By Gwen Kervin, Regional Economist
The baby boom generation, those born between 1946 and 1964, have been a driving factor in the economic prosperity seen in both the United States and Utah for the last five decades. During this time, this generation has been a strong contingent in labor markets. Their exit will be significant. A dearth of youthful labor to replace them is the driving factor behind the current labor market tightness. While various factors could conspire to keep them in the labor force longer, their ultimate departure will affect certain industries more than others and present opportunities to younger workers seeking to enter the workforce or to move up the promotion scale.
In Utah, workers over the age of 55 number approximately 295,400, representing 16.6% of the state’s total labor force. While significant, Utah has a relatively smaller share of workers over the age of 55 than the rest of the United States, which has just over 38.1 million people in the labor force over the age of 55, making up 22.9% of the nation’s workforce. This relatively smaller Utah population share over the age of 55 can be attributed to a population surge seen in the state in the 1980s when the local baby boom generation had children in greater abundance than themselves. This was a second population boost that did not occur at the national level. This second Utah wave then produced a third wave, which became the Utah baby boomer’s grandchildren. These younger population waves have helped support Utah’s economic growth and absorbed jobs vacated by retiring baby boomers.
Many older baby boomers have already retired. However, a significant portion of this generation faces financial headwinds that stand to postpone their departure from the workforce. Many saw their savings take a significant hit following the 2008 financial crisis, when they pulled savings out of the market when it moved lower and missed the rebound. Subsequent low interest rates set by the Fed to bolster the economy undermined yields of bond funds many were encouraged to purchase. A report published by the Transamerica Center for Retirement Studies found that baby boomers have saved an estimated median of $162,000 in total household retirement accounts. Moreover, 49% expect to work past the age of 70 or don’t plan to retire.
Coming out of the pandemic, the baby boom generation has encountered employment risks, volatility in the financial markets, and increasing inflation. Across all industries, between the fourth quarter of 2019 and the second quarter of 2022, those over the age of 55 have increased employment in Utah by 5.2%, led by those over the age of 65 whose employment increased by 13.5%, perhaps lured in by higher wages and insufficient retirement savings. Those between the ages of 55 and 64 increased their employment by 1.9%.
Part of the employment gains among those over the age of 65 can be attributed to an increase in part-time work, as retirees cushion their income with supplemental wages. However, even though baby boomers are staying in the workforce longer, they will ultimately exit. Their departure will impact employers and employees in the industries that employ them in different ways.
Industries with a higher concentration of baby boomers will have to contend with a “brain drain” when their most knowledgeable employees exit the workforce. As many of the baby boom generation have already retired, some of this has already taken place. In 2010, baby boomers made up 61% of the employment in the utilities sector. That number dropped to 33% by 2020, as the oldest of the baby boom generation had retired. The utilities sector in Utah has the highest concentration of boomer employment, surpassing that of the United States. Utilities aside, the United States has a higher concentration of boomers across all industries due to its older population relative to that of Utah. Other industries that have a high concentration of workers over the age of 55 include agriculture, forestry, fishing and hunting, public administration, and educational services.
A more granular picture emerges when these broad industries are broken down into their various subsectors. Looking at the utilities industry, it is apparent that all of the industry’s subsectors have a high concentration of workers over the age of 55. Data from the second quarter of 2022 shows a large proportion of boomers employed in the electric power generation subsector, and the water and sewage subsector.
Moreover, within the manufacturing sector, the subsectors of printing and related support, aerospace products and parts, and navigational, measuring, electromedical, and control instruments manufacturing all have high concentrations of baby boomers in their workforce.
It is important to note that the industries with the highest concentration of boomers (utilities and agriculture, forestry and fishing) employ a relatively small number of people. Aside from the share of baby boomer employment in a given industry, another factor to consider is the sheer number of employees a given sector has over the age of 55. While baby boomer retirements won’t have the same brain drain effect, retirements will open up opportunities for younger workers seeking employment and could push wages for people entering those sectors higher as employers strive to attract talent in a tight labor market. Educational services, manufacturing, health care and social assistance, and retail trade all employ a large number of people over the age of 55, accounting for roughly 45% of total employment for that age cohort.
Educational services stands out as the only industry that has both a high concentration and a high quantity of baby boomers employed. This sector makes up 10.0% of total employment in Utah. Within the educational services sector, the largest level of employment is found in elementary education and secondary schools, which account for 5.7% of state employment. Colleges, universities, and professional schools also employ a large number of boomers, and make up 3.0% of total employment in the state. While junior colleges don’t employ a large number of individuals, they have a high concentration of boomers and could be impacted as the older generation retires.
Due to Utah’s relatively young population, the impact of baby boom retirements will not have the same impact in Utah as it will in the rest of the nation. However, the structural shift in the state’s workforce brought on by the retirement of the baby boom generation will keep labor markets tight for some time, presenting both challenges and opportunities. Employers in industries with a high exposure to this age group will grapple with the challenges, while employees will be faced with an unprecedented level of opportunities. The education sector is a prime example of this structural shift because of the large number of retirements set to take place over the next ten to fifteen years, which will offer employment opportunities, but bring employer challenges.
- The retirement of the baby boom generation, which has been a driving force in labor markets for decades, will keep labor markets tight for some time. While some may stay in the labor force longer, their ultimate departure will affect employers and the labor market to varying degrees depending upon the industry.
- Industries with a higher concentration of baby boomers will have to contend with a loss of expertise as employees exit the workforce. The industries with the highest concentration of boomers are utilities, agriculture, forestry and fishing, public administration, and educational services.
- Industries with a higher number of baby boomers employed will offer job opportunities for younger workers. The industries with the highest number of boomers employed are educational services, manufacturing, health care and social assistance, and retail trade.
- Educational services have both a high proportion and number of boomers employed. The upcoming retirements will offer up both opportunities and challenges in that sector.