Highly recommend reading and thinking about this report from McKinsey: “Dependency and depopulation? Confronting the consequences of a new demographic reality.”
It is dense and daunting but does a great job of defining the problem. It also offers some solutions. The solutions don’t strike me as very robust. But maybe that’s the risk averse engineer in me.
Caveat: What follows are my key take-aways from my understanding of the report. Like I said, it’s dense and daunting so maybe I missed or misunderstood something.
- The UN projects the world’s population will peak in 2084 and decline thereafter. But, in developed countries and China, population already peaked in 2020.
- In developed countries and China, people are living longer. So, there will be more old people (old = 65+, the report’s definition, not mine). Most old people don’t work and contribute to the economy. They collect pensions and Social Security. Old people have higher healthcare costs.
- In developed countries and China, people are having fewer children. So, there will be fewer young people. Young people work and contribute to the economy. The taxes they pay support older people. Fewer and fewer young people will be supporting more and more old people.
- In developed countries and China, population will decrease. (I think that GDP growth is a fair indicator of economic growth and prosperity. I think GDP growth is primarily driven by population growth. QED, if population decreases, so will GDP growth.)
The % changes in population between 2023 and 2100 are astonishing. (Good Lord the reader said, 77 years in the future! 2100 is so, so far away. If you’re a 65+ like me, we won’t be around. A few of our children might be. Our grandchildren will be.) A sampling of the #s:
- Nigeria gets 109% bigger.
- The US gets 23% bigger. (Compared to other developed countries, the US looks pretty good. But hold on. Between 1946 and 2023, the last 77 years and about my lifetime, the US grew from 141M to 335M, getting 138% bigger. Unless we do something, our children’s and our grandchildren’s lives won’t look anything like what we’ve enjoyed. Their country only gets a little bigger; ours more than doubled.)
- India, Indonesia, UK, and France are flat (3-8% bigger).
- Brazil, Turkey, Germany, Japan, and Italy get significantly smaller (down 16-41%).
- China gets 55% smaller!!!
What needs to be done? The report says: “A combination of higher productivity, more work per person, effective migration, and higher fertility rates can ensure global prosperity for the future.” Makes sense to me.
Now, I’m thinking out loud. What can you and I do?
- Reed’s Broken Record #1: Advocate for more legal immigration to the US, some humanitarian … but a lot of attracting the world’s IQ points (especially STEM) and go-getters.
- Reed’s Broken Record #2: If you manage an operation, put in place metrics on productivity and improve it.
- Re-employ willing and able 65+ people. Most of my 65+ friends are or were knowledge workers. Most can work; they are still sharp and in good health … and have valuable skills, experience, and wisdom. Most of them work part-time … some in paid positions and some for free (e.g., volunteering). I bet most of them would like to continue to work part-time as long as their health allows … and most of them are under-employed (i.e., they are only using a fraction of their potential). As far as I know, there’s not a good process to broker 65+ part-time job seekers with challenging part-time positions. Maybe companies could do something here.
- Raise the fertility rate. As for me and as much as I might enjoy it, I’m passed the point of impacting the fertility rate. Maybe you’re not. If so, you know what to do. 😊
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This is a problem that has been building for decades. It is critical in some countries. The hardest one of the steps is the 4th. In the USA, the low fertility rate seems to be greatly impacted by the extreme income inequality in this country and the lack of an adequate social safety net. A large proportion of the population is discouraged from having children because the dreadful economic and political systems make it unaffordable. Their incomes are stunted, and the cost of having a child is astronomical (free in almost all other developed countries). You give the goal, but not steps toward achieving it. Possible steps would include highly porogressive taxation (instead of the regressive system built in the last 60 years), publicly funded universal health care (providing more and better health care at a lower cost than our highly expensive capitalist medical system with the highest costs in the world), and a significant period of paid parental leave (we are one of only two countries in the world without that now).
Interesting point. Unless I’m missing something (and I may be), the DATA DOES NOT SEEM to support it. Google AI says: “Generally, there’s an inverse relationship between household income and fertility rates, meaning that lower-income families tend to have higher fertility rates than higher-income families.
Here’s a more detailed breakdown:
Global Trend:
– Across countries, there’s a strong negative correlation between gross domestic product (GDP) and fertility, meaning richer countries tend to have lower fertility rates.
United States:
– In the U.S., women in households with incomes below the poverty threshold had the highest birth rate in 2023, at 72 births per 1,000 women.
Income and Fertility:
– Low Income: In low-income countries, fertility rates are higher, likely due to factors like the need for children as a labor force or for care in old age, and limited access to contraception and education for women.
– High Income: In high-income countries, fertility rates are lower, potentially due to factors like delayed childbearing, access to education and contraception, and changing societal norms.
U.S. Data (2021):
– Birth rates were highest for women in households with incomes between \$10,000 and \$14,999 (52.31 births per 1,000 women).
– Birth rates decreased as income increased, with the lowest rates being for women in households with incomes of \$35,000-\$49,999 (52.69 births per 1,000 women).
Cultural Factors:
– Beyond income, cultural factors also play a role in fertility rates, with some groups having higher fertility rates than others, even within the same income bracket.
Note:
The relationship between income and fertility is complex and can vary across different populations and cultural contexts.”
There’s more data at: https://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/.
I don’t have time to do the research but I think many of countries with low fertility rates already have and have had the programs you propose as solutions. If true, they don’t seem to be the solution, at least to the fertility rate problem.
I agree the healthcare system in the US is a mess, worse outcomes at higher cost.
I haven’t thought enough about parental leave.