Not Too Many, But Too Few

Joel Kotkin got it right.

The Economist last week reported on increasing concern with the impending demographic disaster of China’s One-Child policy.  While their 2010 census counted 1.34 billion people, the survey also reveals a “steep decline” in average annual growth rates.  China’s fertility rate may be as low as 1.4 now, far below the natural replacement rate of 2.1 (average number of children per woman of child-bearing age).  The Economist continues:

Slower growth is matched by a dramatic ageing of the population. People above the age of 60 now represent 13.3% of the total, up from 10.3% in 2000 (see chart). In the same period, those under the age of 14 declined from 23% to 17%. A continuation of these trends will place ever greater burdens on the working young who must support their elderly kin, as well as on government-run pension and health-care systems. China’s great “demographic dividend” (a rising share of working-age adults) is almost over.

As I noted last month, in his recent book The Next Hundred Million: America in 2050, analyst Joel Kotkin called out those who predict Chinese ascendancy with just this insight.  China’s long-term problem may not be too MANY people, but too FEW people of working age to support their aging infrastructure.

We are seeing similar demographic shifts in many areas (primarily rural areas) of the US and Europe.  It’s not a bad thing that we’re getting older, but will become an increasing challenge to support the needs of older Americans with a smaller percentage of working age citizens.  Tom Gillaspy, the Minnesota State Demographer, issued a report recently titled “The Long Run Has Become the Short Run: Budget Implications of Demographic Change”:

The next two decades will be unlike any in recorded history. Minnesota and the United States, and indeed much of the world, will experience unprecedented demographic changes. The biggest will be the aging of the world population. In Minnesota and the United States, this will be characterized by aging of the Baby Boom Generation into itsretirement years and beyond. The 2010s will see Minnesota transform from a youngstate to an old state, from a work-based economy to aretirement-based, entitlement economy. Many of the rules that govern how the world “normally works” will change and a new set of rules of thumb for the “New Normal” will take their place.

Gillaspy notes that “The jobs problem…is not likely to be simply a shortage of jobs, but rather a shortage of the jobs that match with the skill sets of those in the labor market.”  Even if we have young people available to fill new jobs, there is no guarantee they will have the skills we need to meet tomorrow’s challenges.  (By the way, Gillaspy is an excellent speaker if you are interested in an honest perspective on Minnesota’s demographic situation.)

Kotkin’s call to celebrate immigration and the possibilities of the creative economy may not play well in all political corners.  His call to celebrate entrepreneurship ought to play well across the spectrum but too often is lost in the hue and cry of prejudice and political gamesmanship from all sides.  Apparently, however,  some other observers are starting to take notice of the same trends he’s been noticing for quite awhile.

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