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In April of this year, as employers grew increasingly concerned about retention amidst the "Great Resignation," the U.S. Bureau of Labor Statistics (BLS) showed a record 4 million Americans quit their jobs. This was the highest number of quits since the Job Openings and Labor Turnover Survey (JOLTS) series began in 2000. The trend shows no signs of letting up; in August, the number of quits increased to 4.3 million workers, marking another series high, and in September, it rose again to a series high of 4.4 million. Meanwhile, analysis from the Federal Reserve Bank of St. Louis suggests that more than 3 million Americans retired early because of the COVID-19 crisis, representing a substantial proportion of the workers still missing from the U.S. labor force compared with before the pandemic. These effects on the labor market form the backdrop to the latest BLS employment forecasts for the decade ahead.
A Slowdown in Labor Force Growth
In the years ahead, the economy will continue to add jobs, but growth in the labor market will slow. The BLS, which recently published its 2020 to 2030 Employment Forecast, estimates that the U.S. economy will add about 11.9 million jobs between 2020 and 2030, with employment reaching a level of 165.4 million in 2030. Yet, the BLS also projects slowed growth in the labor force, even as employment and real output grow faster during the next decade than in previous projection periods as the economy recovers from the 2020 recession.
Well-established demographic trends form the basis of most of the projections about the labor force, especially for the aging population. About one-fourth of the population will be ages 65 or older in 2030. The rise in the number of adults in this age demographic will continue to drive strong demand for various services. In particular, health care and social assistance services will add about 3.3 million jobs to the economy through 2030.
In addition to driving the growth of some industries, the BLS also forecasts that the aging population will have a significant effect on the labor force. Increases in the labor force are likely to slow as many workers reach retirement age, leading to a decline in the overall labor force participation rate.
Will Some Retirees Return to Work?
While demographic changes are relatively straightforward aspects of the future projections, some unknowns are making it more challenging to predict what the labor force will look like in the years ahead. One example is the extent to which some older workers who left the labor force earlier than planned due to the pandemic will decide to reenter the job market. BLS data on labor force participation rates by age and educational attainment showed that between 2019 and 2020, older workers with higher levels of educational attainment, though more likely to work at older ages, had among the steepest declines in labor force participation compared with workers in the same age group with lower levels of education. These more highly-educated workers may have been the most financially empowered to choose to leave the labor force early during the pandemic. Conversely, these may be among the older individuals who could have the best opportunity to find reemployment if they decide to reenter the labor force, especially if employers continue to report recruiting difficulty for jobs that require a bachelor's degree or higher.
Shifting Structural Demand
Another potential aspect of the economy clouding forecasts is the difficulty in modeling which industry changes that occurred during the pandemic represent lasting structural shifts. For example, greater use of information technology services to support teleworking during the pandemic may have a long-term influence on where and how people work. This could affect the demand for computer-related occupations while also influencing working conditions across industries.
In many ways, we are still in the eye of the storm when it comes to seeing the employment effects of COVID-19. It may take several years for economists to truly understand the long-term changes it brought about for the way Americans work. Despite the uncertainty, one thing is clear: forecasts will continue to show how significantly the aging population and older workers are shaping the economy and labor market.
For more jobs data: Find the latest employment data in the AARP Public Policy Institute's (PPI) Employment Data Digest, PPI's monthly review of job trends for those ages 55 and over. Visit the AARP website's work and jobs section for articles on work and unemployment and job search resources.