The Wave of Retirements and the Openings to be FilledJune 7, 2017 Retirement – the light at the end of the tunnel, and arguably the pursuit of most workers within the labor force. While hard working individuals transition from working day-to-day to investing in various endeavors after retiring from the workforce, the question for many economists, legislators, and training providers is, “Which occupations will they leave behind that will need to be filled?” The jobs left open may very well be in high demand after a wave of retirements.
In this article, we’ll examine the share of the current labor force held by workers at or near retirement age, industries with the highest concentration of workers age 55 and over, and occupations with the greatest number of projected replacement openings.
Age of the Workforce
For quite some time, the workforce within the State of Oregon has seen an upward trend in the age of workers. This could be attributed to many factors, but the number of baby boomers at or nearing retirement age is the main underlying reason for this demographic shift. Baby boomers have been categorized as those who were born between 1946 and 1964. By this standard, the oldest boomer would be 71 years old, and the youngest would be 53 years old.
For the last 25 years, the share of the labor force aged 45 and older has increased, with the greatest relative increases occurring amongst the older age groups. Those within the labor force aged 45 to 54 years old have increased their share of the workforce by 3.2 percentage points since 1992, workers aged 55 to 64 have more than doubled their share of the workforce, and those aged 65 and over have nearly tripled their share. Workers 45 and over comprise 44.6 percent of the workforce today compared with 28.3 percent of the workforce in 1992.
It is true that many workers pushed off the notion of retirement due to the Great Recession, which could very well be the reason we’re seeing more workers aged 65 and over remaining in the workforce. However, older workers will eventually retire. Let’s take a look at which occupations and industries will be greatly affected by these impending retirements.
Preparing Business Sectors for Impending Retirements
The general demographic trend of an aging workforce affects employers, industries, and regions as a whole. But the sectors that have an older, often highly experienced workforce may need to invest more time in planning on how to replace their workers.
Sectors that top the list in terms of the raw number of workers 55 and over are educational and health services (both private and public) and professional and business services (private and public). In fact, one out of every four workers employed within the educational and health services industries is age 55 and over – arguably within 10 years of retirement. One out of every five workers employed within the professional and business services sector is age 55 and over. Both of these sectors employ the greatest number of people in general, with educational and health services topping the list by employing 382,000 workers.
Sectors that have the greatest percentage of workers age 55 and over are natural resources and mining with 30.7 percent – nearly one-third of their workforce; and transportation and utilities with 29.4 percent. Although these sectors do not necessarily employ the greatest number of people, the concentration of boomers within their workforce is greater than any other sectors. So, these businesses will essentially see the greatest share of their workforce leave due to retirements.
Occupations with High Replacement Openings
Essentially, it’s not a matter of “if,” it’s a matter of “when” this wave of baby boomers will retire. As these workers retire, it’s not just an employee leaving that can be easily replaced; these retirees are taking years of institutional knowledge and experience with them. This can be especially critical as employers will need to structure their recruitment and training practices to react to their coveted employees reaching retirement.
An increase in retirements could be cause for concern since difficult-to-fill positions cite a lack of applicants as the main issue in filling an open position in the first place. Based on the 2016 Job Vacancy Survey done by the Oregon Employment Department, 26 percent of difficult-to-fill vacancies requiring postsecondary certification or an associate’s degree are due to a lack of qualified candidates, while 45 percent are due to a lack of applicants altogether. Those difficult-to-fill vacancies requiring a bachelor’s or advanced degree report similar numbers – 28 percent of difficult-to-fill vacancies are due to a lack of qualified applicants, and 44 percent are due to a lack of applicants. Vacancies requiring a high school diploma reported 14 percent of their difficult-to-fill positions due to a lack of qualified applicants, and 36 percent due to a lack of applicants.
The employment projections for 2014 to 2024 indicate that there are going to be more than 440,000 replacement openings from workers permanently leaving their current occupations, most frequently due to retirements. Of all the projected openings in the state, by 2024, 63 percent of openings are for replacement needs while 37 percent are due to economic growth.
The second table lists the top 20 occupations with the most projected replacement openings. Jobs requiring some form of postsecondary education or training typically have experience and skill requirements that are not as easily replaced as in jobs without a higher education requirement. These higher education-requiring positions are more often difficult to fill due to a lack of qualified applicants, as detailed in the Job Vacancy Survey. Therefore, occupations requiring a high school diploma or less have been filtered out of the table above.
There are two sectors whose occupations dominate the list for the most projected replacement openings – education and health services; and professional and business services. These are also the two sectors that top the list for the greatest number of
workers age 55 and over. Therefore, employers within these sectors should ensure that their recruitment and training practices are highly effective in order to avoid a gap in experienced employment.
One “Goodbye” Is Another “Hello”
As the waves of baby boomers retire, many employers will find themselves saying goodbye to more than just an employee. They will be parting with someone who understands their industry, their business practices – someone with years of experience and institutional know-how. As retirements occur, the replacement of these retiring workers and the associated business processes of recruitment and training will play a pivotal role in smoothing the transition from retiree to new hire. As the baby boomer generation dominates the greatest share of the workforce, it is very possible that there may be an employment gap. While Generation X (born 1965 to the early 1980s) may not be as large in number as the boomers, the Millennial generation moving in to the prime working age range of 25 to 54 will help sustain the workforce with their substantial size in numbers. They are referred to as the “Echo Boomers,” after all.
Essentially, to maintain the same level of efficiency within the workplace, businesses will need to identify not only the number of likely replacement openings, but also the skills and training opportunities these replacement workers will need.