Chart of the Day: Shrinking Workforce

Map credit: StatChat blog

This chart, published by Hamilton Lombard on the StatChat blog, shows how the working-age population of the United States has begun shrinking in much of the United States. While metropolitan areas still experience a growing workforce as they suck up labor from rural counties, even urban growth is slower than it was ten to fifteen years ago.

Workforce growth 2000-2005.
Workforce growth 2000-2005.

The downside of this trend, is that working Americans will have to support a fast-growing population of elderly Americans, along with the Medicare, Medicaid and Social Security programs that benefit them. As has been widely publicized, government will become increasingly hard-pressed to finance these entitlements in the absence of meaningful reform.

The bright side of the story is that intensifying competition for workers should translate into lower unemployment and higher wages, assuming the economy can continue to produce even modest job growth. (The next U.S. president, whoever he or she is, will no doubt claim credit for the benefits of demographic shifts forces over which they have no influence whatsoever.)

Here in Virginia, the public policy apparatus has not begun to think seriously about the implications of a stagnant workforce. “With shrinking workforces and lower unemployment rates, most rural areas will need to change their focus toward attracting workers rather than just keeping them,” says Lombard.

The same can be said of urban areas as well. If metropolitan areas want to grow, they, too, will need to change their focus to attracting workers. Fifteen years ago, urban geographer Richard Florida noted that corporate investment chased the workforce, especially what he termed the “creative class.” As the nation enters a no-growth phase for the workforce, that phenomenon should intensify. Virginia communities will need to re-think what constitutes economic development. Instead of using subsidies and tax breaks to lure corporate investment, communities should expend resources to create the amenities that lure young workers, especially skilled and educated members of the creative class. Attract the workforce, and the corporate investment will follow.

 — JAB

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7 responses to “Chart of the Day: Shrinking Workforce”

  1. Andrew Roesell Avatar
    Andrew Roesell

    Dear Jim,

    How does this play into the oft-cited number on Conservative sites that there are 94 million people out of the workforce? Is that number bogus, or is there a problem with the study, or some other factors we should be looking at?



    1. Hamilton is looking at “working age population” — not the number of people in the workforce. The number of people in the workforce is smaller, reflecting the number of stay-at-home moms, students, people on disability and other types of welfare, and participants in the black- or gray-market economy.

  2. Andrew Roesell Avatar
    Andrew Roesell

    Here is an item that looks at the native American workforce versus the immigrant workforce.



  3. Jim, there is another component of the working agers which is fairly large according to recent press reports: those who have simply given up their quest for work after a long, frustrating search with no results.

  4. LarrytheG Avatar

    a couple of issues to consider:

    1. – if your “native” work force is shrinking – how do you increase it??

    it appears to me that immigration is the path…

    an advantage of immigration is that they get educated before they come here… and they don’t need nor get things like earned income tax credits and other goodies..

    2. – if you’re worried about Social Security – there’s an easy fix.

    stop exempting it for employer-provided tax breaks. POOF – Social Security would be more than adequately funded for the next 100 years!

    my bet is that if you take away that subsidy- that employer-provided would then be forced to get along without it and incentivized to find more efficiencies.

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