Last week in this space, Dr. Mathews wrote that labor force changes we are tempted to blame on the pandemic or on pandemic relief policies are more accurately considered part of a demographics story than a pandemic story. Our labor force has shrunk because our population has aged.
It is good news that the labor force was less impacted by the pandemic than it may seem on the surface. It is not especially convenient, though, that we cannot just blame our gaps on the pandemic and wait for time to heal all wounds. An aging, retiring workforce is a problem that will only be exacerbated by time if we are not intentional about addressing it.
There are a couple of policy approaches to alleviating the economic stress brought on by our aging workforce. One is to encourage workers to work longer and/or more productive careers. My colleague Dr. Heather Farley will take a look at this policy challenge in her column next week.
The second policy approach, which could be taken simultaneously with the work longer approach, is to expand the working age population. The annual rate of population growth in Europe and North America has been declining since the early 2000’s, and the UN predicts that by 2075, the death rate will outpace the birth rate in the US.
This is not good news for our labor force, but we can do something about it. There’s a ton of literature showing that our policy choices and priorities have a direct impact on fertility choices.
In 2021, Norwegian sociologists Bergvik, Fauske, and Hart published a review of 35 other studies on the relationships between family policy and fertility in Europe, the US, Canada, and Australia. They found that childcare availability, cash transfers to parents, expanded parental leave, and subsidizing assisted reproductive treatments all, to varying degrees, encourage increased fertility.
Increasing the fertility rate is not the only way to expand our workforce. If you want more people in your house but don’t want to have a baby, invite someone over! Immigration!
While our native born population is aging, immigrants are a major source of younger, working-age adults in the U.S.
In the US, only 61.5% of native born residents are between ages 18 and 64. Among foreign-born US residents, that statistic is 78.1%.
In Georgia, the difference is more pronounced, with 62.3% of native born Georgians and 82.8% of foreign-born Georgians between 18 and 64.
Immigrants are not only more likely to be younger than native born Americans; they also are more likely to go to work.
Native born Americans have a 62.8% labor force participation rate and a 58.9% employment rate. Foreign born American residents have a 66.5% participation rate and a 63.2% employment rate.
In Georgia, the native born participation and employment rates are 63.3% and 59.2%, respectively. The foreign born rates are 70.2% and 67.5%.
These numbers include both documented and undocumented workers.
Immigrants to the US are younger and more likely to work than native-born Americans, and, as I have written before for this column, several studies in the economics literature find that foreign-born workers, including undocumented immigrants, do not push native-born workers out of the labor force. On the contrary, the presence of foreign-born workers often opens doors for creation of new jobs for native-born workers.
Our workforce is aging, and the resulting strain on our economy is palpable. If we are going to effectively relieve the pressure and continue a growth trajectory for the US economy, our policy response should be both pro-family and pro-immigrant.
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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.
Reg Murphy Center