We've struggled with the steepest recession in our lives, the outsourcing of millions of American jobs, and the rise of formidable competitors and obstacles to continued U.S. economic supremacy. But if you look closely at demographic trends, there clearly is a worker shortage in the nation's future. It will make itself felt in only a few years.
This is not open to much question. It will happen even if the jobless recovery continues its vexing ways. That's because the people who will shape this future are already here and their numbers aren't going to change in the next 10 years. And it's because we have a pretty good idea of how many people it will take to generate the economic activity we can reasonably expect to occur.
[Use our Mutual Fund Score to find the best investments for you.] For older Americans, the prospect of worker shortages couldn't come at a better time. OK, I admit to making some lemonade here out of some bitter present-day realities. But think about it. We are living longer than ever and many of us don't even want to retire when we're 65. Besides, retirement is a financially scary place these days. We've lost a lot of money in the market downturn, and may have lost a job or been forced into early retirement. We don't have much choice about needing to continue earning money.
In a study done at Northeastern University earlier this year, Barry Bluestone and Mark Melnik say that in eight years, more than five million jobs may go begging unless there's a big boost in what's called the labor force participation rate -- the percentage of Americans who seek work. The big driver here is that the numbers of Baby Boomers leaving the work force will exceed the supply of new workers coming from younger generations.
Again, these people have already been born. We know how many there are. Between 2008 and 2018, the authors note, the 65-74 age group will grow by nearly 44 percent and the 55-64 group will grow by nearly 40 percent. By contrast, the pool of people aged 45-54 will drop by 8 percent and there will be a 4 percent decline in the number of persons aged 35-44.
Looking more closely at labor force participation rates (LFPRs), it will come as no shock that the age groups with the lowest rates are among folks who have reached their 60s. Many have retired; others have reduced work schedules. Among younger workers, more than 80 percent are already in the labor force, and there's not much that can be done to raise that number in a meaningful way. But the 2008 participation rates for workers aged 55-64 was only 64.5 percent. And, of course, it tails off a lot for older workers -- 25.1 percent for people aged 65-74 and only 7.3 percent for people 75 and older.
So, if we're going to close the jobs gap that they see coming, it's going to be older employees coming to the rescue. In order to provide enough employees to fill the number of jobs expected in 2018, here are the participation rates we'd need to see among older workers:
The study notes that projections for job growth anticipate that new jobs will be concentrated in precisely the occupations most suitable for older employees -- primarily health care, social assistance agencies, education, and government. Total employment in this sector will rise from 44.6 million in 2008 to 51.5 5 million in 2018, it says. And nearly all of this growth -- 5.9 million out of 6.9 million new jobs -- will come in positions that the authors say will be less physically demanding jobs.
"Few of these jobs require heavy physical work," the study says. "Many could lead experienced workers to carry their existing skills and credentials into new settings -- such as a registered nurse who moves from a major hospital to working in a community clinic; a computer systems analyst who moves from a private software company to take a job in local government; a civil engineer who moves from a private construction firm to work on a state government highway project."
Here is a list of the 30 biggest growth numbers from 2008 to 2018 (in hundreds of thousands) for what the authors call "encore" jobs:
Source: T. Alan Lacey and Benjamin Wright, “Occupational Employment Projections to 2018,” Monthly Labor Review, November 2009.