How Are Retiring Boomers Affecting Central Oregon’s Labor Market?June 9, 2016 The oldest of the Baby Boomer generation reached traditional retirement age (65) in 2011. Boomers are categorized as those born from the end of World War II (1945) through 1964. Today this generation encompasses those who are between 52 and 70 years old. There has been considerable research into the effect of the boomers retiring on the U.S. economy, as well as growing old-age dependency globally. The main concern over the aging of the workforce is that there will be fewer workers. Fewer workers equates to less productivity, unless retirement ages are moved back or we experience increased efficiency through technological advances.
At the macro-level you cannot run away from the aging of the workforce. However, when you zoom in at a local or regional level the stark warnings about the slowdown in productivity and labor shortages are not necessarily inevitable. Higher birth rates or strong in-migration can stymie the negative effect of an aging community on the economy. Are we seeing any effects of the retiring of the boomers here in Central Oregon?
The quick answer is yes. In 2015, there were around 39,000 Central Oregonians ages 65 and over, up from around 32,000 in 2011. That represents a growth rate for retirement age residents of nearly 22 percent in a four year period, significantly faster than the working age population (+3.6%) or youth (+2.9%).
Our retirement age population represents a larger share of the total population than we see in Oregon as a whole. Just over 18 percent of our population is 65 and over, compared with 16 percent statewide. Our older population doesn't necessarily mean we need to be worried about the loss of productivity from a shrinking labor force. Other factors, such as how long people work and who is working (women, youth, immigrants, etc.) also factor into big picture labor force trends.
Today, boomers (in this case 55 and older) account for around 23 percent of Central Oregon workers. Ten years ago those aged 55 and older only represented around 15 percent of our workers. How about 20 years ago? Just 10 percent of Central Oregon workers were over 55. Our employment base is much older today, however it looks like the aging of our workforce is slowing. Over the past four years the percent of our workforce aged 55 and over only rose by about 1 percentage point and it hasn't substantively changed over the past two years. At the moment boomers do not seem to be increasing their share of our workforce, yet they are becoming a larger share of our population. What does that mean for the local economy?
It looks like the average retirement age may have risen in Central Oregon for a period of time as we saw the percent of workers in Central Oregon who were 65 and over nearly double over the past 10 years. Many local residents likely postponed retirement due to the negative effects of the Great Recession. Ultimately, it seems like any added productivity from older workers staying in the labor force longer has run its course. This does not bode well for Central Oregon. Our population, particularly the retirement age population, is growing rapidly, yet the labor force is not keeping pace. The supply of labor is very tight in Central Oregon due to a hot job market and low levels of unemployment (4.6% in Deschutes County). It will continue to be difficult for businesses to find qualified workers with the current high demand for labor and boomers leaving the labor force at a fast pace. When someone retires they leave a hole in the labor force. The loss of those skills and experience in the economy is enormous, particularly with the boomers as they represent a large share of the total labor force. However, a retiring individual compounds the labor crunch as they create a labor demand through their consumption of goods and services, such as health care, retail, leisure, and housing.
The research into localized effects of a growing retirement population is still in its infancy. One study published in 2008 funded by the Eastern Carolina Council tried to assess the positive and negative impacts of attracting retirees as an economic development strategy. Positives included an increase in volunteerism, charitable giving, and economic diversity. Some of the negative impacts they highlighted included increased demand for housing that resulting in inflated home prices and service sector expansion with job growth concentrated in primarily low-wage jobs. Bend and Redmond are struggling with housing affordability issues. It is important to backfill the labor force with young workers as folks retire out. However, this becomes a tough task when low-wage and young workers cannot find affordable housing in our communities.