May 4, 2021 by Clare Coffey
Emsi has released a new ebook, Demographic Drought: How the Approaching Sansdemic Will Transform the Labor Market for the Rest of Our Lives. In this ebook, we discuss the people shortage that is affecting higher education and businesses and will only worsen in the coming decades.
The US is suffering the beginning stages of a sansdemic: a lack of people to do all the work that needs to be done. Between 2011 and 2021, nearly every county in the US saw declines in its working-age population. The 2020 census shows that 16 states saw net population decline over the past years—the worst numbers since the Great Depression.
The people shortage is only projected to get worse. So how did we get here? What are the economic ramifications? And is there anything we can do about it?
The Demographic Drought answers these questions by analyzing past, present, and future workforces. From baby boomers to millennials to the 2020 Baby Bust, we track the rise and fall of America’s population and labor force participation rate. We also outline how employers and higher ed institutions can survive the sansdemic when it hits in force.
We can’t understand why America’s falling population will hit businesses so hard until we understand the Baby Boom of 1946-1964. The Baby Boom created an enormous population cohort: a group that shaped virtually every American institution by sheer virtue of its size.
Because of an unprecedented labor force participation rate, boomers left their mark on the workforce in powerful ways.
Ambitious, career-oriented, and competitive, boomers created the perfect talent pool. They marketed themselves in pursuit of opportunities, which allowed firms to shop around for ready-made talent rather than develop it themselves.
This employer-friendly model of talent acquisition is one that many companies still assume is the norm.
But now the boomers are leaving, and they aren’t coming back.
Roughly two million baby boomers retire every year. In 2020, that number increased to three million.
Who is replacing them? The answer is, unfortunately, no one.
It was hard to ignore the sharp and sudden exit of over 2 million women from the workforce between 2020 and 2021.
But a more slow-moving workforce calamity has been unfolding for years: the declining rates of male labor force participation.
Where are America’s missing men? It’s complicated.
For one thing, some millennials may simply not need to work as much. The median boomer household net worth is $1.2 million, a tidy sum that their children stand to inherit. For middle and upper middle class millennials especially, work may simply not be as attractive or as necessary a method of attaining their preferred lifestyle.
Making matters worse, the 2008 housing crisis pushed many men into part-time work. Countless working-age men moved from full-time construction and manufacturing jobs into part-time work within retail and service sectors, simply because they were the only jobs around.
Yet even when the economy recovered, and despite the fact that employers desperately needed them, men did not return to full-time work. By 2015, men ages 21-30 were working 12% fewer weekly hours than they had been in in 2000, with one in eight not working at all the prior year. Compounding the tragedy, the opioid crisis has been responsible for up to 40% of these disturbing trends.
And there’s no evidence the future will be brighter.
In the wake of the Baby Boom, there were dire predictions of endless exponential population growth, on the assumption that the Baby Boom fertility rates were here to stay. But in fact, the opposite is true. Population growth has steadily slowed, and the US hasn’t hit 2.1 births per woman (replacement level fertility) since the 1970s.
In early 2018, Korn Ferry predicted that by 2028, the US can expect to see a deficit of six million workers. This means a growing elderly population will rely on the support of a shrinking number of young people.
It also means that there simply will not be enough people to fill open jobs. Millions of Americans will be absent first from the classroom and then from the labor market because, to put it bluntly, they were never born.
The coming sansdemic is more than a challenge for HR directors or CEOs. It will affect quality of life for everyone. When a shipping company is short thousands of truck drivers, it means packages arrive late and essential goods go missing from grocery store shelves. When hospitals can’t find enough nurses, life-saving treatments are delayed, and short-staffed, sleep-deprived medical teams make critical mistakes. When corporations can’t fill high-tech security roles, people are left vulnerable to data breaches and cyber attacks.
Fewer people also means fewer new ideas. Fewer students. Fewer people in research and innovation. Fewer skills in the job market. Fewer employees. Fewer products and fewer goods. Fewer opportunities for growth. As a result, the standard of living will stagnate or decline.
In the face of such grim predictions, the obvious question is, how can we stop the sansdemic from happening?
As of right now, we can’t.
Even if the total fertility rate spiked tomorrow, it would take decades for the consequences to work themselves through the economy.
Right now, all we can do is prepare ourselves for a workforce and educational recruiting landscape unlike any we’ve ever known. Employers and higher ed institutions will need to:
Fundamentally, the only real solution is to value people more. In a human-capital economy, people are the key ingredient. Every student, every employee, every potential employee is not only valuable, but is literally irreplaceable.