November 28, 2019
The Washington Post reported that birthrates hit their lowest level in more than three decades in 2018. It then told us why this could be bad news for the country:
“Keeping the number of births within a certain range, called the “replacement level,” ensures the population level will remain stable. A low birthrate runs the risk that the country will not be able to replace the workforce and have enough tax revenue, while a high birthrate can cause shortages of resources.”
That’s an interesting story, but productivity growth, even at slow rates, swamps the impact of demographic changes on the need for labor. Even a modest rate of productivity growth (e.g. 1.5 percent annually) means that we would need one third fewer workers to get the same output twenty years from now as we do today. This would dwarf the effect of any plausible shrinkage in the size of the workforce due to a smaller population. Such shrinkage could also be easily offset by immigration if we choose.
It is also worth noting that a regular theme in economic reporting is that robots are taking all the jobs. This is not true as the productivity data clearly show, but if it were true, then the last thing we would need to be concerned about is a shrinking workforce.
Finally, as a practical matter, a shrinking population will reduce strains on resources, as in making it easier to limit global warming, for those familiar with the issue. It is difficult to see a downside to a smaller population.
(Yes, we should have the supports to give people the option to have children. That is a different issue. They should have the right to have kids, but we don’t need their children.)
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