Tech Boom, Demographic Shock Shaping the Future of Business (Part 1)
(In this shocking two-part series, author, commentator and Ipsos Public Affairs CEO Darrell Bricker [@darrellbricker] reveals how technology and demographic trends will shake up consumer and labor markets now and in the future.)
If demographic trends shape future consumer and labor markets, businesses are in for a shock.
Forget the planet overpopulation hype. It turns out that we’re actually running out of people faster than we can replace them. That’s the counterintuitive conclusion of “Empty Planet”, a new book co-authored by Canadian thought leader Darrell Bricker and journalist John Ibbitson. And the shock of declining fertility rates has serious implications for business and society in general.
The research in this provocative book reveals that we’re on the cusp of a steep decline in family size which will cause major disruptions to future labor and consumer markets in the U.S. and elsewhere.
We’re already starting to see impacts in Hungary, Italy, Portugal, Japan, Ukraine and 17 other nations, according to World Bank data. In fact, almost half of countries around the world have birth rates below the level needed to replace current generations. And in the U.S. a recent report from ADP and Moody’s Analytics revealed that companies are struggling to find people to fill a record 6.7 million job openings.
News reports say that the situation is so serious the labor gap is now approaching epidemic proportions and employers could end up paying the cost.
Bricker recently sat for an interview with Digital Masters to share his thought-provoking outlook on how population trends will impact future consumer and labor markets and society in general. Hope you enjoy the conversation.
Appian: First of all, thanks for participating in our thought leader series. I came across an article in Wired magazine that talked about the commentary in your book “Empty Planet” and how the world might actually run out of people which is opposite of what most people think.
Bricker: I’m happy to do that.
Appian: But first, let’s talk about what motivated you to write “Empty Planet”.
Overpopulation Hype? Doomsayers Got it Wrong
Bricker: I’m very big into counterintuitive arguments and so is my co-author, John Ibbitson. There’s this overwhelming assumption we have about what the direction of the planet’s based on U.N. data suggesting that by 2100, the world’s population is going to grow from 7.7 to 11.2 billion people.
But when you look at the models behind that assumption, you really have to question how U.N. demographers came up with that (forecast). So, what John and I decided to do was poke away at that and travel the world and talk to people to better understand why the hype about overpopulation is happening. And that’s what the book is about.
Appian: So, what did you learn from those conversations? And what are the implications for business and business leaders?
Bricker: Well, there are several implications. The first one is that we have this overwhelming assumption that what’s going to drive the future of the marketplace is continuous growth and particularly the continuous growth of people. And that’s going to happen until about the midpoint of the century. And then our population is going to peak and decline.
So, if you have a business model that’s based on growing consumption driven by young consumers, then you’re probably going to have to change your assumptions because the future is not going to look like that.
The second thing is that we have this obsession with youth in marketing. So, we believe that the population that’s going to drive all consumer choice going forward is going to be our youth.
Gray Market: Huge Growth Opportunity for Business
Appian: But since the end of the second world war, that’s basically been true.
Bricker: But what’s going to happen is that you’re going to see the median age of the World’s population creep up. And the older generations—what I call the perennials—are going to drive consumer tastes. But we assume that they’re all just sitting at home and watching TV. So, the question is, how do we unlock what is the largest amount of wealth in our population to drive a consumer marketplace? And one of the wake-up calls in the book is that it’s time to move the needle off of youth and on to older populations as a growth market for consumer businesses.
Appian: Another trend that’s getting a lot of press these days is the explosion of intelligent automation. In the short term, how will automation affect the workforce impacts of our shrinking population?
Bricker: What I hear the most in social media commentary is that we don’t have to worry about this (shrinking population) because of robots and technology. And my answer to that is where is that the case?
We have this view that technology just comes into the human population and causes the effect that we intended. But if you look at any technological innovation that’s happened in the last century, it generally comes into contact with humans and doesn’t survive in the way that it was originally intended. Otherwise we wouldn’t be watching Netflix at night because the internet wasn’t built for that purpose.
We’re reaching a point in human history where we’re deciding to have a smaller population – watch CIGI expert @darrellbricker and @JohnIbbitson discuss the implications of a population bust: https://t.co/IggvjtDaBV
— CIGI (@CIGIonline) May 20, 2019
Time to Rethink What the Workplace Looks Like
Appian: You’ve talked about the graying of the consumer market as a huge opportunity for business. But what are some of the business challenges that will come with the aging population?
Bricker: Well, we’re really going to have to rethink what the workplace looks like. We’re going to have to think about how to retain some of the older population to continue to work which will require us to reconsider what retirement looks like. Because not only are there going to be a lot of people in the retirement population, but they’re going to be working pretty late in life. So why would we continue to kick them out of the workforce at 50 and 60 (years of age) when they’re actually hitting their peak potential?
Appian: Sounds like you’re talking about ageism in the workplace?
Bricker: You know, one of the biggest prejudices in the workplace is the misconception that older people somehow can’t contribute or be creative. And I think we’re going to have to reconsider that because older workers are the most productive part of the population, particularly in the developed community, but it’s not being fully utilized today.
Appian: Let’s switch gears and talk about another surprising finding that came out of your research. You’ve written that by the end of the century, the US and China are basically going to have the same population. How is that even possible?
Bricker: Well, it’s really just a function of two things. One of them is fertility and the other one is immigration. On the first point, the Chinese population, depending on whose estimates you look at, has a birth rate of about 1.5. The U.S. has a birth rate of about 1.9 and it’s declining.
Both populations will continue to shrink because of declining fertility rates. But the decline in China is going to have a bigger effect over a shorter period of time than in the U.S. So, sometime around 2025, China’s population is going to decline, and the population of the U.S. will continue to increase because there’s a birth advantage built into the U.S. population that will be an advantage going forward.
China’s Population to Decline by 300 Million
Appian: So, how does immigration play into the declining population narrative?
Bricker: The U.S. takes in about a million people a year. But the Chinese population actually has an out-migration of people from their population. There are several estimates about how much the Chinese population will shrink over the next century. But even the U.N.’s estimate projects a decline of 300 million people which is almost the size of the entire U.S. population today.
Appian: 300 million people? Is that what you mean by the shock of global population decline?
Bricker: We’ll, I think there are two reasons we decided to call it a shock. First of all, it’s a dramatic impact on humanity. And it’s the first time in human history that we’ve decided to roll back the human population as a matter of choice. The reason that the world population will decline as we get past mid-century is because we have chosen to be smaller. It’s about choices people are making all over the world about the size of the family they want to have. And in every country, it’s smaller. So that’s a big shock.
The number of #babies #born in the US fell last year to a 32-year low. In fact, falling fertility rates are reshaping everything from economic growth to immigration and climate change. Listen to @JohnIbbitson and @darrellbricker explain on #DeepDish: https://t.co/JCbKXUWHHj pic.twitter.com/OOSyr9C2Ob
— The Chicago Council (@ChicagoCouncil) May 17, 2019
Appian: But most people assume the complete opposite of that.
Bricker: That’s why we call it a shock because it’s so counterintuitive.
Appian: In this thought leader series, we tend to talk about tech trends such as digital transformation and the explosion in AI, intelligent automation and low-code development. Is there a connection between the amazing evolution of technology and the shrinking human population you talk about in your book?
Technology Boom, Baby Bust and What Lies Ahead
Bricker: Absolutely 100%. And the biggest connection is communications technology and access to information. One of the most rapidly declining situations in the world today is illiteracy.
And as the world’s population becomes more and more literate and able to access information via technology—there’s a scene in the book (“Empty Planet”) where I’m sitting in a slum in downtown New Delhi and I’m watching a glow under a woman’s sari as she’s talking about the future of her family and that she wants to have fewer kids than her mother had.
And she reaches under the sari and grabs the thing that’s glowing and its a smartphone. So, she has access to smartphone technology. She has access to a data plan. And she has access to the rest of the world.
But she can also read and everything she’s reading tells her how to control her fertility and how her life will be better with a smaller family. And all of those things come through the process of urbanization and the connectiveness of technology.
(Be sure to tune in for the final episode of our two-part conversation about the remarkable demographic trends that are shaping the future of business.)