Despite my association with the Bear camp, and my belief that we are most likely in a long term secular bear market, I actually am an optimistic guy.

The future is never as dire looking as the survivalists make it out to be. Even though I know the cyclical bull rally within the longer bear will eventually end with a significant correction of ~25%, I have been playing this on the long side. That’s optimism!

I lived through the 1970s — an era of sky high interest rates, ugly cars, polyester and disco — so I now how bad life can get in the USA.

My motto: Hope for the best, but be prepared for the worst.

With that thought in mind, let’s have a look at a long term chart that is actually encouraging. It comes from the book “The Next Hundred Million: America in 2050.” Many people are surprised to learn that America “boasts the highest fertility rate: 50 percent higher than Russia, Germany or Japan, and well above that of China, Italy, Singapore, Korea and virtually all of eastern Europe.”

In terms of economic development, this demographic factor provides a long term advantage — think of the financial bulge of the Baby Boomers (while ignoring everything else they screwed up).

That leaves us with this chart, which has potenetially long term, positive connotations:

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Labor Force Growth (growth in age 15-64)


Chart courtesy of Joel Kotkin

>

Hat tip Kevin!

Category: Economy, Mathematics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

45 Responses to “Long Term Growth in US Labor Force”

  1. dr_w says:

    I would imagine that much of the population entering the labor force are immigrant or the first generation children of immigrants. If this is the case, and I suspect that it is, then our continued growth will be driven, as always, by immigration.

  2. Chz says:

    I’m with you BR on the hope / prepare… but don’t you think that technology and the search for cost savings will inevitably have a huge and unknowing impact on future generations of workers?

    How does a cyclical bull /secular bear protect himself? I’d love to hear it because my short-term greed is currently stronger than my long-term fear and I don’t know what to do.

  3. Trevor says:

    This chart is truly scary. The U.S. land will have trouble sustaining this kind of population growth. To mention but one canary, the Mississippi water table has already lowered far too much to be easily raised in our lifetimes. Those countries in your graphic that show reduced population will likely be the ultimate winners. The land will be able to sustain them better.

    Eventually, North America will come to terms with the idea that growth, in and of itself, is unnecessary, ultimately unsustainable, and therefore irresponsible. It’s like watching bacteria in a petri dish; eventually the population is so large, it snuffs its entire self out due to insufficient food (compare time-lapse of petri dishes with population growth to see what I mean). Growth for near-term goals maybe enjoyable/profitable now, because the end is too far away to be evident in our lifespan, but the costs are merely deferred. Someone will have to pay the piper. And population growth by legal immigration is compounding the problem in many western countries (I’m guilty, there).

    Improving our quality of life and finding ways to increase true per-capita output with a near-constant population (thereby reducing poverty as a byproduct) would be a far more laudable goal.

    I won’t hold my breath, however.

  4. sainttjames says:

    well…with any luck we’ll take over China’s manufacturing base cranking out widgets for the world….and the design/engineering/mgmt jobs will get outsourced to Europe and China…

    yeah that would suk….but at least we’ll be employed!

  5. dead hobo says:

    BR noted

    That leaves us with this chart, which has potentially long term, positive connotations

    reply:
    ———-
    Yes, but only if you assume the newbies into the work force in a few years won’t automatically start collecting their first set of 99 weeks of unemployment, continued at random for others in lottery fashion for another 99 weeks into perpetuity.

  6. Marcus Aurelius says:

    Thank god we’ll finally have enough people to get all of this work done.

  7. Marcus Aurelius says:

    Also, China’s population growth rate was reduced at the point of a gun (super high population is what happens when the only fun you can have is sex). The reason for such drastic measures was due to a huge work force with nothing to do but starve and be peasants. Even now, with their population growth rate slowing and their industrial base cranking at full capacity, the people of China do not have full employment or a lifestyle that is the envy of anyone.

  8. rileyx67 says:

    That chart and its stats was a shocker for me…and DOES indicate some relief for our Social Security system! Others have advocated increased immigration to enhance the numbers of those working and putting money into? Japan obviously has some very serious debt issues ahead with its net spenders over lenders due its aging population.

  9. Mannwich says:

    @MA: LOL. I had the very SAME thought. There already isn’t enough productive activities left for the population that we have. This only ADDS to the problem. I’m sure they’ll find other unproductive things to do though.

  10. Invictus says:

    Growth in the labor force is fine as long as we’re creating enough jobs to support it. It’s alot like printing 2MM+ Housing Starts — not a problem as long as the demand is there. If the demand’s not there (as eventually happened in the housing market), then it’s a tad problematic (as we’re seeing now).

  11. Yossarian says:

    Wow, what a bunch of whiny Malthusians on this board. Of course we can support this growth as long as we continue to innovate and markets remain free to efficiently allocate resources. And before you spew some populist nonsense about how markets caused the current depression (after being responsible for so much progress)- the financial bailouts have nothing to do with free markets- they are mostly examples of crony-capitalism. The fact is the US is not very overbuilt when compared to Europe. I’d say most US cities can easily double in size without expanding the boundaries (higher density). Of course this entail infrastructure investment at some point but those are local decisions that have to be made when the path becomes clearer (not some top-down Obama Utopian stimulus program with no accountability).

  12. Machiavelli999 says:

    I agree with Barry here. Our above average fertility rate and our relative expertise at assimilating immigrants from varying cultures gives us a huge, underrated advantage.

  13. Mannwich says:

    On the “bright” side, maybe all these new people will be able to buy up all these empty homes over the next two decades.

  14. The Curmudgeon says:

    Population growth creates jobs. Population decline/aging destroys them. It is virtually impossible for a declining/aging population to have a vibrant, growing economy. If you need empirical evidence, just take a gander at Japan.

    Virtually all of the population growth in the US is due to immigration. Whites (that are still over 70% of the US population) are reproducing at just barely enough to replace themselves. Blacks aren’t much better, and neither are second-generation Hispanics. Thus, the assumption must be that immigration to the US will continue apace. Maybe. But things change in funny ways, given enough time. No one would have predicted in 1960 that China would have a declining and aging population going forward in 2010. Perhaps the potential US immigrants, seeing a looming fiscal and monetary disaster as the population ages (that they will be asked to pay for) will find better places to go. Or, perhaps their numbers will swell until they can throw off the yoke of the past, and refuse to pay for all the baby boomer’s viagra prescriptions and hip replacements. Time will tell.

  15. Robespierre says:

    But isn’t EU absorbing a big chunk of immigrants? I see lots of central, south Americans and Africans (young) whenever I go there. BR are you sure the population numbers you are using are counting these people? Many of them are actually illegal. I believe US counts all population (legal or not) not very sure about Europe.

  16. DL says:

    Mannwich @ 3:33

    We can always use more lawyers and investment bankers, right?

  17. Charlatan says:

    About an hour ago, Doug Kass wrote the following at TheStreet.com: “I wanted to extend heartfelt congratulations on Jim “El Capitan” Cramer’s fifth anniversary of “Mad Money” on CNBC this evening.
    Few recognize how difficult it is for anyone to be rigorous in analysis in a media forum such as “Mad Money” or to be such a great teacher, especially when the investment mosaic — particularly these days — is complicated and non-linear. Jim manages to pull it off with a remarkable work ethic and a vast reservoir of investment knowledge. What a run, and what a great guy.”

  18. The Curmudgeon says:

    Malthus’ basic premise was that population would expand in the face of improved agricultural productivity to keep the vast majority of the population living at subsistence levels most of the time. Regarding the US, he maybe should have said that “individuals” would expand in the face of improved agricultural productivity to keep themselves at a subsistence level of existence.

  19. davefromcarolina says:

    And now a moment of Populist Nonsense:

    I really and truly believe free markets are a great idea, but I’m not at all convinced that any actually exist. As opposed to crony-capitalism, which it seems just won’t go away.

  20. advocatusdiaboli says:

    The size of a labor force is not to only important factor. What is the skill and education level of the workforce and is our nation setup to employ them? The affordability crisis in US higher education meaning fewer and fewer of these workers will be educated beyond high school relegating them to either low-paying semi-skilled labor/service jobs or manufacturing jobs (which are in ever shorter supply in the US). If we don’t build viable industries paying a good liveable wage to this booming population of workers, the US will slide closer to its Southern neighbor in standard of living–a slide which we’ve already started in this last recession. NAFTA in reverse.

  21. Marcus Aurelius says:

    The Curmudgeon:

    So, if we populate every square inch of the planet, we’ll all be rich, or at least better off? I don’t think that logic holds water. if I’m wrong, we’d all better start screwing.

  22. Bokolis says:

    How much of that is due to limp noodles, how much of that is due to the Gen Yers coming into their own, and how much of that is due to the rest of the world continuing to find its way to these shores? Ironic that everybody would be heading this way while the jobs are going that way.

    There are already too many people around here and not enough smart ones to go around. Marginal productivity isn’t improving- closer to snowboarding- so hell of good all those extra folks are going to do if they’re not bred to add value. Once Indians develop a capacity for critical thought, our labor force is fcuked.

  23. EAR says:

    Good! There’ll be enough labor in 2050 to push around the wheelchairs and gurneys…

    http://www.calculatedriskblog.com/2009/08/us-population-distribution-by-age-1950.html

  24. The Curmudgeon says:

    @MA:

    No, you are correct, and following the argument to its logical conclusion yields exactly the world which you describe, which would not be much fun to live in. Such is why the long-term growth rate of all organisms must necessarily equal zero. But my observation is true for the short run, like a lifetime. The growth conundrum is severe. Nearly everything we do (in the US) is predicated on continued population growth, which is not only not feasible in the long run, is not even assured for the short haul. It should give optimists pause. Neither trees, nor human populations, grow to the sky, never mind the things that humans produce and consume upon which all these markets are based.

    But the truth that a declining and aging population will not create a vibrant and growing economy is as sound a premise as the idea that an old growth forest of oak trees will neither consume nor produce very much in the way of growth. Until it dies. And the cycle starts again.

  25. constantnormal says:

    So let’s see … some things that we need to do RIGHT AWAY …
    1) repeal all minimum wage legislation — national/state/local
    2) repeal all child labor laws
    3) repeal all OSHA-type laws

    Then we will at last be able to compete with the Chinese on a labor price basis, and bring back manufacturing to Bananamerica!

    WE’RE NUMBER ONE! WE’RE NUMBER ONE! WE’RE NUMBER ONE!

  26. seneca says:

    Rapid population growth is butting up against peak oil, peak water, peak soil, peak fisheries, and peak metals. But if we can just learn to live on bandwidth and B.S., no problema!

  27. Mysticdog says:

    LOL, we don’t have any way to employ the people we do have. The last thing we need is more population. We will continue to automate more and more jobs out of existance, outsource another big chunk to cheap labor overseas, and flood the profits from our efficiency up to the pog-based economy of the investor class. Then bitch when people have to use credit to survive, and bitch more when their credit runs out, then bitch non-stop about all the lazy institutionally-unemployed people.

    Bacterial cultures don’t die from a lack of food… the agar-solutions and dishes have plenty there still. They die from the waste they produce. Malthus was an optimist. Our current consumption is unsustainable not because we run out of food, but because the amount of energy it takes to feed so many people, to grow that much food per acre, produces far too much waste and poisons our litttle petri dish. Much of our trash doesn’t even decompose… how much of our trash do we dump out to sea and on third world countries because we can’t deal with it in our borders? We could easily reach a point where CO2 alters the climate enough that it hurts food production, and we have to blow even more energy to make up the difference.

    Americans have the worst waste foot print of all. The last thing we need is more Americans! And we are toast when Asia decides they are going to catch up with our lifestyle.

  28. tawm says:

    BR — I have to question your assumption that the increased “Labor Force” will be willing and/or qualified to “work” in economically-productive capacities.

  29. nebyarg says:

    As a Boomer I say Great Barry, I really appreciate what you do and find you very interest, but what about creating middle class paying jobs and providing education and infrastructure for that 42% increase in population? Large corps offshore for cheap labor, fewer regulations and costs, (unemployment insurance, S.S. etc), and don’t pay US taxes, then import engineering details or blue jeans or whatever under free trade agreements. Grreat for the corps and perhaps the consumer, but not the middle and lower classes.
    We know the problems and you’ve suggested excellent solutions, such as for “Time to Regulate Derivatives” March 11, 2010.
    But the political system is broken. Why are military expenditures off the table when we question unfunded mandates, massive budget deficits and programs we can’t afford? Iraq was not a threat except to US petroleum companies who were excluded from any contracts under Saddam Hussein, which I presume was the real reason for the US War on Iraq.
    That our third branch of government, justice, allows rights of the individual to legal entities is absurd. Only the human residents of voting age in my state should be eligible to provide any campaign money to fund potential political representatives, not the corporations, ngos, trade unions, PACs etc.
    But hey, with more young people there will be more implied productivity. Hell, all those immigrants during the industrial revolution of the 1800s fled potato famines for the Statue of Liberty to live in tenements with 14 hour days of sweat shop labor and no child labor laws. The Railroads, JPMorgans etc benefitted from all that cheap labor.
    Let the US fund infrastructure and education for a civil society and encourage businesses with the quality of life here like Canada.
    What is the quality of life projection for that 42%???

  30. rootless_cosmopolitan says:

    @davefromcarolina:

    “I really and truly believe free markets are a great idea, but I’m not at all convinced that any actually exist. As opposed to crony-capitalism, which it seems just won’t go away.”

    Of course. Latter is reality, former is libertarian fantasy land, which has never existed and will never exist. For that reason, libertarians can praise their fantasy land as alleged salvation and will never be proven wrong, like it is with any (quasi)-religious believe system. If things don’t work as they should be according to this believe system, government interference and cronyism will always be blamed.

    rc

  31. Arequipa01 says:

    All the future excedent value of that cohort’s labor has been entailed (if not already consumed). If you are young, pack up and go somewhere else. The fruit of your labor will expropriated and fed to others.

  32. rootless_cosmopolitan says:

    @Yossarian:

    “Wow, what a bunch of whiny Malthusians on this board. Of course we can support this growth as long as we continue to innovate and markets remain free to efficiently allocate resources.”

    The problem in capitalism isn’t lack of resources to sustain population growth. Resources are more than plenty in capitalism, sufficient so that every human’s needs could be served and more. The problem is the recurring conflict between the abundance of resources and the over-accumulation of capital on the side of the owners of capital and means of production, who invest for profit under the conditions of market competition, and the lack of purchasing power on the side of the majority without capital and property, since needs exists for markets only, if they are backed up by purchasing power. Without purchasing power on the demand side profits can’t be made on the supply side.

    “And before you spew some populist nonsense about how markets caused the current depression (after being responsible for so much progress)- the financial bailouts have nothing to do with free markets- they are mostly examples of crony-capitalism.”

    What strange “logic” is this? Markets didn’t cause the crisis, but the bailouts did, which were a response to the crisis?

    “The fact is the US is not very overbuilt when compared to Europe. I’d say most US cities can easily double in size without expanding the boundaries (higher density). Of course this entail infrastructure investment at some point but those are local decisions that have to be made when the path becomes clearer…”

    Oh, there need to be local decision for it? This wouldn’t happen just by itself through the miraculous self-acting of “free markets”?

    rc

  33. philipat says:

    US Corporations are not going to ever bring manufacturing jobs back home because the margin impact would be too great. Even if China doubles the value of the CNY and even if wages in China increase four-fold, it won’t make any difference. Remember also that very little value added remains in China and most of the profits accrue to Global Corporations, transfer priced out through intra-Company materials purchasing, Licencing, Royalty and Trademark Agreements through tax haven countries.
    The only way to slow the trend is to place an import levy on Chinese manufactured goods and use the proceeds directly towards education and job creation in future infrastructure etc. That also would not result in reduced imports from China, again because the price differential is just to great, but won’t happen because it would trigger a trade war. Maybe not such a bad thing for the average American ultimately?

    So, accepting reality, I wonder where are the jobs to usefully employ all those additional citizens going to come from. They can’t all flip burgers and dream up useless financial products.

    The Japanese, arguably the most racist society in the world, is going to have to take a long hard look at itself as it crumbles. And my money is on just that because I truly don’t see them changing.

  34. John Clarke says:

    “…an era of sky high interest rates, ugly cars, polyester and disco — so I now how bad life can get in the USA..”.
    Ugly cars???, Disco??? WTF!!! Those were some of the best cars and best music this country has every seen… 1970 T-bird with a 429 cu. inch… 1970 Chevelle SS 454 cu. inch… Mach 1 Boss 429… Dodge Charger 426/440 sixpack… 1978 Mercury Marquis Station Wagon (Green.. with Wood Paneling–460 cubic inch)… the list goes on!
    Disco music is fantastic (along with most of the other music from the 70′s and 80′s)… that’s why so much of it is still played over the airwaves because Todays Stuff SUCKS.
    (I’m ready to pull my bell bottoms out of the attic right now!!).

  35. Yossarian Says: March 16th, 2010 at 3:58 pm

    Wow, what a bunch of whiny Malthusians on this board. Of course we can support this growth as long as we continue to innovate and markets remain free to efficiently allocate resources. And before you spew some populist nonsense about how markets caused the current depression (after being responsible for so much progress)- the financial bailouts have nothing to do with free markets- they are mostly examples of crony-capitalism. The fact is the US is not very overbuilt when compared to Europe. I’d say most US cities can easily double in size without expanding the boundaries (higher density). Of course this entail infrastructure investment at some point but those are local decisions that have to be made when the path becomes clearer (not some top-down Obama Utopian stimulus program with no accountability).

    x2
    ~~
    and, re: “Waste”, that’s an issue of choice of system design–the post-WWII American Economy was on predicated upon Waste.

    It doesn’t, with existing, tried and proven, Technology have to be that way..

  36. Mr. Micawber says:

    Um, we’re scraping the bottom of the barrel for sweet light crude (not oil generally, but the oil that can be had without turning massive tracts of land into post apocalyptic waste, or without massive expenditures of money).

    We’re depleting the aquifer in the Great Plains, the aquifer that allows our agriculture out there, the aquifer that took millions of years to form, at a rate way faster than it can be replaced.

    We’re polluting at a massive rate thanks to ourselves, China, and India.

    How exactly is adding another hundred million people to our country going to help? If anything, that will all accelerate the problems.

  37. philipat says:

    Looking at it another way, a surplus of labour means that the US should be encouraging investment in labour-intensive industry to absorb all the excess labour, just as China is doing today. The logical conclusion is that, although today US labour costs cannot compete today, as US Corporations continue to ship manufacturing overseas, living standards in the developing world will steadily increase, whereas structural unemployment in the US will steadily reduce living standards in the US. Therefore, by 205o, labour costs in the US will be low enough by global standards to allow manufacturers to take advantage of the US labour pool and relocate low cost manufacturing jobs to the US.

    These trends are actually already well in place, but I’m not sure it is entirely something to look forward to?

  38. perra says:

    @BR
    “Even though I know the cyclical bull rally within the longer bear will eventually end with a significant correction of ~25%”

    You mean at some point during the current supereon? Or do you have a specific epoch mind?

  39. Jojo says:

    You assume all those people will find some way to be gainfully employed. I don’t think that will happen.

    A post-industrial society needs LESS workers with each step forward in time that it takes.

  40. [...] A reason for optimism within a secular bear market.  (TBP) [...]

  41. bondjel says:

    If you think the 70s were so bad you must have missed the 80s and the beginning of the age of Reagan from which we are still suffering. Here’s what “true” conservative Andrew Bacevich has to say about Reagan:

    “You describe Ronald Reagan as the “modern prophet of profligacy. The politician who gave moral sanction to the empire of consumption.”

    ANDREW BACEVICH: Well, to understand the truth about President Reagan, is to understand why so much of what we imagined to be our politics is misleading and false. He was the guy who came in and said we need to shrink the size of government. Government didn’t shrink during the Reagan era, it grew.

    He came in and he said we need to reduce the level of federal spending. He didn’t reduce it, it went through the roof, and the budget deficits for his time were the greatest they had been since World War Two. ”

    Whole interview:

    http://www.pbs.org/moyers/journal/08152008/transcript1.html

  42. ashpelham2 says:

    The most ironic thing of all is that we are doing more to degrade our standard of living than any government or conspiracy could ever do. In my mind, every dollar that goes to China or Indonesia or whoever, is a dollar taken away from a US worker. Those same folks who used to shop at higher end stores that now shop exclusively at wal-mart are shopping their own jobs away. I don’t visit wal mart very often, but just a run-through one night last week, in a hurry admittedly, I observed a few less choices on some aisles than once existed. Now, the argument can be made that “efficiency” has taken over, and it’s a valid argument. But I see wal mart, as the worlds largest retailer, now exerting so much influence as to impact an entire nation’s unskilled labor force.

    Not wanting to start an anti-wal mart thread here, but I see a direct relationship to their success and our nation’s ability to employ people in lower wage, unskilled labor position.

  43. [...] Long term demographics provides optimism for the US economy.  (Big Picture) [...]

  44. tenaciousd says:

    Reading Kotkin’s book now. Quite good. I think he errs on the side of over-optimism. But, even if you discount him by 10% (fair I think), it’s still a good outlook. I think the Boomers are going to zone most of America’s cities into economic oblivion in order to prop up their housing values, which will be a difficult adjustment and create much inter-generational friction.

    In regards to ugly cars, I take exception. Jim Rockford’s Pontiac Esprit is still the coolest car ever!

  45. Jim Rockford’s Pontiac Esprit..(?)

    http://www.gardenofspeedin.com/partslocguides/lnkpontiac.html
    http://www.underhoodservice.com/Article/47775/pontiac_forced_off_the_road.aspx
    http://www.cargurus.com/Cars/Overview-c7587-1974-Firebird.html

    tenaciousd,

    are you in Canada? I hadn’t heard the Firebird referred to as an ‘Espirit’, in quite awhile..
    past that, that was some serious Brand Equity GM flushed, down the drain, when they pulled the plug on Pontiac, no?