Economy White Paper Series

Supply chain struggles have been widely blamed for the inability to meet consumer and business demand throughout the pandemic. While fixing the supply chain should be a top priority, it is worker scarcity, driven by the lack of basic, long-term population growth that is the true underlying cause—and a critical future challenge for the economies of the United States, and particularly California.

“For several decades there has been a substantial slowdown in the growth of Americans in their prime working years,” said Christopher Thornberg, Director of the Center for Economic Forecasting and author of our latest White Paper. “Whether it’s the missing factory worker, delivery truck driver, or salesclerk, the scarcity of workers is hindering the ability to connect demand to supply and is slowing economic growth.”

According to the analysis, the population growth rate of prime working age people in the nation today is 0.2%, one-tenth of what it was 40 years ago.

The mass wave of retirements that occurred during the pandemic both accelerated and exacerbated today’s worker shortage, but it is not the root cause. “This is a long-term demographic problem, not a short-term cyclical one,” said Thornberg. “It is not going to disappear as the COVID crisis fades.”