The United States economy is growing, but at a lackluster pace. At the same time, the labor market has become fairly tight. This seems to be a paradox.

Unemployment peaked at 10 percent in the recession and is now at a very low 4.3 percent. Normal is about 5.5 percent, which reflects the time it takes job seekers and employers to find a match. Both sides are swiping left or swiping right until a lasting relationship can be found.

The weak economic growth suggests that maybe the labor market is not quite as slack as the official statistics indicate. Or maybe economic growth is stronger than the GDP numbers show. These are the most common explanations, but let’s consider a third possibility: we are in a demographic environment in which sluggish economic growth can trigger a tight labor market. This would have strong implications for human resources policies.

To explore this we have to understand baby boomers, millennials, and those in between.

Dr. Bill Conerly based on data from the U.S. Public Health Service

U.S. Births

The baby boom was a little later than many people realize. The median boomer was born in 1957, a decade after soldiers and sailors came home from the war. It wasn’t about young couples making up for lost time, but rather couples wanting large families. So the median boomer is just 60 years old today and a few years away from retirement. Some boomers have already retired, of course, but the great mass of baby boomers will be retiring in the coming years.

After the baby boom generation, child-bearing slowed down in this country. We economists called this the “birth dearth.” Then the millennials were born, the children of the baby boomers. The median millennial was born in 1990 and is thus 27 years old today. Most millennials have already entered the labor force, though a few are still in college or military service.  And some never found a job in the recession and are now in their parents’ basements playing video games.

The growth of the working age population has slowed, according to Census Bureau estimates and forecasts. The working age population grew very slowly from 2010 through 2015, and will grow even slower in the coming decade. And these projections are probably overly optimistic. Foreign immigration into the United States has been surprisingly low in recent years. The statistics look like we have already built that wall that President Trump wants.

Dr. Bill Conerly based on Census Bureau estimates and forecasts.

Working age population in the U.S.

The Census Bureau has not yet adjusted their forecasts to reflect the slower immigration, so the actual figures will probably be even lower than the chart shows.

When the supply of workers is hardly growing, it does not take too much increase in labor demand to bring unemployment down.

The labor supply problem is accentuated by people of working age who are neither working nor looking for work. These are mostly males who became discouraged during the recession. The common meme is that they are in their parents’ basements playing video games. There is actually hard data supporting this view. Many of these people could enter the workforce, and they may well enter the workforce as they hear from friends and family about job availabilities. And unless they do start working, businesses will have a very trying time filling open positions.

The labor market is tight today, and will remain tight until those millennial men who are not working go outside and look for a job.

Today every employer, whether business, nonprofit or government, should have an employee retention plan and a recruitment plan.