Why the U.S. Economy Will Need More Older Workers
If the nation hopes to grow, employers must hire and keep millions of workers in their 50s and 60s
From December 2007, the beginning of the “Great Recession,” through early 2010, the United States shed nearly 9 million jobs. Although the economy has begun to recover since then, there are still 6 million fewer jobs in the country than before the recession began. By most accounts, based on the present growth rate, it will take at least two to three years to regain those jobs, and the nation might not return to “full employment” — an unemployment rate of 5 percent — until 2016 or later.
Given this discouraging data, it’s hard to imagine that America may actually face a worker shortage by 2020. But there’s a good chance that will be the case. The United States will need every worker it can find to fill the jobs required to preserve the nation’s prosperity. And that will include, by necessity, many workers in their 50s and 60s.
Just take a look at population projections. Between 2010 and 2020, there will be 25.2 million additional adults ages 16 and older in America, according to the U.S. Census. That 25.2 million will include immigrants as well the young people who reach the age of 16 during this period. Only 3.5 million of them will be under 55. Almost 15 million adults will be 65 or older. Aging baby boomers will make up a larger and larger share of the population, with the baby bust generation coming up right behind them.
At current labor force participation rates, 25.2 million adults translates into about 11.6 million new workers to maintain the U.S. economy. (The rest will be in school, retired or will simply have decided — for the most part voluntarily — not to work.) Add these 11.6 million workers to the roughly 6.8 million Americans who will leave the unemployment ranks over the rest of the decade, by my estimate, and the total additional workforce will number 18.4 million.
Trouble is, the United States will need almost 20.5 million additional workers to reach its historic 3 percent economic growth rate, according to the U.S. Bureau of Labor Statistics. In other words, the nation faces a shortage of more than 2 million workers by the end of the decade.
How will we fill this gap? Many workers will need to stay in the labor force not only past the age of 55, but also well past 65.
According to U.S. Census projections, this is likely to happen. The proportion of people 55 and older in the labor force — now 40 percent — is expected to climb to 43 percent by 2020. Those 65 and older are expected to nearly double their labor force participation, rising from 1 in 8 in 2000 to nearly 1 in 4 by 2020.
Fortunately, the carrot of improving health and the continuing trend away from bone-wearying jobs and toward work that's less physically demanding will make this shift possible. At the same time, the stick of falling home values and stock portfolio assets will keep some Americans working when they might otherwise have preferred to retire.
Of course, some employers are reluctant to hire older workers or even keep the ones they have. But in the labor market that will be upon us later in this decade, they may have little choice if they want to expand their businesses and increase profitability.
When baby boomers were born in such great numbers after World War II, they helped fuel the U.S. economy: The sudden growth in population led to bigger homes, new suburbs and new schools, not to mention all the goods and services these children’s parents showered on them. Now, as the boomers hit their 50s and 60s, it appears they’ll be fueling the economy again.