July 20, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi, everyone. This is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are you’re a political and unbiased source of economic intelligence. And today I wanted to talk about the labor force, especially in terms of participation rates and demographics. I like talking about this subject because we can weave in and out of the near term and the long term as it pertains to 2030. And I know I’ve been doing a lot of 2030s talking lately, but for good reason, because we’ve only had we only have three and a half years to prepare for this downturn. And these demographics and labor force participation rates are, you know, key elements to not just some of the challenges here in the near term, but some of those challenges around the 2030s.

One of my favorite slides that I present when I’m delivering keynote presentations around the world is our labor force participation rates, because it really gets at some of the challenges that we’re having with the large baby boomer generation, as well as the younger millennial and Gen Z population. So let me share a few statistics with you just to lay out our current labor force participation situation. Our 25-54 year olds, we often refer to that as the prime age labor force here in the United States. If you’re over 54, I still think you’re prime. It’s just how the economists like to refer to it. Those groups, we typically break them down into three different groups. We’re not just looking at all 25-54 year olds. We’ll look at 25-34 year olds, 35-44 year olds and 45-54 year olds. And those participation rates, respectively, are running consistent with the long run average, I’d say really all the way back into the mid 80s. So the 35-44 age group, that’s at 84.7%. And that is the highest participation level. If you look at the next highest participation level, it’s our 25-34 year old, that’s at 83.6% participation. And then the third highest is our 45-54 year olds, and that is that 82.9% participation. And again, just to put these numbers in context, that’s pretty consistent with where we’ve been. Again, if you really go all the way back to sort of at mid 80s, early 90s time frame.

So though that prime age labor force, we continue to see strong participation. That’s not where the problem is. The problem is when we look at the other two groups that I’ve left off this, left out of our conversation so far, which is our 16-24 year olds and our 55-64 year olds. Now I want to put in context the word problem because I say these two groups are a problem, but maybe not the best way to put it. I’d say that’s, that’s where the challenges are. So if you look at the 55-64 age group, that participation rate is 66.5%. That is the highest reading in well over six decades for this group. And again, I’m looking at a chart that goes all the way back to the 1970s. And I’ve never seen a higher participation rate for that 55-64 group. So it’s clear that that age cohort is working longer. And that’s not a surprise. You see the retirement age creeping out here in the US folks are living longer. Folks are working longer.

Now, the challenge that we have, though, is that our 16-24 year old participation rate is 55.2%, and that is historically low. So let me give you a reference point. Back in 1979, in July of 1979, if you want to get specific, the participation rate of our 16-24 year olds was about 68.7%. Today, it’s only 55.2%. And I don’t want to act like I’m just throwing shade at Gen Z. Gen Z, we love you. You’re a big part of the economy as we think about our future. This was also the millennials, too, because this participation rate’s been around 55%, really since 2010. Now, there’s a number of ways you can speculate on why that number has really come down, why our 16-24 year olds aren’t working. Some folks say social media, some folks say the emphasis on college, the financial crisis of 0809, being able to stay on your parents’ health insurance till you’re 26, and I don’t think it’s one factor, necessarily more than the other. I think it’s a confluence of factors, especially the ones that I had just listed there, but the challenge that we have here is there is a big gap between the 55-64 year olds and then the 16 to 24-year-olds. Now, I want to be careful here, though, because the millennials, like I had mentioned, had these low participation rates between 16-24. But then when all the millennials turned 25 and older, they jumped up into the workforce and kept a pretty normal participation rate for that 25-plus category, it’s just still a little early for us to tell if that’s going to be the case with Gen Z.

Now, you might be asking yourself, why is this important in terms of the context of 2030? Because I think we all understand the importance today, which is that we need to find ways to get these young folks excited about joining the workforce, because even with AI, even with a lot of these productivity developments, there are still a number of industries, especially our blue collar industries, that have big labor gaps, that have a lot of unfilled jobs, that have a lot of open jobs, and we need these young people to get excited about the workforce to fill this. But as we think about the longer term, one of the challenges for this 2030 downturn that we’ve been speaking to, the number one driver of the 2030 downturn for us has always been demographics. It’s always been the top of our list, because we have the baby boomer generation, which is the biggest generation to work its way through the United States, although I do believe the millennials are now have surpassed the baby boomers, unfortunately, because some of our baby boomers have passed away and moved on as morbid as that is. But still, we have this massive generation, which is the baby boomers retiring in 2030. And what comes along with that is increased health care costs and increased social security costs, which are the second and third drivers of this 2030 downturn.

So the more we can get these young folks excited about the workforce, the better off we’ll be in the 2030s to manage this. Now, we don’t think we’re going to, again, avoid a depression by any means. But it’s really interesting to see how the US is positioned from a demographic perspective relative to other countries around the world. So we get this really great data from the U.N., the population division of the U.N., I should say it’s the Department of Economic and Social Affairs. And we have a list of the population projected change by 2040. And the US is actually still in positive territory at 7.8%. So to all the Gen Xers and baby boomers that find us millennials and Gen Z insufferable, you do have to thank us a little bit because we still have a positive population trend. And that’s part of the reason we think the US comes out of the 2030s better than some of the other countries around the world. Now, we’re not the only ones with positive population demographics through 2040. The U.S. is at 7.8%. We have our four safe haven countries, which we’ll expand on more. But that’s Australia, Canada, Sweden, and Switzerland. Australia’s population change by 2040 is a positive 14.8%. Canada, a positive 11.8%, Sweden and Switzerland a positive 5 and 4.6%, respectively. You might be able to see a little bit why there’s some of our safe havens. So being in that positive territory from a demographic standpoint means doesn’t mean you’re going to going to avoid 2030, but it does mean 2030 might be a little less painful for you compared to some of the regions or countries around the world that have a negative population projected change by 2040 and a couple of notable ones there. Korea, minus 5.4%, that’s South Korea, I should be clear on that, minus 5.4% projected change by 2040. China, minus 5.6, Japan, minus 9.8, we have Western Europe as a whole at minus 0.5, and Eastern Europe at minus 6.7. So those are the areas that are going to feel 2030 in the even more. I should say we’ll feel even more pain in 2030. Demographics have a real impact on our labor force now, but also into the future, and it’s something that we watch very closely.

So folks, I can’t legally tell any of you in the US to have more kids, but I’ll tell the millennials out there, the more kids we can have the better off the economy will likely be as we move into the 2040s, 2050s and beyond. But for now, I sure hope you found this information helpful. We’re going to continue to cover demographics, as I mentioned, because it’s such a big driver of this 2030 challenge that’s in front of us. But as always, please like and subscribe to TrendsTalk, wherever you listen to your podcasts and folks, I look forward to seeing you on the next one. Thanks for joining me. Take care for now.