Demographics Count — Countries That Will Have a Decreasing Labor Force in Coming Years

Even if deflation came to the U.S., it would be very short lived (am saying this twice to emphasize).

That is a function of demographics. The U.S. population is growing. Every day when we wake up in the U.S., there are more people than the prior day and year. Hence demand in the U.S. — for almost everything – inherently grows each year as the population grows.

This is not true, however, for every place in the world.

Consider the countries that have had diminished birth rates and as a result currently or soon will have shrinking populations. It takes 2.1 children per couple just to maintain the population over time. If a country has less than 2.1 births per couple, and if net in migration does not make up the short fall from domestic births, then the population will shrink.

Now think of China with their decades-long limitation of one child per couple. And zero in-migration. From a workforce perspective, China shrinks every day, year and decade.

The Wall Street Journal reported the estimated year that 11 countries would enter a declining number of people in the workforce. Two of the 11 are already peaked out and shrinking: Japan and China. That essentially says that beyond value-added productivity, both country’s economies are either in or heading to a shrinking phase. China, for example, as a decades-long result of one child per couple, saw their working-age workforce decline by 3.45 million in 2013 and 2.45 million in 2013.

So where are the major countries forecast by the Wall Street Journal to have declining workforces?

3-22-14 graph

Just to give a comparison, the U.S. Census Bureau forecasts population numbers for all countries in the world. Take a look at my blog at http://blog.stewart.com/stewart/2013/11/25/forecast-world-population-change-a-very-diverse-landscape/ from last November.

Japan is forecast to decline by 2.9 million people in the 10-years ending 2023.

At the same time, the U.S. population is projected to increase by 28.9 million. This includes both increased births and net immigrants

Go figure – many of these counties need an immigration program just to maintain their workforce. China and Japan need to open their borders – no kidding.

Jobs are everything. Incomes and spending is next. Population to an extent drives both.

We are fortunate to live in the U.S.

Ted

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