These years, all countries are facing aging or even population shrinkage problems. This is an expected outcome given the strongest baby boom happened right after WWII, which now is nearly 80 years from then. Albeit expected, this is a real problem for all countries as population growth is directly proportional to economic growth, which the production function prescribes.
Technology can substitute the supply side of mankind but not the demand side. As a result, tech-advanced countries with serious aging, like Japan and China, cannot escape weak demand.
Against this backdrop, why is the U.S. economy so strong, given it is also facing the same aging problem?
Indeed, tech helps, but as just mentioned, it is not a deterministic factor. U.S. tech is undoubtedly strong but never a leader in all aspects, but many other European countries are also strong in tech yet could not escape the Japan/China fate.
In this regard, there must be some reason(s) unique to the U.S. If we just look at the aggregate population growth, we cannot arrive at any meaningful conclusion. But the picture is different if we look at the breakdown.
The accompanying chart shows the breakdown of the population growth rate by age group. The advantage of this dataset is all series are in monthly frequency; this is rare for population data. The aggregate growth rate has declined like most other countries but it has rebounded in recent years. The most eye-catching pattern is the 55+ age group growth rate has been declining while the teenage group growth is accelerating. The newly graduated and working population groups are also improving. Importantly, the immigrant grows at almost the same rate as the teenage group.
This suggests U.S. population growth is driven mainly by incomers. Places like Hong Kong are facing severe population decline and claim to be fighting for manpower. While places like the U.S. do not make such claims. The fact is it gets lots of young people. One obvious reason is the U.S. has the best universities where 16-19 is the age to do tertiary education. The 20-24 group surges even more, suggesting either postgraduate study is becoming popular or other graduates remain in the country and start their careers locally.
The 25-54 age group growth also accelerating suggests the latter factor is certainly in play (this age group is too wide that the number would not jump much in a short span). For such a heavily indebted country with high tax rates, there must be some crucial pros outweighing this. The U.S. is well-known to be a place that lets your dreams come true. The key is a good system.
Grabbing talent is not a slogan. A country with a truly good system does not need a slogan. Like Hong Kong, four decades ago the government prevented a Vietnamese influx yet ironically it now plans to attract them. The collapsing system has already concluded a failure. Only those countries with good institutions will finally win the game of the manpower competition.
KC Law, Ka Chung
