UCR Suggests Reason Behind Worker Shortage: Population Growth Not Pandemic

By: Sharjeel Sohaib


Aug 13, 2022



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According to a new analysis published by the UCR School of Business Center for Economic Forecasting and Development, the underlying cause and a significant future challenge for the country is worker shortage, which is driven by a lack of real, long-term population growth.

Key Takeaway:

  • According to UCR, the main reason behind supply chain problems is the shortage of workers, not the pandemic.

We Covered this in our Weekly Wire Roundup

Analysis of the Research by UCR

The study found that the long-run population growth of Americans between the ages of 25 and 54 drastically increased in the 1970s, peaked in the middle of the 1980s at over 2% growth year, and then rapidly decreased in the 1990s due to sharp drops in birthrates. 

International migration increased in the 1990s, partially countering the baby bust. Still, it too drastically reduced after the turn of the century. The country’s population growth rate for those of prime working age is at 0.2%, which is one-tenth of what it was 40 years ago.

Thornberg points out that although these population patterns have been evident in the data for many years, policymakers and corporate executives haven’t given them much attention because they occur gradually.

According to the data, California, particularly Southern California, has a worse labor deficit than the rest of the country. The scarcity of housing in the state effectively restricts population and labor force expansion, deteriorating affordability and pushing people and businesses out. Furthermore, the demographic projections for the state portray a pessimistic picture of future developments.

Highlights from the Report:

The report specifically highlights the following:

  • Rather than tightening regulations on gig labor and flexible scheduling, as California is currently doing, they ought to be loosened.
  • Reducing or eliminating potential cutbacks to current retirement benefits should encourage and support older workers who desire to stay engaged in the workforce.
  • Rather than being based on preset, publicly imposed minimums, regulation should change to allow firms to offer a variety of compensation, benefits, and training packages per worker preferences.
  • Regulations on staffing and licensing should be loosened.

Longer-term, elected, and regulatory officials can influence things in a variety of ways, including:

  • Congress can work to fix the nation’s dysfunctional immigration laws and make it easier for more people to enter the country legally.
  • To reduce emigration, state and local authorities in California can increase housing availability, especially multifamily housing.
  • To help employees transition off of public assistance and into lower-paying, lower-skill employment, policymakers might raise earned income tax credits.
  • Government officials might fund employer-based worker training initiatives to enable and motivate less-skilled individuals to pursue more advanced career pathways.
  • To assist employees (especially women) in continuing on their chosen job path while starting families, policymakers might invest in Pre-K education and publically subsidized childcare facilities.
  • The government can offer grants and training to help small enterprises implement labor-saving technology.

Startempire Wire reports about a new grant for UCR


The analysis concludes that all of this indicates that government organizations and politicians should focus on boosting the labor supply and assisting businesses in adapting to a new environment where people are a limited resource. Leaders can take an immediate, somewhat passive action to help: they can loosen labor market restrictions to give firms the most latitude possible in choosing their employees.


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