The World Must Prepare for Demographic Change Before it is Too Late​

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Since the Industrial Revolution that began in the 18th century, the world has known nothing but population growth. In fact, after centuries of little or no population growth, it took just 200 years for the world’s population to expand from one billion to eight billion. A similar situation took place in the United States, where in just 250 years, the population of the US has risen from just 2.5 million in 1776 to 342 million today.

 

However, population growth around the world and in the United States has now fallen to its lowest level in recent centuries, and could fall even further in the coming years. For a world and a country that has known nothing but population growth, this could prove to be a massive challenge. In your own region, the impact of these demographic changes will be felt by all segments of society.

 

I have recently led studies for several national, state and local governments on forecasts for their demographic future and what the impact of population change will be on those regions. Already, we have already witnessed the impact of slower population growth, as many countries’ and regions’ populations have been barely grown in recent decades. Meanwhile, in some of the world’s most important economic centers, their population has been in decline in the 21st century, a trend that is forecast to continue for the foreseeable future.

 

There are many factors contributing to the long-term population slowdown around the world and in the United States. First and foremost, fertility rates are declining both in the United States and around the world. If there is no immigration and no emigration from a region, the average woman in that region has to have 2.1 babies in her lifetime to keep the region’s population at its current level. In the US, the current fertility rate is just 1.62. In other parts of the world, the fertility rate is much lower, including in Canada (1.33), China (1.02) and South Korea (0.75). This means that population growth rates will continue to trend downwards in most parts of the world for the foreseeable future.

 

Without higher birth rates, individual countries or regions will become more dependent upon migration into those countries or regions, either from other parts of their own country, or from beyond their country’s borders. In recent decades, migration into the United States and other countries has been focused on those areas where job creation levels have been the highest, but recent trends suggest slowing growing regions could be becoming more attractive for would-be migrants due to their lower-cost-of-living and, in some cases, improving quality of life. For the United States, much of the recent migration in that country has come from outside of the US, but the recent crackdown on immigration by the Trump Administration threatens this source of population growth for our region.

 

Without a higher level of immigration, the population of most countries or regions will inevitably decline. Without immigration, most countries’ populations will become much older in the years ahead. At the same time, their working-age populations will stagnate, while their youth populations could fall significantly. All told, most countries’ populations will look much different in the future than it does today.

 

The impact of these changes to the population will be profound. For example, population change will have a massive impact on the economy. A shrinking labor force would stymie growth in many sectors of the economy. An older population will lead to major shifts in demand for goods and services and force governments to spend more on programs and infrastructure for the elderly. This and other demographic changes are expected to place great strains on public finances around the world in the coming years. Meanwhile, major changes to housing stocks, infrastructure and healthcare systems will be needed to tackle the challenges presented by a population that is much older than today, and by households that are much smaller than in the past.

 

Governments can take steps today to optimize their demographic future. First and foremost, policymakers must do everything they can to attract more young people to their country or region. At the same time, countries and regions need to attract business and investment in those sectors of the economy that promise high rates of growth in the future. Meanwhile, housing stocks and infrastructure needs to fit the needs of younger people seeking to move a new region as well as the increasing number of elderly people as populations age. Those countries and regions that take these steps to optimize their demographic future will be the ones who are in a better position to succeed in a future in which the population undergoes a massive transformation.