Boomer Retirements will Shrink Labor Force
PlanSponsor reported (link) that a Federal Reserve Board of St. Louis study (link) concluded that “Boomer retirements could pull down the U.S. Standard of Living.” This has become an often-debated hypothesis, with the leading skeptic being Dr. Peter Capelli of Wharton. Dr. Capelli and others conclude that the shortage will be offset by retirees being pulled back into the workforce.
The Federal Reserve study details Labor Force Participation Rates by various age, sex, and ethnic breakdowns. For one thing, this is one of the better illustrations regarding the theme of this blog, the great increase in Labor Force Participation by women and minorities. However, the danger signs are evident among those groups, as the study illustrates how those trends have levelled off.
The study concludes that “the aging of the baby-boom generation”… “..is likely to lower aggregate participation rates for the next several decades.” They go on to say that “it may become increasingly difficult to maintain growth in our standard of living because there will be fewer workers generating goods, services, and income…”
These trends could be counteracted, of course, by government action to remove disincentives from work (like those affecting phased retirement, and defined contribution plans); and maybe even provide some significant incentives for older boomers to stay on the job. Let’s hope, and fight for, the actions that could precipitate extended work patterns. Let’s make Dr. Capelli’s forecast come true!