The Middle Class Can't Afford to Live in Cities Anymore

The trend in US wages/employment for youths doesn't seem to signal that. The trend in wages/employment for youths in nations with even lower fertility rates (Spain, Italy, Portugal...) doesn't seem to signal that. Even Japan, where absolute population decline is already underway, has good-but-not-amazing trends in wages and unemployment for youths. Where's the race to bid up the prices for young workers, and buy all their labor that's for sale, if an aging work force really is leading to crisis-level worker shortages? If the market expects a huge impending shortage of (e.g.) coking coal, you don't see the same lackluster demand for the output that's currently available.

Maybe you meant that the shortage isn't coming in the next couple of months or years, but in a generation or so, so the market reaction isn't there yet. The view that I subscribe to, which seems common here on HN, is that technological change is going to significantly reduce the market demand for human labor in a generation or so. I expect that automation will generally deflate the market price of human labor faster than an aging work force can inflate it.

Social Security solvency currently depends on lots of middle class workers earning wages, because its funding is structured that way. But that's a policy choice that is more easily reversed than fertility rates or technical progress in automation. If the problem is more about paying for retirees than lacking warm bodies to do work, higher fertility just makes government funding problems more severe: you end up with more people who need non-market support mechanisms if the market demand for additional human labor isn't there.

The better question is do middle class families have to live as far away from their jobs in LA as they do in SF, and the answer to that question is increasingly "yes."

Throughout US history there have been economically booming areas where people could move to become more prosperous. The majority of good new jobs are in cities. The fact that we are not building enough housing and transit infrastructure so people can actually live somewhere while working those jobs is a problem for national employment and economic growth. The landlords end up taking home a great share of the economic benefit instead of the workers as the price for scarce housing is bid up. This is also the root cause of gentrification.

This leads to megacommutes as people occupy housing further and further from the booming economy. That's clearly the case in the Bay Area, where many cities have built more units of office space than housing, guaranteeing a rough commute for the people who work in those buildings.