With a historically low unemployment rate, America is running low on workers in everything from high-tech to construction, manufacturing and services as Donald Trump’s stronger immigration policies help raise wages for existing US workers, from the lowest paid to well-paid construction workers, for the first time in decades.
President Trump’s much criticized claim that America is “full” may have been taken out of context, since it referred to the immigration system, but it has also ignited interest in demographics. More immigration, and even higher salaries won’t solve our impending demographic crisis, and there are already many more jobs here than workers to fill them, and that gap is growing. There are over six million open positions, more than five times the annual supply of migrants, documented or otherwise. This could be addressed in part by opening the border—something only one in five Americans favor, although such calls have become popular on the political left, including over a third of all Democrats—or, more workably, by making immigration policy more responsive to our labor needs.
The most direct path to a potent economy doesn’t run through the border, however, but into the bedroom, with critical steps, particularly on housing, that could lift sagging domestic birthrates.
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Depopulating trends are global, across the developed world. After decades of worrying when Paul Ehrlich’s “population bomb” would go off, we are seeing a rapid decline in child-rearing, so much so that, for the first time, there are more grandparents than grandchildren on the planet. The lower birthrates are leading some demographers to suggest that global populations, instead of growing into the next century, will start to decline as early as 2070.
In the US, a report from the Brookings Institution shows that from 2006 through 2017, the population of child-bearing-age offspring of native-born Americans dropped by half a percentage point per year. The Congressional Budget Office foresees the American labor force rising by only 0.5 percent a year over the coming decade, about one-third the rate from 1950 to 2007.
The shortage is most profound in the middle of the country, Eighty percent of US counties, notes a study by Economic Innovation Group, with roughly 150 million people, have seen their labor force decline in the past decade. The demography of the United States will become more difficult in the next quarter century, with an increase in the working population (15-64) of 18 million projected to be swamped by 28 million new senior citizens, according to the United Nations.
This shortfall is projected to be even greater in Europe and Japan, and increasingly China. In the E.U., the labor force is expected to shrink by about 40 million, while the senior citizen population increases by about the same. Japan’s workforce is expected to diminish by 16 million, while the senior population grows by four million. Most critically in China, where a new aging generation of workers is now aging, with the labor force expected to decline by more than 160 million, even as there will be 210 million more senior citizens.
A new Korn Ferry Report suggests the global labor deficit is expected to grow from 3 percent of the workforce to 11 percent in 2030, with shortages predicted in a broad array of industries, from financial services, technology, telecommunications and media to manufacturing.
In the US many of the missing jobs are in such things as food preparation, production and construction. In the skilled blue collar field, with a workforce that now substantially older—average age 45—the shortages are projected to be particularly severe. According to a recent Deloitte study, the country will create over four million manufacturing openings in the next decade but be only able to fill barely half—creating a $ 2.5 trillion hit to the economy. A Monster.com list of the hardest jobs to fill include medical personnel and techies but also skilled tradespeople, drivers and technicians of all sorts. Overall the shortfall in tech professions, according to a recent Virginia Polytechnic Study, has reached 340,000 and seems likely to get worse in the future.
The decline in workforce, as we can see in both Europe and Japan, has profound fiscal and social consequences. It means fewer potential employees and consumers to correct a massive fiscal imbalance, as retirees eat up more of the state’s total resources. Virtually every low-birthrate country faces mounting pension costs from a population of senior citizens whose size is growing relative to that of the working population.
Most political discussion about demographics focus on ethnicity and immigration but in reality, there is no acceptable level of legal immigration that can make up for the dearth of children in virtually all high-income countries.
Much of this reflects rapid cultural changes that have led to plummeting birth rates in historically Judeo-Christian and Buddhist countries—the German rate has been lagging for decades well below the 2.1 fertility rate needed to replace the current population, while Japan’s has fallen to even lower levels. More recently, the trend has spread to Muslim countries including Iran, where the fertility rate has fallen below that of the U.S.; Turkey, and Bangladesh also now have at-or-below-replacement-rate fertility.
One key factor is the growing involvement of women in the workforce. In Singapore, where women traditionally took a back seat in the workforce and focused on child raising, the labor force participation rate for women is approaching 60 percent. The women who work, notes demographer Wolfgang Lutz, average a 53-hour work week:” Of course, they are not going to have children. They don’t have the time.”
Not everyone sees the decline of population, and rapid aging, as a negative. Some environmentalists see net benefit , as a smaller population reduces greenhouse gas emissions and demand for raw materials. Some even elevate a stagnating, aging but still wealthy country such as Japan into something of a role model. Certainly, Japan has experienced a radical devolving of traditional values such as hard work, sacrifice and loyalty; the new generation, the shinjinrui, which one Japanese sociologist describes as “pioneering a new sort of high quality, low energy, low growth existence.”
Indeed, many greens view procreation as an abomination . If the medieval mentality attacked sex—and as much as 15 percent of the population was permanently celibate—to “save souls,” some greens see childlessness as a way to slow an impending climate change holocaust. Some have called for special taxes on families and limits of one child per family to “save the planet,” and New Green Deal champion Alexandria Ocasio-Cortez broached the family-unfriendly topic, leaving the “legitimate question” lingering in an Instagram live video:
“There’s scientific consensus that the lives of children are going to be very difficult. And it does lead young people to have a legitimate question: Is it OK to still have children?”
Perhaps the most pernicious assault on family comes from housing policy, particularly in countries like Australia, the United Kingdom and parts of Canada (particularly Toronto and Vancouver). Land-use regulations have made it prohibitively expensive or even virtually illegal to build middle-class, family-oriented housing. In cities such as San Francisco, Los Angeles, Portland and Seattle, the housing shortage has become critical, and mini tent-cities of the homeless remind one of Mumbai’s pavement dwellers.
Without affordably priced family-oriented housing, which can only be built most readily on low-cost suburban land, a shortage of middle-class housing has developed that’s particularly acute for young people hoping to start families. All of this is happening, even though 74 percent of millennials want single-family detached houses, according a 2019 report on home buyer preferences by the National Association of Homebuilders—considerably more than the 63 percent of households who live in detached housing nationwide, according to the American Community Survey (2017).
There are one-third more school-age children per household in the suburbs and exurbs than in the urban core, and nearly 3.5 times as many as in the high-density central business districts dominated by high-rise condominiums.
Not surprisingly, homeownership in California among millennials plunged 19 percent from 2000 to 2015, and is now nearly a third lower than the national rate. More than a quarter of US households were single-person households as of 2017 but in New York City, that figure is 45 percent.
Some demographers suggest that high-income countries turn to developing countries , places that still produce prodigious numbers of children, to replace the children they no longer produce. Overall, immigrants now account for nearly 18% of the US workforce. And poorer immigrants, including undocumented ones, dominate some occupations, such as house cleaners, agricultural workers, drywallers and sewing machine operators.
But we’ve seen how strong political barriers make welcoming large numbers of migrants from poor countries problematic. Certainly, blanket acceptance of refugees from traumatized countries in Africa and the Middle East has already convulsed European politics, sparking a strong political reaction. Even mass migration of Europeans can cause disruptions, as we can see in the case of Brexit.
Immigration could be sold better if designed around a country’s needs. Many skilled professions, from doctors and programmers to carpenters and machinists , are in short supply in most high-income countries. Canada and Australia have figured out that a worker with a PhD in chemical engineering is preferable to an unskilled one, particularly if the worker is middle aged. A more coherent, skills-oriented approach, as even some progressives suggest, is infinitely better than our current chaotic and incoherent system.
In contrast, accepting hundreds of thousands of poor, largely uneducated people from Central America or other parts of the Third World may not be universally welcomed in communities where newcomers would compete at the lower end of the job spectrum. The upper-class progressives may celebrate having more poor people—after all there’s always need for nannies and dishwashers—but it’s in the barrios and ghettos where the impact of mass migration on incomes, and housing prices, are most severe.
Things are by no means hopeless. Today, 16 million millennials have had children, up from barely six million a decade ago. Many mothers may have kids in their forties. The potential for a demographic rebound remains. We should embrace planning, economic and immigration policies that encourage middle-income families, adding to our economy and reinforcing the continuity critical to a healthy democratic society.
