If the US economy functioned fine 10, 20, 50, and 100 years ago, when the population was ~half the size, why can’t it withstand a population decline now?
In: Economics
The problem is that the social welfare problems have now gotten to large and cannot be sustained with a declining young population (work force, paying taxes) AND the fact that a ton of working age people have checked out of the workforce entirely.
Social Security: $1.4 trillion was spent on Social Security, which is 21% of the budget.
Health insurance: $1.6 trillion was spent on health insurance, which is 24% of the budget. This includes Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace health insurance subsidies.
Employment-population ratio: In January 2024, the employment-population ratio was 60.2% for people aged 16 and older. This ratio has been between 59.9% and 60.4% since March 2022.
It has been in between 57 and 67% since the 50’s, but in the last 15 years there has been a “hidden” decline of people who are so uninvolved in the work force that they don’t even show up in the stats. (People of working age who haven’t even been looking for a job and haven’t had one for a long enough period of time that they aren’t considered workforce participants)
In the 1970 fiscal year, the United States spent $143 billion on social welfare programs, which was 15% of the country’s goods and services output. This was a significant increase from 1965, when the percentage was 11.8%. The growth in social welfare spending was almost double the rate of growth of the gross national product (GNP).
In summary – social programs in the 70’s were 15% of the total budget in the US. Now they’re 46%. The workforce has remained at around ~62% of the population during that entire time frame. As the”baby boomers” are poised to leave the workforce, and birth rates are declining, the social program expenditures are going to increase and the tax base is going to decrease simultaneously.
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