The Economic Consequences of an Aging Workforce

Abstract

Between the years of 2002 and 2017, the number of older workers (ages 65 and over) in America’s labor force increased by 57%. In Europe, this same age group has grown from 4.4% to 7% since only 2007. Financial professionals and demographers have both warned the private sector, as well as governments, of their concern over the aging workforce. The consequences could reduce economic productivity, constrain innovation, and slow economic expansion. It is also noted that people normally leave employment at a quicker pace as they get older, making them less likely to later become reemployed. The current issue makes note of these factors and ссровs initiatives to better inform both members of the workforce and those in charge of creating policy. What belongs to the workforce are new expectations? What needs to be known by employers, professions, and jobs adapting with growing frequency? What is the policy needed for the increasing numbers of individuals choosing to work past retirement? There are also special challenges needing to be addressed, including recurrent labor market shifts that have elderly workers exiting lifelong jobs in search of new, less physically intense forms of work. Policymakers at the national level must confront even broader challenges. The essay will explore the economic implications of a workforce that is growing older. Its primary focus is Western societies, with a secondary concentration on the United States and, to a lesser degree, Europe. The paper will begin by outlining the demographics of these societies. The possible scenario is examined with projections of the probable future. The second part addressed the consequences of such an age structure of the workforce, both as they influence the macroeconomy and in more selected industrial branches. The consequences of an older workforce are examined for employers, specifically rising labor costs, changing labor force quality, and a possible increasing shortage of labor. The strategies available to individual companies in anticipation of such developments are discussed. Finally, the possible ways employers’ associations, governments, and labor unions might address the workforce aging are considered. In the case of the latter two, it is attempted to draw from the Japanese experience to offer some selective suggestions for national polices.

 Keywords aging workforce, economic productivity, labor market, workforce demographics, policy implications, labor costs, innovation constraints, employment strategies.