As I was sitting in my Richmond hotel room this morning watching New Hampshire news (ah, the wonders of modern technology), an interesting report on the working age population of New Hampshire came on (watch the whole video. It’s only about 5 minutes). New Hampshire, unsurprisingly, is experiencing a falling Labor Force Participation Rate due to an aging population. One of the interviewees in the video sums up the situation aptly (beginning at the 1:20 mark):
One of the reasons [for the decline] is [New Hampshire] was an excellent place for baby boomers to live in the 60’s, 70’s, 80’s, and 90’s and now they are aging. As they age, they naturally participate in the labor force less, so the labor force naturally declines. The other thing…is people are not moving to New Hampshire as they did in the 70s, 80’s, and 90’s so we’re not replenishing the workforce in the way we used to so, absent changes in the way people migrate, we’re looking at reductions in the labor force.
Although this report focuses on New Hampshire, this is a trend we’re also seeing around the US (there is a graph in the above video showing the trend). The US labor force participation rate is declining, and part of that decline is due to the Baby Boomers (a very large generation) retiring. In other words, the pool of available workers for businesses is shrinking. If left untouched, this could lead to 1) worker shortages (which we are already seeing that in some fields), 2) increased costs of labor, 3) increased automation. Most likely some combination of the three.
Labor is an economic resource and, just like other resources, is necessary for economic growth. If the domestic supply of labor is shrinking and not being replenished fast enough, then immigration (ie importing workers), becomes an economic necessary in order to maintain and expand the economic pie and grow living standards.
In a later post, I will expand more on this and flesh out my idea that immigration is necessary for an advanced economy to survive.