Tag: labor force

Demographics and Economic Growth

The Future Manufacturing Labor Force

SUMMARY

This post is a summary of some of the themes of previous posts on demographic and population projections, with an emphasis on how demographics impact economic growth. See bibliography at the end of this post. For a list of all blog posts on a wide variety of topics, see List of Posts by Topic on my blog.

Almost all countries outside of Africa are already facing or will soon face below replacement birth rates. Without immigration, this could lead first to smaller labor forces with greater numbers of retired citizens. Eventually, however, both the number of workers and retired citizens will decrease. During both stages of the transition, there will be issues of how to increase total output, maintain standards of living, and allocate income between the two major age groups. For background, see Global Demographics and Population Projections.

Population and economies can growth even if birth rates are below replacement. But eventually both economic output and real income per capita fall unless countered by migrations, new technology that increase productivity, or organizational, political and societal change. Societies will have to manage these transitions to avoid economic and political crises.

The first country that has started on the demographic declining path for wealthy nations is Japan. The depopulation curve starts with a slow descent, then accelerating. Japan has until 2030 to prepare for the rapid decrease in total population and the labor force age group. For details, see Demographics and Population Projections of Japan.

Other countries – China, countries in Southeast Asia, and countries in Central Europe – will soon face the same demographic trends as Japan.

The countries outside of Africa will have a collective labor shortage; the countries inside Africa will have a collective labor surplus. Wealthy industrialized or industrializing countries with declining populations will have different problems and strategic alternatives than poorer countries that have above replacement birth rates and increasing populations. For details about global population projections and the demographics of these two types of countries, see Global Demographics and Population Projections.

Immigrants into the wealthier countries will be one way to counter a dwindling labor force. Some of the immigrant will come from countries with declining labor forces. Immigrants will be especially in demand in the “service” sector with rising numbers of older citizens needing medical care and other services. In the United States, immigrants, both legal and undocumented, are also crucial for new construction, farm labor, restaurants, and various service and maintenance industries. But until the labor shortage becomes critical, there will be continuing political opposition to immigration.

An aging population plus increased immigration of different ethnic and religious groups may be necessary for economic growth but also a recipe for political conflict. Aging populations tend to become more conservative, less likely to support change, but more in need of immigrant service employees.

Changing demographics will influence the national and global allocation of labor. Decisions about allocation of labor – outsourcing, immigration – will sharpen the conflict between national policies and the global economy. Corporations have different strategies and objectives then national governments.

Changing demographics will influence the mix of supply and demand. In wealthier countries, more of the economic and political decisions will be driven by the increasing population of the elderly, including public support for health care services and biotechnology research. In poor countries, the economic objective will be how to grow rapidly to employ a quickly growing labor force.

There are three substitutes for a country’s shrinking labor force – immigration, investment in innovation and new technology, and organizational innovation and more productive employees. Better educated and trained employees and researchers are crucial for innovation and economic development. The new technologies of robotics and AI may reduce the long-run demand for the human labor force, especially in areas of white collar data processing and analysis jobs, although both will create new jobs demanding a high skill level.

How will governments and societies cope with the triple problems of declining populations, supporting an aging population and the cost of mitigating global warming?

THE ACCOUNTING IDENTITY OF ECONOMIC GROWTH

The accounting identity here is a framework to explore implications of a shrinking labor force for economic growth and development.

An accounting identity says nothing about causality, assumptions or feedback. But it introduces some general issues.

The following accounting identity shows the sources of economic growth:

The economic growth rate (growth rate of total output) roughly equals the growth rate of the labor force plus the increase in labor productivity (output per member of the labor force).

If the labor force numbers are stable, all of the increase in output depends on the increase in productivity. The pressure on productivity is even greater if the labor force numbers are decreasing. So, for example, if a labor force is increasing at about 1% per year and productivity is increasing at about 1% per year, output will increase about 2% per year. If the workforce stops growing, productivity will have to double to 2% to yield the same economic growth. If the workforce were to decrease at 1% a year, as it is in some countries already, productivity would have to increase 3% a year to achieve 2% economic growth. This is a high productivity growth rate for a developed economy.

Declining population, declining labor force and some increase in productivity could lead to higher standards of living (real income and consumption per person). But the demographic trends, without other changes, might lead to less innovation and lower or negative rates of productivity growth.

Low rates of productivity growth with accelerating rates of labor force and population decline could also lead to less output (negative growth rates) and declining standards of living.

LABOR SUBSTITUTES

A member of the industrial/information labor force today is better educated, with new skills, working with better capital equipment and IT inputs, compared to a member of the labor force a generation or two ago. The difference should show up as an increase in labor productivity. Increase in total factor productivity is due to innovation in capital equipment – including information technology – combined with employees with new skills and knowledge. Other factors included economies of scale, network effects, public investment and organizational innovation.

Capital investment, technological innovation, and organizational change are substitutes for labor. The composition of the declining labor force will change.

2-3% sustained productivity growth is unlikely without a dramatic impact from AI-augmented robots, AI-augmented business software, advances in new energy and production processes, and, possibly, quantum computing. Unit costs and prices are falling for a wide range of new outputs – EVs, solar panels and systems, energy from other renewables, hydrogen, large batteries and carbon capture.

Changing demographics will help direct the actual products and services of the new technology.

Some white-collar, middle-class jobs will be eliminated and replaced by software like AI, which will become more sophisticated in the future. AI programs are already able to analyze large quantities of specialized data and quickly reach conclusions and devise strategies. While AI and other new technologies will create technology jobs there is a fear that for the first time in the history of the Industrial Revolution, more jobs may be eliminated than created by new technology. Labor-intensive manufacturing and white collar data processing may be hit the hardest. One possibility is that high-wage, advanced technology systems may replace labor-intensive economic processes in low-wage countries. The economic disruption may be less if matched by a decreasing number of workers.

The new information technologies may primarily affect white-collar jobs, unlike past industrial technologies that mostly affected blue-collar jobs.

There will possibly be a greater importance of a globally connected and managed economy. Multinational companies will develop and control technology and globally allocate labor and other inputs. This might increase conflicts between the objectives of multinational companies and national governments.

DEMOGRAPHICS AND DEMAND

Demographics also influence the demand side of economies. Americans spend more money on pet products and services than on childcare. In South Korea, which has the lowest birth rate in the world, consumers spend more money on “baby carriages” for pets than for human babies.

Companies use demographic information when planning marketing and advertising strategies. Changing demographics are analyzed when developing new products, changing product mix, and segmenting markets. The explosion of detailed demographic information about smaller and smaller segments, down to individuals, combined with online marketing technology and almost real-time data analysis algorithms, is revolutionizing marketing and advertising.

Companies are using this data and analysis to fine tune pricing strategies such as price discrimination and dynamic pricing.

Autonomous driving vehicles and robotaxis should find a huge demand from older Americans, the number of whom are expected to double in the next 20 years.

IMPLICATIONS FOR ECONOMIC POLICY

In the past, there was a correlation between industrialization and secular increases in population. There were also national and international allocation of labor. A large number of people left Europe between 1815 and 1914, especially at the start of the second stage of the Industrial Revolution around 1870. An estimated 60 million people emigrated from Europe. They opened up new agricultural lands in other countries and provided some of the labor force for the new factories, mines, and railroads. The United States also experienced a large immigration of Latin American and Asian groups, starting in the 1960s. There was also large internal migration within countries. At the same time, the Industrial Revolution created new economic groups including industrial entrepreneurs, industrial work force, investment bankers, and a new technical and managerial middle class. This led to political conflict between traditional elites and the new groups, fights for political power and status. This also led to a call for economic and political reforms – the Populist and Progressive movements around 1900.

The standard economic models demonstrate that the demographic changes we saw over the last 200 years are a function of economic growth and development. Industrializing, urbanizing populations have declining birth rates. The experience of the poorer regions of the world tends to indicate that these demographic changes can occur even without economic growth and development because of imported modern health and the spread of primary education. The challenge for low and middle-income countries now is the danger of “getting gray before getting rich.”

Although wealthier countries concentrate on the costs of their rapidly growing retired population, for most of the world the critical question over the next two generations will be how to accelerate economic growth to provide jobs and opportunity for the growing working age population. The related challenge is how to improve education, training and economic opportunity to raise standards of living now to provide the resources for the aging population in the future.

For the entire world, these objectives are complicated by how to pay for the social costs of past industrialization and environmental degradation, and the future costs of climate change.

Over the next 40 years, the global population is expected to increase by 1.7 to 2.0 billion people, despite below replacement birth rates in most of the world. Although wealthier countries will concentrate on the costs of their rapidly growing retired population, for much of the world the critical question over the next two generations will be how to accelerate economic growth to provide jobs and opportunity for the growing working age population. Part of the challenge is how to improve education, training, and economic opportunity to raise standards of living now to provide the resources for the aging population in the future.

For the entire world, these objectives are complicated by how to pay for the social costs of past industrialization and environmental degradation, and the future costs of climate change. This will be a major part of future investment and a possible source of income and employment, especially for the technically educated.

In the long run, the positive side of declining global population may probably be less demand for resources. It depends on fewer people versus higher standards of living and changing preferences. Combined with substitute technology, global warming might slow down or stop. Climate change might not have quite the devastating effects trend projections indicate.

The advanced and industrialized countries with stable or declining populations and labor forces will have to consider the following:

Economic growth will have to come from large increases in productivity (output per member of the workforce). To achieve this, and also meet social welfare costs, most countries and regions such as the European Union will have to make changes in economic policies. Particularly disruptive and contentious will be the adoption of automated factories and offices. On the positive side they will increase labor and total productivity; on the negative side they will probably eliminate a large number of existing and future jobs. Retirement ages and requirements might change, depending on political resistance. Tax laws will have to change.

Even in the United States, a large increase in retirement age populations is leading to potential underfunding of public and private pension funds. Taxes to fund public pension funds are rising, both in amount and as percent of federal, state and local budgets. Despite this, unfunded liabilities – promised future benefits not covered by projected future revenue – are also rising. The $300 billion/year deficit in social security funding after the trust fund runs out in 2034 will probably be paid for by an increase in general government expenditures.

The United States is already experiencing large yearly fiscal deficits and a very large and rapidly-rising national debt. For the present and future impact of these trends on federal government budgets, see

Government Finance 101: Fiscal Policy. Can’t Anyone Add?

Multinational corporations will develop and adopt the new technology. Countries that do not have quality education, invest in public infrastructure, fund scientific research, encourage innovation and change economic incentives will not be able to attract foreign and domestic investment and compete in the global economy. And their best educated and most motivated people may emigrate.

On the other hand, poor countries with decent transportation, energy and communication infrastructure will probably attract foreign investment. Real wages of at least part of the labor force will rise.

Attitudes towards immigration might change from the current restrictive policies of some countries. Attracting “human capital” will be just as important as attracting investment capital. Trans-border movement of people will increase. New national, regional and international agreements will have to be negotiated. Remittances back to the home country will be a more important part of the economy of many countries and global capital flows.

Attitudes about work, labor laws, retirement and retirement ages will change. The benchmark age of 65 was arbitrarily set by Bismarck almost 150 years ago when a very small percent of the German population lived that long. When the United States adopted Social Security, life expectancy was 56 years. The life expectancy of America’s younger workers is already around 80 years.

The Japanese government and elites seem to have accepted declining population, slow (if any) economic growth, social stability and rising per capita income. They are increasing immigrant labor but there is a limit. They will export capital, earning income from overseas investments. They will outsource production of Japanese companies and export manufacturing technology, including robots. Whether all industrialized, wealthy countries can adopt the same policies at the same time seems unlikely.

What is uncertain is whether or not the Japanese government can continue to fund domestic expenditures by running large deficits. Global interest rates were low until 2022. This assumes that Japanese are willing to lend their savings to the government. Maybe part of an implicit social contract that the money will be spend on services for the elderly.

Other countries facing a “Japanese future” do not have the resources (per capita income and tax base) that Japan has. Many other countries do not have the political and cultural stability that Japan has. Hardly any country realizes this is soon going to be their number one domestic problem.

Countries are already facing the domestic problem of needing more immigrants to augment the declining labor force in the face of rising opposition against immigration. Without immigration, some countries will be facing declining output and lower standards of living. This will probably increase domestic anger and stresses. Rather than Japanese stability, there will be further instability fueled by increasingly shrill populist, nativist politicians.

More people will see they are living in a “zero-sum” country where more domestic resources will have to be allocated to a rapidly increasing older population It could be that political battles will be fought over age-based “income inequality.”

If taxes on the working population go up, this might further discourage economic development (innovation and risk-taking) and growth. The exception may be for products and services aimed at senior citizens.

Demographics are heavily influencing the areas of investment in wealthy countries; these sectors will drive future economic growth. Three current active areas of research and net investment are robots and AI (reaction to declining workforce), autonomous driving and robotaxis (aging population) and biotechnology (aging population).

How will governments and societies cope with the triple problems of declining populations, the cost of mitigating global warming, and supporting an aging population? With dysfunctional societies and governments, large and growing budget deficits and national debts, opposition to immigration, on top of existing political, ideological and economic problems?

The solutions may have to be global. This suggests increasing conflict between national governments (and their power elites) protecting privileges, national identity and sovereingty. This appears to be happening in the European Union. Maybe national governments can by replaced by international organizations whose members are not national governments. Some possible alternatives might be multinational corporations and privately-funded NGOs.

Fighting global warming, especially reducing the burning of fossil fuels, may pose an economic threat to poor countries dependent on “extractive” industries. Developing and poor countries whose economies depend on exporting raw materials – fossil fuels, minerals, agricultural goods – may have a particularly difficult time.

Increasing population and rising real income in emerging economies, especially in Asia, are increasing the demand for energy. A dramatic increase in the number of cars in Asia is the main reason for the continuing increase in global demand for oil. Increased demand for electricity is being partly met with new power plants burning fossil fuels. For at least another generation, these trends will make it difficult to meet global goals to drastically slow down or stop global warming.

DEMOGRAPHICS AND DEMAND

Demographics also influence the demand side of economies. Americans spend more money on pet products and services than on childcare. In South Korea, which has the lowest birth rate in the world, consumers spend more money on “baby carriages” for pets than for human babies.

The large increase in the Hispanic population in the United States has created a demand for new types of food and restaurants, new source of popular music, Spanish language TV and radio, bi-lingual teachers, imported beer, shifts in airline travel, and higher income remittance services. Chili is the go-to food at many Super Bowl parties.

Companies use demographic information when planning marketing and advertising strategies. Changing demographics are analyzed when developing new products, changing product mix, and segmenting markets. The explosion of detailed demographic information about smaller and smaller segments, down to individuals, combined with online marketing technology and almost real-time data analysis algorithms, is revolutionizing marketing and advertising.

Companies are using this data and analysis to fine tune pricing strategies such as price discrimination and dynamic pricing.

An aging population has increased demand for health care, retirement communities, RVs, leisure activities such as cruises, robot companions (in Japan), and reverse mortgages. Autonomous driving vehicles and robotaxis should find a huge demand from older Americans, the number of whom are expected to double in the next 20 years.

South Korea has the lowest birth rate in the world. Sales of “baby carriages” for pets is greater than sales for human babies.

DEMOGRAPHICS AND SUPPLY

If there are labor shortages, the result may be larger salary increases. Corporations may then step-up investment in labor-saving technologies, especially if immigration in the wealthier regions is limited by the political backlash.

The shortage of workers may accelerate the development of robotics and AI to substitute for workers. Economic growth will depend more than in the past 250 years on economic development, innovation, new technology and productivity increases than on population and labor force growth. The quality of workers – their education, skills and knowledge – will be more important than their numbers.

Demographics will change attitudes about retirement, immigration, employment and unemployment, automation, work and leisure, and economic growth. Retirement programs may be especially strained as the ratio of retired people to working people goes up.

DEMOGRAPHICS AND FOOD PRODUCTION

Demographics is interacting with climate change in another important area – food production. Many scientists believe the most serious effect of climate change will be its impact on food production.

Global warming and more extreme weather events will make it more difficult to expand food production using current technology. As in other areas, trend projections can be changed by the development of new technology such as drought-resistant strains of grains.

The global population will include about 1.7 to 2.0 billion more people between now and the 2060s. The challenge here is how to feed them, on top of rising food consumption per capita in emerging economies and possible negative effects of rising temperatures on food production, especially in tropical areas.

Technology is a substitute for using more land. Yields per acre have gone up dramatically in the last 75 years. In the U.S in the last 100 years, tractors eventually replaced about 23 million horses and mules. About 60 million acres of cropland planted to feed the horses and mules were freed up. Farms became larger and reduced the number of workers needed to produce food. (The Economist, “A Short History of Tractors in English,” December 23, 2023, 20-21.)

Expanding agriculture, and highly productive modern agriculture, are now a threat to the environment and a cause of climate change and environmental degradation. Examples are the burning of tropical forests, depletion of aquifers, and heavy use of fossil fuels to run machinery and produce nitrogen fertilizer and farm chemicals.

Food producers in industrialized areas may find that declining populations mean lower sales. But exports to poorer regions with increasing populations may rise.

SPECULATIONS AND SUMMARY

Static or declining labor forces outside of Africa mean economic growth will mostly depend on increases in productivity. To counter demographic trends, technological innovation leading to high rates of productivity growth will be necessary to increase standards of living (real income per person).

Rising population in poor countries make high rates of economic growth both pressing and difficult. Emigration pressure from poor regions of the world will probably increase unless there are high rates of economic growth in poor countries.

Most of the world’s population increase will take place in cities and surrounding metropolitan areas, creating even larger massive urban areas. Large urban areas are increasing rapidly in poorer countries.

It is nearly impossible to predict technological and organizational change over the next 25 or 50 years. This will help determine if increases in productivity will counter the decrease in the size of the working population.

Demographics interact with global economic and environmental trends. More people mean more food and more consumption products and services, which means more energy and technological inputs. At the same time, new technology must reduce carbon-emitting energy and production processes.

BIBLIOGRAPHY

DEMOGRAPHICS AND ECONOMICS

I believe that projections and related analysis of demographics should be the starting point of any long-range planning. There is time to implement strategies that mitigate the probable negative impact of these trends. For the data, see

Global Demographics and Population Projections

The United States may be one country that avoids experiencing declining population and labor force. For details on how this may be possible, see

Demographics, Immigration and Future Economic Growth of the United States

Japan is already on the declining labor force and population curve. It also has the world’s oldest population. For details, see

Demographics and Population Projections of Japan

For a case study of the difficulties of an African country trying to develop, see

Nigeria

For a discussion on why England and America had the prerequisites to start the Industrial Revolution and continued to economically develop, see

THE INDUSTRIAL REVOLUTION IN ENGLAND

The Beginning of the Industrial Revolution in England

Adam Smith’s Pin Factory

Josiah Wedgwood, the Wedgwood Pottery Company, and the Beginning of the Industrial Revolution

A Cautionary Tale – England and the Industrial Revolution

AMERICAN ECONOMIC HISTORY

The Beginning of the Industrial Revolution in America

How America Industrialized and Became Wealthy

Alice in Wonderland and the Origins of Silicon Valley

AMERICAN HISTORY

The classic book on colonial immigration is David Hackett Fischer, Albion’s Seed. For a much shorter study of colonial American immigration, and an introduction to some long-term consequences, see

American Colonial History, 1607-1775

For a case study of a country (multi-national empire) undergoing industrialization, internal migration, the rise of new classes, and heightened social and political tensions, see

The Austro-Hungarian Empire Before World War I

October 16, 2025

Demographics, Immigration and Future Economic Growth of the United States

Americans

SUMMARY

Population projections and demographic changes, especially in the different age cohorts, should be seen along with large annual fiscal

deficits and the large and increasing national debt. The connection is the forecasts of large increases in the over-65 age group and the shrinking working age (and tax-paying) age group.

This essay should be read along with Government Finance 101. Fiscal Policy: Welcome to Alice in Wonderland.

UPDATE (November 2025)

Combining the recent changes in the birth rate and net

immigration, plus the “baked-in” projection that Americans over the age of 65 will increase by about 50 million by 2060 (see below), it seems likely that the number of Americans in the working ages cohort (15-64) will decrease at least 40 million by 2060. From about 230 million in 2025 to 190 million in 2060. Well before then, it seems likely that America, like other wealthy countries, will have extensive temporary worker permit programs to augment the native-born work force. This will probably be combined with much more extensive use of generative AI algorithms to handle much of the information analysis in organizations combined with greatly increased use of industrial robots.

UPDATE (October 2025)

Projections are changing rapidly because of the dramatic change in net immigration and a slight but continuous fall in the birth rate. Past long run projections, assuming historic levels of immigration, now seem high.

In January, the CBO’s projections showed “without immigration the population would shrink beginning in 2033” if birth rates stayed at current low levels. Without immigration, the CBO now expects the US population to start shrinking in 2031. If there is net negative immigration – more deportations and immigrants leaving the US – CBO projections indicate that the population may reach zero growth as early as around 2028.

At least half of immigrants, about 6 million, have entered the country in the last four years with some protection from immediate deportation, especially under asylum status. This protection is being withdrawn, even from immigrants who have been granted asylum status in the past.

There are some estimates that the total immigration population of the US is falling, about 1.5 million over the last year. This may indicate net negative immigration.

Since immigrants tend to be young adults and have a higher birth rate than the US-born population, lower levels of immigration, mass deportations, and voluntary leaving of immigrants could lower the projected birth rates.

UPDATE (September 2025)

The Congressional Budget Office (CBO) has updated its population projections based on a lower birth rate and lower net immigration. “The CBO projects that the U.S. population will increase from 350 million in 2025 to 367 million in 2055. Deaths will be greater than births starting around 2031; the gap gets larger over time. So all population growth after 2031 will be from net immigration. If net immigration falls to zero, the U.S. population will stop growing in 2031 and start a slow decrease after then.

UPDATE (August 2025)

Recent data from the Center for Disease Control and Prevention show the U.S. birth rate has fallen below 1.6, the lowest rate on record. With a falling birth rate, far fewer legal and illegal immigrants and increasing deportations, the United States is now on the same demographic falling population path as most other industrialized and industrializing countries.

Reported in The Economist, “America’s fertility crash reaches a new low,” August 5, 2025.

OVERVIEW OF POPULATION PROJECTIONS AND DEMOGRAPHIC CHANGES

The longer-run projection is a population of about 335 million people in 2100 (Lancet), about the same number as today. This projection was made with data up to 2017. There is a very wide range of uncertainty around this projection, partly depending on future birth rates and levels of immigration.

The U.S. birth rate is a little over 1.6, below the replacement level of 2.1. This is in line with some industrialized countries but higher than Japan, China, South Korea, and most European countries. If the birth rate stays about the same and there is little or no net immigration, the Lancet projection is too high. The U.S. maximum population may occur much sooner.

According to the Census Bureau, by 2030, one in five Americans will be 65 or older, which is up from less than one in 10 in 1960.

By 2060, the Population Reference Bureau expects the number of Americans 65 and older to more than double from 46 million today to over 98 million.

In less than two decades, older adults are set to outnumber kids for the first time in US history.

Because of demographics, the United States could have a relatively better economic future than almost any other industrial or industrializing country. Almost all these countries will experience declining populations (if levels of immigration do not substantially increase), many with population decreases of 30-50%. Also, most of these countries will have higher dependency ratios (a higher percent of old people) than the U.S. That is, the U.S. will have a relatively younger population. This is partly due to higher birth rates and high rates of immigration into the U.S. since the 1960s. With the current birth rate, the United States will reach maximum population later than the other industrial or developing countries.

DEMOGRAPHICS OF AMERICA: POPULATION PROJECTIONS

For generations, demographers considered America exceptional. High levels of immigration and relatively high fertility rates increased its population faster, and kept it more youthful, then its rich country peers in Europe. Americans within their borders were also exceptionally mobile.

America has had high population growth rates since the first immigrants. (For a detailed look at immigration in colonial times, see American Colonial History, 1607-1775) Since becoming a country, America’s population has gone from 4 million in 1790 (the first census) to 30 million in 1860 to the current (7/24) population of 343 million. The main reasons for America’s high population growth rates in the past have been high birth rates, immigration, relatively healthy and well-fed population, and industrialization (economic development and growth).

The period from 1950 to 2000 was unusual.

Population during this period was:

Year	Population Millions	Decade Increase Millions	Decade % Increase
1950	152
1960	176	24	16%
1970	200	24	12
1980	223	23	12
1990	248	25	11
2000	282	34	14
2010	311	29	10
2020	339	28	9

United Nations, Department of Economic and Social Affairs, Population Division,

World Population Prospects, The 2024 Revisions

Between 1950 and 2000, the U.S. population almost doubled. The American “baby boom” started after World War II, temporarily reversing the long-term decline in birth rates. In the middle of this period, partly due to more effective and more available birth control, starting around 1970, birth rates began a rapid decline. That was partly offset by an increase in immigration.

Since 2000, population growth rates have slowed. The 2020-2030 population growth rates will probably be lower, maybe around 6% for the decade, because of Covid, lower birth rates, and lower net migration rates (fewer immigrants and more past migrants leaving the United States).

The U.S. population at the beginning of 2024 was 343 million.

The UN projection continues:

2040 – 370 million

2050 – 381 million

2070s – 400 million

2100 – 421 million

The projected population in 2050 is only 11 million higher than 2040, a decade increase of only 3%. It is also 38 million people higher than 2024, an average increase of about 4-5% per decade.

After the 2070, the U.S. population will increase by less than one million per year. (United Nations, World Population Prospects, 2024 Revision.) These projections are high and like past United Nations projections will probably be lower in the future.

The alternative projection from Lancet expects the U.S. population to peak at 365 million in 2062 and then decline to 335 million in 2100, about the same number as today.

There is a very wide range of uncertainty around this projection, depending on future birth rates and levels of immigration. These projections were made from a starting point of higher birth rates and higher immigration numbers before Covid and current immigration and deportation policies. Birth rates have not returned to pre-Covid levels.

The U.S. birth rate has been around or slightly below replacement since 1975. The current (2024) U.S. birth rate at 1.62 is the lowest since records began in 1909. The population growth rate is 0.5% a year is low and falling. The 2025 population growth rate is expected to be around 0.2%.

About half of the decline in the birth rate since 1990 has been due to fewer teenage pregnancies.

Without past immigration and the children of immigrants, the U.S. population and labor force growth rate would have been lower in the past 40 years. And more of the total growth would have been in the over-65 age group. Immigrants tend to be young adults. If net immigration is zero or below, America’s birth rate will continue to fall.

The over-65 population is expected to double in the next 35 years, from 46 million now to over 98 million in 2060. (Population Reference Bureau) All of the total population increase will be in the over-65 group; the number of people under 65 will decline. This will increase the ratio of the over-65 age group to the prime labor force age group of 18-64. Again, depending on immigration, since immigrants tend to be younger than the native population.

Like other industrialized countries, older adults are expected to outnumber children (under 18) in less than two decades. (Population Reference Bureau)

The current birth rate is now about the same or slightly higher than that of many industrial countries. This might be partly due to the effects of Covid, although the current birth rate is the same as the birth rate during the Covid years of 2020-2022. But because of past immigration and its demographic effects, the long run decline in America’s population and the labor force should be less than most other industrialized countries.

The partial abortion ban will have little effect on future population growth. The number of abortions was going down even before the ban. Abortions are still legal in many states. Abortion pills accounted for over half of abortions before the ban. In Europe, pills account for about 70% of abortions.

The United States has a special problem. Because of the opioid/fentanyl epidemic and suicide, America’s adult mortality rate is increasing, mostly among white men under 55. A 15-year-old white male’s probability of dying before the age of 50 is now higher in America than in Bangladesh. The good news is that while still high, deaths from opioids and fentanyl are going down. The bad news is that a new, more powerful drug than fentanyl has begun to show up.

ECONOMIC GROWTH AND THE FUTURE SIZE OF THE LABOR FORCE

With birth rates below replacement, the future size of the labor force will depend critically on immigration. Future productivity increases will partly depend on immigrants’ young age composition, birth rate, and education and training.

The current (2024/25) unemployment rate is near a post-World War II low. The labor crunch is likely to persist for some time. The Pew Research Center projects no or very little growth in the working-age population over the next two decades. If the United States were to cut off the flow of new immigrants, Pew noted, the American working-age population would shrink.

The U.S. economy is growing at about 2-2½ percent a year. Employment is growing at about 1.0-1.5% a year; productivity is growing at about one percent a year. The size of the labor force (employed plus unemployed) is growing at about 0.3% per year; the growth rate is in long-term decline and may accelerate with a possible decrease of immigrant workers. This indicates that the growth in employment will probably be lower in the future than in the past.

The US youth (16-24 years old) labor force participation rate is dropping. Bureau of Labor Statistics data show that only 53.1% of young people (ages 16-24) were employed during the summer of 2025, about 15 percentage points less than in 2000. This might also lead to delayed marriages and family formation. This could affect the demand for housing.

This is puzzling. The minimum wage is much higher. College graduates have large amounts of student loan debt. Both of these should indicate higher labor force participation rates. But currently (second half of 2025), companies, based with uncertainty due to randomly changing tariffs, higher interest rates, and uncertainty about future consumption expenditures, are not hiring new entrants to the labor force.

One possibility is that traditional employers of young people, such as restaurants, are cutting back on total employment and also substituting automation.

Periods of high youth dropping out and unemployment are historically correlated with increases in social instability, drug use, crime, and political extremism.

Ed D’Agostino, “Unemployment’s Slow Burn,” October 10, 2025.

There’s another variable, one highlighted in The Wall Street Journal. Suzy Welch wrote an important commentary based on her research on Gen Z at NYU Stern School of Business. This group was born between 1997 and 2012, making them 13 to 28 years old today. Welch, former editor of the Harvard Business Review, took a look at Gen Z’s values. She found a stark disconnect between their values and those sought by today’s businesses.

Welch reports that only about 2% of Gen Z prioritize the values most employers seek—achievement, learning, and a strong drive to work. Instead, Gen Z places higher value on selfcare, authenticity, and helping others—commendable values on their own, but when they are your top priorities, you might find it hard to thrive at work.

Another possible source of disconnect of the young is the addictive attraction of the internet, especially video games, for males. Some researchers believe this is also the reason that male academic achievement is below female achievement and the gap is widening.

Combined with the high use of illegal drugs, these factors might help explain the dropout rate and lack of traditional values.

Most of the recent increase in the size of the labor force has been in the over-55 age group. This is the fastest growing age group and more older Americans are living longer, healthier, and working past retirement age. Also, millions of Americans own small businesses and apparently do not automatically retire just because they turn 65. Others have technical skills (tax accountants, dentists, various types of data analysts) that allow them to continuing working, often part-time or online.

There has been little increase in total employment in the under-55 age group. There are studies that suggest an aging labor force causes slower productivity growth. Also, possibly, less innovation. This may be a factor in the decline of new business formation.

Like other wealthy countries, economic growth will depend on productivity increases. Productivity growth in the ten years of this economic expansion (since 2009, before Covid) was the lowest for any ten-year period since the end of World War II. It is possible, however, that government statistics are not picking up the productivity increases from innovations in information technology.

DEMOGRAPHICS AND IMMIGRATION

The following report from 2015 shows how important immigration has been from the 1960s to the date of the report. This is in contrast to the situation since Covid and the Trump campaign against immigration.

According to a 2015 Pew Research Center report, “Immigrants and their children will represent 36 percent of the U.S. population in 2065, which equals or surpasses the peak levels last seen around the turn of the 20th century. That share will represent a doubling since 1965 (18 percent) and a notable rise from today’s 26 percent.” Pew estimates that as of March 2025, immigrants and their U.S.-born children comprise about 28% of the U.S. population, totaling over 93 million people. These projections are now in doubt because of the drastic reduction of immigrants seeking permanent residence.

The report states that “the arrival of new immigrants and the births of their children and grandchildren accounted for 55 percent of the U.S. population increase since 1964…The projections also show that 88 percent of the increase in population until 2065 is linked to future immigrants and their descendants.”

Over the last two decades, immigrants and their children accounted for more than half the growth of the population of 25- to 64-year-olds, according to the Pew analysis. Over the next 20 years, immigrants and their children will have to make up for the net deficit in the labor force left by the retirement of the baby boom generation. If immigration were to continue at recent levels, around 2050 the United States would have the lowest percent of retirement-age population of any developed country. Even lower than China. This means more tax-paying workers per retired person than any other industrialized country.

Immigration over the last 50 years has impacted American demographics. The American population continues to grow despite below replacement birthrates of native-born inhabitants. Immigrants tend to be young, increasing the size of the workforce and slowing the increase of the average age of the population. The education and skills they bring is a “free lunch” for the American economy. A high percent of Americans who have won Nobel prizes were immigrants or the children of immigrants.

Immigrants and their children have traditionally provided a disproportionate share of entrepreneurs. “Immigrants start companies at twice the rate of native Americans. Almost half the companies in the Fortune 500 were started by immigrants or their children.” (Austan Goolsbee, “Sharp Cuts in Immigration Threaten U.S. Economy,” New York Times Sunday Business, October 13, 2019, 4). One of the founders of Google was from Russia. The current CEOs of Microsoft and Google are from India and the CEOs of Nvidia and AMD are from Taiwan.

IMMIGRATION POLICY AND STATISTICS

Currently, there are 9 million people in the United States with green cards, which means they are on a path to citizenship. During the Biden administration, about 3.5 million people became naturalized citizens, almost one million a year. (New York Times, “Immigrants are Becoming U.S. Citizens at Fastest Clip in Years,” August 12, 2024, From the photos in the article, it appears a high percent are young people.)

America has an estimated 11-14 million illegal immigrants. But this is more complicated than the political rhetoric and sensationalist journalism indicates. Many would have eventually attain some type of legal status leading to permanent residence; less now because of deportations and blocking the part to residence and citizenship.

The United States does not have a coherent immigration policy. The last immigration law was passed in 1990. Attempts to modernize immigration policy has been stymied because of difference between Democrats and Republicans.

The Trump administration reduced legal immigration and plans to make it difficult for foreign, especially Chinese, students to attend American colleges. In the past, foreign students who remained in the United States were a major source of scientists, technology workers and entrepreneurs. Over half of the science, math and engineering graduate students in the U.S. are from foreign countries.

Discouraging immigration, limiting foreign work visas, and foreign graduate students will reduce major sources of American innovation, technology entrepreneurs, and productivity growth in the future. It will also eliminate the major source of the overall growth in the labor force.

DEMOGRAPHICS AND ECONOMIC GROWTH

Immigration over the last 50 years has impacted American demographics. The American population continues to grow despite below replacement birth rates of native-born inhabitants. Immigrants tend to be young, increasing the size of the workforce. The education and skills they bring is a “free lunch” for the American economy. On the other hand, the increasing number of older Americans will make it difficult to reduce yearly deficits and fund programs for economic growth.

The changing demographics of the United States may be influencing other variables besides economic growth. Changing demographics might interact in the future with changing social

attitudes, global warming and how to combat it, and America’s foreign policy.

POLITICAL CONSEQUENCES OF DEMOGRAPHIC TRENDS

Immigration since 1960 has changed the ethnic and racial composition of America. Latinos make up about 20% of American population; Asians about 10%. There are about twice as many Latinos than blacks; there are almost as many Asians as blacks. This will change the influence of minority groups. (New York Times, February 22, 2021).

The continuing change in the age distribution of the population will have political and economic consequences. For example, when the Social Security trust fund runs out around 2034 (maybe earlier), benefits will drop by at least 20%. With seniors on Social Security making up a large minority of voters, the government will probably make up the shortfall out of general tax revenue. This could increase federal yearly deficits or there would be less money for other programs.

Fewer taxpayers in the future will have to support the greatly increased public health care costs of an aging population living longer.

It could be that the United States will have a better economic future than almost any other country because of demographics. That partly depends on future immigration policies. And there probably will be internal political conflict over the distribution of income by age group.

SUMMARY

With labor force growth rates falling and productivity not increasing, the labor force aging, and legal immigration restricted, long-term U.S. economic growth rates may be lower in the future – below 2% – than currently. Increases in per capita income will depend on productivity increases from new technology, including the widespread application of robotics, new business software, artificial intelligence, and technology developed in the future. It is too early to predict what the long-run impact of artificial intelligence will be on economic growth and employment.

SOURCES:

S.E. Vollcet et. al., “Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100: a forecasting analysis for the Global Burden of Disease Study,” Lancet, July 14, 2020, 1285-1306. https://doi.org/10.1016/ S0140-6736(20)30677-2.

Probably the best estimates of long-run population projections. Also includes “uncertainty internals” (two standard deviations from mean estimate). They become wider the further out the projection.

United Nations, Department of Economic and Social Affairs, Population Division,

World Population Prospects, The 2024 Revisions

The United Nations population projections used here are the most recent “medium,” most likely projections. They are lower than the UN projections made two years earlier. It is likely that future UN projections will revise population numbers downward.

Pew Research Center

Particularly strong on immigration data and analysis

United States Census Bureau (census.gov)

Statistica

Population Reference Bureau

Worldometer (for current figures)

Numerous articles in The Economist

Again, population projection and demographic changes should be thought of in connection with government deficits:

Government Finance 101. Fiscal Policy: Welcome to Alice in Wonderland.

For population projections and analysis for Japan and the world, see

Demographics and Population Projections of Japan

In contrast to the United States and other countries, Japan is further along the declining population and labor force curve than almost any other country and may be a preview of the future of many countries outside of Africa. Japan has the world’s oldest population. There is limited but rising immigration, which has triggered a political backlash.

For an analysis of global demographics and long-run population projections, see

Global Demographics and Population Projections

Demographics and Economic Growth

For a look at current global and American use of industrial and humanoid robots, see

Robots. “It’s Alive.”

Includes some (hopefully) satirical comments about the future use of robots.

October 13, 2025