Where Are All the People?

We all know that the Biden administration places a high priority on restoring the U.S. manufacturing base and creating lots of well-paid jobs. That has been a constant refrain, and that goal is embedded in much of the administration’s impressive record of legislative accomplishments over the past two years, notably with the infrastructure bill, the CHIPS and Science Act, and the Inflation Reduction Act.

Behind that record, however, lies a significant irony—we don’t have enough people to fill the jobs that are being created. More important, we’re not going to have enough people unless we do something about it.

Looking at the short term, at the end of last year, there were more than 10 million unfilled jobs in the U.S. economy. At the same time, there were under 6 million unemployed persons. We could have a long discussion about what kind of jobs are going wanting and whether the unemployed have the necessary skills to fill them, but the basic math is compelling. Even if we could match everybody looking for a job with one, we would still be more than 4 million short.

These numbers fluctuate with the health of the economy. A major recession would boost the number of unemployed and decrease the number of jobs available, making everything worse, but a period of strong growth would likely increase the gap as well by creating more jobs without increasing the number of people available to fill them, thus also making everything worse.

The lesson here is that demography rules. In 2020, the fertility rate for American women was 1.64. The replacement rate—the number of babies needed to keep the population level—is 2.1.The  2020 fertility rate represented the lowest recorded level. While we are not in as difficult shape as Japan (1.34) or China (1.28), the downward trend is clear, and it means a declining, aging population and slower growth with fewer workers. If you want to look at the future, watch Africa, where the median age is 19. In the United States in 2021 it was just about 39—and growing.

This is not a short-term problem. All our country’s workers in 2040 are already born. We know what that number will be, give or take, depending on pandemics, wars, and other cataclysms, all of which will only reduce the number. Other countries have faced this problem earlier and have responded in different ways. Some are providing financial incentives for women to have more babies. Japan is building out its robot population to take on tasks it no longer has enough people to do. By and large, these are palliatives that make little difference in long term trends.

There is really only one solution, and that is immigration—importing people. And here, the United States has a great advantage—people want to come here. Emma Lazarus’ “golden door” may now be a myth in reality, but thousands of people still believe in it. I don’t have space to go through the history of U.S. immigration policy, except to say that developing one has always been plagued by the irony of a nation composed largely of immigrants wanting to shut the door on everybody else once they get in.

I also have neither the space nor the knowledge to get into what a twenty-first century immigration policy should look like. Politically, action has long been stalled by disagreements over whether it is better to pursue comprehensive reform or act piecemeal on low-hanging fruit like the Dreamers of the Deferred Action for Childhood Arrivals (DACA) and green cards for PhD engineers—yet another example of the perfect being the enemy of the good. In addition, action is paralyzed by the emotional debate over border security—building or tearing down walls—and how to deal with the people that enter illegally.

Unfortunately, in the midst of all that emotion, the economics of demography has gotten lost: we need more people, and we need them at all levels. There is a lot of talk about letting in more engineers and others with STEM educations, but some of our fastest-growing occupations are health care—practitioners and support—construction, transportation, maintenance, and food preparation. Those do not require PhDs. Instead of getting wrapped up in an endless debate about who should be allowed in, we need to realize that we simply need more people of all kinds and backgrounds if we are to grow and prosper. And, if you know your history, you understand that that is exactly what has made our country great for over 200 years—people of all kinds, all skills, wanting to make something great for themselves and their children, and in the process making something great for our country.

One of the traps political leaders often fall into is focusing on the immediate—earthquake, war, gun violence, disease, etc. Those are important, but we should expect our leaders to also worry about making a better place for our children and grandchildren. As a recent grandfather, I think about that a lot. If they’re lucky, those two will make it into the 22nd century. Our most important job is help them get that far and to make sure we have a country worth living in at that point. Creating more jobs in 2023 is a great political talking point, but if there are no people to fill them, it’s an empty gesture.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.