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Home Publications Blogs Beat the Press Researchers Who Know Economics Worry About Per Capita GDP Growth, Not Overall Growth

Researchers Who Know Economics Worry About Per Capita GDP Growth, Not Overall Growth

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Tuesday, 22 July 2014 08:05

The Washington Post had an interesting piece reporting on how many young couples are putting off having children for economic reasons. At one point the piece told readers:

"Births have slowed so sharply that researchers note that future economic growth could be stunted by a smaller labor pool. Immigration is often seen as a fix. But the downturn crimped supply lines for both babies and new foreign faces. The change was so dramatic that the Census Bureau in 2012 was forced to revise the 2050 U.S. population projection it made just four years earlier, dropping it by 9 percent, to just under 400 million."

Contrary to the impression given by this paragraph, the prospect of slower population growth should be good news for most people. It is likely to mean a relatively smaller labor supply, and therefore higher wages for most workers. It will also mean less strain on the infrastructure and on natural resources. In other words, smaller traffic jams and less crowded beaches and parks. It also will be easier to contain greenhouse gas emissions with a smaller population.

The only people who are likely to be hurt by the prospects of a smaller population are the "it's hard to find good help" crowd, since they will likely have to pay more for people they hire to clean their houses, mow their lawns, and care for the kids. Since more people do such work than pay for such work, most people will end up as winners with slower population growth.

Comments (9)Add Comment
Rose colored glasses again
written by Bill H, July 22, 2014 9:07
It also means a smaller consumer base and therefor lower consumer spending, and fewer people paying into Social Security. But that's not a problem because the government can do the spending that consumers aren't doing and Social Security, um, well...
Upsides
written by Squeezed Turnip, July 22, 2014 9:15
You'd think the WP would be excited that there will be fewer welfare queens in 2050 as a result. Maybe the WP, living in their DC bubble, are unaware of the stress on resources such as land, water, energy, fish/food, ...

And what became of the "the robots are coming" story? Gag me with a spoon, why doncha?
One other group
written by nEB, July 22, 2014 11:18
One other group hurt by lower birth rates is teachers. When student population drops, classrooms are cut and teachers laid off, a four year undergraduate degree, 2 years master degree and several years of experience teaching don't do much for them when student population shrinks. Might rebound 4 years later - but 4 years of student teaching or working retail pretty much destroys a teaching career.
Five Billion Turds a Day
written by Last Mover, July 22, 2014 11:35

No kidding, there is a song called Five Billion Turds a Day under the Darryl Cherney Music label.

Why not add a per capita turd calculation to the per capita GDP calculation as a check on negative externalities?

If turds per capita increases faster then things are not going well in the sanitation industry and soon Americans will be going outside any old place like other poor nations.
cheap talk at the fed
written by Jim, July 22, 2014 11:47
while it is definitely helpful to have the fed chair focus on asset bubbles, it would also be helpful to have material that supports her claims. notably in april you mentioned internet and biotech were overvalued, since rebounding 20% plus. in relation to the s and p they are not over valued versus history. it would be more helpful to have madame chair yellen focus on the grasp for yield in the utility and tobacco sectors which are trading completely out of whack with history; as compared to focusing on high p/e sectors and saying they are "overvalued."
Machines increasing their capabilities faster than people, which will help with future labor needs
written by John Wright, July 23, 2014 12:04
I don't understand the emphasis on increasing the numbers of relatively slowly evolving people when we have much evidence that machines are rapidly changing and will multiply the effects of human labor.

In the past we had people employed in the film processing industry, but digital photography has obsoleted many (most?) of them.

Computer processing power, electronic sensors and electronic control devices are improving every day, this will lead to more sophisticated automation of tasks we may not anticipate and decrease the demand for human labor.

For example at the dentist office today I was told that dental schools now have electromechanical human patient simulators, with artificial saliva, for students to practice on.

A smaller well equipped labor force should do just fine while also helping with climate change issues and perhaps work fewer hours.

A nation who build and maintains a top-notch infrastructure, avoids subsidizing parasitic industries (such as a bloated financial sector),avoids costly military expenditures, avoids crony capitalism, and invests wisely in new technology and public sponsored research should do quite well with a shrinking population base as technology improves to increase productivity.

However, I am not suggesting the USA is proceeding on this path.

ECO Friendly
written by Juan Valdez, July 23, 2014 4:25
Talking up economic growth with the environment is a good thing. Too bad few economists discuss it all when formulating economic arguments. The environment is under serious threat from increased trade and increased population growth. With increased trade and increased population growth there has been a linear upward increase in the amount of C02 emissions. Last month NOAA reported the highest C02 amounts ever recorded and expect it to continue increasing. Fossil fuel use must be significantly reduced very quickly to save ourselves.
Delong and Panetta need to hear this
written by Dave, July 23, 2014 11:11
I really don't know what they're doing the WCEG, but they clearly don't understand what you've said here. They seem to care only about overall growth, and as a secondary measure, let's make it equitable, whatever that means.
...
written by dax, July 24, 2014 11:17
" It is likely to mean a relatively smaller labor supply, and therefore higher wages for most workers."

Bingo! If you want labor to earn more compared to capital, you need less labor.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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