Analytical Essay

Monthly Labor Review July 2000 17

A s the oldest baby-boomers begin retir- ing in the next several years, the impli- cations for the workforce could be enor-

mous. The current tight labor market situation could be exacerbated, hindering prospects for economic growth and putting a greater burden on those remaining in the workforce, perhaps forcing them to work longer hours. Especially in occupations with functions less conducive to technology-driven productivity innovations— many of the jobs in health services and educa- tional services, for example—service may suf- fer and needs could go unmet unless older work- ers can be retained or other sources of workers can be found. Even in occupations where tech- nological innovations have produced relatively large productivity gains—many of the more com- plex machining jobs in manufacturing, for ex- ample—the learning curves often are steep, meaning that new workers need to enter these occupations soon, so they can become proficient in the necessary skills by the time the baby- boomers begin leaving the labor force. This ar- ticle looks at the occupations and industries likely to be most affected when the oldest baby- boomers begin retiring.

The aging labor force

The baby boom began in 1946 and continued through 1964. During those 19 years, 76 million people were born. The sheer magnitude of the

Retiring Baby-boomers

Gauging the labor force effects of retiring baby-boomers

As aging baby-boomers begin retiring, the effects on the overall economy and on certain occupations and industries will be substantial, creating a need for younger workers to fill the vacated jobs, many of which require relatively high levels of skill

Arlene Dohm

Arlene Dohm is an economist in the Office of Employment Projections, Bureau of Labor Statistics.

number of births during this period has had a major impact on many aspects of our economy over the last 50 years. It also has largely determined the size and age composition of the labor force for the past 30 years. In 1978, when baby-boomers were aged 15 to 32, they made up approximately 45 percent of the labor force. Now, in large part reflecting the aging of the baby-boomers, the percentage of work- ers aged 45 and older will increase from 33 per- cent of the labor force in 1998 to 40 percent in 2008, adding nearly 17 million workers to this age group. Over the same period, those aged 25 to 44 will decline as a percentage of the labor force— from 51 percent to 44 percent, resulting in 3 million fewer workers in this age bracket. Consequently, the median age of the labor force will rise from 38.7 in 1998 to 40.7 in 2008.1

As the age of the labor force increases, a greater number of people will leave the labor force due to death, disability, or retirement. Of the 25 million people projected by the Bureau of Labor Statistics to leave the labor force between 1998 and 2008, 22 million will be aged 45 years or older and thus will be leaving mostly to retire. The total number of people who left the labor force the previous de- cade was 19 million. Over the 1998–2008 period, the oldest baby-boomers will be aged 52 to 62. After 2008, as more and more baby-boomers reach retirement age, the impact of their retirements will continue to grow.

Three methods are often cited for determining the average age of retirement. The first method uses

Retiring Baby-boomers

18 Monthly Labor Review July 2000

a simple model to estimate the average annual number of net exits or withdrawals occurring over a given period within a particular age cohort. Using this “cohort method,” Murray Gendell concluded that, from 1990 to 1995, the average age of retirement in the United States was 62.2 years for men and 62.7 years for women.2 The second method relies on determining the average age for first withdrawal of a Social Security pension check. The Social Security Administration states that in 1998 the average age for first withdrawal of a pension check was 63.8 years for men and 64.0 years for women. However, about 50 percent of men and 53 percent of women made their initial claims at age 62.3 Finally, a third method of estimating the average age of exit from the labor force involves examining labor force participation rates among older workers by single years of age. With this method, the average age of exit is defined as the age at which half the popu- lation is in the labor force and half is not in the labor force. In 1999, the average age at exit from the labor force was between 61 and 62 years. (At age 61, about 47 percent of the popula- tion was not in the labor force; at age 62, about 55 percent of the population was not in the labor force.)4

The “retirement” age, as calculated using these methods, has remained fairly stable over the last 20 years, although there are signs that it may be starting to increase. BLS projects that labor force participation rates for those aged 55 years and older will increase by 5.5 percentage points from 1998 to 2008.5

For a number of reasons, including changes to Social Security, this trend should continue. By congressional mandate, begin- ning in 2000, the normal retirement age for collecting a full Social Security pension will increase by gradual increments from its current level of 65 years and 2 months to 67 years in 2022. At the same time, the amount of reduced pension ben- efits one can collect at age 62 also will be lowered. In addi- tion, Congress recently eliminated the earnings limit on the amount that Social Security recipients between the ages of 65 and 69 can earn before having to forfeit part of their Social Security benefits. Together, these rule changes should keep people in the workforce longer.

Another reason the retirement age is likely to rise in the future is the trend toward companies offering defined con- tribution pension plans instead of defined benefit plans. A BLS survey of medium to large employers showed that, among full-time employees, participation in defined benefit pension plans declined from 59 percent in 1991 to 50 percent in 1997.6 Defined benefit plans provide the maximum benefits when taken at the earliest possible age of eligibility. In con- trast, under defined contribution plans (such as 401(k)s), the amount of benefits accrued depends on the amount contrib- uted to the plan by employers and employees, as well as on the rate of growth of the investments in the retirement fund.

A study by the American Association of Retired Persons (AARP) provides further evidence of prolonged labor force participation, finding that 8 in 10 baby-boomers plan to work

during their “retirement years,” although not necessarily at the same job and not necessarily full time.7 Declining age dis- crimination and increasing labor force participation among women also should contribute to raising the retirement age in the future. To the extent that these changes occur and the re- tirement age rises, the BLS estimates may overstate the number of retirements occurring over the 1998–2008 period.

Evidence from the BLS Current Population Survey (CPS) reveals a number of interesting details about the gender com- position of older workers.8 For example, men’s labor force participation rates peak at 94 percent, while those of women peak at only 79 percent. At age 55, when many government and some union workers are eligible to receive pensions, par- ticipation rates were 83 percent for men in 1999, and 66 per- cent for women. At age 62, 53 percent of men were still in the labor force, compared with only 38 percent of women. Finally, at age 65, only 29 percent of the population was still in the workforce—36 percent of men and 22 percent of women. These statistics suggest that women leave the workforce after age 55 more rapidly than men. As a result, occupations employ- ing large numbers of women can expect to have, on average, higher retirement rates at earlier ages than predominately male occupations.

The data

This study examines CPS data on occupation and age from 1998 and 1999; it also uses BLS projections data to estimate the num- ber of retirements expected to occur over the 1998–2008 pe- riod. Of the approximately 500 occupations included in the CPS, only those that had a greater-than-average proportion of workers aged 45 and older were included in the study. Be- cause in the average occupation, slightly less than 34 percent of its employees are aged 45 years and older, only occupations with 34 percent or more workers aged 45 years and older were considered. This age group was selected because persons aged 45 in 1998 will be 55 in 2008, and thus will be eligible for retirement under a number of plans.

Only occupations with more than 50,000 total employees are described, because the data for occupations with fewer employees were deemed less reliable. This last criterion eliminated approximately 30 occupations with older-than- average workforces. Some of the more common occupa- tions deleted from the analysis because of their size include tailors, firefighting occupations, funeral directors, actuar- ies, telephone line installers, geologists, purchasing manag- ers, optometrists, veterinarians, podiatrists, stevedores, ur- ban planners, petroleum engineers, boilermakers, aircraft mechanics, a variety of repairers, and some metalworking machine operators. A number of other occupations that would not have met the size requirement on their own, but that were homogeneous enough to be considered as a group, were com- bined into five aggregated occupations: rail transportation

Monthly Labor Review July 2000 19

occupations; water transportation occupations; teachers, col- lege and university; fishers, hunters, and trappers; and super- visors, construction occupations. The aggregate group rail transport occupations, for example, comprises locomotive operating occupations and railroad conductors and yardmas- ters. In addition, college and university teachers, normally listed by 30 different specialty occupations, here are included under the combined group teachers, college and university. An additional 20 occupations were excluded because replace- ment data are not available for them. Finally, a number of nonspecific or miscellaneous occupations were excluded. After these restrictions, 102 occupations were researched for this study.

Table 1 lists the occupations having the largest percentage of workers aged 45 years and older, along with the median age for each occupation. There are a number of reasons that these occupations have older workforces. Many of them are made up of supervisory or managerial employees, who nor- mally are older than frontline employees. Within executive, administrative, and managerial occupations, for example, 41 percent of employees are 45 or older. Another reason is that, due to obsolescence, productivity improvements within the occupation, or difficulty in hiring and recruiting, many of the occupations listed in the table are declining in employ- ment—which means fewer younger workers coming into the occupations, leaving a workforce that is older than average. Many of the clerical and manufacturing jobs on the list fall

into this category. As workers retire from these declining occupations, many will not be replaced. Such occupations include farmers, millwrights, dressmakers, rail transporta- tion occupations, and tool and die makers.

Professional occupations also have a disproportionate num- ber of older workers, particularly those requiring postgradu- ate degrees. The opportunity costs for these high-wage earn- ers leaving the labor force is greater than for most other occu- pations. Also, many of them are self-employed and thus are better able to control their schedules as they get older. In a study that looked at the labor force withdrawal patterns of a group of older workers, Joseph Quinn and his coauthors found a strong positive correlation between self-employment and delayed retirement, and a slightly positive correlation be- tween education and delayed employment.9 Self-employed workers often retire later because they lack pension plans. More educated workers also have a tendency to stay in their careers longer, due to greater job satisfaction and the costs of lost income in leaving the job, as well as other factors. At the same time, however, these workers often have better pen- sion and health benefits than other workers, enabling them to retire younger. Occupations falling into this category in- clude dentists and psychologists.

Some of the occupations listed in table 1—such as real es- tate sales occupations, bus drivers, and taxi drivers—have a large number of part-time workers. Older workers often take part-time jobs to supplement their retirement earnings or as a

Table 1. Occupations in 1998 with the highest percentage of workers aged 45 years and older

Total employed Percent of employed (in thousands) 45 years and older

Total, all employees ..................................................... 131,995 33.7 39

Farmers, except horticultural .................................................. 946 68.5 53 Construction inspectors .......................................................... 71 60.6 49 Real estate sales occupations ................................................ 753 59.8 49 Administrators and officials, public administration .................. 632 58.7 47 Clergy ..................................................................................... 327 56.9 48 Millwrights ............................................................................... 83 56.6 46 Librarians ................................................................................ 209 56.5 47 Administrators, education and related fields .......................... 754 56.1 47

Bus drivers ............................................................................. 474 54.2 47 Dressmakers .......................................................................... 68 52.9 46 Dentists .................................................................................. 156 51.3 45 Stationary engineers .............................................................. 130 50.8 45 Teachers, secondary school .................................................. 1,228 50.3 45 Counselors, educational and vocational ................................. 231 50.2 45 Managers, properties and real estate ..................................... 521 49.9 45 Psychologists ......................................................................... 233 49.4 45

Crane and tower operators ..................................................... 67 49.3 45 Management analysts ............................................................ 443 49.0 45 Telephone installers and repairers .......................................... 232 48.7 45 Authors ................................................................................... 130 48.5 45 Private household cleaners and servants ............................... 555 48.3 44 Inspectors and compliance officers, ex. construc. ................ 238 47.5 44 Tool and die makers ............................................................... 135 46.7 44 Taxi cab drivers and chauffeurs ............................................. 275 46.5 44

Median age Occupation

Retiring Baby-boomers

20 Monthly Labor Review July 2000

Total, all employees .............................. 53.8

Fishers, hunters, and trappers ................... 80.5 Water transportation occupations ................. 76.7 Operations and systems researchers

and analysts ............................................. 74.2 Supervisors, police and detective ................. 70.9 Telephone installers and repairers ................ 69.6 Insurance underwriters ................................. 68.6 Supervisors, mechanics and repairers ......... 68.3 Laundering and dry cleaning machine

operators ................................................. 67.7 Teachers, secondary school ......................... 66.8 Supervisors, construction workers ............. 65.9

Mail carriers, postal service ....................... 65.8 Rail transportation occupations .................... 65.2 Welfare service aides ................................... 65.1 Winding and twisting machine operators ...... 64.9 Dental laboratory and medical appliance

technicians ................................................ 64.7 Public relations specialists ........................... 63.7 Telephone operators ..................................... 62.4 Industrial machine repairers ......................... 60.4 Rail transportation occupations .................... 60.6 Licensed practical nurses ............................. 59.1

way of staying productive in their older years without the stress of a full-time job. Other occupations listed in the table have a large percentage of older workers due to a lack of hiring in the recent past, resulting from downsizing or a temporary oversupply—in some cases, even when the occupation is pro- jected to grow in the coming period. Teachers are an example of an occupation for which the demand tapered off in the 1980s (due to a declining birth rate during the 1970s), leaving a workforce that is older than average.

Some occupations have more older workers because they are highly unionized and thus favor seniority and generally have lower turnover rates due to higher wages and better ben- efits than nonunion jobs. Airline pilots and rail transporta- tion occupations are examples of occupations with large pro- portions of unionized workers. Some occupations are sim- ply less attractive to younger workers—even though jobs are available and demand for workers may be high. An example of an occupation experiencing difficulty attracting young qualified workers is that of tool and die makers.

Affected occupations and industries

How many job openings will retirements generate, and in which occupations and industries? BLS calculates net separations for each occupation in developing data on replacement needs. The number of net separations approximates the number of people permanently leaving an occupation and is measured by exam- ining the net flow of individuals entering and exiting the occu- pation. For occupations that are growing or maintaining their employment level, replacement needs are equal to the number

of workers leaving an occupation. For occupations that are declining, replacement needs are equal to the number of work- ers leaving the occupation less those that will not be replaced.10

This study examines replacement needs or job openings gen- erated by those who are projected to permanently leave an occupation over the 1998–2008 period.

The investigation focuses only on those aged 45 years and older and assumes that the vast majority of these workers will leave the occupation to retire. Although persons aged 45 and older occasionally change jobs or leave and reenter the workforce at a later time, for this article, it is assumed that the number is quite small. In the future, with the increasing port- ability of pension plans, movement into and out of occupa- tions may become more common among older workers. At this time, however, with defined benefit pension plans still prevalent, movement between jobs generally is not voluntary and workers retire at the earliest possible time.

Table 2 lists the top 20 occupations that will have the great- est replacement needs due to persons aged 45 and older leav- ing the occupation from 1998 to 2008. Because the majority will be leaving the labor force to retire, they are referred to here as retirees. The occupations listed in the table are large occupations with workforces that are older than average. Among these occupations, five are in the education field, in- cluding three teaching occupations, as well as janitors and cleaners (most or whom work in schools), and education ad- ministrators. The reason for this is that many public educa- tion workers, like most workers in government, can retire

Total, all employees ................................... 22,205 ..............................................................................

Secretaries ......................................................... 519 Truck drivers, heavy ......................................... 425 Teachers, elementary school ............................. 418 Janitors and cleaners ......................................... 408 Teachers, secondary school .............................. 378 Registered nurses .............................................. 331 Bookkeepers, accounting and auditing clerks ... 330 Teachers, college and university ....................... 195 Administrators, education and related fields ..... 178 Farmers, except horticultural ............................. 175

Supervisors, construction occupations ............. 165 Administrators and officials, public administration ......................................... 143

Real estate sales occupations .......................... 144 Insurance sales occupations ............................. 135 Industrial machinery repairers ........................... 125 Maids and housekeeping cleaners ..................... 122 Private household cleaners and servants ......... 112 Physicians ......................................................... 108 Financial managers ............................................ 102 Lawyers ............................................................. 99

Occupation

Occupation

Occupations with the greatest replacement needs for those retiring, 1998–2008

[In thousands]

Table 2.

Occupations with the greatest percentage of workers aged 45 and older permanently leaving the occupation, 1998–2008

Percentage of workers

permanently leaving occupation

Retiree replacement

needs

Table 3.

Monthly Labor Review July 2000 21

Total, all employees .................................................................... 9,419 10,411 11,794 25.2

Airline pilots and navigators ............................................................. 5 9 1 4 172.7 Management analysts ...................................................................... 6 1 1 1 6 152.0 Teachers, special education ............................................................ 8 1 1 1 9 135.4 Photographers .................................................................................. 3 4 5 94.8 Teachers aides ................................................................................. 2 7 3 8 5 2 91.8 Industrial engineers .......................................................................... 1 1 1 5 2 1 87.6 Eligibility clerks, social welfare ........................................................ 5 6 9 85.0 Personnel and labor relations managers ........................................ 7 9 1 3 83.6 Postal clerks, except mail carriers .................................................... 1 6 2 0 3 0 81.0 Supervisors, police and detectives .................................................. 9 1 4 1 7 80.2

Plumbers, pipefitters, and steamfitters ............................................. 2 1 2 8 3 6 73.6 Financial managers .......................................................................... 3 4 4 4 5 8 73.1 Psychologists .................................................................................... 1 5 1 7 2 6 73.0 Social workers .................................................................................. 3 2 4 0 5 4 72.0 Lawyers ............................................................................................. 3 3 4 2 5 7 71.6 Administrators, education and related fields ................................... 5 9 7 8 101 70.6 Teachers, elementary school ........................................................... 141 181 237 68.8 Registered nurses ............................................................................ 116 143 188 62.6 Administrators and officials, public admin. ...................................... 5 0 6 2 8 1 60.3 Chemists ........................................................................................... 7 7 1 1 57.6

earlier than those in the private sector. According to BLS, two- thirds of all State and local employees in 1994 were covered by pension plans that allow a person to retire at age 55 or earlier, as long as they have met a years-of-service require- ment (usually 30 years).11 This standard also applies to Fed- eral employees. It is also the case that most government em- ployees are covered under defined benefit pension plans that provide the maximum economic benefits to those who retire at the earliest possible age of pension eligibility. People un- der these plans tend to retire earlier than those under other plans or with no pension coverage.12 For these reasons, gov- ernment occupations will be among the first to experience the effects of the surge in retirements by baby-boomers.

In contrast, table 3 lists the occupations that will have the most replacement needs due to persons aged 45 and older leav- ing the occupation as a percentage of the occupation’s workforce that was 45 and older in 1998. What makes these occupations unique is not the percentage of persons 45 and older leaving them; rather, these occupations already have a workforce that is older than average. It is this combination of older-than-average workforces and greater-than-average per- centage of people aged 45 and older leaving that makes these occupations stand out, because even in occupations with workforces younger than average, those aged 45 and older typi- cally leave in large numbers. On average, 54 percent of work- ers aged 45 and older will leave the workforce in the next 10 years. Interestingly, secondary school teachers is the only oc- cupation to appear in tables 1 and 2, having both a large num-

ber of people leaving the labor force and a very large percent- age of those aged 45 and older leaving the profession.

Table 4 shows the top 20 occupations most affected by baby-boomer retirement. It is assumed that the effect will be stronger in the later years when the baby-boomers are older. By looking at the replacement-needs data over a 15-year pe- riod, using 5-year cohort data, if an occupation is projected to have much greater replacement needs in the 2003–08 pe- riod than in the 1993–98 period, it was assumed to be attrib- utable mostly to the baby-boomers retiring. Under this as- sumption, most job openings or replacement needs occur- ring during the 1993–98 period were attributable mostly to non-baby-boomers. By 2008, however, the oldest baby- boomers will be age 62—at or near the average retirement age for the population—and thus the 2003–08 period will include baby-boomers aged 45 to 62. On average, for all employees, replacement needs during the 2003–08 period are projected to be about 25 percent greater than during the 1993–98 period, confirming the significant impact of baby- boomer retirements. The occupations listed in the table em- ploy a large number of baby-boomers, and early retirements are prevalent. Airline pilots fall into this category, as well as most public administration and teaching occupations.

Table 5 lists all the occupations in this study ranked by percentage of workers aged 45 years and older, along with total replacement needs for the occupation and an estimate of the percentage of workers aged 45 and older that will leave by 2008. It also shows the industries that employ approxi-

2 Calculated percentage uses unrounded numbers.

[Numbers in thousands]

Table 3.

Table 3. 3.

Retiree replacement

needs, 1993–981

Retiree replacement

needs, 1998–20031

Retiree replacement

needs, 2003–081

change, 1993–98 to 2003–082

Occupation

Occupations most affected by baby-boomer retirements, 1993–2008Table 4.

Percent

1 Numbers based on 5-year average, not equivalent to total employed.

Retiring Baby-boomers

22 Monthly Labor Review July 2000

Total, all employees ................................. 131,995 34 22,205 53.8

Farmers, except horticultural ......................... 946 69 175 24.3 Agriculture Construction inspectors ................................ 71 61 17 45.9 Construction; public administration Real estate sales occupations ................... 753 60 144 33.8 Real estate Administrators and officials,

public administration ................................... 632 59 143 41.7 Public administration Clergy ............................................................ 327 57 69 36.6 Religious organizations Millwrights ..................................................... 83 57 22 53.3 Manufacturing Librarians ...................................................... 209 57 50 46.4 Libraries; education Administrators, education

and related fields ........................................ 754 56 178 47.1 Education

Bus drivers .................................................... 474 54 89 34.9 Bus service and urban transit; education Dressmakers ................................................. 68 53 14 28.4 Dressmaking shops; retail trade Dentists ......................................................... 156 51 29 40.3 Offices of dentists Stationary engineers .................................... 130 51 27 47.7 Manufacturing; real estate Teachers, secondary school ....................... 1,228 50 378 66.8 Education Counselors, educational

and vocational ............................................ 231 50 56 48.4 Education Managers, properties

and real estate ............................................ 521 50 70 26.3 Real estate Psychologists ................................................ 233 49 43 36.9 Health services, not elsewhere classified (n.e.c); ....................................................................... offices of health practitioners, n.e.c. Crane and tower operators ........................... 67 49 16 54.2 Metal industries mfg.; construction; blast furnaces Management analysts ................................... 443 49 28 15.7 Management and public relations Telephone installers and repairers ................ 232 49 60 69.6 Telephone communications Authors .......................................................... 130 49 17 29.5 Miscellaneous professional services Private household workers ............................ 555 48 112 45.8 Private households Inspectors and compliance officers,

excluding construction ............................... 238 48 42 39.4 Public administration Rail transportation occupations ..................... 105 47 33 60.6 Railroads Tool and die makers ...................................... 135 47 24 42.4 Manufacturing Taxi cab drivers and chauffeurs .................... 275 47 39 38.9 Taxicab service; bus and urban transit Upholsterers .................................................. 71 47 12 53.1 Furniture and fixtures manufacturing; ....................................................................... miscellaneous repair services.; retail trade Welfare service aides .................................... 92 46 24 65.1 Social services, n.e.c. Insurance sales occupations ........................ 595 46 135 52.1 Insurance Physicians ..................................................... 743 46 108 37.2 Offices of physicians; hospitals Supervisors, cleaning and

building service workers ............................ 165 46 40 52.3 Services to dwellings and other buildings; hotels and motels Teachers, college and university ................... 922 45 195 50.1 Education Supervisors, police and detectives ............................................... 118 45 31 70.9 Public administration Managers, farms,

except horticultural ..................................... 170 45 22 32.6 Agriculture

Lawyers ......................................................... 955 44 99 27.7 Legal services; public administration Mail carriers, postal service .......................... 334 44 87 65.8 Postal service Personnel and labor

relations managers ..................................... 163 44 22 40.3 Manufacturing Postal clerks, except mail carriers ................ 320 43 50 39.1 Postal service Bookkeepers, accounting

and auditing clerks ..................................... 1,735 43 330 46.4 Retail trade Architects ....................................................... 158 43 19 34.7 Engineering and architectural services Secretaries .................................................... 2,925 43 519 41.9 No concentration Airplane pilots and navigators ........................ 113 43 24 47.9 Air transportation Teachers, elementary school ........................ 1,957 43 418 54.4 Education

Barbers .......................................................... 67 42 24 58.5 Barber shops Supervisors, mechanics

and repairers .............................................. 259 42 69 68.3 Manufacturing; retail trade Janitors and cleaners .................................... 2,247 42 408 47.8 Building services; education Winding and twisting

machine operators ..................................... 53 42 12 55.2 Textile mill products manufacturing Sales workers, furniture and

home furnishings ........................................ 153 41 27 46.3 Retail trade Teachers aides .............................................. 635 41 90 38.1 Education Painters, sculptors, craft-artists,

and printmakers ......................................... 242 41 39 42.5 Miscellaneous professional services; manufacturing Guards and police,

except public service ................................. 759 40 96 34.3 Detective and protective services

Industries employing more than 20 percent of occupation Occupation

Total employed,

1998

Percent employed,

45 and older,1998

Retiree replacement

needs, 1998–2008

Percent workers

45 and older leaving

occupation, 1998–2008

Table 5. Occupations with a greater-than-average number of workers aged 45 years and older, 1998–2008 [Numbers in thousands]

Monthly Labor Review July 2000 23

Operating engineers ...................................... 245 40 44 50.7 Construction Miscellaneous electrical and

electronic equipment repair ........................ 83 40 14 44.0 Motor vechicle and equipment manufacturing Electrical and electronic

equipment assemblers ............................... 343 40 58 54.7 Elec. mach., equip., and supplies manufacturing Fishers, hunters, and trappers ...................... 53 40 10 57.2 Fishing, hunting, and trapping Eligibility clerks, social welfare ....................... 94 39 14 34.7 Public admin.; social serv., n.e.c.; offices of physicians Supervisors, general office ............................ 398 39 79 48.2 Public administration; banking Personnel clerks, excluding

payroll and timekeeping .............................. 74 39 13 53.4 Public administration Production inspectors,

checkers, and examiners .......................... 524 39 96 47.6 Manufacturing

Civil engineers ............................................... 297 39 42 43.5 Construction; public administration Supervisors, motor

vehicle operators ........................................ 88 39 14 55.7 Trucking; wholesale trade Registered nurses ......................................... 2,039 39 331 47.2 Hospitals Grader, dozer, and scraper

operators .................................................... 76 38 6 19.4 Construction Pressing machine operators ......................... 92 38 18 48.3 Laundry and garment serv.; apparel products mfg. Supervisors, construction workers ............... 756 38 165 65.9 Construction Teachers, special education .......................... 382 38 29 22.6 Education Textile sewing machine

operators .................................................... 514 38 81 39.2 Apparel and textile products manufacturing Sheriffs, bailiffs, other law

enforcement officers .................................. 162 38 13 25.7 Public administration

Maids and housekeeping cleaners ...................................................... 657 38 122 51.5 Hotels and motels; hospitals; nursing facilities

News vendors ............................................... 101 38 12 30.5 Printing and publishing; retail trade Brickmasons and stonemasons .................... 192 38 29 56.7 Construction Telephone operators ...................................... 160 38 36 62.4 Telephone communications Records clerks .............................................. 206 37 23 37.1 Education Dieticians ....................................................... 91 37 18 57.3 Hospitals; nursing facilities Messengers ................................................... 156 37 17 33.0 Trucking services Musicians and composers ............................ 183 37 25 42.4 Entertainment and rec. services; religious organizations Technical writers ............................................ 73 37 12 59.0 Manufacturing; computer and data processing services Industrial engineers ....................................... 262 37 36 38.8 Manufacturing Library clerks ................................................. 174 37 22 39.4 Libraries; education Operations and systems

researchers and analysts .......................... 212 37 54 74.2 Manufacturing; public administration Plumbers, pipefitters,

and steamfitters .......................................... 516 37 65 38.1 Construction

Industrial machinery repairers ....................... 563 37 125 60.4 Manufacturing Water transportation

occupations ................................................ 63 37 16 76.7 Water transportation Interviewers ................................................... 167 37 22 43.9 Hospitals; research and development Payroll and timekeeping clerks ...................... 147 36 31 54.2 No concentration Surveying and mapping technicians .............. 72 36 8 34.5 Engineering and architectural services Truck drivers ................................................. 3,023 36 425 43.1 Trucking; retail trade Office machine repairers ............................... 62 36 9 46.3 Wholesale trade; electrical repair shops Dental laboratory and medical

appliance technicians ................................. 54 35 11 64.7 Health services n.e.c.; offices of dentists Chemists, excluding biochemists .................. 134 35 18 38.7 Chem. and allied prod. mfg. research and development Financial managers ....................................... 707 35 102 51.6 Banking Underwriters .................................................. 117 35 19 68.6 Insurance Aerospace engineers .................................... 86 35 13 43.0 Guided missiles, space vehicles mfg.; aircraft and ....................................................................... parts manufacturing Machinists ...................................................... 532 35 89 53.8 Mach. and computer equip. mfg.; metal industries mfg. Sales workers, motor vehicles ...................... 310 35 41 37.5 Retail trade Photographers ............................................... 155 35 9 20.4 Miscellaneous personal services Public relations specialists ............................. 170 35 28 56.8 Management and public relations Mail clerks, except postal .............................. 179 35 20 35.5 No concentration Licensed practical nurses ............................. 382 35 85 59.1 Hospitals; nursing facilities Laundering and dry cleaning

machine operators ..................................... 200 35 44 67.7 Laundry, cleaning, and garment services Social workers ............................................... 751 34 95 39.1 Social services n.e.c.; public administration Production coordinators ................................ 256 34 37 51.8 Manufacturing Dispatchers ................................................... 235 34 39 55.4 Public administration; trucking

[Numbers in thousands]

Occupation Total

employed, 1998

Percent employed,

45 and older,1998

Retiree replacement

needs, 1998–2008

Percent workers

45 and older leaving

occupation, 1998–2008

Industries employing more than 20 percent of occupation

Table 5. Continued—Occupations with a greater-than-average number of workers aged 45 years and older, 1998–2008

Retiring Baby-boomers

24 Monthly Labor Review July 2000

mately 20 percent or more of the occupation. It can be as- sumed that these industries will be at least moderately af- fected by the aging of workers in the occupation. How severe the impact will be largely depends on how critical the occu- pation is to the industry and whether the industry is trying to add or reduce workers in the field. Due to the large number of individual manufacturing industries, it is rare for one to employ more than 20 percent of an occupation. In most cases, therefore, only the aggregate industry manufacturing was listed. However, when a particular manufacturing industry did dominate a profession, it was listed separately.

Although much of the industry information is intuitive— such as teachers tending to work in the education industry— the table does point out industries that will be affected by re- tirements in multiple occupations. Although manufacturing leads the list of affected industries—with 12 occupations and another 14 manufacturing industries listed separately—it is difficult to measure the effect because of the size of the manu- facturing sector and the number of occupations included within it. Several of the occupations in the manufacturing sector are managerial or highly skilled jobs, normally held by older, more experienced workers. It is the experience and skill that many manufacturing companies will miss most, because of the length of time it takes to train new workers.13 However, the manufac- turing sector includes industries in decline as well as indus- tries that are growing; therefore, the reasons that some of the occupations have a higher concentration of older workers may vary between industries. One detailed manufacturing industry that appears three times in the table is apparel and textile mill products. As an industry widely known to be in decline and projected by BLS to have negative job growth through 2008, the lack of new hiring in this industry has created a workforce whose average age is unusually high.

The public administration industry appears 13 times in table 5, and it includes Federal, State and local government workers employed in the administrative, executive, legislative, judicial, regulatory, and international areas of government. Other indus- tries employing a relatively large number of government work- ers include educational services, hospitals, and urban transit. Again, it is hard to measure the effect of retirements on this in- dustry, because of the wide variety of jobs and differing growth trends among the three branches of government, with employ- ment projected to decline in Federal government and to grow in State and local government. However, one occupation that makes up a large proportion of government employment will soon lose significant numbers to retirement—officials and administrators, public administration. In this occupational group, 59 percent of its workers are aged 45 and older, with 42 percent projected to leave by 2008. Clearly, upcoming retirements will dramatically affect this important government occupation.

The industry that will be most affected by baby-boomer retirements is educational services. Nearly all the major oc- cupations that make up this industry are included in table 5,

many near the top of the list. People in this industry retire earlier, in general, because of pensions that often provide full coverage for qualified employees after 30 years of service. Also, a slowdown in hiring in the 1980s and early 1990s raised the average age of the teaching professions and left fewer workers to move into vacant slots.

Almost all the transportation industries are on the list, in- cluding railroads, bus service, urban transit, taxicab service, air transportation, trucking, and water transportation. The rea- sons for this include the relatively high age requirements for operating vehicles and other modes of transportation, high wages and low turnover rates in the highly unionized railroad and airline industries, and a large number of part-time work- ers, especially in bus and taxicab services, occupations often preferred by older workers.

The health services industry (especially hospitals) and the construction industry are two other sectors that have at least eight occupations listed in table 5. In particular, registered nurses (RNs) and licensed practical nurses (LPNs) are expected to leave the hospital industry in large numbers. Currently, 62 percent of RNs and 32 percent of LPNs work in hospitals. A number of other healthcare occupations are on the list, in- cluding physicians, dentists, and psychologists. Construction industry occupations listed in the table tend to be senior or skilled positions, where one would expect to find more older workers. On the whole, though, the average age in the con- struction industry is much lower than average.

The data show that the impact on occupations and industries from the retirements of the oldest baby-boomers will vary, even among those occupations with a greater-than-average number of workers aged 45 years and older. The impact will be felt more prominently in some occupations (particularly those in education and public administration) than in others (such as farming, where replacement needs equal about a quarter of the workforce aged 45 and older). Among the broad occupational groups, the executive, administrative, and managerial occupations will experience the greatest turnover. Those 45 and older make up 41 percent of this group, and 42 percent of these older workers are expected to leave by 2008. That is equal to nearly 3 million job openings in this field due to retirements, resulting in a significant loss of managerial skills and experience.

For a number of occupations, however, the attrition generated by the upcoming retirements may be the preferred mechanism to reduce the size of the occupation in the face of declining demand. Farmers, bookkeepers, sewing machine operators, among others, all face declining prospects due to productivity improvements or declining U.S. production.

Beyond 2008

The effect of baby-boomer retirements will be more dramatic in the decade following 2008. By 2018, all but the youngest

Monthly Labor Review July 2000 25

baby-boomers will be of retirement age. Aggravating the situ- ation is a much smaller pool of workers immediately follow- ing the baby-boomers. Nevertheless, there are encouraging signs that the labor force will not collapse in 20 years. Re- cent changes to Social Security will probably cause some to delay retirement. The increased use of defined contribution pension plans, such as 401(k)s, which do not have an age or length-of-service component, may motivate some to stay in

the workforce longer. A healthier older population and one that sees work as beneficial may also keep people working longer. Finally, the supply of workers may be on the upswing. Immigration, for example, is projected to continue increas- ing in the coming years, and the birth rate increased over the 1979–94 period, the so-called “baby-boom echo.”14 These phenomena will help provide more workers for a dwindling labor force.

ACKNOWLEDGMENT: The author thanks Sean Kirby of the Office of Employment Projections for programming support.

1 Howard N Fullerton, Jr., “Labor force projections to 2008: steady growth and changing composition,” Monthly Labor Review, November 1999, pp. 19–32; see table 5, p. 27; for age of labor force, see p. 30.

2 Murray Gendell, “Trends in retirement age in four countries, 1965–95,” Monthly Labor Review, August 1998, pp. 20–30; for methodology, see p. 21 and sources cited; for study results, see pp. 22–25.

3 Social Security Bulletin, Annual Statistical Supplement, 1999 (Social Security Administration, 1999), p. 265.

4 Bureau of Labor Statistics, unpublished tabulations from the Current Population Survey, 1999 annual averages.

5 Howard N Fullerton, Jr., “Labor force projections to 2008,” table 3, p. 24.

6 Employee benefits in medium and large private establishments, 1997, USDL 99–02 (U.S. Department of Labor), Jan. 7, 1999.

7 “Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis” (American Association of Retired Persons, February 1999), on the Internet at http://www.aarp.org (visited June 2000).

8 The Current Population Survey (CPS), conducted for BLS by the Bureau of the Census, is a monthly survey of about 50,000 scientifically selected households, chosen to be representative of the civilian noninstitutional population of the United States. Each month, using CPS data, BLS analyzes and publishes statistics on the labor force, employment, and unemployment, classified by a variety of demographic, social, and economic characteristics. For more information on the CPS, see BLS Handbook of Methods, Bulletin 2490 (Bureau of Labor Statistics, April 1997), pp. 4–14. All of the data cited in

this paragraph are from unpublished tabulations from the Current Population Survey, 1999 annual averages.

9 Joseph Quinn, Richard Burkhauser, Kevin Cahill and Robert Weathers, “Microeconometric Analysis of the Retirement Decision: United States,” Economics Department Working Papers No. 203 (Organisation for Economic Co-operation and Development, July 1, 1998), pp. 18–19; also, see OECD’s Economics Department website on the Internet at http://www.oecd.org/eco/eco.

10 BLS uses age-specific employment data from the CPS for two discrete points in time to estimate net separations. The same birth cohort is followed over the course of 5 years as it enters the next older age cohort. The resulting employment change for that cohort determines if there is a net decline in the occupation or net growth for that particular age group. This is repeated for all birth cohorts. The sum of net separations across all age groups determines the number of net separations for the occupation. Permanent exits from the occupation are totaled and reported as net separations and go into the calculation of future replacement needs for each occupation after employment changes are taken into account. For more information on how separation rates and replacement-needs data are calculated, see “Estimating Occupational Replacement Needs,” in Occupational Projections and Training Data, Bulletin 2521 (Bureau of Labor Statistics, May 2000), pp. 71–90.

11 BLS reports on employee benefits in State and local governments, 1994, USDL 95–368 (U.S. Department of Labor), Sept. 14, 1995.

12 Quinn, Burkhauser, Cahill, and Weathers, “Microeconometric Analysis of the Retirement Decision,” p. 19

13 “Ageing Workers,” The Economist, Sept. 4, 1999, p. 65.

14 Frederick W. Hollman, Tammany J. Mulder, and Jeffrey E. Kallan, “Population Projections of the United States, 1999 to 2100: Methodology and Assumptions,” Working Paper No. 38 (U.S. Bureau of the Census, 1999).

Notes