The U.S. is expected to face a shortage of a staggering six million workers before the end of the decade. For the first time in history, more people will turn 65 than 16, depleting the working population over the country. As industries prepare for the hit in the coming years, there may be one solution to the looming problem— immigrants.
A new study by Lightcast, a provider of labor market data, argues that a "storm" is rising in the U.S., in which several disruptions will drive a shortage. A combination of retirements, mismatches between workers and available jobs, and a decline in workforce participation among men is set to drive this trend.
Over the next five to seven years, "our labor pool's growth will not match our population's," said Ron Hetrick, an economist at Lightcast. "We will increasingly have more consumers than producers, driving price hikes and product shortages."
Lightcast suggests that in 2027, the number of Americans who turn 65— historically a typical retirement age— will exceed the number that turn 16 for the first time, meaning there may not be enough potential new entrants into the workforce to replace retirees.
Likewise, in a surprising analysis, the study also argues that prime-age men are disappearing from the job market, which is likely to have dramatic effects on the workforce. That's partly due to an increase in substance abuse and incarceration, which between them are responsible for taking 4.6 million Americans out of the labor force, at a time when there's a rising number of openings in "critical, male-dominated skilled-trade jobs," Bloomberg reports.
Overall, the company estimates that by 2032, based on expected growth in population, these factors will lead to a 6 million shortfall of workers compared with the current level.
The report comes as the share of immigrants in the U.S. labor force has steadily increased for more than a decade, and could potentially alleviate the stress of a potential worker shortage.
In 2023, immigrants made up 18.6% of the country's labor force, according to the U.S. Bureau of Labor Statistics, setting a new record. By comparison, in 2006, 15.3% of the civilian labor force was made up of "foreign-workers."
The trend has directly benefited the American economy.
Mark Zandi, chief economist at Moody's Analytics, told CNBC back in March, the increase in foreign-workers is "taking pressure off the economy."
"In fact, it's probably one reason why the economy grew so strongly last year," he said.
One of the reasons for this could be due to immigrants tending to be younger— usually under age 55—when they first arrive in the U.S., helping counterbalance the country's aging workforce. Another reason could be that the native-born U.S. households are having fewer children and the baby boom generation is aging out of the job market, CNBC explains.
Despite Lightcast's grim report, the Congressional Budget Office estimates the U.S. labor force will grow by 5.2 million people from 2023 to 2034, largely due to "a surge in immigration." As a result, gross domestic product will be about $7 trillion higher and revenues $1 trillion larger than they would have been otherwise.
"More workers means more output, more income, and that in turn leads to higher revenue," Phillip Swagel, CBO director, said of those projections during a U.S. House hearing in February.
