USA>Economy
from the September 12, 2006 edition

Is a bigger nation richer?

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Do more people mean more riches?

Does that prosperity have anything to do with population growth? Opinions differ, but at least in contrast to other developed countries many demographers and economists think so.

Families in Europe and Japan are not having enough children to keep their populations growing in the long term. That means their societies are aging rapidly. And it also stands in contrast to the US, which alone among the developed nations is expected to see its population surge in the coming decades. America's population growth is a function of three things: a fertility rate of just over two births per woman, a relatively high rate of immigration, and greater longevity.

US population: 300 million
Part 1 - 09/12/06
Part 2 - 09/19/06
Part 3 - 09/26/06
Part 4 - 10/03/06
Part 5 - 10/10/06

"We're the envy of Europe and Japan for our population growth, for our level of fertility," says Samuel Preston, an economist and professor of demography at the University of Pennsylvania.

"Other Western societies are imperiled, I would say, by very low levels of child-bearing and their much-reduced ability to integrate immigrants into society," says Dr. Preston. "Their age structures are extremely antithetical to economic growth because they are so old and there is such a high burden of support required for the elderly population."

For US, a growing consumer market

Other experts note that a younger, growing population stimulates a workforce to produce more while energizing research and development and increasing the market for goods and services - all important in an age of globalization.

In a world economy that is increasingly "flat," as New York Times columnist and author Thomas Friedman puts it, having more immigrants may be important, too.

"For us to survive as an economic power we're going to have to not only trade with other people in the world but also bring a fair number of people here to be in our labor force, to help us understand how the rest of the world is operating," says William Frey a demographer with the University of Michigan and the Brookings Institution.

Payoff of a flat population?

Not every expert agrees with these assessments. "Nobody has yet proven that it's absolutely necessary to have population growth [to thrive economically]," says Martha Farnsworth Riche, former director of the US Census Bureau. "That's simply the model we all have in our heads. My personal belief is it doesn't have to be this way - that you can have economic well-being with a steady-state population."

Ireland, for example, has a fertility rate (1.87 births per woman) that is below the replacement level (2.1) - less than half what it was before the country lifted restrictions on contraception in 1979. Since then, Ireland's "dependency ratio" (the number of working-age people compared with the number too old or too young to work) has dropped considerably. In other words, there now are relatively more wage-earners paying taxes to support children and the elderly.

"That change coincides precisely with the country's extraordinary economic surge," Malcolm Gladwell writes in a recent issue of The New Yorker magazine.

(Graphic) POPULATION GROWTH: This graphic examines the impact of population growth rates on nations' standards of living. Enlarge the image to take a closer look.
SOURCE: UNITED NATIONS; WORLD BANK (AS REPORTED B DEVELOPMENT DATA GROUP); RICH CLABAUGH - STAFF
Click here to enlarge the image

"It depends on what policies a country has and how different sorts of social arrangements work, and all that," says Nicholas Eberstadt, a scholar in political economy at the American Enterprise Institute in Washington. "All other things being equal, which of course they never are, the prospects of moderate population growth, additional growth in the labor force, a moderated pace of population aging - all of those things one might imagine being positives rather than negatives from the standpoint of enhancing prosperity."

Moderation is the key. A nation's population can grow too fast and overwhelm its resources. In the United States, by contrast, the rate of growth is slowing. But the nation is adding more people than ever before in absolute numbers because the population base is so much bigger than it was.

Slow progress on poverty

Has there in fact been enhanced prosperity for Americans during these nearly four decades of extraordinary population growth?

There's general agreement, as Henry Paulson said in his recent debut speech as Treasury secretary, that "amid this country's strong economic expansion, many Americans simply aren't feeling the benefits."

Today's poverty rate is a bit less than it was when there were 200 million Americans in 1967 - 12.6 percent last year, according to a Census Bureau report last month.

But because the overall population has increased, the number of those in poverty has also grown - from 28 million to 37 million over the same period. Whether an individual is likely to be officially designated as poor depends in large part on race. For non- Hispanic whites the poverty rate is 8.3 percent; for African-Americans, 24.9 percent; and for those of Hispanic origin, 21.8 percent.

(Graphic) SOURCE: CENSUS BUREAU; RICH CLABAUGH - STAFF
Click here to enlarge the image

"The real incomes of lower- and middle-class households have fallen since 1970, while those of the top fifth have increased dramatically," according to "America by the Numbers." Census Bureau and Internal Revenue Service figures bear out this growing rich-poor gap.

But at the same time, says Mr. Eberstadt, "poor Americans have been enjoying progressively higher living standards. They have been on the escalator as well as everybody else." His research shows gains among the officially designated poor in areas such as health and nutrition, housing, auto and appliance ownership, and travel.

As the US population grows and moves around, where people live also can reflect relative economic prosperity - across the country and within states.

In Oregon, once heavily timbered, dozens of sawmills in rural areas have shut down while blossoming high-tech facilities near cities have given the place a new nickname: the Silicon Forest. The largest private employer in the state now is computer chipmaker Intel.

But economic demography may not be destiny. Last week Intel announced that it will eliminate more than 10,000 jobs worldwide.

Page 1 | 2       Next part: A rising mix of immigrants.

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