DeepSummary
The episode discusses the implications of an aging workforce and population decline on the economy and worker prospects. Jerusalem Demsas interviews economist Adam Ozimek, who argues that while tight labor markets can benefit workers in the short term through higher wages, an aging population leading to labor shortages is ultimately detrimental for economic growth, productivity, innovation, and overall societal progress.
Ozimek explains that demographic changes like low birth rates and reduced immigration contribute to population decline, which hinders entrepreneurship, business formation, and technological advancements. He contends that the narrative celebrating labor shortages as empowering for workers is misguided, as it fails to consider the broader negative impact on economic dynamism, tax revenues, and public services.
The discussion highlights the need for policies that address declining birth rates and promote sustainable immigration to offset the effects of an aging population. Ozimek emphasizes that while tight labor markets can temporarily boost worker bargaining power, long-term economic progress requires a growing, productive workforce driven by innovation and population growth.
Key Episodes Takeaways
- An aging workforce and population decline due to low birth rates and reduced immigration can hinder economic growth, productivity, innovation, and entrepreneurship, despite potential short-term gains in worker bargaining power.
- Policies that address declining birth rates and promote sustainable immigration are necessary to counteract the negative effects of an aging population on the economy and workforce.
- The narrative celebrating labor shortages as empowering for workers is misguided, as it fails to consider the broader negative impact on economic dynamism, tax revenues, and public services.
- Areas experiencing population loss tend to have reduced business formation, innovation, and economic vibrancy, challenging the notion that labor shortages inherently benefit workers and communities.
- While tight labor markets can temporarily boost worker bargaining power and wage growth, long-term economic progress requires a growing, productive workforce driven by innovation and population growth.
- Policymakers should aim for a balanced labor market that avoids excessive tightness leading to unanchored inflation, which can erode the gains of wage growth for workers.
- The public tends to be more averse to inflation than unemployment, viewing it as an external force impacting their lives, in contrast to job growth.
- Simple policy solutions like eliminating single-family zoning may not be sufficient to address complex housing supply issues, as there are often multiple interrelated factors contributing to the problem.
Top Episodes Quotes
- “What a state like Vermont would be dealing with, with an aging workforce is not something that's great for the economy. It's not something that's great for workers.“ by Adam Ozimek
- “If you look at places in the US which have lost lots of population, they are not the most dynamic in innovative parts of the country. Indeed, if you look at very careful econometric analysis, what you find is that causally, when population growth falls, the number of startups go down.“ by Adam Ozimek
- “The easy thing is let in the people who want to come here, of which there are many with high skills. If we let those people in, it's not only going to help offset the declining population, but it'll help offset the negative impacts of the declining population on productivity growth and innovation, things like that.“ by Adam Ozimek
- “I think people really don't like inflation, and they think it's something that sort of happens to them and it's easier to take a just dessert standpoint about job growth.“ by Adam Ozimek
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Episode Information
Good on Paper
The Atlantic
7/2/24
Does an aging workforce mean greater worker power?
One of the takeaways from pro-worker advocates during the pandemic financial crisis was that employees saw fantastic gain. As demand for workers skyrocketed, employees got to be choosy. What bosses called “The Great Resignation” was actually workers having the power to demand better wages and working conditions, as well as the willingness to quit jobs that wouldn’t offer those things.
But economist Adam Ozimek warns that people may be taking the wrong lesson about tight labor markets, and that the coming labor shortage isn’t cause for celebration—but concern.
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