United States companies face a "new era" in which fewer people are entering the workforce and pressure to pay higher salaries may become permanent, Microsoft president Brad Smith told Reuters.
At the software maker's Redmond headquarters, Smith highlighted one source of what he called today's "greater economic turbulence."
Smith said this is due to population growth tumbling in the United States, Europe, China and Japan.
The trend of around five million people expanding the US working age population every five years since 1950 has shifted, starting in the period between 2016 and 2020 when growth slowed to two million.
It is now slowing further, Smith said, citing United Nations data.
Major markets overseas have seen outright laboor force declines.
"That helps explain part of why you can have low growth and a labour shortage at the height at the same time," Smith said.
"There just aren't as many people entering the workforce," said Smith, who helps oversee the nearly US$2 trillion company selling cloud-computing services to major businesses.
Government stimulus during the pandemic, COVID-19 concerns, childcare and other factors have contributed to the current labour shortage as well.
Executives including Mark Zuckerberg, chief executive of Facebook parent Meta Platforms, have recently fretted about the economy.
Zuckerberg warned the United States might face "one of the worst downturns that we've seen in recent history."
Smith however said it would be premature to declare a recession inevitable.
Competing for limited workers, Microsoft recently boosted pay at the same time as it slowed hiring, company officials said.
The software maker also trimmed a small percentage of jobs pegged to the start of its new fiscal year.
US Department of Labor data from June showed employers broadly had continued to raise wages and hire more workers than expected.
Labour force participation, however, shrank for the second time in three months, to 62.2%, showing no persistent improvement since the start of 2022.
Population growth has become a hot topic in the tech industry.
Tesla chief executive Elon Musk, who reportedly has nine children including newborn twins, has particularly drawn attention to the low US birth rate.
"Doing my best to help the underpopulation crisis," Musk wrote on Twitter.
Smith said that while he concurred with Musk he wouldn't recommend the same solution.
Microsoft's business selling productivity tools, cloud services and technology with artificial intelligence, which enterprises may need in a downturn, sets it up to weather economic challenges, Smith said.
The company has recently faced antitrust scrutiny in Europe, and Smith said Microsoft had until October to "finalise the implementation" of changes he promised.