Beyond the Census: America's Demographic Advantage

As the nonstop TV commercials have made clear, the U.S. Census Bureau really hopes you've sent back your questionnaire by now. But in reality, we don't have to wait for the census results to get a basic picture of America's demographic future. The operative word is "more": by 2050, about 100 million more people will inhabit this vast country, bringing the total U.S. population to more than 400 million.

With a fertility rate 50 percent higher than Russia, Germany, or Japan, and well above that of China, Italy, Singapore, South Korea, and virtually all of Eastern Europe, the United States has become an outlier among its traditional competitors, all of whose populations are stagnant and seem destined to eventually decline. Thirty years ago, Russia constituted the core of a vast Soviet empire that was considerably more populous than the United States. Today, Russia's low birthrate and high mortality rate suggest that its population will drop by 30 percent by 2050, to less than one third that of the United States. Even Prime Minister Vladimir Putin has spoken of "the serious threat of turning into a decaying nation."

Perhaps an even more important demographic gap is emerging between the United States and East Asia. Over the past few decades a rapid expansion of their workforce fueled the rise of the East Asian tigers, the great economic success story of our epoch. Yet within the next four decades, a third or more of their populations will be older than 65, compared with only a fifth in America. By 2050, according to the United Nations, roughly 30 percent of China's population will be more than 60 years old. Lacking a developed social-security system, China's rapid aging will start cutting deep into the country's savings and per capita income rates. A slowdown of population growth in poor countries can offer a short-term economic and environmental benefit. But in advanced countries, a rapidly aging or decreasing population does not bode well for societal or economic health.

Between 2000 and 2050 the U.S. population aged 15 to 64—the key working and school-age group—will grow 42 percent, while the same group will decline by 10 percent in China, nearly 25 percent in Europe, and 44 percent in Japan. Unlike its rivals, America's economic imperative will lie not in meeting the needs of the aging, but in providing job and income growth for our expanding workforce. What the United States does with its "demographic dividend"—that is, its relatively young working-age population—will depend largely on whether the private sector can generate jobs, an issue that's particularly critical now, with more than 15 million unemployed.

Immigrants may be one force that will lead the way: between 1990 and 2005 immigrants started one quarter of all venture-backed public companies. This enterprising spirit is crucial, because U.S. employment has been shifting not to mega corporations but to individuals; between 1980 and 2000, the number of self-employed people expanded tenfold to make up 16 percent of the workforce.

To create jobs, America needs to pay attention not only to high-tech industries but also the basic ones—construction, manufacturing, agriculture, energy—that will employ our expanding blue-collar workforce. Expanding our basic industries, and focusing on the necessary skills training for those laboring in them, will provide new opportunities for the majority of workers who do not possess college degrees. It also will be critical to addressing the outflow of capital to other countries, and provide the basis for innovations that will create new exports.

With the mobilization of our entrepreneurs and supportive government policies, the United States should be able to exploit its vibrant demography to assure its preeminence over the next four decades. If we fail to start taking these steps now, our current leaders will have earned the opprobrium that future generations will heap upon them.

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