America’s people shortage is about to get real. Colleges, companies, and cities are unprepared.

America is about to tumble off the edge of a massive demographic cliff.

The timing is no coincidence. The US birth rate peaked in 2007, with just over 4.3 million babies born that year. That number has dropped almost every year since, reaching a 30-year low of 3.8 million births in 2017. Last year, the rate was down to 3.6 million.

Now, those 2007 babies are turning 18 (ugh, I know). As they prepare to start college and enter the workforce, their transition to adulthood signals a new reality for universities, employers, and the whole of America’s economy. Every year from here on out — at least for the foreseeable future — colleges will face a smaller and smaller pool of prospective students and companies will see a drop-off in the number of potential workers.

Before long, industries that are already grappling with worker shortages such as healthcare and agriculture could reach a point of crisis. A report by the labor market analytics firm Lightcast found that the joint forces of baby boomers retiring and shrinking demographics will create a deficit of 6 million workers by 2032. That also means there will be fewer people contributing to Social Security while the number of retirees grows.

While elected leaders puzzle over strategies to boost births, employers and higher-education institutions are already scrambling to bridge the gap. Nathan Grawe, a Carleton College economics professor who is widely credited for coining the term ‘demographic cliff,’ says the problem will need to be attacked from multiple angles at once. “It won’t be solved by one silver bullet.”

Incentivizing Americans to have more kids has become a popular political talking point, particularly on the right. As part of Donald Trump’s “One Big Beautiful Bill,” parents will now receive a $1,000 investment account for every new baby they have between 2024 and 2028.

Population decline isn’t a uniquely American problem. According to a report from the United Nations Department of Economic and Social Affairs (UNDESCA), fertility levels below 2 births per woman are “becoming the global norm,” meaning that societies around the world are falling short of the required 2.1 births per woman to replace the population. The trend is especially pronounced in high-income countries where women are more likely to have access to birth control, higher education, and professional opportunities, all of which are linked to delayed childbirth, which in turn generally leads to fewer total kids. But women in many low- and middle-income countries are also having smaller families, even in places where marriage is nearly universal and childbirth isn’t delayed, such as India.

The country’s nearly 4,000 degree-granting colleges and universities have to come up with their own strategies for survival. For some, the challenge will be insurmountable.

With no single, clear-cut cause, the birth-rate decline is a problem without simple solutions. “I don’t believe there are any policy levers — at least, that we know of — that can make a big difference here,” says Wafa Orman, a labor economist at the University of Alabama in Huntsville. Social incentives like baby bonuses and parental leave help, Orman says, but not enough to flip the downward trajectory of new births.

That leaves the country’s nearly 4,000 degree-granting colleges and universities — the institutions most immediately affected by the demographic dropoff — to come up with their own strategies for survival. For some, the challenge will be insurmountable.

Parts of the US are already feeling the pain. “Because of out-migrations and lower fertility, the northeast quadrant of the country has been in this sort of decline for a while now,” says Grawe. Eleven of the 31 degree-granting colleges and universities that shut down in 2024 were in the northeast, according to federal data analyzed by the State Higher Education Executive Officers Association released by The Hechinger Report. The Federal Reserve Bank of Philadelphia predicts that as many as 80 more schools could close by 2029.

When a school shuts down, it derails its students’ lives. One recent study found that less than half of students (47%) displaced by college closures went on to re-enroll in another postsecondary institution. Of those that did re-enroll, less than 37% stuck it out long enough to earn a degree.

Even when schools manage to survive, the demographic cliff may leave them ill-equipped to serve all students. “Some smaller rural campuses are already seeing really diminished program offerings,” says Betheny Gross, research director at an EdTech nonprofit run by Western Governors University. That means already underserved communities end up with even fewer postsecondary options, which makes the members of those communities a lot less likely to pursue higher education, and which in turn diminishes job prospects. The Georgetown University Center on Education and the Workforce projects that by 2031, 72% of US jobs will require some form of postsecondary education or training, up from 68% in 2021.

For small-town America, college closures can mean the loss of a vital economic lifeline. In an instant, employers lose precious talent-recruitment pipelines, local businesses lose customers, and critical public services are wrung dry. The Chronicle of Higher Education reported that when Wells College shut its doors to its 350 students last spring, the upstate New York village of Aurora — home to just 255 non-student residents — was suddenly left without a quarter of its volunteer firefighters and a $200,000 tab to continue running its water-treatment plant, which the college had been operating for more than a century.

Though students and rural communities pay a particularly steep toll, the economic aftershocks are significant across the board. According to a 2024 IMPLAN analysis, each college closure leads to an average loss of 265 jobs, $14 million in labor income, $21 million in GDP, and $32 million in overall economic activity.

Grawe sums it up plainly: “Some parts of the country are going to face some really stiff challenges.”

Beyond academia, the demographic cliff will strain the entire US economy.

In a new report, the Congressional Budget Office (CBO) projects that by 2033, deaths will begin to outpace births, culminating in a smaller and older-skewing population. This pattern of demographic shrinkage leads to a shrunken labor force, which means less economic growth over time. Japan’s postwar trajectory gives a prime, and ominous, example of how it might play out in the US.

If the population plunge isn’t hampering the US’s relative edge in the global market, is slower growth really such a big deal?

In the 1950s, Japanese Prime Minister Shigeru Yoshida prioritized rebuilding the nation’s economy by encouraging corporations to offer lifelong job security in exchange for worker loyalty. This strategy helped Japan grow into the world’s third-largest economy, but it came at a cost: fertility rates dropped from 2.75 children per woman in the early 1950s to 2.08 by 1960. It has since dwindled to a historic low of 1.15 last year. The shift piled new pressures onto an already overtaxed workforce, while driving a more than trillion-dollar, or 20%, drop in the country’s nominal GDP since 2021. Last year, Japan lost its slot in the world’s top three economies, slipping to fourth place behind Germany.

“There are some studies that show that the difference in economic growth between the United States and Japan can be entirely attributed to demographics,” says Orman. “Japan’s growing more slowly only because they have fewer people, and especially fewer young people. So if our population starts to shrink, we should expect to see the same thing happen.”

If America’s demographic cliff were happening in isolation, it would present serious questions about the nation’s ability to maintain its position among the world’s major economic powers. But population decline is affecting a majority of countries around the world. As of 2024, the US birthrate remained higher than in nearly all of Europe, the Russian Federation, South Korea, Brazil, Japan, and China, according to UNDESCA’s report. The situation presents an interesting thought experiment: If the population plunge isn’t hampering the US’s relative edge in the global market, is slower growth really such a big deal?

Orman proposes a longer view. “Most innovation comes from young people,” she says. “Young people are usually the ones that are more creative, have new ideas, and see things in a different way. Once you get older, you have the wisdom that comes with age, but you are less creative than you were in your youth.” An aging population can be a detriment to innovation and progress, which is a potential detriment to societies everywhere.

So what happens now? First, the bad news: A complete reproductive rebound is probably off the table. There is no precedent for pronatal policy measures raising birth rates enough to get population counts back on track, and certainly not before 2033. According to the CBO’s report, the only surefire way to do that is by expanding legal pathways for immigration to the US — a solution rife with political friction. Colleges, companies, and communities will have to adapt to the hands they’ve been dealt.

The good news is that some early strategies to adapt have already shown potential.

Jenny Petty, vice president of marketing and communications at the University of Montana, says that the school saw a 40% decline in enrollment between 2011 and 2019. It has since doubled down on targeting non-traditional student populations through community-college licensing programs and workforce-development training partnerships with regional employers. The university has also focused on improving student retention, with admissions counselors shifting away from recruitment to prioritize meeting one-on-one with new students. Those efforts have paid off: Petty says that the university has seen eight consecutive semesters of enrollment growth, and retention is up to 74.8% — well above the national average of 68.2%.

The University of Montana’s multi-pronged approach reflects the kind of strategy that several higher-ed experts say will be necessary for colleges and universities’ survival through the demographic shake-ups ahead. Student retention will be an increasingly critical piece of that puzzle. Employers and communities will similarly need to find ways to make the most of fewer workers and residents, whether by leveraging new technologies or finding creative solutions for developing young people’s skills and economic capacity.

“I hope that we’ll see some real attention to student success, and there are institutions that have already gotten ahead of the demographic contraction,” says Grawe, the Carlton College economist. “A 15% decline in enrollments is very challenging for many tuition-dependent institutions, but it’s not happening all at once. It’s happening bit by bit, year after year. So that’s a challenge, but it’s a workable challenge.”

Kelli María Korducki is a journalist whose work focuses on work, tech, and culture. She’s based in New York City.

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