In his Wall St. Journal column, “Biden’s Slow-Growth Budget Gamble,” Brookings Institution Senior Fellow William A. Galston, author of Anti-Pluralism: The Populist Threat to Liberal Democracy, writes:
According to a recent CBO report, the principal driver of slow growth since 2008 has been a sharp slowdown in the growth of the labor supply. As baby boomers joined the workforce, the annual increase in labor supply averaged more than 2%, peaking at 2.5% between 1974 and 1981. As late as the 1990s, annual labor-force expansion averaged 1.2%. But as the population aged and baby boomers began to retire, annual increases fell to 0.5% between 2008 and 2020, a figure that the CBO expects to fall to 0.4% in 2021-25 and 0.3% in 2026-31.
The distant future looks no brighter. The total fertility rate needed to maintain a stable population is about 2.1 children for every woman. In 2020 the U.S. rate dropped to 1.64, the latest in a long decline. The workforce of the 2030s and 2040s could be smaller than today’s, a prospect that other advanced economies are also facing, including China.