Is the U.S. Labor Market in a "Demographic Desert?"

 Is the U.S. Labor Market in a "Demographic Desert?"

Walk down any street in the United States and you will see “Help Wanted,” “Now Hiring “and “$1,500 hiring Bonus” signs in all directions. While industries like airlines, restaurants and hospitality face extreme shortages of labor, shortages persist in about every segment of the U.S. economy. In May 2022, there were 1.9 job openings per every 1 person unemployed.

A few facts to consider:

• More Baby Boomers are retiring every day. This accelerated during Covid.

There are currently fifty-two million people in retirement. This trend was exacerbated during the pandemic. In fact, there were 3.3 million more retirees in October 2021 than in January 2020

 

• International immigration has been decreasing year over year.

According to the US Census Bureau, international immigration in 2021 was 230,000 lower than in 2020 and 324,000 lower than 2019

 

• Gen Z and the subsequent generations entering the workforce are a smaller cohort than the Baby Boomers

Baby Boomers number about 70.68 million while Generation Z is over 3.6 million smaller at 67 million. The “Zoomies” (Generation Alpha) those born 2011-2025 is projected to be smaller still.

• Workers are NOT just staying home post pandemic.

The unemployment rate in May was 3.6%. The labor participation rate in May 2022 is now approaching that of February 2020. The exception could be women who are not returning to the workforce due to the high cost/lack of availability of childcare or those who, post-pandemic, have decided to remain at home and home school their children

 

• Birth rates in the US continue have been flat or have declined every year since 2007. In fact, birthrates have fallen by 20% since 2007

These facts among other conditions do not bode well for a recovery of the labor force any time soon. Now, most demographers and economists who follow demographics are predicting a very tight labor market throughout this decade. Peter Zeihan, a geopolitical strategist, had the depressing prediction that, short of a major downturn or depression, he did not see the labor market “normalizing” until the children of the millennials enter the workforce.

What do you think? Is the U.S. Labor Market in a Demographic Desert? What are the economic implications? What do organizations need to do to adjust? Please comment.