US demographic change will have broad economic effects

Significance

This has implications for the size of the workforce and the living standards that the US economy is capable of supporting. It will also have broader consequences for the US economy over the next 30 years.

Impacts

• Lower workforce participation rates will lower average living standards, relative to what they would have otherwise been, by 10% by 2050.
• Medicare and social security spending will rise by 4% of GDP over the next 30 years; higher taxes or spending cuts elsewhere will be needed.
• Immigration is projected to be just sufficient to offset natural population decline by 2050, cushioning the working-age population drop.
• Estimating the extent to which immigration and automation could help to fill worker shortages over the longer term is difficult.