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November 2007, Vol. 130, No. 11
Labor force projections to 2016: more workers in their golden years
For the past several decades, the U.S. labor force has consistently posted high growth rates. According to the Bureau of Labor Statistics (BLS), these elevated rates are likely to be replaced by a much lower growth rate over the 2006–16 decade, principally for two reasons: the baby-boom generation is aging and retiring, and the labor force participation rate of women appears to have peaked.
In the second half of the 20th century, labor force growth was especially rapid as the baby-boom generation reached working age and entered the labor market. At the same time, the labor force participation rate of women expanded rapidly. Both trends have run their course. However, due to significant increases in both the participation rate and the share of the older labor force, the growth of the older labor force in the next decade will be much higher than the labor force growth of the other age groups.1
The civilian labor force is projected to increase by nearly 13 million, reaching 164.2 million in 2016. This 0.8-percent annual growth rate is lower than the 1.2-percent annual growth rate registered during the previous 10-year period. (See table 1.) In addition, the labor force will continue to age: the 55-years-and-older workforce is expected to grow by 46.7 percent over the projection period, more than 5 times the growth projected for the aggregate labor force.
The BLS projects that the labor force participation rate of the U.S. population will be 65.5 percent in 2016. After increasing for more than 50 years, the proportion of the population that participates in the labor force reached an all-time high of 67.1 percent in 1997.2 The participation rate continued its high growth until 2001, when the U.S. economy entered a recession, causing the rate to fall. Unlike its behavior during previous downturns, in which it would soon return to the prerecession level, the labor force participation rate continued to decline long after the 2001 recession was over. After dropping to 66.0 percent in 2004 and 2005, the participation rate had a small increase of 0.2 percentage point in 2006.
This excerpt is from an article published in the November 2007 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 The older age group is defined as all those 55 years and older.
2 The labor force consists of all employed persons and unemployed persons actively looking for a job. The labor force participation rate is the ratio of the labor force to the civilian noninstitutional population.
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