A specter is haunting Europe—the specter of aging.
Lant Pritchett, one of the world’s top thinkers on developmental economics, has seen this crisis coming for decades over his career at Harvard, the World Bank, and Oxford University, where he currently heads a research lab. He told Fortune his radical plan to stave off economic disaster.
Now is the time to act, economic veteran Pritchett told Fortune. But doing so involves some radical rethinking of the current immigration debate.
Classical economics offers a number of ways to address a labor shortage, Prichett said. Since most of the unfilled jobs are “unskilled,” or don’t require a degree to complete, one solution for businesses and governments is to invest in automation, essentially having robots fill the gap. But, while automation helps get the jobs done, it depresses human workers’ wages by decreasing the amount of jobs available, “exacerbating” the issue, Pritchett said.
That leaves two other options: forcing workers to work more or allowing an influx of legal, controlled immigration.
Mitsotakis’ plan for a six-day-work week is a step in the right direction for the short term, Pritchett said.
If policymakers simply try to make everyone work an additional day, the math simply won’t work out in the long run, Pritchett said. Even if Greece has “fantastic success” and increases its working hours by 10% over the next 30 years, that growth would represent a “drop in the bucket” in fighting a worsening labor shortage. He calculated a demographic labor force gap of 232 million people globally in his most recent paper, even assuming the highest possible labor force participation rate.
“You can’t solve a problem that’s growing over time with [a labor force] that has an upward bound,” he said. You would have to keep the labor force working more and more, and even then, you would never be able to fill in the gap.
The truth, Pritchett said, is the U.S. needs low-skilled migrants, and many migrants need the economic boost from working in the U.S. Immigration is a symbiotic relationship that the West cannot quit—that’s why it’s so hard for us to actually control our borders.
“The way to secure the border is to create a legitimate way for people and firms to get the labor that the economy really needs in legitimate, legal ways, and until we have that, the whole debate over the wall and stuff is just silly,” Pritchett said.
What Pritchett suggests isn’t too dissimilar from simply turning the clock back to a time when migrants could move and work freely. He proposes a fixed-term system: a worker comes to the U.S. with the understanding that they are not on a path to citizenship, works on a 3-year contract, and then returns to their home country. After an “off period” of six months to a year, the migrant could come back for another three years.
“There are a billion people on the planet who would come to the U.S. under those terms,” Pritchett said. “But we don’t have that available.”
He isn’t exaggerating about the billion. In a 2010 survey, Gallup asked people around the world whether they would like to temporarily move to work in another country. Some 1.1 billion responded “yes,” including 41% of the 15-to-24 population and 28% of those aged 25-44, Pritchett said.
“What you could make in America in three years and go back to Senegal with is a fortune compared to anything else you could do to make your way in Senegal,” he added. “You go back to Senegal, you build a house, you buy your own business, and you’ve transformed your life by working temporarily.”
To avoid potential labor shortages in sending nations, Pritchett’s system would depend on bilateral agreements between the host and sending countries, and nations “could choose to put limits on their participation” to address their own labor needs, Pritchett said.
Meanwhile, the U.S. would receive fresh batches of workers for service industries, elderly care, or manufacturing—essentially, all the jobs that would be otherwise unfilled.
Policies like these are not yet being discussed on the national stage, but Pritchett believes that will soon change. With the upcoming labor shortage and the unpopularity of forcing workers to toil for longer, politicians will have to expand their understanding of immigration to allow for policies like his. For now, he’s planting the seed.
He is also courting business leaders in sectors that will be the hardest hit by labor shortages, such as elderly care, who could “be potentially a powerful force” in explaining to politicians why policies like his are necessary.
“Ideas at times are like dams: huge, unmoving, impregnable, able to hold the water back forever,” Pritchett writes in the conclusion of his paper. “But a small, strategically placed crack can cause a dam to be washed away overnight.”
A version of this story was published on Fortune.com on August 4, 2024.
