The corporate world is witnessing a seismic shift as a wave of baby boomers are beginning to retire.
Though surpassed by millennials in 2020, baby boomers were the largest living generation for decades. Because of this, baby boomers have held a large share of jobs across the economy. Now, as they begin to trade in briefcases for beach bags, companies are grappling with the reality of a shrinking talent pool.
Labor Pains Ahead
According to projections from the Congressional Budget Office, the potential labor force is expected to grow by just 3.6% between 2022 and 2031. This growth rate is a mere fraction of the growth seen in the 1970s, when baby boomers entered the workforce en masse.
The 1960s saw a labor force explosion of 17%, followed by 19% in the 1970s. The forecast for the current decade is comparatively tame. What’s more, the growth rate is expected to decelerate further to 2.9% in the decade to come.
In other words, today’s tight labor market may be due to more than just the Great Resignation. If those projections are correct, employers could face decades-long stagnation in the job market. Even as younger generations come of working age, the labor pool might barely ripple compared to the wave of previous years, leaving companies to face an era of talent scarcity and increased competition for qualified candidates.
The Silver Lining
As this wave of retirement unfolds, the fight for talent will intensify. Companies will need to up their game in terms of benefits and working conditions to attract a sufficient workforce. Younger workers may also find the corporate ladder less crowded, leading to accelerated promotions as their senior counterparts step down.
This competitive landscape may mean a transformation of the labor market for employers and employees alike. And for the younger generation of workers, more opportunity and benefits could soon wash ashore.
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