The U.S. workforce is likely to shrink in the coming decade, according to the Bureau of Labor Statistics, as more people get to retirement age and less people have children.

That aging problem also means we’re likely to see labor shortages, like the one we’re currently in, persist for much longer, according to Alfred Marcus, professor of strategy and technology leadership at the University of Minnesota.

“This is a global shortage, the entire population of the world is aging at this moment,” Marcus said in an interview with Morning Report host Sabri Ben-Achour.

Below is an edited transcript of their conversation on how much our workforce has aged, how the pandemic exacerbated this and what solutions need to be considered.

Sabri Ben-Achour: So why do you think this labor shortage that we’re currently experiencing is something that we’re going to see persist for a while?

Alfred Marcus: Well, this is a global shortage, the entire population of the world is aging at this moment. And for most of the 20th century, particularly during the Great Depression, what we were worried about was unemployment. And right now, I think we’re entering an era where labor shortage is going to be much more common, particularly in countries like the United States and other developed countries where the age where the workforce is aging very rapidly.

Ben-Achour: The workforce has been aging for a while, how did the pandemic make that specific problem worse?

Marcus: It amplified it a great deal. Many people who are elderly – so the, let’s say, 55 years and older – many of them have decided to take retirement or to take early retirement, especially among people who are not college educated. So this is a long-term trend, but the pandemic has amplified it. The labor shortage in the United States now is quite large. There are currently something like 10.4 million jobs, and only 8.4 million people that are looking for work. And so there are more jobs than available workers. This is a trend that Japan has experienced for a long time. In Japan, approximately, there’s 1.6 jobs for each worker, and Japan is the oldest society in the world right now with a median age of about 49. So we’re going to rapidly reach that point. And so are countries like Russia, China, Germany is right now the second oldest country in the world. We’re all going to be facing this labor shortage.

And another factor related to but it’s been exacerbated by the pandemic is that the share of the retired population in the United States has gone up from 15% of the population to 20% of the population between 2010 and 2020. Trends like this are just going to continue and the actual working age population is going to shrink over time. And even the people who are going to be working tend to be older and this will, I think, affect some of our older industries, like Boeing, many of the engineers are older and  moving on to the next generation is not going to be as simple as it once was.

Ben-Achour: So the argument, then, is that as our workforce ages, people move on, there are fewer people to replace them. How do we fix that?

Marcus: OK, the main ways that exist are immigration, which is not a sure fix for at least two reasons. Globally, there’s a decline in population that’s setting in as women have fewer babies globally, this is a trend everywhere in the world. The second issue is that we have backlash against receiving immigrants in our country that has been occurring for a long period of time, when it’s really in our interest to receive immigrants and we’re really a global struggle for talent. The other way to deal with the problems, technology and productivity. The existing jobs have to be more productive, if we’re to maintain our living standards.

Ben-Achour: If we are going to be experiencing labor shortages, sustained labor shortages beyond the pandemic, I mean, what are the consequences of that economically? I mean, does that mean wages will rise? Does that mean we’ll become less competitive?

Marcus: Well definitely I think it’s going to lead to rises in wages, the kind of rises in wages that we’ve already seen. And so, those rises in wages are good for all, but they can be inflationary, and at the same time, we could see less demand because as people get older, their consumption tends to go down, except in certain areas like health care. At the same time that we see a pickup in inflation, we could also see a decline in demand which would lead to less consumption which could lead to a decline in GDP. So the worries or concerns that people are having now about so called stagflation or stagnation combined with inflation are exacerbated by this trend. It does from the perspective of business also create all kinds of opportunities that did not exist previously in caring for the elderly.

Ben-Achour: If we’re going to have sustained pressures pushing us towards further labor shortages in the future and our jobs need to be more productive, doesn’t that mean we have to spend more on either education to fill those more productive jobs, or invest in industries that provide more productive, higher paying jobs?

Marcus: I think both. There are going to be a lot of jobs that, even right now, are not being filled at the lower ends. And that’s because many of the people who are older, they may not want to return to the workforce because the jobs that are out there, many of them are extremely demanding. And even people who are doing the hiring may not want to hire them, because these jobs are demanding, like home health care workers, that’s going to be a growing category. And so workers are going to have more choice about what the jobs that can do. But on the other hand, it’s absolutely true we’re in a global hunt for talent and for educated people and even in the United States, we have to increase our educational capacity so that we make the productivity advances that are necessary.