As the baby boom generation enters retirement age, New England employers will become increasingly dependent on older workers – those aged 55 and above – to meet the demand for skilled workers. The ability to retain and recapture these older workers in the labor force will be critical to the long-term economic prosperity of the region.
Changing demographics in New England could ultimately stall economic development and job growth in the future, according to a report prepared by Northeastern University's Center for Labor Market Studies.
The numbers are significant in Rhode Island, which the report indicates has a somewhat larger and more rapidly growing share of the older population.
To prepare for the future, private and public leaders must begin to craft strategies now that will remove obstacles for many older workers who desire to stay in the work force beyond retirement age.
The Northeastern study states that the aging of Rhode Island's population has several consequences for overall economic growth in the state. Without sizable increases in skilled foreign immigration and or migration of residents from other states in the nation into Rhode Island, the state's population will continue to grow older and the consequent decline in the childbearing-age population will continue to reduce its already low birth rate. In the meantime, the state will increasingly have to rely on the older population for its labor supply.
Some of the report's highlights:
* According to the U.S. Census Bureau, the overall Rhode Island population will grow at a comparatively slow pace between 2005 and 2015 of 4.8 percent.
* The proportion of Rhode Island's population that is 55 years or older has increased from 19 percent in 1950 to 23 percent in 2000.
Between 2005 and 2015, the share of 55-plus population in Rhode Island is projected to increase from 24 percent to 28 percent, and by the year 2030, the 55-years-and-older population will account for nearly one out of three Rhode Island residents.
* The older population is projected to be the source of all population growth in Rhode Island between 2000 and 2030.
* The average age of Rhode Island residents is considerably higher than that of their national counterparts.
* In 2004, Rhode Island had the sixth lowest birth rate among the 50 states and the District of Columbia.
There is no doubt that the need for well-educated and well-trained younger workers continues to influence government policy. But the demographic analysis demonstrates that unless the labor force attachment of older workers increases, the graying of the work force will result in labor shortages that will hamper economic growth.
In response to this data, The New England Council recently partnered with Mercer Human Resource Consulting to launch a work force initiative focused on this issue. The project will likely result in public policy proposals for the nation's retirement system as well as work force development programs to encourage employment of older workers.
Certainly this aging work force issue is national in scope. There were 35 million people at retirement age in the nation in 2000. By 2030, there will be 70 million people ready to retire. By 2020, forecasters expect that there will be more jobs than workers.
But New England, which is facing little or no labor force or population growth in the next decade, will be particularly challenged by these changing demographics. Retirement regulations – both on a state and federal level – often encourage workers to retire early and not return to the work force.
The region is at a critical juncture. We need to develop specific proposals to encourage the active engagement of older workers in the employment market. These strategies range from age-specific training programs to increasing funding for incumbent worker training to the creation of new definitions or categories of employees which would alleviate obstacles to mixing work and retirement.
In New England, we could experience a significant gap of available employees and skilled worker shortages that ultimately will hinder our ability to add jobs and grow. The time to craft these proposals is now.
James T. Brett is the president and CEO of The New England Council, the nation's oldest regional business organization. James McCaffrey is the New England market leader for Mercer Human Resource Consulting.
