Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Healthcare Workforce
Transcript
- Lucas: So there's this number that's been rattling around in my head for weeks, and I think it gets to the heart of a really under-discussed economic problem. By 2025, Japan will have more people aged 75 and older than it has registered nurses. Luna: Wait, the entire nursing workforce versus just the over-75 population? That's staggering. Lucas: Exactly. And 2025 is next year. That's not some far-off forecast. So today I want to look at what happens when a country runs out of the people who take care of the people who are living longer. And it's not just a Japan problem—it's a preview for much of the developed world. Luna: Well, and the root cause is exactly what this show keeps coming back to: falling birth rates. Fewer young people entering the workforce means fewer nurses, fewer doctors, fewer home health aides just as the boomer generation ages into high-need years. Lucas: Right. The healthcare workforce is uniquely vulnerable to demographic shifts because it requires years of training, it's physically demanding, and it's historically been underpaid relative to the skill level. So when the pipeline of new entrants shrinks, you can't just snap your fingers and produce more. Let's start with Japan because they're the canary. Luna: Give me the baseline. How many nurses does Japan have right now, and how many will it need? Lucas: As of 2023, Japan had about 1.2 million registered nurses. The government estimates they'll need roughly 1.6 million by 2028 just to maintain current staffing ratios. But the nursing schools are already seeing enrollment drop year over year. The birth rate fell to 1.2 children per woman in 2024, so the pool of 18-year-olds keeps shrinking. Meanwhile, the over-75 cohort is growing by about half a million people per year. Luna: So the math is straightforward: more patients, fewer caregivers. What's Japan doing about it? Lucas: A few things. First, they've raised the mandatory retirement age for doctors from 65 to 70, and they're talking about 75. They're also aggressively recruiting nurses from the Philippines, Indonesia, and Vietnam under economic partnership agreements. But that's controversial domestically—there's pushback about wages being suppressed and cultural friction. Luna: I remember reading that Japan admitted fewer than 2,000 foreign nurses last year, despite having a target of 10,000. The licensing exam is notoriously difficult, and it's given only in Japanese. Lucas: That's the tension. The need is urgent, but the policy machinery moves slowly. And it's not unique to Japan. Let's look at the United States. The American Association of Medical Colleges projects a shortage of up to 124,000 physicians by 2034, with primary care being hit hardest. The ratio of primary care physicians to patients is expected to drop by 15 percent. Luna: And that's before you factor in that a third of the current workforce is over 55 and likely to retire in the next decade. Lucas: Right. So we're looking at a demographic pincer movement: fewer new doctors graduating because fewer young people are choosing the profession, plus the existing workforce aging out, plus a patient population that's older and sicker. The economic consequences are broad. Luna: What are the first-order effects? I'm thinking higher wages for healthcare workers, for one. Lucas: Absolutely. We're already seeing it. Average hourly wages for registered nurses in the US rose by about 8 percent year-over-year in 2025, according to Bureau of Labor Statistics data. For home health aides, it was even higher—about 11 percent. That's good for workers, but it feeds into healthcare cost inflation, which is already running above general inflation. Luna: And those costs get passed on to insurers, employers, and individuals. So part of the story is that falling birth rates will make healthcare more expensive for everyone. Lucas: That's one channel. Another is the shift toward automation and technology. Japan is already ahead here. They've been deploying robots in elder care facilities for years—robots that help lift patients, monitor vital signs, even provide conversational companionship. SoftBank's Pepper robot was an early attempt, but now there are more specialised devices like the Robear, which can transfer a patient from bed to wheelchair. Luna: I've seen videos of those. They're impressive, but they're also expensive—a single Robear unit costs around $30,000. Not every facility can afford that. Lucas: Right, and that creates a two-tier dynamic. Wealthier facilities in urban areas can invest in automation and retain staff with higher wages. Rural facilities, which already struggle to attract workers, get left behind. We're seeing this in the US too, where rural hospitals are closing maternity wards and even entire units because they can't staff them. Luna: And that's not just an inconvenience—it's a health crisis. If you live in rural Kansas and the nearest hospital is 60 miles away and doesn't have a full-time doctor, your outcomes are worse. Lucas: Exactly. So the demographic trend amplifies existing inequalities. And it's not just doctors and nurses. Think about the entire ecosystem: pharmacists, lab technicians, physical therapists, nursing home aides. All of these roles require human beings, and the supply of young human beings is shrinking. Luna: One fix that comes up a lot is immigration. But politically, that's a tough sell in many countries. Even in Canada, which has a relatively open immigration system, there's debate about whether we're training enough healthcare workers domestically versus relying on foreign-trained professionals. Lucas: Yeah, and the ethics of recruiting nurses from lower-income countries is complicated. The Philippines has been a major source of nurses for the US and UK, but that strips the Philippines of its own healthcare workers. There's a term for it: 'care drain'. Luna: So we have a global mismatch. Countries with aging populations need workers, and countries with younger populations need investment and economic opportunity. But the movement of people is not frictionless. Lucas: That brings us to another angle: what if we restructured care itself? Some economists argue that we should professionalize and raise the status of care work—pay home health aides $30 an hour, make it a career with a ladder, attract more men into the field. Currently, care work is overwhelmingly female and undervalued. Luna: That would help, but it also costs money. And in a world where healthcare spending is already straining budgets, finding the political will to raise wages for caregivers is hard. Lucas: Look, if we're serious about this, we need to think about the whole lifecycle. Lower birth rates mean fewer children, which means we can redirect some resources from pediatric care to geriatric care. But that's a political non-starter—no one wants to hear that their child's pediatrician might be redeployed. Luna: It's interesting because the conversation around falling birth rates often focuses on economic growth, pensions, and housing. But the healthcare workforce angle is, in some ways, more immediate. If you're 75 and need a hip replacement, you don't care about GDP growth—you care about whether there's a surgeon available. Lucas: That's the core of it. And I think the next decade will force some hard trade-offs. Do we accept higher wait times? Do we ration care by age? Do we invest heavily in productivity-enhancing technology? Each of those has deep ethical implications. Luna: Before we go further—and I don't want to disrupt the flow—but I've been thinking about something you said earlier about how this show helps make sense of these trends. If someone listening feels like they got some clarity today, there's a simple way to support the show that keeps it ad-free and independent. Lucas: Yeah, it's low-key but it matters. If walking through the economy with us has made something click, you can buy us a coffee—literally—at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No pressure, just a way to keep this going. Luna: Exactly. And we appreciate everyone who has already done that. It keeps us free of annoying ads and lets us dive deep on topics like this. Lucas: Alright, back to the hard trade-offs. So we mentioned technology. Let's talk about what's actually on the horizon. There's a lot of hype around AI in healthcare—diagnostic algorithms, robotic surgery, virtual nursing assistants. But the workforce shortage is most acute in the low-tech, high-touch tasks: bathing, feeding, toileting. Luna: Right, and those are the hardest to automate. A robot can't really replicate human empathy and comfort. At least not yet. Lucas: And even if it could, there's a social resistance to being cared for by a machine. Surveys in Japan show that elderly people prefer human caregivers over robots, even when robots are more available. So technology is a supplement, not a substitute. Luna: Let me ask you this: if we can't solve the workforce shortage through immigration, higher wages, or technology alone, what does that mean for the standard of care? Are we looking at a future where only the wealthy get decent care? Lucas: That's the fear. And there's some evidence it's already happening. In the US, the market for concierge medicine—where you pay an annual fee for same-day access to a doctor—is growing at 10 percent per year. Meanwhile, the average wait time to see a primary care physician in a traditional practice is 20 days in some cities. Luna: So falling birth rates could accelerate the stratification of healthcare. That's a pretty stark implication. Lucas: It is. And it's one reason why some policymakers are talking about national service programs—training young people as care aides in exchange for student loan forgiveness or tuition credits. South Korea is experimenting with that, actually. They're offering free college to anyone who commits to two years in elder care. Luna: Does it work? Are people signing up? Lucas: Early data shows modest uptake—about 15 percent of eligible students. But it's not enough to close the gap. The fundamental issue is that care work is hard, and it doesn't pay well. Until that changes, the math doesn't work. Luna: So it's a market failure. The social value of care is higher than the market price, and because of demographic shifts, the gap is widening. Lucas: Exactly. And that's the kind of thing that might eventually force a policy response—maybe a massive public investment in training and compensation, maybe a rethinking of Medicare and Medicaid reimbursement rates, maybe even a value-added tax earmarked for long-term care. Luna: But those are big political lifts. In the meantime, people are suffering. I heard a story about an elderly woman in Tokyo who waited 12 hours in an emergency room because there were no nurses available. Lucas: That's happening more and more. It's called 'ambulance merry go round' in Japan—when paramedics take a patient to multiple hospitals because none can accept them due to staffing shortages. It's a direct consequence of the demographic squeeze. Luna: And that's in Japan, which has universal healthcare and a relatively efficient system. Imagine the situation in countries with weaker healthcare infrastructure. Lucas: Right. India, for example, has a younger population overall, but its elderly population is growing fast, and the healthcare workforce is already stretched thin. The ratio of doctors to patients in rural India is 1 to 10,000 in some regions. Luna: So this isn't just a rich-country problem. It's a global phenomenon, just manifesting at different speeds. Lucas: Exactly. And the common thread is falling birth rates. Every country that has seen fertility drop below replacement level is going to face some version of this healthcare workforce crisis. The only question is how severe and how quickly they respond. Luna: Alright, so let's end with a forward-looking question. If you had to place a bet, what do you think will be the most surprising development in this space over the next five years? Lucas: I think the surprise will be how quickly some countries move to subsidize care work directly. Not just training, but permanent wage subsidies. We're already seeing murmurs of that in Germany and the Nordic countries. Once the shortage becomes acute enough, the political calculus shifts. The alternative—rationing care by price—is too unpopular. Luna: So maybe falling birth rates will finally force us to properly value the people who take care of us. That would be a silver lining. Lucas: It would be. It's not the outcome anyone would choose, but it might be the one we get. Thanks for listening, and we'll be back next week with another angle on how demographics are reshaping the economy.