OPINION: Demographic storm ahead: Labor shortage threatens economy

Last Tuesday, Lightcast released a report The Rising Storm, building on its 2021 report, The Demographic Drought. The Daily News covered the report, which confirms we’re now facing a full-blown demographic crisis.

In May 2021, I warned that the government’s COVID-19 response would worsen the looming workforce crisis. It didn’t just cause disruptions; it accelerated the retirement of over 3 million baby boomers. Compounding the issue, the U.S. fertility rate has been below replacement level since the 1970s, leaving a worker gap that younger generations can’t fill. As a result, we’re projected to be 6 million workers short by 2028.

“The Rising Storm" gives an even more alarming forecast. baby boomers are leaving the workforce at an accelerating rate, with more than 11,000 reaching age 65 every day. By the end of 2024, boomers will be the second-smallest generation in the workforce. Health care and construction are strained. We don’t have enough younger workers to replace them, especially as birth rates continue to plummet.

The report also reveals that immigration has become essential to maintaining our workforce; without it, we’d be facing an even more severe shortage. We need skilled, legal immigration that aligns with workforce demands. Japan’s demographic crisis serves as a cautionary tale — its failure to adapt quickly led to severe economic disruption. We must learn from their mistakes and take proactive measures. However, relying on immigration alone isn’t a long-term fix.

Some suggest that automation and AI are the solutions we need. The report shows that despite the hype, these technologies are years away from meaningfully filling labor gaps. AI can’t swing a hammer, wire a building, or care for patients at the bedside. Technology is far from replacing critical roles requiring human expertise — like carpenters, electricians and nursing staff. Counting on unproven technology to solve our immediate problems is a risky gamble.

There’s also the issue of prime-age men leaving the workforce. Labor force participation among men aged 25-54 is steadily declining. Substance abuse and incarceration, including the opioid crisis, have sidelined millions. According to the report, 4.6 million Americans are completely out of the workforce because of addiction or imprisonment — a massive drain on our economy.

We can’t ignore the cultural shifts pulling men away from traditional employment. There’s a growing disillusionment with the value of hard work, with many questioning whether traditional employment still offers the rewards or fulfillment it once promised. We need to answer tough questions about how to reengage this demographic.

Let’s consider the inheritance windfall. Baby boomers are set to pass down an estimated $80 trillion in assets. With fewer children to inherit this wealth, some millennials are choosing to work less, further shrinking the labor pool. This transfer could lessen motivation for full-time work, complicating efforts to boost labor participation. It’s a subtle factor that could erode our workforce before we even notice.

Despite adding over 4.5 million college graduates since 2019, there’s a mismatch between education and market demand. Nine out of the top 10 most in-demand jobs for 2024 don’t require a college degree. Younger generations still flock to four-year programs, creating a surplus of misdirected workers and a shortage in critical sectors like skilled trades and services.

We need to realign our educational priorities. Investing in vocational training and apprenticeships, starting in high school, can bridge the gap. Let’s revalue the skilled trades and service roles that are the backbone of our economy. It’s time we move away from the notion that a four-year degree is the only path to success.

This shift in thinking is already gaining traction — not just because of the demand for trades, but because many are waking up to the reality of the college debt trap. The average federal student loan debt is $37,853, leaving graduates burdened without clear job prospects.

We need to return to the traditional wisdom of education as preparation for life — keeping it free from politics and government loan schemes. It’s time to move past the one-size-fits-all mindset of four-year philosophy degrees and refocus on practical, time-tested approaches that serve individuals and society.

Time is running out. The labor pressures of the last four years were just the first waves before the storm, and we can’t afford to drift any longer. Boosting legal immigration, retraining workers and developing local talent are essential strategies, but they require immediate action.

 “The Rising Storm” isn’t just a future threat; it’s already here. Will our leaders take meaningful action or let us face the fallout? Our economy depends on it.

Courtney served 20 years as a nuclear engineering officer aboard submarines and 15 years as a graduate school instructor. A political independent, he spends his time chasing his eight grandchildren around Moscow.