Demographic changes over the past 50 years are having an enormous impact on the US labor market. Since the 1970s, the birth rate in the United States is too low to maintain existing population levels. As these younger people enter the workforce, there are simply not enough of them to replace existing workers who are retiring. When combined with a declining labor force participation rate, this is having a devastating impact on the labor market.
Currently, the working-age population is growing and will continue to grow for several more decades. However, by 2030 all of the Baby Boomers will be at least 65 – with HUGE numbers of them retired. Just four years later, by 2034, there will be more older adults than children for the first time in our country’s history. At the same time, the number of people aged 16-24 entering the workforce is plummeting. This means that people leaving the workforce will outpace people entering the workforce, and that gap will widen each year. On top of this, there has been a considerable loss of immigrant workers in recent years. All of this means that more and more employers will struggle to find enough workers.
There are more than 11 million job openings in the US, but only 6.5 million available workers. The labor force participation rate has shrunk since the pandemic and is not returning to pre-pandemic levels. For many reasons, sizeable numbers of people are unable or unwilling to re-enter the US labor market. Many of these people are child-care workers who are not returning to those historically difficult and underpaid jobs. Without sufficient child care workers, many working parents—especially women—have also been forced to leave their jobs. Employers may need to consider offering childcare benefits to employees, either as a direct subsidy or by providing childcare services. This could mean working with local daycare centers or other employers to operate dedicated child care centers. Flexible scheduling and remote work can also help by giving parents options that allow them to work AND care for their children … without multitasking!
So if we need an additional 3.5 million workers to fill the available openings, what are the solutions? Well, there are really only two: find them in our country or find them in other countries via immigration. Even if the US birth rate magically increased, it would take 20 years or more before we’d start to see workforce gains, so that is an unlikely solution. Instead, employers will have to figure out how to bring people back to the labor force. That could look like “retiring” from full-time to part-time work. It could look like more job-sharing opportunities. It could involve additional training and educational opportunities for new and existing employees. It will also need to include populations of people who have been historically marginalized in job opportunities: veterans, those with disabilities, people with substance-abuse or criminal histories, people who don’t have college degrees or traditional educational backgrounds. Other employers will need to look at their salary and benefit offerings to attract people.
The other way to increase the number of workers in the US labor market is to add numbers via immigration. This is not a simple solution as there are many social, political and economic issues associated with immigration. Immigration numbers in the US have been steadily declining for a number of years due to a variety of factors. These include political decisions, delays in processing immigration paperwork, outdated immigration caps, covid-related disruptions and more. There are currently more than 4 million people waiting for work visas. On top of that, many Americans state they want fewer immigrants coming to the United States, at the same time that immigration numbers are at their lowest levels in recent history. This suggest a disparity between perception and reality, which may be difficult to align. Birth rates are declining globally. Other countries also need more workers – so they are trying to retain their own citizens or competing for the same immigrants as US employers.