People@Work: The Argument for a Looming Labor Shortage
Behind the looming worker shortage is demographics, says economist Barry Bluestone, at Northeastern University in Boston. As baby boomers march inexorably toward retirement, he predicts that within the next eight years the U.S. could have at least 5 million job vacancies, nearly half of them in education, health care, government and nonprofit organizations.
By 2018, Bluestone says, fewer people will be taking the positions left by exiting boomers, leading to potential worker shortages. That's because the generation that immediately follows the boomers, Generation X, "will likely be too small to fill many of the projected new jobs," according to Bluestone's report, After the Recovery: Help Needed -- The Coming Labor Shortage and How People in Encore Careers Can Help Solve It.
Looking for an "Encore"
And that's where aging boomers may benefit, Bluestone says. While many in the group will still seek retirement, others for whatever reason -- boredom, lack of financial resources, etc. -- will continue to work. Bluestone's research and that of other labor experts show that most people expect to work longer than previous generations. And they're OK with that.
Half of those aged 44 to 70 want "encore" careers that combine personal meaning, continued income and social impact, Bluestone says. "Not only will there be jobs for these experienced workers to fill, but the nation will absolutely need older workers to step up and take them." That's particularly true in health care and social services, sectors that are likely to create significant numbers of jobs.
Bluestone's forecasts are based on simple assumptions that include healthy economic growth and no changes in immigration, worker productivity or in something called the "labor force participation rate," the percentage of workers aged 16 or older who hold jobs or who aren't working but could. As an example, the rate stood at 64.9% in March, the Bureau of Labor Statistics reported earlier this month.
Back in the Driver's Seat?
Forecasting future worker shortages is hardly novel. About five years ago, plenty of predictions said that by 2010, as boomers started to enter retirement age, worker shortages would surface amid low levels of unemployment, says John Challenger, chief executive at Chicago-based Challenger, Gray & Christmas, an employment-services firm.
But then economic calamity hit, and 8.5 million jobs were lost in the Great Recession that began in December 2007. "That's put the tipping point way off," says Challenger, noting that the sheer number of jobs lost was "way more than expected."
Currently, with high levels of unemployment and underemployment, the possibility of worker shortages would seem all but impossible. But Challenger says if the U.S. economy created 150,000 jobs a month (1.8 million a year), it would take about five years, or to around 2015, to make up the 8.5 million jobs lost. Add three more years of steady job growth, and by the time 2018 rolls around, workers could once again be in the driver's seat.
But Christy Caridi, director of the Bureau of Economic Research at Marist College in Poughkeepsie, N.Y., notes that the U.S. economy needs to create 100,000 jobs each month just to accommodate new entrants into the workforce. Further, she says, some of Bluestone's assumptions are debatable.
"Longer and Longer to Regain Lost Jobs"
BLS projections call for immigration to increase -- not stagnate -- while worker productivity growth will average about 1.8%. That's key because a rise in productivity is a proxy for hiring, since employers can rely on their current workforce to do a bit more work the longer they stay on the job.
More important, however, Caridi points out there's no precedent in recent economic history for the end of a recession to bring about an expansion in the number of jobs. In fact, she says, it's quite the opposite. "Since 1991, we're seeing that it's taking us longer and longer to regain the jobs that we lost during the recession -- not to mention to rebuild the jobs that we need for a growing labor force."
The upside is that it's likely that significant employment opportunities will appear in sectors that Bluestone points out. Gaps are already showing up in the number of workers available to fill open positions in health care and social services, Caridi says. And as boomers age, those shortages are only bound to grow.