One Solution to the Coming Labor Shortage


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One Solution to the Coming Labor Shortage

  1. 1. iStockphoto Encore Careers One Solution to the Coming Labor Shortage ith nearly 10 percent of the American labor force unemployed as of this writing and another 7 percent so discouraged by their prospects that they either have dropped out of the workforce or have settled for part-time jobs, the most urgent economic challenge is how to generate enough jobs to put America back to work.1 So it may come as a surprise that within less than a decade, the United States may face the opposite problem—not enough workers to fill expected job openings. by Barry Bluestone and Mark Melnik20 Spring 2011
  2. 2. That is likely to occur as the Social-Sector Job Growth for Some Encore Careersbaby-boom generation reach-es traditional retirement age. 2008-2018 (in thousands)U.S. Census-projected popula-tion growth between 2008 and2018 suggests that the nation will Net, Lessundergo a dramatic shift. The vast Physicallymajority of population growth Total Total Net Job Demanding,is projected to take place in the Employment Employment Growth Job Growth55 and older age group, one that 2008 2018 2008-2018 2008-2018historically has had labor force Wage and Salary Employmentparticipation rates well below Health care and social assistance 15,819 19,816 3,997 3,510those of younger workers. If the Educational services 3,037 3,842 806 750shift in the age distribution toolder Americans results in a sub- Nonprofits 2,973 3,353 379 319stantial reduction in overall labor Performing arts 118 127 9 24force participation—the propor- Museums 132 161 29 22tion of an age cohort working orlooking for work—long-term eco- Libraries 30 35 5 4nomic output could suffer. The numbers are startling. Total private social sector 22,109 27,333 5,224 4,629Between 2008 and 2018, the totalU.S. population age 18 and over isexpected to increase by 21.8 mil- Federal government 2,764 2,859 95 75lion as a result of immigration State government 5,178 5,624 446 399and greater longevity. But of thistotal, only 900,000 will be under Local government 14,557 15,703 1,146 831age 55 because a baby bust fol-lowed the baby-boom generation; Total government 22,499 24,186 1,687 1,30520.9 million will be over 55. (See“Estimated Population by AgeCohort,” p. 22.) Total social sector 44,608 51,519 6,911 5,934 Source: U.S. Bureau of Labor Statistics; Dukakis Center/BRA Labor Market Assessment Tool.A ChangingLabor PictureResearch based on U.S. Bureau shortage. Using BLS estimates of future Social-Sector Jobsof Labor Statistics (BLS) data suggests labor-force participation rates, there could The social sector is projected to be anthat a return to healthy economic growth still be 3.3 million to 4.0 million unfilled increasingly important part of the labor mar-could mean 14.6 million additional non- jobs by 2018. ket. Currently, social-sector jobs account forfarm payroll jobs created between 2008 and 32 percent of employment. By 2018 there2018. However, given projected population Beyond Retirement will be 6.9 million new jobs in the socialgrowth and current labor-force participa- One way to help reduce the size of the sector, accounting for 47 percent of all thetion rates (and assuming no major change potential labor shortage is by encouraging expected U.S. employment immigration policy), there will be only older workers to continue in their current Looked at by industry, nearly 4 millionabout 9.1 million additional workers to jobs beyond normal retirement age or to of the most promising encore career oppor-fill all those positions. Even taking into find encore careers after they retire. Civic tunities will be in health care and socialaccount multiple-job holders, the total Ventures, a nonprofit think tank focus- assistance; 1.1 million in local government;number of jobs that could be filled at cur- ing on baby boomers and social-purpose 800,000-plus in educational institutions;rent labor-force participation rates is 9.6 work, defines encore careers as occupations nearly 450,000 in state government; andmillion, leaving 5.0 million to 5.7 million for older workers that “combine personal close to 380,000 in nonprofits such as reli-potential jobs vacant. fulfillment, social impact, and continued gious and community organizations. (See The BLS projects, however, that boom- income.”2 One sector of the economy that “Social-Sector Job Growth.”)ers will stay active in the labor force longer exhibits the characteristics of encore careers Among the millions of opportuni-than previous generations because of better is the social sector: for example, health care ties that will be added to social-sector jobshealth and a desire to keep active. More- and social assistance; educational services; (more than 85 percent of which do notover, boomers may need to work longer to nonprofit community and religious orga- require physical stamina), the vast major-make up for value lost in homes or port- nizations; the performing arts; museums; ity are well suited to encore career seekers.folios in the downturn. Nevertheless, the libraries; and government.3 In many cases, older workers could carryincreases may not be enough to avert a labor their existing skills and credentials into Communities & Banking 21
  3. 3. new settings. For example, a registered nurse higher than the BLS projects Labor-Force Participation Rates might move from a major hospital to a com- for 2018 and 10 percentage 2008 and 2018 munity clinic; a computer systems analyst at points higher than the cur- a private software company might take a job rent 2008 rate) and raising the Age Group 2008 Rate 2018 Rate in local government; a civil engineer at a pri- rate for 65- to 74-year-olds to (in percent) (in percent) vate construction firm might work on a state 33.3 percent from the project- government highway project. ed 2018 rate of 30.5 percent 16-24 58.8 54.5 (and the current rate of 25.1 The Promise of Encore Jobs percent) while boosting the 25-34 83.3 82.4 According to the BLS, the labor-force partici- rate for those 75 and older to 35-44 84.1 83.2 pation rate of younger adults will continue to 12.4 percent. 45-54 81.9 81.7 decline as more attend college and graduate Such a scenario is not 55-64 64.5 68.1 school and undertake professional studies. impossible given continued There will even be slight declines in partici- expected improvements in 65-74 25.1 30.5 pation among those aged 25 to 54 if parents the health status and project- 75+ 7.3 10.3 decide to take advantage of improved mater- ed lower morbidity of older Total 66 64.5 nity and paternity leave. Americans, but it would like- In contrast, large increases in labor-force ly require changes in many Source: Mitra Toosi, “Labor Force Projections to 2018: Older Workers participation are expected to occur among jobs. That is why beginning Staying More Active,” Monthly Labor Review, November 2009. those 55 and older, with 55- to 64-year- to think of ways to restructure olds increasing their participation rate from work to appeal to older work- 64.5 percent to 68.1 percent between 2008 ers is advisable. What types and 2018. Workforce participation by those of training and mentoring will they need? aged 65 to 74 is expected to increase from How can social-sector jobs be reconfigured Barry Bluestone is dean of Northeastern Uni- 25.1 percent to 30.5 percent. Participation to take full advantage of the talents of an versity’s School of Public Policy and Urban Af- by those aged 75-plus is projected to increase older, but experienced, workforce? If jobs are fairs and the director of the Dukakis Center for from 7.3 percent to 10.3 percent. (See not restructured to attract older workers, it Urban and Regional Policy. Mark Melnik is “Labor-Force Participation Rates.”) is likely that wages will be bid up to entice the Boston Redevelopment Authority deputy di- Changes in labor-force participation enough workers to fill expected vacancies— rector for research. rates mean that the social-sector subset could and that could lead to higher rates of price see its workforce increase by 5.4 million. But inflation. Endnotes that still leaves a gap of 1.5 million social- Soon a much larger percentage of the 1 This article is based on Barry Bluestone and Mark sector jobs that could remain unfilled if workforce will be over 55. As one observ- Melnik, “After the Recovery: Help Needed—The projected participation rates hold true. er has suggested, if trained and strategically Coming Labor Shortage and How People in Encore The gap could be closed if the partici- deployed, boomers could “function as the Careers Can Help Solve It,” Civic Ventures, March pation of adults 55 and older increases more backbone of education, health care, non- 2010. than official projections. One scenario for profits, the government, and other sectors 2 S e e h t t p : / / w w w. e n c o r e . o r g / l e a r n / a b o u t filling the entire employment gap would essential to national well-being.”4 Society encorecareers. involve both raising the labor-force partici- could gain workers uniquely suited to pro- 3 For our purposes, the definition of the social sector is pation rate for 55- to 64-year-olds to 74.4 viding many of the services on which the limited to that portion of the economy. But because percent (more than 6 percentage points country relies. jobs beyond the scope of our analysis (for example, green jobs) can be considered part of the sector, the Estimated Population by Age Cohort 4 implications are, if anything, understated. Marc Freedman, Encore: Finding Work That Matters 2008-2018 (in millions) in the Second Half of Life (New York: Public Affairs 50 Books, 2007). 40 2008 This Communities & Banking article is copy- 2018 righted by the Federal Reserve Bank of Boston. The views expressed are not necessarily those of 30 the Bank or the Federal Reserve System. Copies of articles may be downloaded without cost at 20 10 0 18-24 25-34 35-44 45-54 55-64 65-74 75+ Source: U.S. Census Bureau.22 Spring 2011