Each scenario is then analyzed to determine what life would be like, what problems would have to be addressed, and what steps the community could take to make the scenario as liveable as possible. It is a labor-intensive approach to community planning. If done correctly, however, it can be extremely helpful in getting a community to face a realistic range of options and reach conclusions about the future that are much more helpful than an approach based on a singular vision. In particular, it gets communities to face the possibility of unpleasant future events – something which can be very useful if life doesn’t go as planned.
For this Part 2 look at population change, I’m going to do something similar in that I’m going to try to analyze a possible future scenario. Due to limitations on space (not to mention your patience and my time), I’m just going to look at one scenario, not many. But I’m going to select a relatively negative one that should highlight the potential pitfalls that many of the population naysayers are fretting about.
Assumed Parameters for the Future
The U.S. Census Bureau does a range of projections that are updated every year or two. I’m going to use the 2023 “low” projection, which is certainly not the worst possible population outcome. It is, however, a professionally done projection (with lots of supporting detail) which is significantly below the middle or main projection series that is typically used for most official decisions. The main projection, for example, shows the US population peaking in 2080 at 370 million people and then dropping slightly to 366 million by 2100. The low projection, on the other hand, has the population peaking in 2043 at 345 million people (just 11 million more than today’s population) and declining to 319 million by 2100. [1]
It is always entertaining to talk about apocalyptic changes because they make such great headlines, but the fact of the matter is that the apocalypse simply doesn’t arrive very often. This is why I’m so skeptical of the gloom-and-doom population forecasts. The projection I have chosen is lower than what most professional demographers think will happen, but it is at least reasonably plausible. Besides, if you want to be apocalyptic, you should focus on the death side of the population equation because both mankind and nature have been quite creative in figuring out how to kill people. Births may go up or births may go down, but they don’t go away because there is a strong human urge to procreate.
Aside from the possibility of World War III, the biggest population variable for our country is going to be the rate of immigration. The low projection that I will be using includes immigration rates that are significantly lower than what we have experienced in recent decades.
All of this comes with one enormous caveat – a population projection to the year 2100 has little science or professional judgment involved. It is simply a mathematical extension of assumed trends. It is as much fiction as anything. Seventy six years into the future is three full generations in a world where the pace of change in just one generation is breathtaking. I am doing it simply to illustrate what might happen if trends remain unchanged, but the likelihood of trends going unchanged for that long is extremely low.
Think of going back in time 76 years to 1948. The birth rate was more than double what it is now and the country was entering what would come to be known as the “baby boom.” How many people would have predicted that birth rates would fall so dramatically despite huge advancements in our standard of living? How many people would have predicted that the average person getting married would be nearly 30 and that young couples would be comparing the advantages of having a baby with getting a dog? Not many, and our ability to see what life will be like in 2100 is equally blurry.
But, IF IT DID HAPPEN, here is what the numbers might look like. I’m going to focus on three age groups to keep things simple: ages 0 through 14 (children), ages 15 through 64 (workers), and ages 65 and up (retirees). These proxies have some weaknesses, but the simplification they allow is worth it. I’m also going to focus on three 25-year increments: 2025 to 2050, to 2075 and to 2100. Each step is roughly one generation.
U.S. Population Estimates by Age Group (in thousands)
Source: U.S. Census Bureau - Low Projection
As you would expect with low birth rates, the number of young people declines. In this scenario, it goes from roughly 58 million children in 2025 to less than 42 million in 2100, a drop of 28 percent. The middle age range drops as well, although not as quickly. It starts at 216 million in 2025 and ends up at 180 million by 2100. Although not everyone in this age range will actually be in the labor force, it represents a loss of 36 million potential workers. The elderly group is the only one that gains, going from roughly 63 million in 2025 to nearly 98 million in 2100, an increase of more than 50 percent.
This means that the ratio of people of working age compared with people who typically don’t work (children and retirees) grows to worrisome levels. Known as the dependency ratio (and expressed as the number of “dependents” per 100 people of working age), it goes from 56 in 2025 to almost 78 in 2100. Especially worrying is that these “dependents” are increasingly retirees who are big users of medicare and social security.
Equally important is that the number of females of childbearing age declines steadily from roughly 76 million in 2025 to less than 60 million in 2100. Fewer females of childbearing age means fewer babies even if birth rates start to go back up. This is part of the demographic momentum that has some people so freaked out. They see declining birth rates as a self-reinforcing trend that doesn’t end until humankind is basically extinct. While possible, it is certainly not inevitable, nor even likely in my opinion. The trend can be reversed, it just takes several generations of women with birth rates above the replacement rate of 2.1 births per woman.
Ramifications for Our Country and Society
So what do the numbers mean in terms of changes to our everyday life? Aside from human extinction, many experts are predicting a variety of mostly negative effects that we would have to deal with as a society. Although I’m going to be focused on the U.S., these impacts are shared to much the same degree with every country that is experiencing low birth rates and population decline.
Declining rate of production. Fewer workers is likely to lead to labor shortages which could easily put a major crimp in our long-standing pattern of economic growth. It is not clear which industries would be most affected, but my guess is that the industries which pay the worst or which have the least attractive jobs will suffer the most (e.g. the fast food business or elder-care assistants). Companies will either have to figure out how to do more with fewer workers or face a future where output shrinks instead of grows.
Inflation. Labor shortages will lead to increased labor costs as companies bid more and more for increasingly scarce workers. Increased labor costs combined with potential product shortages (due to labor shortages) could fuel a general rise in the cost of day-to-day life. There are likely to be some anti-inflationary forces at the same time so it is not clear how things will balance out, but labor intensive industries in particular will feel inflationary pressure.
Lowered consumer expenditures. According to the U.S. Bureau of Economic Analysis, consumer spending makes up 65 to 70 percent of our country’s gross domestic product (GDP). Fewer people mean fewer purchases, which is bad for retailers as well as a significant chunk of the manufacturing industry. Declines in the number of children and working age people are particularly painful because they tend to buy more stuff. Old people already have closets full of clothes and houses full of furniture, for example, and thus are less likely to buy as much.
Funding shortages for Medicare and Social Security. Both of these Federal programs depend to a significant degree on payroll taxes paid by the current workforce to fund benefits to retirees. As the number of workers decline and the number of retirees grows, the already tenuous balance in funding will become unsustainable given current funding sources. A 2023 Gallup poll found that 47 percent of non-retired U.S. workers believe that Social Security will not be able to pay them benefits when they retire. This percentage has been relatively stable for several decades, but the fear is much more justified as the dependency ratio increases.
Declining influence on world affairs. America’s ascendency to world leadership starting roughly one hundred years ago was fueled in part by a young and rapidly growing population coupled with a robust economy and an innovative manufacturing sector. How will our world image change if we are rapidly aging and losing population? Will the free world look elsewhere for leadership? For a country that touts its “exceptionalism,” a decline in global influence would be hard to swallow.
Shifting politics. Retirees have always been an important political bloc because they are such reliable voters, but their importance will increase dramatically as their population numbers grow. Issues that are of particular concern to older voters – such as long-term medical care or enhanced crime fighting initiatives – are likely to gain more traction while issues that are important to younger voters – such as climate change or gay rights – may be put on the back burner.
Withering school districts. As the population under the age of 18 continues to fall, there will be corresponding drops in student enrollment numbers even in suburban districts that grew rapidly in the past. This means that there will be a surplus of both teachers and school facilities that will need to be downsized. It also means that political support for educational expenditures and school bond issues may be harder to come by, which may lead to school infrastructure that is increasingly antiquated.
Real estate crash. The commercial real estate market is already struggling due to low office occupancy rates, but stagnant or falling population numbers could make it much worse. Fewer workers would push commercial vacancy rates even higher, and if the overall population falls then the housing market could flip from housing shortages to housing surpluses. Buildings don’t last forever so there will always be some demand for new development, but it could be a fraction of what it is now which would decimate the real estate industry.
Tax base erosion. There have only been a handful of cities that have actually gone bankrupt, but they share a common attribute: falling populations. Local governments seem particularly susceptible to the delusion that their economy and population numbers will keep expanding more or less indefinitely. This is why local governments and their economic development arms are constantly pushing for new growth, even if many of their constituents are fed up with the negative ripple effects. Future demographic changes threaten the stability of government revenue streams in several ways: income tax revenue may fall if the number of workers declines, property tax revenue may fall if the real estate industry struggles, and sales tax revenue may fall if people buy less stuff.
Taken in combination, this list of negative effects from falling birth rates seems dire indeed. No wonder many people are predicting that our standard of living is going to decline, our influence is going to wane, and our prospects for the future are going to dim.
Countervailing Trends
One of the problems with trying to predict the future is that we tend to focus on just one issue that is of particular concern at the moment (e.g. birth rates). This is understandable given the complexity of our world, our economy, and our social interactions. Unfortunately, it is also a fatal flaw because nothing changes in isolation from other things that are happening simultaneously. Many of these ‘other things’ end up counterbalancing the one thing we thought was so catastrophic. That is why catastrophes are predicted far more often than they actually occur.
I’m going to look at four such counterbalancing trends that will not reverse falling birth rates but which will lessen the negative effects. All four are important, but I’m going to present them in what I think is their ascending order of importance.
The ‘gig’ economy. Fifty years ago, the labor market was much more structured than it is today. If you were a worker, you worked full time for perhaps two or three employers during your lifetime. When you retired, you traveled or worked on hobbies or watched TV until you died. Today, things are a lot more fluid. Many workers change jobs every few years, and roughly 10 to 15 percent are self-employed. But that number roughly doubles if you include people who work at a regular job while also having a ‘side-gig.’ Many work with platform-based apps like Uber, Doordash or TaskRabbit to find work, but others use personal or professional connections to find lucrative side hustles outside of normal job market channels.
The result is that retirement is no longer a firm dividing line between working and not working. According to a 2023 survey by the Transamerica Center for Retirement Studies, more than half of the respondents planned on working past “retirement” – mostly part time. [2] The end result is that while the number of people who are over 65 years of age will indeed grow dramatically, many of these people will continue to work. This means they will continue to pay employment taxes and continue to build wealth to help them through medical or end-of-life expenses. The internet, phone apps, and widely available broadband connections enable retirees to have more ways to earn money than ever before.
Declining births is a world-wide trend. Despite the population problems that the U.S. is facing, the reality is that nearly all of the other countries that we compete with economically or militarily are in no better shape than we are. In fact, most of them are worse off. As an example, let’s look at Russia which has always had a population that was much smaller than the U.S. but now things are really getting bad. First, the Russian birth rate is lower than the U.S. birth rate and has been since roughly 1990. Second, nearly 150,000 Russian soldiers have been killed in Ukraine – mostly men who otherwise might be starting families. Third, hundreds of thousands of Russians (perhaps close to a million) left the country after the Ukrainian invasion – again, mostly young people who should be starting families. Fourth, life expectancy in Russia is roughly 10 percent lower than in the U.S., and not just because of the war. Finally, immigration into Russia is minimal because not that many people are interested in living in a dictatorship. [3]
The bottom line is that if America is losing its global prominence, it isn’t because of the potential for future population declines. Military and economic power is diffusing across the globe primarily due to changes in technology. America is not the only game in town and our power no longer dwarfs everyone else’s. Somali warlords with drones that can attack commercial shipping or western military targets may be a more of an immediate threat than traditional warfare with Russia, China or Iran.
Robots and drones. Most people are familiar with industrial robots that do much of the work on automobile assembly lines or retrieve boxes of goods in Amazon warehouses, but that is just the tip of the iceberg in the rapidly expanding field of robotics. The newest versions are being designed to work side by side with humans to help with tasks such as cooking french fries, providing hotel housekeeping, bricklaying, simple medical operations, and dozens of similar activities. Jobs that are repetitive, reasonably standardized, or dangerous are likely to be the first targets.
Similarly, drones are being tested to supplement the productivity of delivery drivers. Some day your pizza may arrive via an autonomous drone that won’t expect a tip. On the battlefield, drones have turned into a major weapons system that is both flexible and deadly while minimizing the direct exposure of troops.
At a macro level, the concern about labor shortages caused by falling populations may largely be balanced by the rise of workforce robots, drones and other forms of automation. At a micro level, however, there are likely to be mismatches caused by workers losing their jobs to robots that do not have the proper skills for the job openings in other industries. That redefines the problem not as a labor shortage, but as a workforce training issue.
Artificial intelligence. People may be getting sick of all the hype around artificial intelligence when practical examples seem lacking or trivial in nature. Sure, I can use ChatGPT to write a memo to my boss with little effort on my part, but that isn’t going to change my life or redefine my job. In my opinion, however, artificial intelligence is not being hyped enough. Yes, the truly useful applications may still be 5 or 10 years out, but it is hard for me to think of any industry that isn’t going to be substantially enhanced and redefined by this technology. Artificial intelligence will cause worker productivity to skyrocket which means that overall economic productivity should grow at healthy rates even as the human labor force declines in size.
Concerns about who will take care of the growing elderly population may melt away if most retirees have a personal assistant powered by artificial intelligence that prompts you to take your medications, reminds you if you left a stovetop burner on, can direct you to the place you left the car keys, warn you that the email you just opened is likely a scam, and make sure bills are paid on time. Such an assistant could even engage in friendly conversation during the day to lessen loneliness and could send a message to loved ones if your cognitive abilities decline to dangerous levels. This level of human/computer interaction may sound creepy now, but I think it is likely to be the norm in the not-too-distant future, and it will be replicated in industry after industry.
The issue will not be the amount of available labor, but the knowledge and sophistication of the available labor. Again, the problem is redefined away from one that is population centric to one that is technology and education centric.
Adaptations
Human beings are wonderfully adaptive creatures. When problems occur, we can either fix whatever is wrong, avoid the problem or adapt to the new normal. Falling birth rates, and eventually falling populations, might not be our preferred future but there are a number of things that can be done to minimize the negative impacts. In fact, the rapid population growth of the past 100 years is the anomaly – for virtually all of human history population growth was glacial and full of temporary setbacks. We adapted in the past and we can adapt in the future.
Raise the retirement age. In 1950, the average life expectancy was 68 years and the standard retirement age was 65. That means that the average worker – in rough terms – had just 3 years of life in retirement before dying. The current U.S. life expectancy is 79 years and the retirement age is 67 – a difference of 12 years. No wonder Social Security funding is out of whack. Raising the retirement age by one year every three to five years until the retirement age is 72 or 75 would go a long way toward putting Social Security funding back in balance. Similar adjustments could be made to Medicare.
Of course, workers in France virtually rioted when a proposal was made to raise their retirement age from 62 to 64, so some opposition should be expected. But working a couple of extra years in exchange for a reliable Social Security system seems like a reasonable trade off.
Focus on corporate taxes. As noted above, many of the traditional sources for government revenue may weaken if populations start to fall. The one exception is that corporate profits should soar as the benefits of artificial intelligence and robotics kick in. Taking care of a big elderly population will be expensive so the overall tax burden is likely to go up. Raising taxes is never popular, of course, but my guess is that corporations will end up footing much of the bill.
Reinvent school districts. Low birth rates are going to cause school districts to end up with too many buildings, too many teachers, and too few students. One option, of course, is for schools to shrink and consolidate. But a better option, in my opinion, is for schools to redefine their mission to not just educate children, but to educate the entire community. Workers, for example, will need to learn new skills if they lose their job to artificial intelligence. Retirees will need to learn how to best take advantage of new technology. Local schools are in the best position to fill those needs.
I could write a series of posts on this topic alone, but suffice it to say that I think school districts need to think outside the box – WAY outside the box. Schools need to be the foundation upon which continuous, life-long learning is built. Change is already happening too fast for many people to keep up and schools need to fill the void.
Conclusions
It should be obvious that I don’t see the current trend of falling birth rates to be an existential threat to human survival. There will be challenges to face, but the end result in 100 years is just as likely to be positive as negative, in my opinion. The human race has always made adjustments as society, technology or the environment changed, and we will continue to do so in the future.
The most serious problem is that the fallout from falling birth rates and the adjustments and countervailing trends will not be synchronized in a way that minimizes suffering. Artificial intelligence, for example, may replace thousands and thousands of jobs before population trends lead to a falling workforce. A new balance will eventually be found – as it always has in the past – but there will be considerable pain and angst to work through. Mankind certainly has things to worry about, but falling birth rates are not worth losing sleep over.
Notes:
1. United States Census Bureau; “ U.S. Population Projected to Begin Declining in Second Half of Century”; November 2023; https://www.census.gov/newsroom/press-releases/2023/population-projections.html
2. Transamerica Center for Retirement Studies; “The Multigenerational Workforce: Life, Work and Retirement”; June 2024; https://www.transamericainstitute.org/docs/research/generations-age/multigenerational-workforce-life-work-retirement-survey-report-2024.pdf?sfvrsn=ef00c973_9
3. Betsy McKay and Georgi Kantchev; “Putin’s Existential Problem: Not Enough Russians”; June 2024; The Wall Street Journal; https://www.wsj.com/world/russia/putin-russia-population-birthrate-war-904d74a7?mod=djem10point
