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Each day, about 10,000 people born between 1946 and 1964 leave the U.S. workforce, a trend accelerated by the COVID-19 pandemic when older workers decided to retire early rather than risk getting sick.
“We're running out of workers. Why? Because baby boomers are retiring, and you don't have enough younger workers who are skilled to fill in their spots,” said Dana Peterson, chief economist at The Conference Board, a research group. “We were going to have labor shortages anyway. The pandemic just accelerated retirements and made labor shortages that much more intense.”
Peterson spoke at a recent online symposium organized by the Brookings Institution.
The problem is that for every one person leaving, there's only one person coming into the labor force, according to Selcuk Eren, a senior economist at The Conference Board. And a stagnant labor force translates into limited growth.
“Economic growth is going to be constrained by the number of workers that you have,” Eren says. “So, one-on-one means that your labor force is not growing, which is going to slow down economic growth, as well.”
The federal government workforce is expected to be hard-hit as more boomers retire.
“Forty percent of the federal government is aged 55 or more as of now, so that means that this huge wave of retirements is coming,” Eren says. “And you're going to have a difficult time to replace them, because there's not enough younger people, especially with the educational requirements that those jobs require.”
A Conference Board report examines which industries are likely to have the most severe labor shortages as older Americans leave the workforce.
These include so-called blue collar, or manual labor jobs like personal care, food services, cleaning, construction, installation, maintenance and occupations involving repairs. Production and transportation jobs will also be impacted by departing baby boomers, but to a lesser extent, according to the report.
The report finds that the most severe labor shortages will be in health-related jobs as more aging baby boomers will require personal care.
STEM professionals — science, technology, engineering and mathematics workers — are at a lower risk of shortages. Occupations that allow for remote work will have less intense labor shortages, according to the report. The potential for labor shortages is generally lower in occupations that require a college degree. But some are still at risk.
“You will see similar trends playing out for dentists,” Eren says. “Probably half of them are above 65 years old, and you don't have enough younger people going into that profession.”
Immigration could be a way to lessen the impact of boomers leaving their jobs, Eren says.
“That's probably the fastest solution, because it takes time to educate a younger person, to bring them to that skill level,” Eren says. “The fastest solution is just immigration and giving priority to immigrants with those skills that we are going to be lacking. That's number one. Number two is essentially, try to delay the retirements by providing incentives to the potential retirees.”
Incentives that could include tax and social security policies that don’t penalize people who work into their seventies. And offering more flexibility, like increased remote work or a part-time schedule, to people nearing retirement age.
For Chicago-based college professor Kristin Mariani, the departure of boomers translates into increased opportunity for her students.
“The impact is, it’s giving younger people, the generations that came after them, to become the change-makers, the decision-makers,” says Mariani, an adjunct assistant professor at the School of the Art Institute of Chicago. “The key is to make sure that the education and the knowledge that is given to these individuals, that they will be able to move forward with these responsibilities.”
Career coach Julia Toothacre expects the dwindling supply of older workers to cause some upheaval as companies struggle to adjust to a new reality.
“I think the downside could be that companies end up restructuring more,” says Toothacre, a résumé and career strategist at ResumeBuilder.com. “But they're restructuring now, so that's just a common part of business, right? Those ebbs and flows are going to continue to happen year to year, but I think it's going to create a lot of opportunity. And then we'll see new shifts in the market, and we'll be having a different discussion in a couple of years.”