This is more than a few scattered thoughts and hopefully you will all see it that way by the time I’ve finished. We’ve had a lot happen in the country in the last several years And many stresses, or shall we say opportunities, are coming together at the same time. First, we have to say we had a series of shocks beginning in 2007 when the financial system started to fall apart. Some would say it was driven apart by the greedy financial wizards Wall Street, but I’m not going that far. They played their games and they lost big, but they’ve managed to carry us back from the brink and going to need to take it from here. No sense going back to try to decide who started it all and how it all happened. Others will no doubt try to do that, but your not going to find that here. Best to focus on what’s coming.
In previous posts i’ve gone through most of that. We know the economy looked very bad in 2008 through 2010. In spite of many efforts at stimulus unemployment went steadily up and a predicted quick recovery never materialized. From 2010 through 2012 a very slow recovery emerged, and now the end of 2013, beginning of 2014, we look to be coming out of the worst. Unemployment is finally starting to move into territory that we can live with. While some say that the numbers are skewed by a marked decrease in the participation rate, that was something we expected all along. As the baby boomers started going into retirement in earnest about the time the financial crisis hit, we began the lengthy period when retirements in massive numbers would gradually begin to take more and more from the workforce as we let less in. We did not see a decline in labor participation rates right away because retirement savings were hit hard by the financial crisis and many were forced to stay on the job. But now, five years in, many more are retiring, but perhaps not at the full rate. Also, some may be hedging a bit with partial retirement — keeping up some work at least at a part time pace. Also, many of those who are entering the work force have kept up their schooling at advanced levels to prepare themselves for the knowledge economy which they will enter later. Thus, fewer new job seekers are entering while many more are leaving the work force. Thus the labor participation rate is beginning to decline. This is, in fact, a good temporary outcome as new jobs are still not sufficiently robust to pull us completely out of the economic downturn. Nevertheless, we have hit 6.6 percent, down from a high of about 10 percent in 2010. In another year or perhaps a little more wee should be down under five percent which is traditionally regarded as near full employment.
One problem is that we will likely continue to lose jobs to both off-shoring and to automation. We hope to be able to keep pace by creating new jobs, but those are also likely to require higher level skills. However, we also have to factor in net increases in the size of the population that traditionally are considered through the birth rate, the death rate and influence of immigration on the population.
Fertility rates have been declining steadily, nevertheless in 2012 there were 63 births per 1000 women (ages 15 – 44). This translates into nearly four million births. However, our infant mortality rates are relatively high, at 6.7 per 1,000 births, or about 320,000 deaths. Thus, we have a net 3.7 million new citizens born. However, birthrate continues to decline at a rate of about 10 percent a decade. Death rates are in the range of about 2.5 million per year and while they could increase, one is hopeful that with improved healthcare over time, depletion of the population though mortality is likely to diminish over the remainder of the decade and into the next. Thus, a diminished birthrate could be offset by a diminished mortality rate, for a while at least.
Immigration, on the other hand, is a factoring population growth that the country has turned on a off at regular internals. Further, in a given year young immigrants will also contribute to the population by the birth of their children. They find jobs, sometimes create their own jobs or businesses, contributing in a Majro way to the growth of the economy and this benefitting the rest of us. While recently immigration has been in an upward direction, it has begun to decline due to problem of illegal immigration. Recent efforts have led to increased deportation rates and has had the effect of forcing the “illegal” pool of immigrants in a downward direction. The Congress has been unable to agree on a major immigration bill, and may, it seems, let the present increased rate of deportation together with better monitoring of borders continue to push the decline of the illegal immigrant population. Subsequently, the Congress is likely to increase immigration rates for some groups to offset losses through deportations and closed borders. It remains to be seen whether or not a reasonable solution is possible. A net increase in the immigrant population has always been a necessary stimulus for the American economy, and without it hard to see how the economy will thrive at the necessary level as we go forward into a decade when the largest recent generation will be nearly fully retired and accounting for nearly 25 percent of the American population. If the Congress lets the immigrant population decline or even stay the same as it is now, we may see further economic decline that could multiply and hold us back from the kind of prosperous future most of us would like to see.