by Jed Kolko, Chief Economist at Indeed
Older adults are often overlooked in analyses of the labor market; for instance, one of my own favorite measures of labor-market health, the prime-age employment-population ratio, looks at 25-54 year-olds only. But the aging of the population is reshaping the economy.
On one hand, aging is contributing to the slowdown in both labor force and productivity growth, creating headwinds that make rosy economic projections implausible. At the same time, the aging population is creating demand for health care jobs, which are projected to lead employment growth over the next decade.
However, older adults affect the economic and job prospects not just of others; they are themselves the future of work. Older workers are a growing share of the workforce, and they will be most directly affected by automation and the gig economy, two of the most important trends shaping what work will look like. Here’s why:
1. The workforce is rapidly aging. The Bureau of Labor Statistics (BLS) projects that 25% of the labor force in 2024 will be 55 or older. That’s up from 22% in 2014 and just 12% in 1994. In part, the workforce is aging because the population is aging: although the most common ages today are twentysomethings, seniors are, by far, the fastest-growing age group. But in addition, the labor force participation rate is projected to grow most for older adults — in other words, tomorrow’s seniors will retire later than yesterday’s and today’s did.
2. Older workers are most at risk of their jobs disappearing. Thirteen percent of workers 55 or older are in occupations that the BLS projects will shrink over the next decade, compared with 9% of workers under 35. And, for older workers who lose their jobs, transitioning to a new career is harder. It makes less sense to invest in new skills later in life, and older workers face discrimination when applying for jobs. Even though other measures of well-being, like poverty and unemployment, are more favorable for older adults, older workers are most at risk from occupational shifts.
3. Older adults are the real gig-economy workers. Older workers are more likely to be in alternative work arrangements like consulting, freelancing, and on-call work than younger workers, and their participation in these alternative arrangements has increased over the past decade more than for younger workers. As of late 2015, 24% of employed 55-75 year-olds were in alternative work arrangements, compared with just 14% of prime-age (25-54 year-old) workers.
Yes, millennials, we know there are more of you in the workforce than Gen Xers or boomers, and your lead will only grow. But older adults will have the most profound impact in the coming years on both the supply of labor and the demand for workers, and they’ll be on the front line — for better or for worse — of some of the biggest changes transforming the labor market.