U.S. population growth was the lowest in 2020 since 1918. DR. BILL CONERLY FROM U.S. CENSUS BUREAU DATA

Population in the United States grew at the slowest pace since 1918, the Census Bureau reported this week. This annual estimate will be superseded by the decennial census soon, but it provides a year-over-year look that the 10-year snapshot will miss. For business leaders, as well as executives of non-profits and government agencies, the report emphasizes the fundamental labor shortage currently masked by the pandemic recession. This slow growth of the population will continue for years, with especially dire results for the labor force.

The annual population figures estimate the resident population as of July 1. The lowest growth rate prior to this year was back in 1918, when we sent two million young men to Europe in World War I. (Overseas soldiers are not counted in the resident population.) The Spanish flu also took a toll, but most deaths occurred after July 1, 1918.

Our numbers are increasing so slowly because of light natural increase and small foreign immigration. Births have been declining since 2015 as the millennials started aging out of their prime child-bearing years. Deaths have been rising as the baby boomers grow older. Even greater than these changes have been the decline in net international migration, which has dropped every year since 2016. Like it or not, President Trump’s immigration policies had a substantial impact.

The latest numbers will be revised as we get results from the decennial census, and the estimates are softer than usual this year. Although we have a very good handle on the number of births and deaths, immigration is much more challenging. The Census Bureau tries to include undocumented aliens in these estimates. The bureau gets hard data on visas issued to immigrants but has to use much weaker information for the undocumented migrants. We also lack good data on the outflow of people from the United States to other countries. Some of the movement consists of U.S. citizens becoming ex-pats abroad, but an even great number are foreign-born residents returning to their homelands. Despite the soft data, the latest figures accord with prior years’ trend and what we know about the country’s population drivers in the latest year.

Business sales won’t increase as much with slower population growth, so companies should adjust their expectations downward a small amount. Companies serving the markets related to life and death should adjust their own market estimates, downward for births and upwards for funerals.

The greatest business impact of the demographic changes will be tighter labor markets. The unemployment rate rose when the pandemic triggered layoffs, but changed little for jobs that can be performed remotely. With the vaccine soon to help many sectors of the economy, the labor market will tighten up again.

The new relief bill will send an extra $300 a week to those collecting unemployment insurance, meaning that those who had been making less than $15 an hour, approximately, will be better off not working than back on the job. The threshold is even lower for previously part-time workers. (The specifics vary from state to state.)

The upshot of the latest news is that employee retention and recruitment will be even more important in 2021 than it has been in past years.