As the baby boom generation enters retirement age, New England employers will become increasingly dependent on older workers – those aged 55 and above – to meet the demand for skilled workers. The ability to retain and recapture these older workers in the labor force will be critical to the long-term economic prosperity of the region.
Changing demographics in New England could ultimately stall economic development and job growth in the future, according to a report prepared by Northeastern University’s Center for Labor Market Studies. The numbers are significant in Connecticut where, the report indicates, all of the state’s labor force and population growth in the future will be among those aged 55 and over.
Connecticut continues to experience substantial net outflows of residents outside the region. Combine that fact with a slow birth rate and limited foreign immigration and the state is expected to experience a slower growing and aging population.
To prepare for the future, private and public leaders must begin to craft strategies now which will remove obstacles for many older workers who desire to stay in the workforce beyond retirement age.
The Northeastern study states that the aging of Connecticut’s population has several consequences for overall economic growth in the state. Without sizable increases in skilled foreign immigration and or migration of residents from other states in the nation into Connecticut, the state’s population will continue to grow older and the consequent decline in the childbearing age population will continue to reduce the already low birth rate in the state. In the meanwhile, the state will increasingly have to rely on the older population for labor supply.
Some of the report highlights:
• According to the U.S. Census Bureau, the size of Connecticut’s working age population, 16 and older, is expected to grow about 5.7 percent from 2005 to 2015, compared to 10 percent for the nation.
• The overall size of the Connecticut “prime age” working population those aged 25 to 54, will fall by about 2.3 percent in the forecast period.
• The size of the older worker population in the state is expected to rise very rapidly. The 55 and older age cohort will increase 21 percent by 2015. All of the net increase in the state’s working age population will be concentrated among those over the age of 55.
• All of the net increase in the state’s population between 2010 and 2015 will be among those aged 55 and over.
• By 2030, the 55-years and older population will account for nearly one out of three Connecticut residents.
• In 2004, Connecticut had the seventh lowest birth rate among 50 states in the nation and the District of Columbia.
A Gray Workforce
There is no doubt that the need for well educated and well trained younger workers continues to influence government policy. But the demographic analysis clearly demonstrates that unless the labor force attachment of older workers increases sharply, the graying of the work force will result in labor shortages which will hamper economic growth.
In response to this data, the Council recently partnered with Mercer Human Resource Consulting to launch a workforce initiative focused on this issue. The project will likely result in public policy proposals for the nation’s retirement system as well as workforce development programs to encourage employment of older workers.
Certainly this aging workforce issue is national in scope. There were 35 million people at retirement age in the U.S. in 2000. By 2030, there will be 70 million people ready to retire. By 2020, forecasters expect that there will be more jobs than workers.
But New England, which is facing little or no labor force or population growth in the next decade, will be particularly challenged by these changing demographics. Retirement regulations – both on a state and federal level – often actually encourage workers to retire early and not return to the workforce.
The region is at a critical juncture. We need to develop specific proposals to encourage the active engagement of older workers in the employment market. Some of these strategies range from age-specific training programs to increasing funding for incumbent worker training to the creation of new definitions or categories of employees which would alleviate obstacles to mixing work and retirement.
In New England, we could experience a significant gap of available employees and skilled worker shortages that ultimately will hinder our ability to add jobs and grow. The time to craft these proposals is now.
James T. Brett is president and CEO of the New England Council and James McCaffrey is an executive with Mercer Human Resource Consulting.
