In 2000, there were about 27 Americans above the age of 65 for every 100 Americans of prime working age (between the ages of 20 and 49). By 2020, this number had increased to 39. By 2040, it will have risen to 54. Because these changes are driven mostly by a decline in fertility, the U.S. workforce will also soon begin to grow more slowly. If immigration into the United States is reduced, this will only contribute to the aging problem. We’ll need more and more people to stay in the workplace longer as has been happening in Japan, Germany, and South Korea, all places that have aged almost twice as rapidly as the United States is aging right now.
The world is set to have 200 million fewer people than previously expected by 2100, according to a UN report that highlights the dramatic impact of falling birth rates on the global population. The latest edition of the World Population Prospects, a report published by the UN every two years, said the number of people would grow from 8.2 billion in 2024 to a maximum of around 10.3 billion in 2080, before declining to around 10.2bn by the end of the century. This is the first time the UN has projected global population decline.
Globally, women are having one child fewer, on average, than they did around 1990. In more than half of all countries, the average number of live births per woman is already below 2.1, the level at which the population is stable. In nearly a fifth of all jurisdictions covered by the report — including China, Italy, South Korea and Spain — there were fewer than 1.4 live births per woman, a level described by the UN as “ultra low.” It is believed that China, Germany and Japan have already peaked in population and that Europe’s population is set to shrink by 21% in 2100 from its peak in 2020.
This may be good for climate change, but it’s pretty awful for how we’ve typically thought about economic growth. A shrinking working-age population and a higher proportion of older people will add pressure on public finances.
So, what do we do? Creating public policy that encourages more babies (although this hasn’t proven to be effective in most countries), encourage immigration from those parts of the world that have the fastest population growth like Africa, Latin America, and the Middle East (but that’s feels politically impossible these days, use technology and AI to do much of the knowledge work that has done by humans (but this is already proving to be disruptive in the short-term), or encourage older workers to say in the workplace longer (this works some places, but look at what happened in France a couple of years ago when they raised the retirement age from 62 to 64: all-out riots).
These numbers suggest that more companies need to invest in intergenerational collaboration and attracting and retaining modern elders in their workforce.
-Chip