Oregon Labor Market Information System
Bookmark and Share
Key Workforce Challenges: Aging Workforce and Looming Retirements
by Nick Beleiciks, Gail Krumenauer
Published Jun-15-2012

 
The aging workforce and looming baby boomer retirements were an almost forgotten issue during the recession. Falling home values and decimated nest eggs forced many older workers to delay their retirement plans for a few years. Now the oldest of the baby boomers are reaching full retirement age and leaving the workforce. Their retirements could leave holes in the workforces of some industries, occupations, and counties. Effectively replacing the coming wave of retirees is one of the key workforce challenges facing Oregon.

Will Oregon Have Enough Workers?
 
There's been a dramatic shift in the age structure of Oregon's population as the baby boomers have aged (Graph 1). This year, the oldest members of the generation began turning 65 years old. The oldest working boomers are reaching the full retirement age of 66, the earliest age at which they can receive full retirement benefits from Social Security. If they are like previous generations, most boomers will probably want to retire as soon as they are financially able to.

Looking at the size of the workforce by age group, Oregon appears to have enough younger workers to fill in behind the first wave of retirements. Oregon's workforce has about 337,500 workers ages 55 and older. Right behind them are the 355,700 younger baby boomer workers between the ages of 45 and 54. The next cohort of just 340,700 Generation Xish workers in the 35 to 44 age category is noticeably smaller, but the following 351,200 Generation Yish workers between the ages of 25 and 34 will help bolster the workforce.

Opportunities will be created for younger workers as employers promote to replace retirees. It is likely that workers will be promoted more quickly than in the past and employers will have to work harder when hiring and training new workers, in order to replace the experience and institutional knowledge they're losing to retirement.

Graph 1
Oregon's aging population
Looming Retirements Will Require Replacement Workers
 
Looming retirements mean there is going to be continued need for so-called replacement workers, even during periods of slow job growth. Projections by the Oregon Employment Department indicate that Oregon will have about 300,000 job openings due to economic growth between 2010 and 2020. However, there are going to be an additional 429,000 replacement job openings from workers permanently leaving their occupations, mostly due to retirements.

Projected growth and replacement job openings by broad occupational group are shown in Graph 2. Service occupations will have the most openings through 2020, but of the 142,000 expected openings, 63 percent will be due to replacement needs. In fact, most job openings in nearly all occupational groups will be from replacements as more workers enter retirement. Only the health care and construction and extraction occupational groups are expected to have more openings due to growth than due to replacement openings.

Graph 2
Oregon projected occupational openings 2010-2020
Health Care and Social Assistance May See the Most Retirements
 
Oregon appears to have enough workers to replace the retiring baby boomers - but does the state have enough workers with the right skills and experience to fill their shoes? This could be particularly problematic in fast-growing industries like health care. New jobs created in growing industries paired with fewer experienced workers to replace those who retire could create hiring difficulties for some employers.

The pace of coming retirements will vary depending on the industry sector and we can get an indication of the impacts by looking at the number and percent of workers ages 55 and over in each sector (Table 1). For instance, utilities and mining have a high concentration of older boomers, but they employ a relatively small number of workers and will require relatively few replacement workers.

The industries that stand out in sheer size and share of workers 55 and over are health care and social assistance (both private and public) and educational services (again, both private and public). Employers in these and in all other industries need to plan for how they are going to attract replacement workers, especially for jobs that require significant training.

Table 1
Utilities Has the Highest Share of Workers 55 and Over,
Health Care and Social Assistance Will Need the Most Replacement Workers 
  Workers of All Ages Workers Ages 55 and Over Percent  Ages 55 and Over
All Industries 1,578,005 337,451 21%
Utilities 6,909 2,043 30%
Mining 1,648 480 29%
Educational Services 143,869 40,475 28%
Real Estate and Rental and Leasing 24,910 6,879 28%
Public Administration 77,186 20,889 27%
Agriculture, Forestry, Fishing and Hunting 38,712 10,306 27%
Transportation and Warehousing 52,012 13,415 26%
Other Services (except Public Administration) 60,012 15,054 25%
Health Care and Social Assistance 225,598 54,070 24%
Manufacturing 166,926 35,992 22%
Wholesale Trade 73,555 15,830 22%
Management of Companies 30,727 6,435 21%
Professional, Scientific, and Technical Services 74,092 15,351 21%
Finance and Insurance 57,440 11,545 20%
Construction 71,724 13,555 19%
Arts, Entertainment, and Recreation 26,383 4,890 19%
Administrative Support and Waste Services 85,126 15,374 18%
Retail Trade 184,033 32,035 17%
Information 33,254 5,736 17%
Accommodation and Food Services 143,892 17,100 12%
Private and public average employment for 3rd Quarter 2011 and prior three quarters.
Source: U.S. Census Bureau, Local Employment Dynamics
Rural Areas Have Older Workforces
 
The workforces of rural counties tend to have a high share of older workers. In counties outside metropolitan areas, nearly one out of four (24%) workers has reached age 55. That represents over 69,000 workers in rural Oregon who are probably hoping to retire sometime this decade. The question is: will there be enough workers in rural areas to replace them?

The extreme example is Wheeler County, where one in three workers is 55 or older. There are fewer than 300 payroll workers at private businesses or working for state and local governments in the county, and about 92 are in the 55 and over age group. The next youngest age group of 45 to 54 year olds has 81 workers, and the 35 to 44 group has just 46. It may be a challenge to keep the same level of economic activity going in Wheeler County unless new workers can be attracted into the area.

Although older workers are a smaller share of the workforce in more urban areas, there are a lot more of them. Multnomah County alone has more workers over the age of 55 than all of rural Oregon combined. No area of the state will avoid the effects of retiring boomers.

Figure 1
Share of county workforce age 55 and over
Boomers Will Take Important Knowledge With Them
 
Employers that have one or two (or one or two hundred) key employees who are approaching retirement age should consider the skills that will walk out the door with that final punch of the time clock. While equivalent degrees and education can be hired through other workers by offering the right wage, specialized knowledge about a certain business, product, or service can only be gained with hands-on experience, and that experience leaves when a long-time employee retires. Employers need to find replacements and instill them with company-specific know-how before the baby boomers decide it's time to retire en force. Doing so will be one of Oregon's key workforce challenges.