10
Alabama Business
Alabama’s Aging
Workforce
The aging of the baby boom generation
is the primary dynamic behind the aging
of the workforce across the United
States. Individuals born to this generation will turn 65 between 2011 and 2029.
Population projections recently released
by the U.S. Census Bureau have the
share of the nation’s population aged 65
and over rising from 12.4 percent in
2000 to 13.0 percent in 2010 and then
escalating to 18.2 percent in 2025. This
trend will be more pronounced in
Alabama, where the 65 and over age
group was already 13.0 percent of the
total population in 2000 and where weak
net in-migration is not bringing many
younger workers into the state. By 2025,
residents 65 and over could account for
close to 20 percent of Alabama’s population. Census projections have the state’s
population growing just 7.9 percent
between 2000 and 2025, adding 352,992
residents. While projections from the
Center for Business and Economic
Research assume more positive migration
trends and forecast the addition of
938,897 people over the 25 years, this
will have little effect on aging trends.
Data recently made available for
Alabama through a partnership between
the Census Bureau and the Alabama
Department of Industrial Relations called
the Local Employment Dynamics (LED)
program allow examination of recent
trends in the aging of Alabama’s workforce by industry for counties, metropolitan areas, and Workforce Investment
areas. The program provides quarterly
workforce indicators by place of residence. Even over the three years from
2001 to 2003, the age composition of
the state’s workforce changed, as the
number of workers under the age of 45
either entering the workforce or moving into Alabama to work did not keep
pace with the ongoing dynamics of
aging. The most rapidly growing group
was workers aged 55 to 64, with the
baby boomers just reaching this age
group in 2001. By first quarter 2004,
the percentage of younger workers had
dropped further to 62.2 percent.
Aging Trends among Alabama Workers
2001 to 2003 (annual averages)
Percent by Age Group
14-44
45-54 55-64
65+
2001
2002
2003
64.7
63.6
62.7
22.1
22.4
22.6
10.4
11.0
11.6
2.9
3.0
3.1
Source: U.S. Census Bureau and Alabama
Department of Industrial Relations, Local
Employment Dynamics Program.
Alabama’s Workforce, First Quarter 2004
Percent of Workers Aged 45 and Over
Across industries 37.7 percent of
Alabama’s workforce was aged 45 or
above. However, the distribution of
workers by age group varies considerably by industry. Educational services
and mining have the largest shares of
older workers (55 and above) at 21.3
and 20.3 percent of employees, respectively. More than half of the workforce in the mining and utilities sectors
falls into the 45 and over age category,
as do 46.4 percent of workers in educational services. The relatively low
wages and available part-time employment in retail trade and arts, entertainment, and recreation may account for
almost 70 percent of workers being
Source: U.S. Census Bureau and Alabama
Department of Industrial Relations,
Local Employment Dynamics
Program.
Age Distribution of Alabama’s Workforce by Industry, First Quarter 2004 (Percent)
Industry
14-24
Manufacturing
8.0
Construction
13.3
Wholesale Trade
8.2
Retail Trade
25.9
Transportation and Warehousing
8.8
Information
12.4
Utilities
3.3
Finance and Insurance
10.5
Real Estate Rental and Leasing
15.4
Professional, Scientific, Tech. Services
10.2
Management of Companies/Enterprises 12.3
Health Care and Social Assistance
10.0
Educational Services
12.4
Arts, Entertainment, and Recreation
27.2
Other Services
13.3
Agric., Forestry, Fishing, and Hunting
10.6
Mining
4.6
Total, All Industries
14.5
25-34
21.9
24.5
23.3
21.3
21.9
28.8
17.4
27.4
23.5
24.8
22.6
25.2
19.7
21.4
20.6
21.2
14.5
22.8
Age Groups
35-44
45-54
28.6
26.0
26.5
21.4
28.2
23.5
20.2
17.4
27.2
24.5
23.8
22.9
26.8
35.5
25.2
21.8
22.5
19.9
26.6
22.2
24.2
23.7
26.0
24.1
20.6
25.1
19.5
15.9
23.8
22.0
26.3
24.1
21.9
37.8
24.9
22.8
55-64
12.8
10.4
12.3
10.3
13.5
9.9
15.4
12.0
12.3
11.9
13.4
11.2
16.8
9.8
13.4
12.6
18.4
11.8
Source: U.S. Census Bureau and Alabama Department of Industrial Relations, Local Employment Dynamics Program.
65+
1.8
3.1
3.6
4.1
3.6
1.4
0.9
2.3
5.5
3.2
3.1
2.8
4.5
5.3
5.9
4.5
1.9
3.1
Share of Workers
Under 45
45+
58.5
40.6
64.3
34.9
59.7
39.4
67.4
31.8
57.9
41.6
65.0
34.2
47.5
51.8
63.1
36.1
61.4
37.7
61.6
37.3
59.1
40.2
61.2
38.1
52.7
46.4
68.1
31.0
57.7
41.3
58.1
41.2
41.0
58.1
62.2
37.7
Alabama Business
younger than 45, including over a quarter under the age of 25.
By county, the share of workers in the 45
and over age group ranged from lows of
33.5 percent in Lee County and 33.6
percent in Shelby County to highs of
48.2 percent in Choctaw and 51.1 percent in Washington County. Many rural
Alabama counties have seen continued
high net out-migration of residents aged
20 to 29, seriously eroding the pool of
younger workers as evidenced by above
average shares of older residents in the
workforce.
Employment versus Retirement. As
retirement nears for the baby boom generation, firms face the prospect of losing
a large base of knowledge and experience
as well as a sizeable part of their workforce. The unknown is whether retirement patterns will change. Retirement
decisions are influenced by a number of
factors, including age requirements for
social security eligibility. Workers turning 62 in 2005 are eligible for reduced
benefits, but must postpone retirement
until age 66 to receive full benefits. This
age will jump to 67 in 2022. Social security now adjusts benefits to be age neutral, so individuals are not penalized for
working past the normal retirement age.
Private defined contribution plans are
also age neutral, but defined benefit
plans generally are not. A mandatory
retirement age is now illegal for most
jobs. Polling suggests, however, that further raising the social security retirement
age would be unpopular, with employees
preferring to set aside more of their
wages for pensions throughout their
work lives than to delay retirement.
Labor force participation of workers 65
and over decreased throughout much of
the twentieth century. However, a gradual increase has been evident since the
mid-1980s. The Bureau of Labor
Statistics (BLS) reported that in 2003 the
labor force included 62.4 percent of 55
to 64 year olds, 27.4 percent of individuals aged 65 to 69, 14.6 percent of 70 to
74 year olds, and 5.8 percent of those 75
and older. Seventy percent of older
workers were employed full time; parttime workers almost always did so by
choice. While it is generally harder for
older workers seeking a job to find one,
only about 2 percent of Americans 55
11
Top Industries in Alabama Employing Older Workers
Second Quarter 2003 to First Quarter 2004 Average Employment
No. of Workers Avg. Monthly
Aged 55 to 64
Earnings
Industry
Professional, Scientific, and Technical Services
Administrative and Support Services
General Merchandise Stores
Ambulatory Health Care Services
Hospitals
Transportation Equipment Manufacturing
Credit Intermediation and Related Activities
Merchant Wholesalers, Durable Goods
Specialty Trade Contractors
Food Services and Drinking Places
Nursing and Residential Care Facilities
Truck Transportation
10,176
7,893
6,818
6,744
5,122
5,099
5,092
5,012
4,805
4,485
4,418
4,354
$5,193
$2,310
$1,890
$4,460
$2,982
$4,702
$3,908
$3,949
$3,198
$1,466
$1,857
$3,048
No. of Workers Avg. Monthly
Aged 65 and over
Earnings
Industry
Administrative and Support Services
Professional, Scientific, and Technical Services
General Merchandise Stores
Food Services and Drinking Places
Ambulatory Health Care Services
Motor Vehicle and Parts Dealers
Specialty Trade Contractors
Merchant Wholesalers, Durable Goods
Nursing and Residential Care Facilities
Food and Beverage Stores
Truck Transportation
Real Estate
3,616
2,815
2,639
1,924
1,804
1,476
1,467
1,429
1,271
1,240
1,071
1,018
$1,431
$3,874
$1,352
$1,083
$3,156
$1,825
$2,389
$2,677
$1,505
$1,199
$2,147
$1,670
Source: U.S. Census Bureau and Alabama Department of Industrial Relations, Local Employment
Dynamics Program, http://lehd.dsd.census.gov.
and over who were not in the labor force
reported that they wanted a job.
Still, in 2002, nearly half of men left the
workforce by age 62 and half of women
by age 60. With the life expectancy of
American women at 80.1 years and men
at 74.8 in 2005, most people can expect
a fairly lengthy retirement. Longer
retirements mean people are at increased
risk for outliving their retirement savings.
As growth in the nation’s workforce
slows, encouraging older individuals to
remain at work longer could benefit individuals, businesses, and the economy.
Later retirement would give people more
income and assets and would also result
in larger contributions to health and
pension systems. The 35.7 percent of
the 55 and over population in the labor
force nationwide will increase to 39.7
percent by 2012, according to BLS projections. This share could be higher if
labor shortages and skill needs lead firms
to offer older workers incentives to
remain on the job.
In the first quarter of 2004, 210,357 jobs
were held by Alabama’s workers aged 55
to 64, while 55,898 were in the hands of
workers who were 65 and older. Older
individuals accounted for 14.9 percent of
the state’s workforce. Those in the 55 to
64 age group were most likely to be
employed in professional, scientific, and
technical service jobs, which offered the
highest average monthly wages among
the top 12 industries for all workers aged
55 and over. Administrative and support
services and general merchandise stores
were major employers of older workers
in Alabama, although earnings were relatively low. Ambulatory health care services are a source of higher wage jobs for
both age groups. Transportation equipment manufacturing; nursing and residential care facilities; administrative and
support services; and professional, scientific, and technical services were the
largest sources of job creation for
Alabama’s older workers, from second
quarter 2003 to first quarter 2004.
Carolyn Trent
[email protected]