In 1950 there were 6.2 workers for every person 65+. Today, there are 3.2. Should we rethink labor?
Social Security was created in 1935. Back then, we were not only young, all we could think about was the wind on our back and the sun in our face.
In 1950, there were six workers for every person over 65 and 27% of Americans were under 14, meaning, a great supply of ready workers helping those over 65 to have a great retirement. Fast forward to 2020 and now there are only 3 workers for every person over 65 and only 19% of the population is under 14. A huge change and one that does not bode well for social security.
“U.S. births have fallen steadily since 2007,” Melissa Kearney and Phillip Levine, economists at the University of Maryland and Wellesley, wrote in “The Causes and Consequences of Declining U.S. Fertility,” “and the total fertility rate is now well below replacement level — the rate at which the population replaces itself from one generation to the next.”
There is on silver lining, so read until the end.
In an era marked by significant demographic shifts, the United States grapples with the dual challenge of a declining birth rate and an aging population. These trends pose potential threats to economic vitality and the sustainability of social security, which is heavily reliant on contributions from the working population.
In addition to the declining share of the population made up of working-age adults, a second factor is the steadily declining labor-force participation of men, especially men without college degrees. From 1950 to 2020, male work force participation rates fell to 71.9 percent from 88.4 percent, according to the Bureau of Labor Statistics. Female participation rates grew steadily to 62.2 percent in 2010 from 33.9 percent in 1959 but are expected to decline slowly to 56.8 percent by 2050.
Declining labor force participation is heavily stratified by education. In 2022, 77.6 percent of men with college degrees were in the labor force, 11.6 percentage points higher than the 66.0 percent of men with high school diplomas who were working.
Take a closer look at recent immigration trends and their impact on the economy and we might have a blueprint for a sustainable future, one that should offer a clear path to citizenship for immigrant workers and supported by those over 65.
The Critical Role of Immigration in Economic Recovery and Workforce Sustenance
A recent article in the New York Times shows how the U.S. has witnessed a remarkable economic recovery post-pandemic, largely attributed to a resurgence in immigration.
With the resumption of visa processing in 2021 and 2022, immigrants have filled significant gaps in the labor force, addressing not just immediate shortages but also longer-term demographic challenges.
As of July 1, 2023, net migration reached its highest level since 2017, with the foreign-born now making up 18.6 percent of the labor force. This surge in immigration has been pivotal, not just in replenishing the workforce but also in moderating wage inflation and stabilizing prices, thereby contributing to overall economic resilience.
The Economic Imperative for Older Worker Support
For older workers, the influx of immigrants represents a bulwark against the potential decline of social security benefits.
Immigrants, through their wages and taxes, contribute significantly to the social security system. In 2023 alone, the number of work authorizations for immigrants surged to more than 1.2 million from about 423,000 in 2022, illustrating their growing contribution to the labor market and, by extension, to social security funds.
This direct relationship between immigrant labor participation and the viability of social security underscores the practical need for older workers to support immigration initiatives.
Advocating for a Path to Citizenship
Given the falling fertility rate of the US which caused the drop in 0-14 population from 27% to 19% in the past 60 years and which will continue to decrease this important demographic, older Americans should rethink immigration from a wholly selfish perspective. Increasing legal (and taxpaying) workers in the US vastly improves the health of social security.
Beyond economic contributions, providing a clear path to citizenship for immigrants is essential for ensuring their full participation in the tax-paying labor market and society.
Initiatives like the extension of temporary protected status and the expansion of humanitarian parole for individuals from countries in turmoil demonstrate the immediate benefits of such policies. Regularizing the status of immigrants not only facilitates their integration into the workforce but also enhances their contributions to social security and the broader economy.
Leveraging Immigration for Economic and Social Security Sustainability
The statistics underscore a clear message: immigration is a cornerstone of future economic stability and the sustainability of the social security system in the United States. As the country faces the challenges of an aging population and declining birth rates, the contributions of immigrants to the labor force and social security system are invaluable. Older workers, in recognizing the mutual benefits derived from a robust and diverse workforce, should not only support immigration but also advocate for policies that provide a clear path to citizenship for immigrant workers.
Financial and labor experts are working to propose solutions to the societal problems caused by the tendency among immigrants to congregate in a few cities. One suggestion, from James Parrott, the director of economic and fiscal policies at the New School’s Center for New York City Affairs is for state governments to facilitate relocation to smaller cities where housing is more available than in the big cities. This would also alleviate work gluts in big cities and help work deficits in smaller cities.
Conclusion
The demographic challenges facing the United States call for a strategic and inclusive approach to workforce development and social security sustainability. By embracing immigration and supporting pathways to citizenship, the country can harness the potential of its diverse population to foster economic growth and ensure the long-term viability of its social security system. For older workers and retirees, supporting these initiatives is not just a matter of economic self-interest but a commitment to building a resilient and inclusive society for future generations.
The Silver Lining
As the participation from younger workers in the labor force decreases, older workers, who already have the expertise in their respective industries and companies will be more valuable than ever for their employers.