The United States is on pace for the slowest population growth in a century and economists worry it will hamper economic recovery. The confluence of rising mortality and declining birth and immigration rates threatens to exacerbate the country’s years-long decline in population growth and threatens to impact the economy.
The number of American residents is expected to increase by just 700,000, or about 0.2%, in 2020, according to Moody’s Analytics. That would put the country on its slowest pace since 1918.
The trend could “make the economy less dynamic,” Moody’s chief economist Mark Zandi told the outlet. “Fewer people means fewer homes (purchased), fewer cars, fewer vacations.”
“Economic growth is driven by a combination of productivity and population, the number of workers,” Michael Graetz, a former senior Treasury Department official and co-author of “The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It,” told Salon. “So when you’ve got a smaller number of workers, you’re going to have a smaller economic growth.”
Economists are concerned about “dependency ratios,” said Graetz, who is now a professor at Columbia University. “Retirees and children are not producing wage income. So the decline in the birth rate reduces the dependency ratio because it reduces the number of children.”
With the ratio of workers to retirees increasing, “more of the workers’ income will have to go to support expenditures on retirees unless those expenditures are dramatically cut,” he said, referring to Social Security benefits and health care expenses.
U.S. population growth has been in decline for years. The Census Bureau estimated that the country’s population has grown just 8% over the last decade, the slowest rate since the 1930s, when the Great Depression and immigration restrictions slowed population growth to 7.2%.
And the problem is hardly limited to the U.S., with many European and Asian countries seeing even slower growth rates. The long-term trend has resulted in an aging population, with the number of retirees rising by an estimated 37% over the last decade, while the fertility rate fell to its lowest level since the government began tracking it in the early 1900s.
The most obvious way to address the slowdown is to increase immigration, Graetz argued.
The pandemic “has accelerated the use of robotics and other technologies to take on tasks that are more fraught during the pandemic” Elisabeth Reynolds, the head of the Massachusetts Institute of Technology’s Task Force on the Work of the Future, told the Financial Times. “It is fair to assume that some firms have learned how to maintain their productivity with fewer workers and they will not unlearn what they have learned.”
A recent paper by researchers at MIT and Boston University found that robots could replace as many as 2 million people in manufacturing alone by 2025. Many telecommunications firms, call centers, customer service firms, and food-service companies have already downsized their workforces.
The gig economy and the number of part-time and temporary jobs, particularly with the decline of union power across the country, has expanded.
“The combination of that, with the fact that an adult in the United States today can expect to change jobs maybe a dozen times over their lifetime, creates a lot of insecurity for people who are not well equipped to deal with it,” Graetz explained. “Temporary and part-time work doesn’t supply a living, doesn’t enable you to know that you’re going to be able to pay for food, clothing, all the things that your family needs.”
“What the pandemic has done… is to shine a spotlight on just how precarious workers’ and their families’ connections are to the workforce and to jobs. And how quickly jobs can disappear unexpectedly,” Graetz said. “A lot of those jobs that have disappeared, and a lot of the businesses that have gone, that have closed as a result of the pandemic, and are not coming back..."