James Pethokoukis, at AEIdeas, has some thoughts. Oddly, so do I.
Pethokoukis first. He paraphrases Binyamin Appelbaum in New York Times:
…economist accept slower growth is partly the result of long-term trends…. [Y]ou have (a) the demographically-driven decline in labor force participation and (b) an apparent productivity slowdown starting in the mid-2000s as the pace of technological innovation and diffusion has slowed.
But these two are easily corrected. The “demographically-driven decline in labor force participation” is largely, if not primarily, the retirement of us Baby Boomers without associated replacement from births into existing and new families, much less an increase in that rate. (The long-term departure from the labor force by those who’ve given up finding work in this economy is a separate matter that policy corrections will resolve.)
The US, though, always has relied on high immigration rates, as well as yesterday’s higher birth rates, for our supply of workers at all levels of a company from the janitor/mailroom clerk (no dating me here…) to the President/CEO/Bossman. We don’t have high immigration rates today, so we’re not getting the influx into our labor force that we need. The illegal entry rates don’t make up for much of that at all, and the illegality of their entry serves only to hold them back from full contribution. That dearth is only exacerbated by our lower birth rates; it’s not caused by it.
The productivity slowdown and tech innovation rate is a function of the lack of new ideas, new approaches to old problems, creative approaches to new problems, etc from an entrenched population that’s used to doing things in the business world in a certain way (and that staidness is a fact of human nature). Here, too, immigration has played a major role in our economic vibrancy. Immigrants bring those new ideas, new approaches, new etc. And immigrants start new businesses—become those CEOs/Presidents/Bossmen—all out of proportion to their numbers.
All of which suggests a solution to that “slower growth” bit.