You probably know that the birthrate in the United States has fallen to record lows and was falling even before the pandemic disrupted dating and drove home the idea that other people are simply vectors for disease.
You may know that this Baby Bust has been going on since the Great Recession, and as a result, America actually has fewer children than we did a decade ago.
But it doesn’t end there. The working-age population of the U.S. is also falling. Yes — we have fewer workers today than we did a couple of years ago.
Here’s data from the OECD on Americans aged 15 through 65:
Ignore that weird lockdown spike in March through May of 2020, which is probably a data oddity. The number of working-age Americans steadily rose for as long as we collected the data until it flattened out in 2018 and 2019.
From 206.6 million in mid-2019, the working-age population has fallen to 204.8 million. That’s only a 1% drop, but it’s a persistent drop. It’s the lowest number since 2015.
COVID-19 contributed, killing 200,000 people in that age range, but that’s a small slice of the 1.8 million reduction. Some of the other reductions are possibly due to out-migration during the pandemic. But with regard to the shrinkage in the pool from which we could pull a workforce, the main reason is demographics.
More people are passing into retirement age than are entering into working age. This will just become more extreme in the next few years as the aftershock of the Baby Bust creeps in.
Back in 2006 and 2007, we saw a mini baby boom, which will flatten the downward curve on the workforce for the next two years as those children turn 15. But almost every year since 2007, fewer and fewer babies were born. This means that every year after 2022, we will have fewer and fewer people entering working age.
That means we will probably have a smaller workforce, which is good for wages, but it also means less stuff will get made, fewer services will be provided, less innovation will occur — and you’ll wait longer and pay more for it. The growing retired population will be pushed to work more, and the prime-age population could have less time for family formation as they have to share more of the burden.
If you’ve liked the supply-chain disruptions and delays of recent months, you’ll love a world with a shrinking working-age population.