Tight Labor Market: Even Worse Based On New Census Projections

The working age population will grow at the slowest pace since the Civil War in the decade of 2020-2030, I wrote two years ago in The Scariest Chart For Business In The Coming Decade: Workers Not Available. The outlook is even worse now, because foreign immigration is much lower than projected, meaning that even fewer working age people will be in the United States.

Growth of working age population will be lowest since the Civil War in 2020-2030.
Dr. Bill Conerly based on Census Bureau data and projections

Last year’s estimate of net immigration into the United States, counting both legal and undocumented people, was 40% lower than the Census Bureau’s projections. (Their latest projections began in 2017.) Now the bureau has created alternative scenarios, including one that very closely matches recent data. It now appears based on that low-immigration alternative scenario that we’ll have virtually zero growth of the working age population through 2030. (The alternative projections do not have the same detail as the base projections that I used to create the chart, but back-of-the-envelope calculations imply approximately no growth at all).

Net foreign Immigration in the U.S. through 2019
Dr. Bill Conerly based on Census Bureau data

Long-term projections can be worthwhile even if they get the first few years wrong. I began my career making 25-year forecasts, so I know the issue intimately. We can shrug off early errors due to temporary fluctuations, such as a recession. This immigration forecast error differs, in that the older Census projections assumed that recent years had been a fluke, and immigration would return to “normal.” We now know that the years just prior to the projection period were the beginning of a trend to lower immigration.

The business implication is that employers will have to work even harder to retain employees and recruit new workers. The strength of the current economy aggravates the challenge, but even a slower-growing economy would leave us with insufficient people for all of the expansion plans that private companies, non-profit organizations and government agencies now have.