The 2012 to 2022 decade saw the 65- 74 age group grow the fastest ( 3.7 % annually ), more than 4.5x the population growth rate of 0.8 % per year , according to the BLS . By 2032 , these people will move into the 75 and older age group , generating a 3.9 % annual increase .
The population ’ s shift towards older age groups will impact the labor force participation rate . The overall participation rate is a weighted average across all age groups ( e . g ., a group with 100 people will have twice the weight of a group with only 50 people ).
Since only 8.2 % of people 75 years and older participate in the labor force compared to 82.4 % of the prime age group , the size of the 75 and older group will depress the labor force ’ s participation rate .
People ’ s tendency to work later in life will help alleviate some pressure on labor force participation . Here are the key factors contributing to the trend of working into retirement years .
• Adopting a more flexible , phased retirement ( i . e ., gradually reducing working hours ) allows people to continue working in a lower capacity .
• Many people must continue working to support themselves financially , especially as life expectancies increase and retirement savings fail to sustain a comfortable lifestyle .
• Feared Social Security and pension system changes – Social Security benefits may be reduced from 2033 onward unless funding changes – may incentivize people to work longer to maximize retirement benefits .
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• Some people may continue working because they enjoy their jobs and find them fulfilling , contributing to overall life satisfaction and well-being . Alternatively , individuals with physically demanding jobs may retire earlier due to the physical strain and risk of health issues .
• Providing financial support for their families or fulfilling caregiving responsibilities for grandchildren or aging parents can affect how long someone works . Balancing work and family commitments can be difficult , and people may continue working to meet these obligations .
THE POPULATION ’ S SHIFT TOWARDS OLDER AGE GROUPS WILL IMPACT THE LABOR FORCE PARTICIPATION RATE .
The participation rate for people 55 and older has increased over the last few decades and will continue . During the 2022-2032 period , the BLS forecasts that the participation rates for the 55-64 , 65- 74 , and 75 and older groups will increase to 68.4 % (+ 3.2 %), 29.9 % (+ 3.3 %), and 9.9 % (+ 1.7 %), respectively .
The aging population will impact the labor force by reducing participation , especially as Baby Boomers move into the 75 and older age group . However , the trend toward working later in life will help offset some of the pressure .
3 . ADULT LABOR FORCE PARTICIPATION
A third factor impacting the labor force is the downward trend in participation among certain demographic groups .
Men ’ s labor force participation has been declining since the 1970s .
From 2022 to 2032 , the downward trend will continue , with projections showing reductions of 2.5 % ( 25-34 ), 1.7 % ( 35-44 ), and 1.5 % ( 45-54 ), according to the BLS .
Several factors contribute to the lower participation rate , including :
• Middle-skilled jobs are declining due to automation , globalization , and economic shifts .
• The criminal justice system can substantially impact young and disadvantaged men ( and women ), which can decrease employment opportunities .
• Alan Krueger ( 2017 ) suggests that about half of prime-age men not in the labor force may have serious health conditions .
• As women ’ s labor force participation increased , some men struggled to adapt to new expectations at home ( Frisco & Williams , 2003 ), contributing to shifts in men ’ s labor force participation .
Men ’ s declining labor force participation rate reflects the cumulative impact of various factors . As noted earlier , beginning around 2015 , women are increasingly more likely to work .
Women ’ s labor force participation depends on age .
The downward trend shifted upward for all age groups in 2015 . Between 2022 and 2032 , the BLS forecasts mixed participation rates . Women in the 25-34 and 45-54 groups will increase participation (+ 0.6 % and + 1.1 %, respectively ), while the 35-44 group will experience lower participation ( -0.6 %).
Women are more likely to participate in the labor force for these primary reasons .
• The reduced fertility rates help explain why the participation rate of women ages 25 to 34 showed the largest gain among prime-age women since 2015 .
• Healthcare and education fields have grown dramatically and tend to be composed of more women than men .
• There has been a shift towards greater gender equality and recognition of women ’ s rights , increasing opportunities for women to participate in the labor force .