ARTICLE
Currently, the United States is grappling with a persistent and noticeable labor shortage. Various factors contribute to this shortfall in the workforce, including the aftermath of the pandemic, the prevalence of remote working conditions, a constricting economy, and recent spikes in layoffs within Silicon Valley, particularly affecting the technology-related sectors. These developments may have a lasting impact on other industries as well. One principal reason for this is due to a demographic shift of the generations that can be demonstrated with some simple numbers: 2010 2020 Population age 65 and over 12.8% 16.8% Population age 25 and younger 34.3% 31.5% Today, 65 and older populations now represent 17.4 percent. This age cohort is increasing at an accelerating rate. Today there are 16 million more people that are 65 or older than there were in 2010. So technically speaking, we are witnessing the slow departure of 16 million people from the labor force over time, and lately, that rate of departure has hastened because the peak year for baby boomers was 1958, exactly 65 years ago. A growing labor shortage is a critical concern affecting both workers and employers. As the baby boomer generation retires, workforce participation faces downward pressure due to an aging population. Millennials, born between 1981 and 1997, comprise around 56 million workers. However, they won’t be enough to compensate for the skills gap left by retiring baby boomers. We have been warned that this could result in a shortage of highly educated talent in the future, making it challenging for organizations to find skilled or experienced employees. And certainly enough, this condition is prevailing now. There was a decline from 2002 to 2012 and participation rates leveled off from 2012-2022, However, the latest reports show they are falling again. In California the growth of the labor force was on a positive swing until the pandemic. The expectation is that less of the population under 55 will be in the labor force by 2032. The only cohort that will participate more than now is the age 65 and over, and especially 75 and over. This is consistent with the baby boomers work ethic. Today, boomers are 60 to 75 years old and many are still in the labor force. By 2032, those same ‘older workers’ will be 68 to 86 and largely out of the labor market. Despite the layoffs in Silicon Valley, the current trend is we need more workers now but we are not seeing a rise in filling those jobs. It is a tangible impact that we will see an accelerated rate of boomer retirement, if the stock market and home prices continue to rise. All a guess at this time. We all fear becoming obsolete due to automation and the rapid onset of AI. However, we are safe at the moment because the labor market is at full employment and businesses can’t really fill all their job openings. Despite the slowdown we’ve seen the past few months regarding the 2024 economy, the labor market is going to be largely immune to the slower growth economy, particularly as long as job openings exceed workers. Employers are going to rely on a strong and strategic workforce plan to replace retiring boomers. Gen X, the post-boomer generation, was smaller in total numbers and there will not be enough of them to fill the job market. Some millennials lack essential work experience. Gen Z represents entry level age workers and some are still in school. Furthermore, they are not entering the labor force as past generations their age have. In 2002, 63.3 percent of 16 to 24 year olds were in the labor force. Today, 55.6 percent of people of the same age are working. This is projected to decline to 51.3 percent by 2032. The level of new immigrants coming over the border today seems like a possible solution except that many of them entering into the U.S. from Mexico, other Latin American countries, China, Africa, Eastern Europe, and the Persian Gulf may not have the necessary skills to fill these jobs. The aging effect is real in Santa Cruz County where the ‘growing’ number of age 65 and older is the largest sector of our region. The unemployment rate in Santa Cruz County was 6.6 percent in December 2023, up from a revised 5.6 percent in November 2023, and above the year-ago estimate of 5.0 percent. This compares with an unadjusted unemployment rate of 5.1 percent for California and 3.5 percent for the nation during the same period. Santa Cruz County UI Claims by age (EDD Jan. 2024 report for Dec. 2023 data. Presently, it's concerning that the population of Santa Cruz County residents aged 60 and older has surged by almost 50 percent since 2010. Given this trajectory, along with the retirements of baby boomers and a healthcare system serving a sizable and expanding population of Medicare and Medi-Cal patients, the question arises: will this trend persist, and can the upcoming generation of workers sustain or boost the local economy?“An 80% growth in the senior population assumes demand for services will see similar growth,” Clay Kempf, executive director of the Seniors Council of Santa Cruz and San Benito County reported in the Lookout Santa Cruz article last fall. He further stated, “We’re talking about growth in the number of seniors living alone, seniors who qualify for Medi-Cal [the state Medicaid system], seniors who are hungry and who need shelter. It’s difficult to pick out what the priority is because of their interdependency.” A remarkable shift must happen in Santa Cruz County to encourage activities that produce jobs and add to the economic vitality of our region.
Currently, the United States is grappling with a persistent and noticeable labor shortage. Various factors contribute to this shortfall in the workforce, including the aftermath of the pandemic, the prevalence of remote working conditions, a constricting economy, and recent spikes in layoffs within Silicon Valley, particularly affecting the technology-related sectors. These developments may have a lasting impact on other industries as well. One principal reason for this is due to a demographic shift of the generations that can be demonstrated with some simple numbers:
2010 2020
Population age 65 and over 12.8% 16.8%
Population age 25 and younger 34.3% 31.5%
Today, 65 and older populations now represent 17.4 percent. This age cohort is increasing at an accelerating rate. Today there are 16 million more people that are 65 or older than there were in 2010. So technically speaking, we are witnessing the slow departure of 16 million people from the labor force over time, and lately, that rate of departure has hastened because the peak year for baby boomers was 1958, exactly 65 years ago.
A growing labor shortage is a critical concern affecting both workers and employers. As the baby boomer generation retires, workforce participation faces downward pressure due to an aging population.
Millennials, born between 1981 and 1997, comprise around 56 million workers. However, they won’t be enough to compensate for the skills gap left by retiring baby boomers. We have been warned that this could result in a shortage of highly educated talent in the future, making it challenging for organizations to find skilled or experienced employees. And certainly enough, this condition is prevailing now.
There was a decline from 2002 to 2012 and participation rates leveled off from 2012-2022, However, the latest reports show they are falling again.
In California the growth of the labor force was on a positive swing until the pandemic. The expectation is that less of the population under 55 will be in the labor force by 2032. The only cohort that will participate more than now is the age 65 and over, and especially 75 and over. This is consistent with the baby boomers work ethic.
Today, boomers are 60 to 75 years old and many are still in the labor force. By 2032, those same ‘older workers’ will be 68 to 86 and largely out of the labor market.
Despite the layoffs in Silicon Valley, the current trend is we need more workers now but we are not seeing a rise in filling those jobs. It is a tangible impact that we will see an accelerated rate of boomer retirement, if the stock market and home prices continue to rise. All a guess at this time.
We all fear becoming obsolete due to automation and the rapid onset of AI. However, we are safe at the moment because the labor market is at full employment and businesses can’t really fill all their job openings.
Despite the slowdown we’ve seen the past few months regarding the 2024 economy, the labor market is going to be largely immune to the slower growth economy, particularly as long as job openings exceed workers.
Employers are going to rely on a strong and strategic workforce plan to replace retiring boomers. Gen X, the post-boomer generation, was smaller in total numbers and there will not be enough of them to fill the job market. Some millennials lack essential work experience. Gen Z represents entry level age workers and some are still in school. Furthermore, they are not entering the labor force as past generations their age have. In 2002, 63.3 percent of 16 to 24 year olds were in the labor force. Today, 55.6 percent of people of the same age are working. This is projected to decline to 51.3 percent by 2032.
The level of new immigrants coming over the border today seems like a possible solution except that many of them entering into the U.S. from Mexico, other Latin American countries, China, Africa, Eastern Europe, and the Persian Gulf may not have the necessary skills to fill these jobs.
The aging effect is real in Santa Cruz County where the ‘growing’ number of age 65 and older is the largest sector of our region.
The unemployment rate in Santa Cruz County was 6.6 percent in December 2023, up from a revised 5.6 percent in November 2023, and above the year-ago estimate of 5.0 percent. This compares with an unadjusted unemployment rate of 5.1 percent for California and 3.5 percent for the nation during the same period.
Santa Cruz County UI Claims by age (EDD Jan. 2024 report for Dec. 2023 data.
Presently, it's concerning that the population of Santa Cruz County residents aged 60 and older has surged by almost 50 percent since 2010. Given this trajectory, along with the retirements of baby boomers and a healthcare system serving a sizable and expanding population of Medicare and Medi-Cal patients, the question arises: will this trend persist, and can the upcoming generation of workers sustain or boost the local economy?“An 80% growth in the senior population assumes demand for services will see similar growth,” Clay Kempf, executive director of the Seniors Council of Santa Cruz and San Benito County reported in the Lookout Santa Cruz article last fall. He further stated, “We’re talking about growth in the number of seniors living alone, seniors who qualify for Medi-Cal [the state Medicaid system], seniors who are hungry and who need shelter. It’s difficult to pick out what the priority is because of their interdependency.”
A remarkable shift must happen in Santa Cruz County to encourage activities that produce jobs and add to the economic vitality of our region.