Key Takeaways
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The number of workers is shrinking as the U.S. population gets older and employees retire.
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As the demographic trend continues, businesses will increasingly compete for workers, boosting wages.
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Immigration has helped fill gaps in the labor force in recent years, but anti-immigration policies under Trump could deepen the worker shortage.
Workers gunning for higher wages have a powerful ally on their side: the passage of time.
As birth rates have declined over the past few decades, the U.S. population is getting older. That fact has big implications for the future of work, according to several recent analyses of workplace trends.
Employers will have a harder time finding qualified hires in the long run as larger portions of the population retire. That could put workers in the driver's seat when it comes to negotiating wages and benefits in the coming years.
“In 2025, we believe the U.S. labor market will remain strong as an aging population restricts labor supply growth and firms increasingly compete for workers, challenging the recent deceleration in wage growth," wrote Adam Schickling, senior economist at Vanguard, in an analysis.
How Fast Is the Population Aging?
According to an analysis last year by the Congressional Budget Office, in 2024, there were 2.9 people aged 25-64 for every person over 65. If current trends continue, by 2054, that ratio will fall to 2.2 to 1, possibly meaning that each working-age person will have to support about one more retiree than they are now.
By comparison, in 1954, there were six younger adults for every American over 65.
In a survey of U.S. employers by the World Economic Forum published in November, 47% identified the aging—and, in turn, declining—workforce as a trend likely to shape the future of their organizations.
The aging workforce has already had a seismic impact on employers and the economy. The pandemic drove a wave of early retirements, boosted demand for the remaining workers, and contributed to the surge of inflation in 2021 and 2022.
What Other Factors Could Be At Play?
In recent years, a surge of immigration has helped make up for the aging, and has kept the labor force growing alongside the economy, an analysis by job site Indeed found in November.
But it's an open question whether that will continue, especially with incoming President Donald Trump promising to crack down on immigration and even deport en masse people who are in the U.S. already.
"The combination of slowing labor force growth, flattening participation rates, and an expected decline in immigration suggests that the labor supply will weigh heavily on the job market in the coming years," Allison Shrivastava, Cory Stahle, and Daniel Culbertson, economists at Indeed's hiring lab, wrote in a report in November. "With fewer workers to fill job openings, competition is likely to increase in the long run."
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