as economic infrastructure and hardwire things such as credential and skills recognition, occupational skills development, and opportunity into mainstream systems, workers connect with jobs that match their skills, employers fill critical vacancies, and communities can rely on essential services. These are not insignificant adjustments—they are proof of concept. But the states doing this work most successfully are also the ones that see its limitations most clearly. States with early wins continue to report severe shortages in health care in rural communities, declining capacity at caregiving facilities, and construction costs and timelines that make affordable housing more difficult to build. The constraint is affecting not only systems, but supply. And no system, however well modernized, can integrate people who aren’t there.
America’s population is shrinking. The U.S.-born working-age population will shrink every year for the next decade. The birth rate has declined by 20 percent in the last two decades. According to the Economic Policy Institute, efforts to boost labor force participation among U.S. workers would not meaningfully change these demographic trends. The only material way to offset declines is through immigration, forecasted to account for nearly all population growth over the next decade, and over 100 percent of population growth after 2031.
The Limits of State Action
This means states cannot retain, train, or micro-credential their way to a sufficient workforce when the underlying working-age population isn’t there. But they have started to create infrastructure that promotes economic inclusion by translating immigrants’ skills and experience into in-demand roles in their communities. In partnership with states and communities, businesses and industry leaders can offer valuable insights into current workforce shortages, anticipate future needs, and help make more accurate projections. Shared expertise should shape where and how people arrive to meet communities’ needs.
Ensuring future economic prosperity for all requires a dual approach. States must continue innovating the systems that translate immigrant talent into productive roles—because integration is what makes immigration live up to its potential. And the U.S. must acknowledge that demographic realities require a strategy to attract additional talent, with input from states, businesses, and industries on where additional people are needed and where they can quickly thrive in their new communities.
The U.S. has long looked to immigrant labor to help build its economy when available workers weren’t sufficient. Many of our most American industries, from mining to manufacturing, were started by immigrants. This shows that demography doesn’t have to be destiny. States are leading the way to prove that, and it’s time to take the next step in ensuring that what they’ve learned, and what they need, can shape stronger economies that work better for all.
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