For some time, I have been expressing concerns about population declines in the developed and developing worlds. I have cautioned that fewer babies mean fewer children wanting toys. However, there is a bigger problem emerging. Fewer people being born means fewer people available to work.
Its a particular problem at this moment in time as Baby Boomers are leaving the workforce in droves. Last week, I ran this quote in The Disruption Report #60:
The baby boomer generation is not only the largest generation but also the best trained and educated. This generation built the most complicated but successful system of international trade the world has ever seen. The problem is now they are retiring en masse resulting in major skill shortages throughout the maritime world.“Boomers Are To Blame For Shipping’s Woes,” John Konrad, freightways, July 7, 2022
The challenge is magnified by Generation X, the next generation in the batting order. They are a much smaller generation than the Boomers, so they lack sufficient numbers to fill the vacant positions. That is why we are seeing job openings going unfilled and salaries rising.
Microsoft’s President, Brad Smith, is the latest to comment on the declines by saying that population declines in the U.S., China, Japan, and Europe are going to have an increasingly negative impact on the global economy. He stated:
“That helps explain part of why you can have low growth and a labor shortage at the height at the same time. There just aren’t as many people entering the workforce.”“Microsoft president Brad Smith sees ‘new era’ of tightened labor pool,” Reuters, july 18, 2022
The U.S. has the benefit of immigration to make up for the drop-off in births. Japan, however, has discouraged immigration. The result is eleven years of population decline, with 2021 being the biggest population drop in Japan’s history. Here is what Elon Musk had to say:
“At the risk of stating the obvious, unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist.”“Elon Musk warns Japan will cease to exist if birthrate continues decline,” Kyoto News, May 9, 2022
Population and birthrate declines should be a concern to anyone in business. Those of us who work with children’s products will feel the revenue impact earlier than other product categories. All of us, however, are going to find that securing qualified employees at reasonable salaries is going to get increasingly challenging.