Business Insider
America is refusing to do the one simple thing that would solve the Great People Shortage
Gaby Del Valle – May 4, 2023
Two simple words: more immigrants
America needs more workers.
The United States is already running low on critical positions such as nurses, home-health aides, farmworkers, and truckers. And there are fewer young people on the way to make up the difference: The National Bureau of Economic Research found that birth rates in the US have declined by nearly 20% since 2007, while the fertility rate has been below the replacement level for decades.
That means that unless people start having a lot more kids, the US population could eventually start to shrink — just like China’s population has. The problem, though, isn’t just a smaller population, but an aging one. With fewer people to pay into Social Security to support the growing number of retirees and fewer workers in critical industries, including healthcare and agriculture, a declining population would have devastating consequences for the American economy.
“This is the issue of the future, because this is going to become the first-order issue for all kinds of industries in America,” Lant Pritchett, a development economist and RISE Research director at Oxford University’s Blavatnik School of Government, told me. “They just won’t be able to attract workers.”
Politicians have suggested various ways to encourage people to have more children: “We will support baby bonuses for a new baby boom,” former President Donald Trump said at a conference in March. But even if these policies went into effect, we’d still have to wait for those kids to grow up before they could enter the workforce. The labor imbalance is already here, and the economy needs more workers now. That’s why a growing number of demographers, economists, and business executives support letting more immigrants into the US as a more immediate way to fill in the gaps. President Joe Biden’s economic advisors even said in March that more legal immigration is needed to boost the economy. And while immigration is a politically touchy solution, the quickly aging US economy is running out of options to keep itself afloat.
“The only solution is more workers,” Pritchett said.
America’s People Shortage
The US fertility rate first dipped below the replacement level — the rate needed to sustain the population, which is about 2.1 births per woman — in the 1970s. After rebounding in the 1990s and early 2000s, the rate began a steady decline in 2007 that has not reversed. While the US population has managed to avoid an outright drop, population growth reached an unprecedented low of 0.12% in 2021. Some of this loss can be attributed to the deaths of over 1 million Americans during the pandemic, but the COVID crisis only exacerbated preexisting demographic trends. Americans are getting older: The median age of the US population has increased by roughly 3.5 years since 2000, according to the Census Bureau, and 2021 saw the largest upward shift in the population age ever recorded.
According to estimates, these trends won’t reverse anytime soon. The Congressional Budget Office estimated this year that population growth will slow between 2023 and 2053, and that by 2042, any growth will be from immigration, not births. Kenneth Johnson, a professor of sociology and a senior demographer at the University of New Hampshire, pointed out that the demographic mismatch is even more dire when you look at county-by-county data. Deaths outnumbered births in two-thirds of US counties in 2021, creating a phenomenon that demographers call “natural decrease.” Even before the pandemic, roughly half of all US counties had more deaths than births, he said.
Johnson said that one big debate among demographers is whether people are simply delaying having children or just putting it off altogether. It’s possible that a combination of factors, including the lingering effects of the Great Recession, coupled with crushing student-loan debt, the rising cost of housing, and the pandemic simply pushed back the timeline for many people to have children. After all, birth rates did rise slightly in 2021, likely because of stimulus payments and the flexibility of remote work. But Johnson told me, “Right now, my impression is that a fair number of those babies aren’t going to be born.”
Policymakers and economists have suggested myriad ways to increase the number of babies people are having — ranging from “baby bonds” to a stronger social-safety net. But some ideas to boost fertility come with a sinister undercurrent. The preoccupation with increasing birth rates has particularly taken hold on the political right, which has long had a fascination with the racist conspiracy theory that there is a global plot to “replace” white Americans with immigrants. Trump’s baby-boom plan, for instance, may have been inspired by Hungary’s family-planning program, which is designed to encourage white heterosexual couples to have more children. “Migration for us is surrender,” Hungary’s far-right Prime Minister Viktor Orbán said in 2019.
Kenneth Johnson, University of New Hampshire
The pronatalist movement, which argues that people should be having more babies, has also grabbed hold in Silicon Valley — but some of its adherents don’t believe that just anyone should be having children. Tech billionaires like Elon Musk (who has 10 children) have become convinced that they need to have lots of children to save the human race. And one Silicon Valley couple has started a campaign to encourage more people like themselves to have children, speaking openly about their use of reproduction technology to select embryos based on genetic testing.
But so far, policies designed to induce people into having more kids have been a bust. Japan has struggled with a declining birthrate for decades despite efforts to encourage families to have more children. Earlier this year, Prime Minister Fumio Kishida warned that Japan was “on the brink of not being able to maintain social functions” due to population decline, adding that it was “now or never” to solve the problem. China’s population is both aging and shrinking as well, and after decades of restrictive family-planning policies, the country is trying to change course. In recent years, China has reversed its notorious “one-child policy” and started restricting abortions for “nonmedical reasons.” But the country’s population is still declining.
How immigration can boost the economy
In the face of looming population decline and resulting labor shortages, there is a clear answer staring the US in the face: immigration. Allowing more people to become Americans would not only help immediately alleviate some of the labor shortages plaguing the US economy but would also help to stem some of the country’s long-term population decline. Historically, the median age of immigrants has been younger than the median American age. And people of working age — meaning those between 18 and 64 — comprised 77% of the immigrant population in 2021, compared to just 59% of the US-born population that same year. Immigrants, Johnson said, “bring not only themselves,” but also the potential for more children, further boosting the US population and productivity.
Though current immigration rates — particularly the number of migrants apprehended at the border — are the subject of contentious national debate, recent Census data shows that the total number of immigrants arriving in the country isn’t enough to offset population losses. Between 2021 and 2022, the number of immigrants in the 20 most-populous counties in the country nearly tripled, but most of those counties still saw their overall populations decline. Despite increased immigration, Los Angeles County’s population declined by 90,000 people in 2022 — and by 180,000 people the previous year.
In order to truly prevent a people shortage, the US will need to let more people into the country. And there’s already evidence that immigrants can help boost local economies — and transform entire cities. Immigrants are 80% more likely to start a business than people born in the US, and recent data shows that they’ve started more than 25% of businesses in seven of the eight fastest-growing sectors of the US economy. Because of that, research has found that immigrants actually create more jobs than they take. Plus, across the US, several key industries — including agriculture, meatpacking, manufacturing, and healthcare — depend on immigrant labor. And if we boost immigration rates, the incoming workers could help ease labor shortages in these critical fields.
From central Indiana to New York City, businesses are struggling because they can’t hire enough workers to fill their open roles. “If we don’t do this and have a positive conversation about immigration today, it will continue to crush Hoosier households and economy,” Patrick Tamm, the president and CEO of the Indiana Restaurant and Lodging Association, told a local publication.
Take Utica, New York. The city’s population declined from 100,410 people in 1960 to just over 60,500 in 2000. But instead of facing extinction, the postindustrial city’s population slowly began rebounding in the 1990s with the arrival of Bosnian immigrants fleeing the Yugoslav Wars, who were followed by refugees from Myanmar in the 2000s and, more recently, Bantu refugees from Somalia. The city’s relatively low cost of living has made it a hub for people fleeing conflicts around the world, who resettle with the help of refugee-aid organizations. Though the city’s population still hovers around 60,000, it would be much lower if not for the resettled refugees and their families who now make up about 25% of Utica’s population.
“The refugee population has helped the city’s economy tremendously,” Brian Thomas, the commissioner of Utica’s Department of Urban and Economic Development, told CNBC.
Political compromise?
Immigration has, of course, been a political hot potato for decades. One 2022 survey found that one-third of Americans and two-thirds of Republicans believe in tenets of the so-called “Great Replacement” theory. A February Gallup poll found that just 28% of responding Americans are satisfied with our current immigration rates, and most of those who are dissatisfied want immigration to decrease. But even without a huge overhaul of the entire system, there are clear solutions that could help welcome more talented, much-needed workers to America.
One way the US could encourage more immigration is by focusing on temporary visas for specific industries that need workers. Japan took this approach and quietly opened itself to foreign workers in 2019 when it began allowing “specific skilled workers” in 14 key industries. These workers are allowed to stay in the country for up to five years on temporary labor visas — but they aren’t allowed to bring their families. Lawmakers hoped that the policy would attract around 345,000 workers in a five-year period, or an average of 5,750 people each month. Pritchett said this model could also work in the United States.
“A lot of people in the world would love to come work in a high-productivity place and would be more than willing to do so not in an exploitative way, but on a term-limited basis,” he told me.
There are already two guest-worker programs in the United States: the H-2A program for temporary agricultural laborers and the H-2B program for temporary non-agricultural workers. Both programs give temporary work visas to people tied to specific employers. The current programs are not perfect, however, and workers on H-2A and H-2B visas have sounded the alarm over squalid living conditions, wage theft, and exploitation. And the treatment of workers in the country on temporary visas has been a problem for decades. For these programs to be expanded, there would need to be significant safeguards in place to ensure workers aren’t exploited.
And there are other approaches that could work. Tara Watson, an economist and the director of the Center on Children and Families at the Brookings Institution, said that solutions focused on bringing people here on a long-term basis are more in line with what the US needs. “I’d rather see more expansion on the permanent side than the temporary side, because I think the challenges that we’re facing are long-run challenges and they really require long-run solutions,” Watson said.
She said that a good place to start would be expanding both family- and employment-based migration by simply allocating more visas in each category. Scaling up both programs would make an immediate difference, she said. Other simple solutions include lifting the cap on the number of skill-based green cards issued to immigrants from each country and letting people on nonimmigrant visas renew their status in the United States, rather than having to leave the country to do so.
Regardless of the approach, the biggest hurdle is a matter of political will. “I think there will be some resistance to this as a solution,” said Watson. “But I also think it’s essentially an imperative.” After all, the US is running out of options, and soon its growing people shortage is going to spell economic disaster.
Watson said that the economic forces will eventually overwhelm the “white-nationalist far right” that has “played an outsize influence” on the immigration debate. “If we don’t solve this problem in the next couple of years, it’s going to come to a head,” she said.
Gaby Del Valle is a writer and reporter living in Brooklyn. She coauthors the immigration newsletter BORDER/LINES.
