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Older workers are helping to keep the labor force participation rate afloat even as large numbers of Baby Boomers leave the workforce for retirement, new research shows.
The labor force participation (LFP) rate, or the percentage of people who are employed or actively looking for work, has been near 63 percent for the past few years, down from 66 percent at the dawn of the Great Recession, according to data from the U.S. Bureau of Labor Statistics (BLS).
One reason for that decline is assumed to be the large number of Baby Boomer retirements. But in a Feb. 6 analysis for the Federal Reserve Bank of Atlanta, bank economist Ellyn Terry writes that retirement rates actually "ticked down" between the fourth quarter of 2015 and the fourth quarter of 2016.
Delayed retirement "completely offset the effect of [an] aging population," Terry wrote. The LFP was 62.8 percent in the fourth quarter of 2015 and 62.7 percent in the fourth quarter of 2016, according to Terry's report. The data show that although actual retirements dropped the LFP by 0.15 points in the fourth quarter of 2016 compared with the fourth quarter of 2015, delayed retirements boosted the LFP by 0.15 points during that same period.
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Terry argues that the labor market has actually shown strength in the face of Baby Boomers' influence on the LFP.
The proportion of people who are employed or actively seeking work "has been essentially flat," Terry said, "which is striking because there is a powerful demographic trend—an aging population" that should be pulling that percentage down.
Other data from the BLS show that mature workers have had plenty of success finding and staying in jobs. The unemployment rate for workers ages 55 and older was 3.4 percent in February, far below the overall rate of 4.7 percent for the month and down from 3.8 percent in February 2016.
There were 34.9 million 55-and-older workers in the U.S. labor force in February, up from 34 million in February 2016, according to BLS data. Meanwhile, workers ages 55 and older will constitute nearly one-fourth (24.8 percent) of the labor force in 2024, up from 21.7 percent in 2014 and 15.6 percent in 2004, according to the BLS.
In some cases, employers may be holding onto older workers to retain their highly valued skills, said Tim Driver, CEO of RetirementJobs.com, a website that matches companies with older workers seeking employment. However, there is another cost-saving advantage to having a mature workforce, he said.
"To the extent employers make a concerted effort to attract and retain older workers, the main driver is not fear of losing skills," Driver said. "It is longer tenure. Tenure of workers age 50-plus is three times longer than workers under age 50. Young adults are prone to changing jobs. They're not bad people, of course. They're determining what career is right for them, so they're less likely to settle in and stay.
"On the flip side, employers enjoy a 'turnover advantage' with older workers, saving them tremendous sums of money in hiring, onboarding and training."
Research from the Society for Human Resource Management (SHRM) shows that many employers are recognizing the value of a mature workforce. In addition to having more experience, older workers were cited by 71 percent of HR professionals as being "more mature/professional" than younger workers, according to SHRM's Preparing for an Aging Workforce survey, conducted in 2014 and sponsored by the Sloan Foundation. The survey collected responses from 1,913 HR professionals, 70 percent of whom also said that older workers had a "stronger work ethic" than younger employees.
Low unemployment among those ages 55 and older is primarily a function of workers' needs, said Jim Seith, a senior director at the National Council on Aging, an Arlington, Va.-based nonprofit that advocates for those ages 60 and older.
"I think it says that many older workers must work to pay bills, especially health care, so they are more likely to stick it out," Seith said. "Of the small and shrinking percentage of older workers who can afford to fully retire, some work because they want to stay active and involved."
Even if some corporations embrace an "older worker first" mentality—for instance, by encouraging the recruiting of 55-and-older workers—that mentality must be ingrained in the minds of hiring managers and others who are active in the recruitment process, Seith said.
"Corporate entities talk the talk, but local storefronts do the hiring," he said.
Joseph Coombs is a freelance writer based in Springfield, Va.
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