America’s workforce is changing.
While it’s obvious that economies and labor pools are almost never static in an open market, the changes we are seeing to modern western economies is unprecedented in terms of sheer scale, led on largely due to the availability of affordable global travel and increased international business opportunity.
Culturally, today’s immigrants come from a wider range of countries than those who came through Ellis Island. In 1907, the top five countries of origin for immigrants to the United States were Italy, Russia, Austria-Hungary, Germany, and Ireland. Today, the top five countries of origin are Mexico, China, India, the Philippines, and Vietnam. This diversity of cultures has enriched the American experience.
Economically, today’s immigrant workforce is more skilled than the workforce that came through Ellis Island. In 1907, only 1.3% of immigrants who came to Ellis Island held professional, skilled, or technical occupations. Today, more than 34% of immigrants hold these occupations (Springer). This higher level of education and skills has helped immigrants to find jobs in a wider range of industries, and it has also helped to boost the American economy.
One of the biggest changes sure to affect the US workforce is an aging native populace, and immigration is playing a major role in the national conversation. The US is facing a demographic challenge, and as the Baby Boomer generation retires immigrants are filling the gap. In 2022, immigrants made up 17.4% of the US workforce, and this number is expected to grow in the coming years.
The age distribution of immigrants is also different from that of the native-born population. Immigrants are more likely to be of working age, and they are also more likely to be young. In 2022, 77% of immigrants were of working age (18-64), compared to 59% of the native-born population. And 36% of immigrants were under the age of 35, compared to 23% of the native-born population.
This difference in age distribution is having a significant impact on the US workforce. Immigrants are filling jobs that are left open by retiring Baby Boomers; in some cases they are even helping to boost the economy by starting businesses and creating jobs.
An aging workforce presents two big problems: Labor Shortages and Skill Gaps.
As the Baby Boomer generation retires, there will be a smaller pool of younger workers to replace them. This could lead to labor shortages in some industries, particularly those that are traditionally dominated by older workers, such as healthcare and manufacturing. Labor shortages could make it difficult for businesses to find the workers they need, and this could lead to higher prices for goods and services.
The aging workforce is also facing a skills gap. As older workers retire, they are taking with them their knowledge and skills. This could lead to a shortage of skilled workers in some industries, and it could also make it difficult for businesses to find workers who are able to use new technologies. These skill gaps are also increasingly exacerbated by automation and the use of AI.
A study by the National Academies of Sciences, Engineering, and Medicine found that immigrants account for about half of the growth in the US labor force since 2000. And a study by the Pew Research Center found that immigrants are more likely to be self-employed than the native-born population.
Another implication is that the workforce is becoming more mobile. Immigrants are more likely to move between states and cities than the native-born population. This mobility helps to keep the interstate economy dynamic and allows businesses to more easily find workers with the skills they need.
The changing age demographics of the US workforce are also having an impact on social programs. For example, the Social Security system is funded by a payroll tax, and the number of workers paying into the system is declining as the Baby Boomer generation retires. Immigrants are helping to offset this decline, as they are more likely to be working age and to pay into the system.
In addition to the economic implications, the changing age demographics of the US workforce are also having a social and cultural impact. The workforce is becoming more diverse, and this diversity is leading to new challenges and opportunities; businesses need to be more mindful of cultural differences in the workplace, and they need to find ways to engender more inclusive environments for all employees.
The educational attainment of the US workforce is also shifting, as more and more workers are obtaining college degrees. In 2020, 37.9% of the population age 25 and older had a bachelor’s degree or higher. This is up from 27.9% in 2000. This shift is being driven by a number of factors, including the rising cost of college, the increasing demand for skilled workers, and the changing demographics of the workforce.
This is leading to a demand for skilled workers, and it is also creating opportunities for businesses that are able to attract and retain these workers. Businesses that are able to hire and train workers with higher levels of education will be better positioned to compete in an ever-changing global economy. They will also be able to attract and retain top talent, which eventually translates to increased productivity.
By all measures America is in a suitable position for future growth, however challenges like automation, decreasing industrial capacity, and illegal labor abuses are a growing concern to many working class families. Those concerns and more in my next edition in this series, coming soon.
