Solving the Aging Workforce Problem

The Urban Institute released a very informative report last November on the legal and institutional barriers to phased retirement and efforts to extend the worklife of older workers. This is a crucial issue for economic developers.

The report says, "within ten years, baby boomers will begin retiring in large numbers. The United States will lose the services of millions of highly skilled, experienced workers. Because of the baby dearth that followed the baby boom, there will not be many new workers to replace them even as the senior adult population grows significantly. Labor force growth is expected to fall from 1.1 percent per year in the 1990s to 0.36 percent per year in the period 2010 to 2020."

The Urban Institute report finds that the problem affects some industries and occupations more than others. It says there will be a particularly severe shortage of nurses and teachers while the supply of blue collar workers will be much less affected. I am not disputing the major report conclusions, but I would argue with some of its findings. For example, I find that the supply of blue collar workers is an issue in many states and communities where we have prepared economic development strategies.

The researchers state that the situation could be improved if older workers could be induced to work longer. I agree. Is this possible? They say it is if right incentives are provided. They say that the attractiveness of working longer could be enhanced if older workers were allowed more flexible work arrangements involving shorter hours and longer vacations.

The report cites a large number of legal and institutional barriers to more flexible employment arrangements for older workers. These were not seen to be a problem when there was a positive desire to move people out of the labor force early in order to make room for the hoard of baby boomers working their way up the career ladder. "It will take a 180-degree shift in traditional benefits thinking to reform a decades-old legal and regulatory system in which employers have looked for benefits tools to ease older workers out of the workforce. Nevertheless, very significant social and economic benefits would result from converting it into a system that encourages longer work."

How can economic developers help? For one, they can stimulate dialogue in their communities about this issue and options to address it. Second, they can aid the hunt for new solutions. The next generation of employment relationships is needed. We are still working out of a model that is decades old. Third, craft new strategies aimed at dealing with seniors industries. Yesterday's EDF article on the aging work population underscores not on the importance of this issue, but it suggests the need for increased collaboration nationally and internationally to find better solutions.

You can download the Urban Institute report here.