A welder works at a Manitou factory in June 2023 at Madison, South Dakota. Labor shortages in North Dakota and South Dakota could be harbingers of a shortage of young people in coming years. (Photo by Joshua Haiar/South Dakota Searchlight)
Today’s children may outperform their parents for the first time since the 1970s, with young workers becoming more valuable and well-compensated. A housing surplus might also ease their lives after years of shortages.
Demographers predict a dwindling supply of young workers by 2040, alongside better wages and housing availability. Immigration and artificial intelligence remain unpredictable factors, and young workers will shoulder taxes supporting aging boomers.
States like North Dakota and South Dakota already face young worker shortages, with job openings doubling the number of job seekers. These positions often require physical labor that AI cannot replace, such as oil fracking and truck driving.
“Really a lot of the Midwest is still investigating things like autonomous systems but we’re not really there yet. So labor shortages are a thing and are an issue,” said David Flynn, an economics professor at the University of North Dakota.
Other states, including Washington and Nevada, are experiencing similar issues, with job seekers outnumbering openings nearly two to one.
Economist Steven Ruggles from the University of Minnesota suggests today’s children face a future brighter than any generation since the Baby Boomers. Ruggles, who published “The pig in the python,” argues a young worker shortage will boost prosperity.
“We are on the verge of a radical reshaping of labor markets in which new workers will be in extremely short supply,” Ruggles wrote. “We may finally see real (inflation-adjusted) wages of the young exceed the levels of the early 1970s.”
By 2040, retirees will outnumber young labor market entrants, potentially making housing more affordable.
We just don’t have the bodies.
– Marcia Goetz Havens, North Dakota Labor Market Information Center
If construction remains high, demographic shifts may lead to a national housing oversupply, impacting states like Arizona, Florida, and Texas more due to rapid building.
While better pay and lower housing costs are hopeful prospects, past predictions of a housing market crash during the 1990s were incorrect, according to Richard Jackson, president of the Global Aging Institute.
Demographic trends are largely set, barring unforeseen events, Jackson noted. Immigration remains a variable, with recent arrivals meeting demand for skilled workers in trades.
“Whether any of that translates to higher wages seems pretty uncertain to me,” said Julia Gelatt from the Migration Policy Institute.
North Dakota companies offer high wages for young workers in sectors like energy and construction, said Marcia Goetz Havens. However, nearly half of job vacancies are in healthcare, hospitality, and retail.
North Dakota’s high labor force participation rate limits available workers, Flynn said, noting fewer young people are interested in manual labor jobs.
Young worker shortages make it difficult to fill other roles. Employers struggle to find nurses, cashiers, and fast-food workers.
“We just don’t have the bodies,” Flynn said. Employers report fewer young people are interested in manual labor, opting for easier jobs with higher pay.
