Economist Aparna Mathur sheds light on two issues we’ve been following: the continuing rise in employment and the skills gap. Older workers, the American Enterprise Institute resident scholar writes in Forbes, explain much of the former and may represent a partial solution to the latter.
The January 2019 jobs report released by the Bureau of Labor Statistics defied expectations. The unemployment rate stood at 4 percent and the economy added a fantastic 304,000 new jobs. Where are these new workers coming from? The answer is quite surprising. Over the past year, data from the Bureau of Labor Statistics shows that nearly 40 percent of all employment gains were driven by Americans aged 55 and older. Going back further, the Federal Reserve Bank of St. Louis notes that all of the net increase in employment between 2000 and 2017—nearly 17 million jobs– has been among workers aged 55 and older. The job market is booming because older workers are continuing to participate in the labor market longer, and at higher rates than we imagined.
Between 2014-2024, the Bureau of Labor Statistics projects that the labor force growth rate of these baby boomers, between the ages of 65-74, and 75 and older, is expected to be faster than for any other age group. The 65-74 year old age group is expected to grow at 55 percent over the 2014-2024 decade, while the 75 and older age group will grow by 86 percent during this same time. This is in comparison to a 5 percent increase for the labor force as a whole.
For most, the continued workplace presence is a positive story.
Why are these older workers continuing to stay in the labor force despite reaching an age at which they qualify to receive social security retirement benefits? There are several reasons. One reason may be financial… But the most important reason is that a large majority of older workers actually want to continue working because they find work meaningful and rewarding.
One threat to continued economic growth has been a lack of qualified workers. Mathur notes,
What are the implications for firms and other workers? The good news is that studies suggest no crowding out of younger workers by these older workers. In fact, older workers have the potential to be a solution to the skills gap facing companies. They often have the right institutional knowledge and skills required by companies because of their extensive on-the-job experience. This knowledge can be tapped into by companies as a resource for training younger workers. As companies are recognizing the potential of older workers, and the fact that their retirement will lead to a gaping hole in their workforce, they are offering opportunities for “returnship” programs, which are essentially internships for experienced workers looking to re-enter the workforce (think Robert De Niro in the The Intern). In addition, companies are offering more flexible options, part-time work and work that is more suitable for older workers within the organization. Many companies are offering retraining opportunities for older workers within the firm. Others are removing age limits from their apprenticeship programs.
None of this suggests any weakening in support for postsecondary training and education, which expands opportunity for younger workers and meets workplace demands. Quite the contrary. But it does suggest that older workers will continue to play a positive role in the economy and provide both transitional and enduring support to a growing economy in need of skilled workers.