Three Thoughts: Spending Our Demographic Dividend

Woody Hayes said, “You win with people.”  His sports mantra might as well be a mantra for industrial development too.  Like in football, economic growth requires people to succeed.

Talent is as important as infrastructure.  Though the talk about financial incentives always makes headlines, it’s the availability of people that is the most important incentive to attract capital investment and jobs.

 

In his book predicting the global future for development, The Next Hundred Million: America in 2050, author Joel Kotkin wrote about the demographic dividend.  The premise?  The U.S. competes favorably for gross domestic product growth over countries which are experiencing demographic challenges.

 A shrinking population is a people problem indeed.  The lack of people to work in manufacturing is the biggest threat to growth.  Conversely, when the U.S. sustains a working age population, we enjoy a demographic advantage.  That advantage is Kotkin’s demographic dividend.

 What made me want to sing from the Joel Kotkin songbook is his predictions, fully 15 years ago, that the middle of the country would bring about a national resurgence by experiencing a reshoring of manufacturing.  He predicted places like Ohio could win the people side of the equation while also providing all the energy, logistics, and manufacturing capabilities needed to gain an edge.

Competitors for GDP growth.

Japan and Germany are two countries from where large investors have made their way to the U.S. and Ohio, in particular. It’s been for demographic reasons.  These two countries’ business leaders recognized 50 years ago that if they wanted to sell in the U.S., they had to come to the U.S.  And they did.

Arguably, of all the incentives dangled to get Honda to Ohio, it was people that won out as the biggest reason they came, and the reason they stayed. 

Those German and Japanese decisions being mirrored by other countries are the reason predictions of reshoring of manufacturing have gained momentum in recent years.

China Faces Demographic Cliff.

It didn’t make many headlines, but India surpassed China in 2025 as the most populous country in the world.  China’s yearly population dropped and, by some estimates, the drop was roughly equivalent to the entire population of Iowa.  Birth rates are to blame.  According to The Guardian, “. . . [China] births in 2025 were roughly the same level as in 1738 when China’s population was only about 150 million.”

That’s not a demographic problem.  That’s a demographic cliff. The workforce ramifications are already impacting China and, undoubtedly, influencing their economic decisions now and for decades to come.

U.S. Demographics Trends to Watch.

Spending, if you will, that U.S. demographic dividend requires achieving working age population growth, comparatively higher birth rates, and steady legal immigration in our country.

Lower birth rates and slowed immigration have caused Kotkin’s prediction of the U.S. achieving 400 million population by 2050 to be off.  Though we keep growing as a nation, demographers are adding years on to the Kotkin prediction.

Trends that show population growth, trends that continue to favor reshoring of manufacturing, and trends that see increased foreign investment are all trends to watch in our state. 

If we look to win at the game competing for GDP economic growth in the U.S. and spending our demographic dividend, we’ll win with people.

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This column is a regular column in The Dispatch.