Demographic Impacts

A lot of the discussion about COVID’s impact on the labor market (“Great Resignation” or “Great Reshuffle”) misses the longer demographic trend. The growth rate of the U.S. population is the lowest it has been in over 120 years. We have been losing workforce for years relative to the total population due to increasing average age. There are simply more people retiring than are entering the workforce. The failure to respond to COVID just pushed us ahead on the curve.

Businesses that depend on a market growing organically through population growth are adversely affected. Businesses that depend on labor are adversely affected. This is not a transient problem that will go away. It will accelerate. We will have to work ever harder to recruit and retain labor.

Businesses exporting to growing markets will have an advantage. Businesses creating more value with fewer employees will have an advantage.

Many developed countries are facing the same demographic challenge. The countries that can effectively recruit immigrants will have an advantage.