Aging Workforce and Looming RetirementsSeptember 18, 2017 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. The oldest members of the generation began turning 65 years old in 2011. The bulk of working boomers are now ages 55 and older. Many will reach 66, the earliest age at which they can receive full retirement benefits from Social Security, over the next decade. If they are like previous generations, most boomers will probably want to retire as soon as they are financially able.
Looking at population projections from the Oregon Office of Economic Analysis, the growth in Oregon’s population at or near retirement age slightly – but not significantly – outpaces the growth in the prime working age cohort, roughly ages 25 to 54.
Although the GenX workforce is smaller than the Baby Boom generation, the GenY workers and Millennials moving into their prime working years will help bolster the workforce.
In addition, Oregon is a net in-migration state, meaning more people move to Oregon than leave the state in any given year. Many of the 52,000 who moved to Oregon in 2016 joined the state’s workforce. What’s more, a few of the state’s job centers – including its largest one, the Portland metropolitan area – sit on or near state borders. One result is cross-border commuting of workers from home to their jobs. Commuting data from the U.S. Census Bureau’s Local Employment Dynamics show a net inflow of 53,000 workers into Oregon from other states for their primary jobs in 2014.
Looming Retirements Will Require Replacement Workers
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.
Looming retirements also mean there is going to be continued need for so-called replacement workers, even during periods of slow job growth. Long-term employment projections indicate that Oregon will have about 233,000 job openings due to economic growth between 2014 and 2024. However, there are going to be an additional 440,000 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 the second graph. Service occupations will have the most openings through 2024, but of the 156,000 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 construction and extraction occupational group is expected to have more openings due to growth than due to replacement openings.
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 and professional and technical services. 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. We can get an indication of the impacts by looking at the number and percent of workers ages 55 and over in each sector. For instance, mining and utilities have high concentrations 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 their share of workers 55 and over are health care and social assistance (both private and public), manufacturing, 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.
Rural Areas Have Older Workforces
The workforces of rural counties tend to have a high share of older workers. In counties outside metropolitan areas, more than one out of four (27%) workers has reached age 55. That represents nearly 63,000 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 examples are Wheeler and Gilliam counties, where more than one-third of workers are 55 or older. Wheeler County has about 281 payroll workers at private businesses or working for state and local governments in the county, and about 107 (or 38%) are in the 55 and over age group. 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 (23%) in more urban areas, there are a lot more of them. Multnomah County alone has more workers over the age of 55 (104,000) than the total 63,000 in all of rural Oregon combined. No area of the state will avoid the effects of retiring boomers.
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.