Is the decline in the global fertility rate a good thing or a bad thing?
Perhaps it is neither – it is what it is.
The Plus Side
From one perspective, this is a good thing as it reduces population pressures on resources (land, water, food). From another, more traditional perspective, it means an economy that will no longer grow as it once did, based upon a continuously expanding population.
For example, consider how more people leads to more housing units. Each housing unit is filled with “stuff” like furniture and kitchen appliances and laundry machines. In this way, there is a constant demand for “more stuff”.
The Minus Side
In a declining population, this demand goes away. In fact, in 75 years we may see the price of housing falling sharply as the world ends up with far more housing units than it has population. In fact, large homes may see the biggest price declines. In 1960, the average U.S. home size was 1,300 square feet; today, the average newly built home is about 2,500 square feet. But families today are smaller than they were in 1960. The fertility rate falls because young families are choosing to have fewer children or no children at all – they have no need for an expensive, huge home.
This leads to the big question of how do we manage the economic effects of a shrinking population?
As of now, I have not yet looked into that, but hopefully it is an area where others have done research and proposals to address this.
An Expanding Population of Immigrants
Between now and these future dates, we do have other problems such as labor shortages. Most economists seem to think that this will be addressed by importing more workers.
This, though, has its own problems.
One, most every country is faced with labor shortages, and they all propose to import more workers – but the decline in fertility and population is global, in almost all countries. To some extent, some countries will be more attractive to immigrants than others and importing workers may be successful.
Second, as country populations gradually change from domestic births to imported residents, this may lead to significant cultural changes. How will these be accommodated – or resisted by some?
Third, U.S. residents are “less global” in their skills than citizens of many other countries. In an always expanding “global skills” need world, this may give a workplace advantage to immigrants to the U.S. How will existing U.S. workers respond to this? Will the U.S. work to improve the global skills of its own citizens? We already seeing this trend today as illustrated by Starbuck’s announcement of its new CEO. He is a highly skilled and experienced CEO who was born in India. Indeed, the CEOs of Microsoft and Google were also born in India. (Note – India has 5x more people aged 20-29 than does the U.S. – this is the critical age group from which new workers come – and bodes well for India having a significant impact on emigration to other countries.)
These CEOs often have multi-country, cross cultural experience, which is essential not just for managing multi-national businesses, but also for managing domestic workforces – which are themselves diverse workforces of immigrants, even though they do all their work here in the U.S.
Many U.S. residents lack this degree of international knowledge and experience.
A majority of significant tech companies were founded or co-founded by immigrants. (Note – this is partially due to sample bias – one must usually be well educated and highly skilled to legally immigrate to the U.S. Thus, many immigrants are, in fact, better educated than the average U.S. resident. Second, those who elect to study abroad or immigrate aboard are likely to possess a greater degree of ambition that “the average” person.)
Five U.S. Senators were born outside the U.S. 29 Congressional Representatives were born outside the U.S. Dozens and dozens of former U.S. Senators and Congressional Representatives were born outside the U.S.
What Does It Mean?
- It means the U.S. (and other countries) must plan now for an economy not dependent on a continuously expanding population.
- It means the U.S. must put far greater emphasis on expanding the global skillsets of its residents.
- It means the U.S. will see a continually growing number of immigrants from many countries, including India.
- It means that U.S. workers will likely find themselves managed by immigrants who in some cases bring different management styles to the workplace.
- America’s young will find themselves competing with the best of the world, rather than just other American workers.
- The labor shortage means that the prices for labor will likely go up. That in turn will encourage the adoption of far more automation – particularly as the costs of automation fall and the capabilities of automation increase. The types of jobs available in the workplace may change significantly as a consequence of automation.
