The Largest Generational Cohort is More Than Halfway into Retirement. Who will Step In To Fill the Void

2022 was the second best jobs growth year on record — a remarkable turnaround following the pandemic which hollowed out jobs and large swaths of the economy overall. As the nation continues to add over 200,000 jobs per month, the unemployment rate remains at a 50 year low. That’s the good news. The bad news is that our workforce imbalance may present a hurdle to our recovery from higher inflation and slow economic growth overall.

Fed Chair Powell said in his speech in December, “Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers.”

If this imbalance between available workers for the available workers continues, it will have significant impact on the economy — with likely destabilization of the improving inflation rate due to increases in wages required to attract and maintain a decreasing base of employees. Our economy didn’t face this challenge after the last recession ended in 2009-2010, because a massive body of Baby Boomers were still active in the workforce (and many needed to continue working to rebuild a lifetime of wealth lost during The Great Recession).

In fact, the importance of baby boomers in the previous recession cannot be overstated: Nearly all of the labor force growth between 2010 and the start of the pandemic in 2020 came from workers 55+.

It’s worth remembering that boomers are comprised of 76 million Americans born between 1946 and 1964. By comparison, the previous generational cohort called the Silent Generation was just 47 million people and the subsequent Generation X was only and 55 million.

What a difference a decade makes

The graph below from the New York Times shows a significant difference between the available Boomer workforce in 2009 and today. Given that Boomer are aging out of the workforce — with more than half already beyond the traditional retirement age — AND many more Boomers have just opted out given accelerated “resignation” trends as well as for health fears/issues related to the pandemic.

Now What?

Adoption and investment in technology and automation of specific industries will help to replace the declining labor force with robots and machines. Of course, foreign workers coming to the US will also help fill the jobs gap, if our government can find a way to deal with immigration issues. There may also be new policies around day care that allow more parents to enter the workforce. The steadily increasing options for remote work will play a role, too, and will continue to open doors to additional workers with disabilities.

The reality is that as Boomers move through retirement age, they will create a vacuum in the economy and in our culture. Not only as a workforce, but as a generational cohort that defined much of American life for the past 7 decades.