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The Changing Face of Retirement The Graying of the Work Force: Economic Outlook and Demographics

The Changing Face of Retirement The Graying of the Work Force: Economic Outlook and Demographics Sean P. MacDonald Labor Market Analyst – Hudson Valley Region NYS Department of Labor, Division of Research & Statistics Friday, May 20, 2005.

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The Changing Face of Retirement The Graying of the Work Force: Economic Outlook and Demographics

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  1. The Changing Face of Retirement The Graying of the Work Force: Economic Outlook and Demographics Sean P. MacDonald Labor Market Analyst – Hudson Valley Region NYS Department of Labor, Division of Research & Statistics Friday, May 20, 2005

  2. Why the graying of the workforce over the next 15 to 20 years? • ----------------------------------------------------------------------------- • An expanding job market in Westchester County and the surrounding region will continue to create favorable job opportunities for the work force, including older workers. • The best job opportunities will be in a diversity of occupations which can draw on the experience and knowledge of older workers. • The trend toward older workers remaining in the work force beyond the traditional average retirement age of 55 to 60 is expected to grow in the years ahead. • Generational issues are also more likely to influence people to remain in the work force. • As the economy expands and the rate of growth of the post-baby boom labor force slows, demand for workers will accelerate, creating more opportunities for the older workforce. • The 65 and older population is projected to be the second fastest growing age group in Westchester County, and the fastest growing in both New York State and the United States through 2020.

  3. I. The current labor market and projected labor market trends in Westchester County and the Hudson Valley Region

  4. The Westchester-Rockland-Putnam labor market area currently accounts for an estimated 62 percent of all jobs in the 7-county Hudson Valley Region. • Westchester County accounts for about 50 percent. • Over the past year, the 3-county area added 9,000 new jobs. • The gains were strong throughout almost all major industries. Employment by industry in thousands

  5. Growth industries in Westchester, Rockland & Putnam Area since April 2004 • Educational and health services +3,200 • Government +2,700 • Professional & business services +2,600 • Financial activities +1,800 • Trade, transportation & utilities +800 • Leisure & hospitality +600

  6. Nearly half of the region’s projected top 25 fastest growth occupations through 2010 will be in health and educational services and in computer technology. • These occupations will span a range of skills from entry level to those requiring advanced education and training.

  7. Among the top occupations with the most openings, entry-level occupations with high turnover rates dominate; however they will also include demand for skilled professionals such as registered nurses and elementary school teachers

  8. So there will be good job opportunities in a wide variety of occupations requiring a range of skills, expertise and education. • Based on the region’s projected occupational growth through 2010, the need for workers will expand by 10.7 %, overall, with average annual openings at 33,000 per year for all occupations. • Occupations with the projected strongest need will include those in: • Business and financial activities • Community & social services • Education • Health care practitioners and technicians • Health care support • Personal care & service • Construction

  9. …And many of these are occupations that will grow as a result of demographic changes, including: • The aging of the population and increasing life expectancy. • Rapid overall population growth among those over age 65. • Slower growth in the labor force as the baby boom generation moves increasingly into retirement and a slowing of growth rates among younger sectors of the population.

  10. II. Demographic Trends

  11. At the same time, these demographic changes are expected to present increased job opportunities and demand for older workers. …And increasing numbers of older workers will likely remain in the work force as many want to or need to work past the traditional retirement age: • Growing demands on baby boomers to care for aging parents as well as younger to college-age children. • Fewer workers being offered traditional retirement packages.1 • Erosion of 401K retirement savings after the stock market decline after 2000, and declining confidence in financial stability in retirement. • Declining birth rates from the mid 1960’s through the late 1970’s which will mean relatively fewer younger workers available to move into positions held by older workers.2 • The increasing value of older workers’ knowledge and skills will make them an increasingly valuable asset to employers. -------------------------------------------------------------------------------------------------- 1. The New Work Force: Age and Ethnic Changes. Judi L McClellan and Richard Holden. 2. A Century of Change: The U.S. Labor Force, 1950 – 2050, Miltra Toosi, Monthly Labor Review, May 2002.

  12. A recent study found that 26.9 percent of workers surveyed were not fully confident about being able to meet their income needs in retirement, and 16 percent were concerned that retirement may not be financially feasible when they reach retirement age. • Thus, approximately 43 percent of workers expressed some degree of discomfort about being able to meet their anticipated financial needs in retirement. Source: “Workers Retirement Plan Preferences and Expectations,” Watson Wyatt, Retirement AttitudeSurvey, March 2005.

  13. Among those workers surveyed, one-third indicated they had an employer-paid pension plan, while another third had a 401K plan. • Close to 10 percent indicated plans to work in their retirement years1. • Based on these kinds of findings, it can be expected that increasing numbers of workers will work past the traditional retirement age. 1Watson Wyatt, March 2005.

  14. Flexible work arrangements may become increasingly common as employers seek to retain qualified older workers. • One recent study found that the primary goal of employers who use phased retirement programs is to keep skilled and experienced employees in the work force. • While such plans gained attention in the late 1990’s as the nation faced record low unemployment rates, there are indications that such plans may gain in popularity as labor shortages tied to slowing population and labor force growth rates begin to be felt in the coming years. • These kinds of plans are characterized by flexible work arrangements, job sharing and telecommuting in an effort to retain skilled workers. Source: Watson Wyatt, “Phased Retirement Programs Evolving as a Retention Strategy,” News Release, Feb. 21, 2001.

  15. III. Population and labor force growth projections

  16. The previous chart from a recent Monthly Review study, projects a leveling off and gradual decline of population and labor force growth rates after 2010. Source: Monthly Labor Review, May 2002.

  17. As population growth and labor force growth rates begin to slow over the coming decade… • … the expertise of older workers will be in increased demand.

  18. Population projections by age, 2000 – 2020: Percent change In Westchester County, Hudson Valley Region, New York State and the U.S. The projected fastest growth age group in the region and in NY State overall through 2020 is those 65 years and over. In Westchester County, the 65+ age group will be the second fastest growing.

  19. By 2020, the population aged 65 and over will represent more than 16 percent of Westchester County’s population, reflecting a similar trend both state- and nationwide. Sources: U.S. Bureau of the Census, population projections based on Census 2000; Cornell University, New York State Statistical Information System, Projection data by county.

  20. Those 65 years and over will – by 2020 - be today’s baby boom generation. • The second fastest growth segment in Westchester and the Hudson Valley - those aged 20 through 24 – represent the aging of the 0 to 19 age group we saw between 1990 and 2000. In Westchester County and the region, this age group grew more than + 20 percent during this period. • However, the projected rate of growth for this younger worker segment will be significantly lower than that for those 65 and over (though in Westchester, they will be fairly close – primarily because the county’s population growth overall will be the slowest of all the counties in the region). • Thus, job opportunities are expected to be increasingly favorable for older workers.

  21. Population projections by age: 2000 – 2020 Percent change for HV counties and New York State Source: Cornell University, New York State Statistical Information System, Projection data by county.

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