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Citation: Monthly Labor Review Nov 1997, v120, n11, p23(16)
Author: Fullerton, Howard N., Jr.
Title: Labor force 2006: slowing down and changing
composition.(Employment Outlook: 1996-2006) by Howard
N. Fullerton Jr.
------------------------------------------------------------------------
COPYRIGHT 1997 U.S. Department of Labor
As the baby-boom generation ages, the median age of the work force rises to a
new record in 2006; the Hispanic labor force could exceed that of blacks
The labor force, those persons working or looking for work, is projected to
increase by 15 million over the 1996-2006 period, reaching 149 million in
2006.(1) This 11-percent increase is less than the 14-percent increase over
the previous 10-year period, 1986-96, when the labor force grew by 16 million.
For women, the rate of growth in the labor force is expected to slow, but
it will still increase at a faster rate than that of men. (See table 1.) As a
result, women are projected to increase as a portion of the labor force from
46 percent in 1997 to 47 percent in 2006. The number of men in the labor force
is projected to grow, but at a slower rate than that in the past as labor
force participation for men in most age groups is projected to continue
declining. The projected labor force growth will be affected by the aging of
the baby-boom generation, persons born between 1946 and 1964. In 2006, the
baby-boom cohort wi11 be ages 42 to 60, and this age group will show
significant growth over the 1996-2006 period. Race or Hispanic origin groups
have shown--and are projected to continue to show--widely varied growth rates
because of divergent rates of population growth in the past. The Asian and
other group is projected to increase most rapidly. By 2006, the Hispanic labor
force is projected to be larger than the black labor force, primarily because
of faster population growth.
[TABULAR DATA 1 NOT REPRODUCIBLE IN ASCII]
The youth labor force (aged 16 to 24) is expected to grow more rapidly than
the overall labor force for the first time in 25 years. At the same time, the
number of persons in the labor force ages 25 to 44 Is projected to decrease,
as the baby-boom generation continues its inexorable aging.
This article describes the labor force projections, made by the Bureau of
Labor Statistics for 136 age, sex, race, or Hispanic origin groups.(2) For
this article, changes in the labor force are first attributed to changes in
labor force participation rate or population changes and then to the dynamics
resulting from persons entering, leaving, or staying in the labor force;
factors that also lead to changes in the composition of the labor force.
Finally, this article reviews the demographic implications of projected
changes in the age composition of the labor force and population.(3)
The labor force projections are made by combining projections of the
population made by the Bureau of the Census with labor force participation
rate projections made by the Bureau of Labor Statistics.(4) Consequently, the
resulting labor force reflects changes in both projections. Changes in the
labor force are better understood if they are decomposed into the two
components and, therefore, each of these subjects is discussed separately. To
gauge the relative importance of the two components, historically, 81 percent
of labor force growth over the 1986-96 period can be attributed to population
growth and the remainder, to labor force participation growth. For projected
(1996-2006) labor force growth, 89 percent of it can be attributed to
population growth and 11 percent, to an increase in labor force participation
rates.
Population
Population will continue to increase over the 1996-2006 period, but the rate
of growth will be slower than that during the previous 10 years, continuing
the slowing trend since the mid-1970s. (This analysis is based on the Census
Bureau's middle population projection scenario.) Minority groups that have
grown the fastest in the past, Asians and other and Hispanics, are projected
to continue to grow much faster than white non-Hispanics. Youth, ages 16 to
24, will increase as a share of the population, reversing a declining trend
since the mid-1970s. The age group 55 to 64 will increase by 9 million persons
over the 1996-2006 period, reversing a decline that occurred over the 1986-96
period. The 65 and older group will decline as a share of the population,
reversing the trend, of the 1976-86 and 1986-96 periods.
Population growth trends and changes in its demographic composition reflect
births, deaths, and net migration to and from the United States. Table 2
provides four snapshots of the population at 10-year intervals over the
1976-2006 period. Four major demographic events over this period have had a
significant impact on shaping the changes in growth rates of the population
and its composition by age, sex, race, and Hispanic origin: 1) the birth
dearth of the late 1920s and early 1930s, 2) the baby boom of the late 1940s
through the early 1960s, 3) the modest increase in births from the late 1970s
through the early 1990s, and 4) the massive immigration that started in the
1970s and has yet to cease.
The effects of the first event are reflected in the declining number of
persons aged 45 to 54 from 1976-86, aged 55 to 64 from 1986-96, and aged 65 to
74, 1996-2006. The second event can be traced by following the movements of
the baby-boom generation through age groups with the greatest increase in each
period. For example, the 25- to 44-age group increased most significantly over
the 1976-86 period and the 35- to 54-age group had the greatest increase over
the 1986-26 period. For the projected period, 1996-2006, persons aged 45 to 64
are expected to generate the highest growth. The population in the age group
following the baby-boomers shows declining numbers, those aged 25 to 34 from
1986 to 1996 and 25 to 44 in the projection, 1996-2006. From 1996 to 2005, the
number of persons aged 25 to 34 is expected to decline by 3.9 million. This
same age group increased by 9.8 million during 1976-86, when the baby boomers
were that age.
The third demographic event will be reflected in growth of the population
aged 16 to 24 from 1996 to 2006, which will reverse the trend of declining
numbers in this age group over the 1976-86 and 1986-96 periods.
For the fourth event, net immigration has had a significant impact on
population growth over the 1976-96 period and is expected to continue to do so
over the 1996-2006 period. The assumption used by the Bureau of the Census for
the middle population growth scenario used in developing the labor force
projections is that net immigration will be 820,000 each year. Thus, a sizable
proportion of the net population growth over the projected 1996-2006 period
will stem from immigration. The effects of immigration on the demographic
composition of the population can be seen in two ways in table 2. The first is
reflected in the very rapidly paced growth of the Asian and other and Hispanic
populations. Although growth of these groups is expected to slow from
1996-2006, the projected growth rates for these groups are nevertheless much
faster than for other groups. The second way immigration affects the
composition of the population is by age distribution. For example, persons
aged 25 to 34 numbered 32 million in 1976. Ten years later, this same cohort
was even larger, 32.6 million. Similarly, persons aged 25 to 34 in 1986 grew
in number from 41.7 million to 43.1 million 10 years later. The only way these
cohorts could increase is through net immigration. Because the overwhelming
reason for immigration is the opportunity to work, the labor force a,t these
ages is affected significantly by immigration.(5)
[TABULAR DATA 2 NOT REPRODUCIBLE IN ASCII]
The general effect of mortality on the population can be seen by the age
distributions of women and men. However, the longevity of women as compared to
men is also seen clearly in table 2. In 1996, men and women were each 8
percent of the population aged 16 to 24. However, for persons 75 years of age
and older, women made up 4 percent of the population and men, 2.6 percent,
reflecting the higher life expectancy of women.
To summarize the projected population component, the middle growth
population is expected to be larger, to have a lower proportion of
non-Hispanic whites (72 percent, down from 75 percent in 1996), more youth and
more older people. The baby-boom generation would be 10 years older. The
proportion of men and women in the population would not change. An alternative
immigration scenario. Of the various ways the future population could be
different, the possibility of higher immigration is of great interest. BLS
prepared an alternative labor force projection reflecting the high net
immigration scenario from the Census Bureau; the only difference in the
population is the assumption about net immigration, which is 1.4 million
persons annually. This reflects more people entering the United States and
fewer leaving it than those in the middle growth scenario. A summary, provided
in table 3, shows how the labor force projection would differ from the base
projection (or middle growth scenario) if this alternative were used. The
labor force would be, of course, larger, by 5.8 million or 4 percent. This is
a greater increase than the population increase, which is 4.4 million or 2
percent. Because the overwhelming number of persons who come to the United
States do so to work, the Bureau increased the labor force participation rates
for this scenario. The labor force of women would increase somewhat more than
that for men. The increase would be concentrated in the ages younger than 55,
which are the ages of greatest immigration. The proportion of the labor force
under age 25 would increase, the proportion aged 25 to 54 would remain the
same, and the older labor force's share would decrease.
[TABULAR DATA 3 NOT REPRODUCIBLE IN ASCII]
Because immigration to the United States varies significantly by country
and area of the world, so does immigration by race and Hispanic origin. Under
the high immigration scenario, the number of Asians and others would increase
by 13 percent and the number of Hispanics by 8 percent. The number of blacks
in the labor force would also increase by more than the overall rate of
increase in the labor force and the increase of white non-Hispanics would be
less than the over-all increase. As a result, their share of the labor force
would be 1 percentage point less. The black share of the labor force would not
change and the other two groups would increase their share.
Labor force participation rates
The labor force participation or activity rate--a measure of the proportion of
a population group in the labor force--differs by age, sex, race and Hispanic
origin as shown in table 4. Although labor force participation rates for
specific groups change over time, the general overall pattern is fairly
consistent across age groups, between the sexes, and among race and Hispanic
origin groups.
[TABULAR DATA 4 NOT REPRODUCIBLE IN ASCII]
Age. Labor force participation is low for young persons (aged 16 to 24)
because of school or child care responsibilities. It rises during the working
years, ages 25 to 44, and then declines after age 55 as workers retire. The
participation rate for persons aged 16 to 19 in 1996 was 52 percent; for ages
35 to 44, the rate was 85 percent; and for ages 75 and older, the rate dropped
to 5 percent in 1996.
Sex. The labor force participation rates for men are not only higher than
those for women at the aggregated level, but also at every age group. The
trends in the rates for men and women are also different. In general, the
rates for women have been rising, while the rates for men have been declining,
although some age groups go against the general pattern. The difference in
rates by sex also holds across race and Hispanic origin groups, as a later
section shows. Age and sex. Changes over time in the aggregate labor force
participation rates of men have been consistent: down by 1.3 percentage points
for both 1976-86 and 1986-96. The age-specific activity rates of men have been
dropping across age groups with few exceptions. Over the 1976-86 period, only
men aged 20 to 24 increased their participation, and only by a modest
0.6-percentage points. This was not repeated in the 1986-96 period. Labor
force participation rates for men 65 and older increased, starting in 1985.
The rates for men 65 to 74 increased sharply, by 2.3 percentage points,
reversing a trend that dates back to at least 1890.
All other age groups of men decreased their labor force participation in
both periods. For age groups under 55, the drop in participation was greater
in the 1986-96 period than that in the 1976-86 period. There has been little
research on the long-term decrease in participation rates of men aged 25 to
54, a group that our society views as strongly attached to the labor force.
Unlike men, the labor force participation rates of women have been
increasing across age groups, with a few exceptions for young and older women
in one of the two periods. For example, the labor force participation rates of
women ages 20 to 24 increased 3.4 percentage points between 1976 and 1986,
before falling by 1.1 points between 1986 and 1996. Also, the labor force
participation rates of women 65 and older decreased in the 1976-86 period, but
increased in the later period, more than offsetting the decrease. Women aged
25 to 34 increased their participation rates sharply during the earlier
period, by 7.7 points, however, the increase in the 1986-96 period was less
than half that increase. The group of women who increased their participation
the most during the 1976-86 period were aged 35 to 44; their participation
increased almost 10 percentage points. Interestingly, the same group of women
displayed the greatest increase in participation in the 1986-96 period, when
they were aged 45 to 54. Women aged 35 to 54 in 1976 have also increased their
labor force participation rates markedly over the past two decades.
Race and Hispanic origin. Differences in labor force participation by race and
Hispanic origin are usually not as great as that observed for age and sex.
However, changes in labor force rates over time differ among the groups. When
participation rate changes are combined with different patterns of population
growth, substantial differences in the future labor force result.
The data shown in the lower part of table 4 indicate the variation in labor
force participation by race. However, the pattern is complex, as shown in the
following tabulation. The groups are ranked in terms of their labor force
participation rates (1 is highest labor force participation; 4 is lowest):
Total Men Women Rank
White Hispanic Black 1
non-Hispanic
Hispanic White White
non-Hispanic non-Hispanic 2
Asian and Asian and Asian and
other other other 3
Black Black Hispanic 4
First, the rankings by race and by sex are different. Hispanic men have the
highest labor force participation rates, Hispanic women, the lowest. The
composite effect is that Hispanics have the second highest rate of labor force
participation. For blacks, the situation by gender is reversed as men have the
lowest participation rate and women, the highest. Blacks have the lowest
overall rate of labor force participation.
The high labor force participation rate for Hispanic males, in part,
reflects their age structure. Hispanics have a younger population with a
greater proportion at the ages of higher labor force participation. As table 5
shows, the rates for white non-Hispanic white men are higher for all age
groups except at ages 20 and 21. The table also shows that Hispanic men have
proportionally more young men. Given that Hispanic women are also younger than
the other groups, their lower overall labor force participation rate reflects
lower participation at most age groups.
[TABULAR DATA 5 NOT REPRODUCIBLE IN ASCII]
The high labor force participation rates for black women also reflect their
age structure. Relative to white non-Hispanic women, the group of women with
the second highest labor force participation (table 6), black women have lower
participation rates at every age. However, they have a younger population.
That is, more of their population is concentrated in age groups with high
participation.
[TABULAR DATA 6 NOT REPRODUCIBLE IN ASCII]
These examples indicate that age, sex, and race are important in describing
the variations in labor force participation. However, the previous discussion
focused on 1996. Overall labor force participation has been changing
differently for the se groups as well. The following tabulation ranks the
groups by the percentage point change over the 1986-96 period:
Total Men Women Rank
White White White
non-Hispanic non-Hispanic non-Hispanic 1
Hispanic Hispanic Black 2
Black Asian and other Hispanic 3
Asian and Black Asian and
other other 4
For the totals by group, the relative rankings of blacks and of Asians and
others shifted. The labor force participation of all four groups of men
dropped, but those for white non-Hispanic men dropped the least. Other than
this change of place with Hispanic men, the rankings for men did not change.
The rankings of women's change in participation did not seem to be as related
to their rankings of participation levels. The labor force participation of
white non-Hispanic women grew more than that for black women. Hispanic women,
who have lower overall participation than Asian and other women, had a greater
increase in participation.
Projected rate changes
The labor force participation rate is projected to rise by less than a
percentage point between 1996 and 2006. The increases in the participation
rates are expected to be greatest for the 45- to 54-age group, made up of the
baby-boom generation. As in 1996, however, the ages of peak labor force
participation should be 35 to 44. Thus, the baby-boom generation's aging by
itself would act to lower overall participation. For both sexes combined,
labor force rates are projected to increase for all groups over age 25. For
the youth, labor force participation is expected to drop sharply at ages 20 to
24.
The overall labor force participation rate of men is projected to drop by
1.3 percentage points, as it did in each of the past two decades. This
constant change is fortuitous because the overall rate is a summary of the
changes in the age composition of the population and changes in labor force
participation for each age as well as the increased race and Hispanic
diversity of the male population. For each of the three 10-year periods
analyzed, the pattern of labor force change by age is different. For men
younger than age 45, labor force participation is projected to drop, while for
men in the 45 and older group, those aged 55 to 64, are projected to have the
greatest increase.(6) The decrease in labor force participation for men aged
20 to 24 is projected to accelerate, continuing recent trends. For all other
groups with declining participation over the 1986-96 period, the amount of
decrease is expected to be less.
The increase in the labor force participation rate of women in the past has
displayed a pattern of slower increases in the more recent period. For the
1996-2006 period, labor force participation rate growth is projected to
continue slowing. Except for teenagers, all age groups of women are expected
to increase their presence in the labor force. Those aged 45 to 64 in 2006 are
the same cohort that had the greatest increase in labor force participation in
the past--25 to 44 in 1976-86 and 35 to 54 in 1986-96--are expected again to
have the greatest increase in the future. The older part of the group, those
55 to 64 in 2006, will be past the years of peak labor force participation and
their labor force rate will decline to 56 percent from 75 percent in 1996
(although showing an increase in participation of 6 points from persons that
age in 1996).
The rankings of labor force participation by race or Hispanic groups in
2006 are expected to be the same as in 1996, except for black women, whose
participation rates are projected to be lower than white non-Hispanic women's
rates--a result of the aging black population. The overall labor force
participation rate of black men is projected to increase, also an artifact of
their age distribution. For all age groups of blacks except 70 to 74, labor
force participation rates are projected to drop.
The overall participation of Hispanic women is projected to increase
significantly, by 3.8 percentage points, but not enough to be higher than that
of the Asian and other women in 2006. Again, white non-Hispanic women are
expected to increase their labor force participation rates the most, though
not as much as over the 1986-96 period.
Historical changes in the labor force
Labor force growth over the 1986-96 period was significantly slower than the
rate of growth over the 1976-86 period, when larger numbers of the baby
boomers caused rapid rates of labor force growth and large absolute growth.
The labor force grew by 22 million between 1976 and 1986, compared with 16
million over the 1986-96 period (table 7). The male labor force, because of
the entry of the baby-boom generation, grew by 14 percent over the earlier
period. This rate dropped to 10 percent between 1986 and 1996. Women increased
their numbers by almost one-third over the 10-year period 1976-86. This growth
rate was cut in half over the latter period.
[TABULAR DATA 7 NOT REPRODUCIBLE IN ASCII]
Age. Labor force changes by age over the 1976-96 period were largely
influenced by the baby-boomers and the birth dearth group of the thirties.
Between 1976 and 1986, the baby boomers were in the age groups that grew
rapidly. Those aged 25 to 34 increased by 10 million and those 35 to 44, by
9.9 million. For the next decade, the two groups with the greatest change were
aged 35 to 44 and 45 to 54, with 9.3 million and 8.6 million added workers.
Growth of the labor force by the baby boomers was affected not just by
population growth, but by growth in the labor force participation rate for
women.
By contrast, the age group 45 to 54 barely grew during the 1976-86 period;
over the next 10 years, the 55 to 64 group added few members. The modest
changes reflect the passage of the birth dearth generation. The labor force
participation rates of this cohort increased, offsetting population decreases.
Sex. Labor force growth for men was less than that for women in both the
1976-86 and 1986-1996 periods whether measured by numbers of persons or rates
of change. Although population growth for both sexes was similar, labor force
participation rates for men declined, and increased for women.
In contrast to the general pattern, labor force participation rates of
young women, 16 to 24 years of age dropped over the 1986-96 period. Because
the population of women that age also dropped, the labor force dropped
sharply. The labor force of young women dropped slightly more than that for
young men (10 percent, versus 9 percent). For all other groups of women,
activity rates increased and, except for the birth dearth group, so did
population.
Race and Hispanic origin. White non-Hispanics were the largest group in the
labor force in 1986, accounting for 80 percent of the total. However, from
1986 to 1996, this group had the lowest growth rate, 0.7 percent a year, among
the groups analyzed. The smallest group, Asians and others had the fastest
growth rate. Interestingly growth rates were inversely related to ranking by
size, an) the rankings were the same for men and women. Asian and other women
and men each were the fastest growing labor force group over the 1986-96
period. All minority groups increased their share of the labor force.
Hispanics increased from 7 percent to 9.5 percent, Asian and others increased
their share from 3 percent to 4.3 percent. Blacks, whose growth rate was .5
percentage point greater than the overall labor force growth rate, increased
their share from 10.7 percent to 11.3 percent. The remaining group, white
non-Hispanic, decreased their share of the labor force from 80 percent to 75
percent. The pattern of labor force growth rates is more reflective of changes
in the population than the changes in labor force participation rates, which
grew most rapidly for white non-Hispanics than other groups.
Projected changes in the labor force
With population expected to continue increasing at a slower rate, the labor
force also is projected to grow more slowly over the 1996-2006 period than it
did over the 1986 to 1996 period.(7) The labor force itself will change in
composition as well, as various age, race or Hispanic groups, and men and
women will experience change at different rates.
Age. The youth labor force (aged 16 to 24) is projected to increase by 3.2
million, reversing the drop of the earlier period. The 2006 youth labor force
is projected to be larger than those in 1976, 1986, and 1996. For the labor
force aged 25 to 54, the story is different. The projected increase of 4.7
million is about a fourth of the 1986-96 period. Those aged 25 to 34, whose
number decreased over the 1986-96 period by three quarters of a million are
projected to drop a further 3 million. The 35- to 44-age group, which
increased by 9.3 million over the 1986-96 period, is projected to drop by 1.1
million. Only the 45- to 54-age group is expected to increase in size; but
even this group, made up of the younger members of the baby-boom generation,
is expected to increase at a much slower rate than earlier. The smaller,
younger age groups are those following the baby-boom generation.
The labor force of older workers--identified as having the fastest rates of
population growth and the greatest increases in labor force participation--is
expected to grow by 7 million. Within that group, the 55 to 64 group is
expected to add 6.6 million. Although the population of the 65- to 74-age
group (the birth dearth of the thirties) is projected to drop, this cohort is
expected to increase their labor force size due to rising labor force
participation rates.
Sex. The labor force of men is projected to grow by .8 percent annually, while
that of women is,expected to grow by 1.3 percent. These represent slowing from
the 1986-96 period, because population is expected to grow more slowly and
because women 's labor force participation rates are expected to increase more
slowly. Women's share of the labor force is projected to increase from 46
percent to 47 percent.
Race and Hispanic origin. The Hispanic population has been growing and is
expected to continue to grow faster than the black population, as a result,
the Hispanic labor force will eventually be larger than the black labor force.
The current projection indicates that this will occur in 2006. Given that
projections have errors and the possibility that the method for enumerating
race and Hispanic origin could change, the specificity of the year should be
viewed with caution.(8) However, by the middle of the next decade, the
Hispanic labor force should exceed that of blacks.
The Asian and other group's population is also growing rapidly. However,
they are expected to remain the smallest of the four labor force groups well
beyond 2006. Similarly, the white non-Hispanic group, which is growing slowly,
will remain the largest group. They made up 80 percent of the labor force in
1986; their 2006 share is expected to be 73 percent. Their 2006 labor force
would be 14 million larger than that in 1986. The remaining three groups are
expected to add 7 million persons to the labor force over the same period.
White non-Hispanics will remain by far the largest group of the labor force
for years after 2006.
Dynamics
>From 1996 and 2006, the dynamics of the labor force change emerge from three
distinct groups: entrants; those who will be in the labor force in 2006, but
who were not in it in 1996; leavers, those who will exit the labor force after
1996 and before 2006; and stayers, those who were in the labor force in 1996
and will remain through 2006.(9) To the extent that the demographic
composition of labor force entrants between 1996 and 2006 is different from
the composition of those now in the labor force, the 2006 labor force will be
different from today's labor force. But the labor force also is affected by
the demographic composition of those leaving. Thus, the labor force of 2006
may be regarded as consisting of the labor force of 1996, plus the entrants,
less the leavers.
BLS projects that between 1996 and 2006,40 million workers will enter the
labor force and 25 million will leave. (See table 8.) These figures compare
with 34.6 million entrants and 18.4 million leavers over the 1986-96 period.
The entrants are projected to be almost equally women and men. In the earlier
period, entrants were more likely to be men. The leavers are more likely to be
men, because the male labor force is older than that of women, but the vast
difference in share exhibited for the 1986-96 period is projected to narrow
somewhat.
According to these projections, by 2006, 20 million men will have joined
the 1996 labor force of 72.1 million, and 13.8 million men will have left the
labor force, resulting in a labor force of 78.2 million men in 2006.
Similarly, 19.7 million women are expected to enter the labor force over the
period 1996-2006, while 10.9 million women are projected to leave. The
relatively fewer women leaving the labor force would raise their share of the
labor force from 46.2 percent in 1996 to 47.4 percent in 2006.
BLS is projecting that the number of entrants over the 1996-2006 period
will be larger than the 34.6 million who entered during the 1986-96 period.
The number projected to leave the labor force is expected to increase by 34
percent. Slightly more men than women entered the labor force, 52 percent
compared with 48 percent, in the 1986-96 period. In the 1996-2006 period,
women and men are expected enter in nearly equal numbers.
Race and Hispanic origin. The largest share of the 1996 labor force--75
percent--was made up of non-Hispanic whites. Three-fifths of the population
expected to enter the labor force between 1996 and 2006 are projected to be
non-Hispanic whites, less than their share over the 1986-96 period. These
proportions are smaller than their share of the work force, reflecting this
group's lower population growth. As a result of the 24.2 million non-Hispanic
whites entering the labor force, and the 17.0 million leaving over the
1996-2006 period, the share of non-Hispanic whites in the labor force is
projected to be 73 percent in 2006--a drop of 3 percentage points and down 7
percentage points from 1986. In the 1986-96 period, white non-Hispanic men
supplied the most entrants; 34 percent. More striking, they supplied most of
those leaving; 52 percent.
The labor force of white non-Hispanics is projected to grow 0.7 percent per
year, slower than the overall labor force. The slower growth reflects little
migration of this demographic group to the United States and lower birth rates
in the past, compared with other population groups. This results in relatively
fewer labor force entrants and relatively more labor force leavers, a
reflection of the aging of the white male labor force. White non-Hispanic
women are projected to increase their participation more than any other group,
but this faster growth rate is not enough to offset the slow growth in the
non-Hispanic population of only 0.6 percent yearly. White non-Hispanic men are
projected to have the least drop in labor force participation of any group of
men.
Blacks, the second largest group in the 1996 labor force, made up 11.0
percent of the labor force. (This number reflects an adjustment, placing
Hispanic blacks with Hispanics rather than with non-Hispanic blacks.) Blacks
are projected to add 6.2 million workers to the labor force between 1996 and
2006--16 percent of all new entrants during the period. This is more than the
number that entered between 1986 and 1996. With the 5.0 million black
non-Hispanics projected to leave the labor force over the period, the group
will increase in number, and by 2006, their share of the labor force is
expected to be 10.7 percent, down from 11.0 in 1996. The black labor force is
projected to grow slightly faster than the overall labor force because of
their higher than average population growth resulting from higher than average
birth rates and immigration.
In 1996, Hispanics (of all races) were the third largest labor force group,
with 12.8 million workers representing 9.5 percent of the labor force. Because
of their higher levels of immigration, some 5.9 million Hispanics are
projected to enter the labor force during the 1996-2006 period. Only 1.2
million Hispanics are projected to leave the labor force (reflecting their
relatively young age composition), so the number of Hispanics in the labor
force is projected to grow by more than 4.6 million. By 2006, the Hispanic
labor force is projected to be greater than the black non-Hispanic labor
force.(10) The Hispanic labor force is projected to grow 3.1 percent annually,
increasing to 17.4 million persons in 2006. The Hispanic share of the labor
force is expected to increase more than that of any other demographic group
because of overall population growth--from higher births and increased
immigration--and because of increases in the participation rate of Hispanic
women.
Currently, the smallest racial group in the labor force is Asian and other.
About 3.3 million members of this group will enter the labor force during the
1596-2006 period, about the size of its 1986 labor force. Because relatively
fewer workers of this group are projected to leave the labor force over the
period, the group is projected to increase by 41 percent. The number of Asians
and others in the labor force is projected to grow 3.5 percent annually.
Increases in the number of Asians and others in the labor force reflect their
continued high immigration. Decreases in labor force participation by men
offset a portion of the increase.
Implications of the aging labor force
Median age. The age of the labor force can be measured in various ways; one is
median age. As the baby-boom generation entered the labor force, the median
age of the labor force decreased; once in the labor force, this large group
can only age, so the median age has been rising. The median age of the labor
force was 40.5 years in 1962, (the highest level attained before the baby
boomers entered the labor force), it dropped steadily until 1980, and since
then, it has been rising. With the population projected to continue aging as
rapidly as in the past, the median age of the labor force in 2006 is projected
to just exceed the level reached in 1962. (See table 9.)
For much of the 1962-96 period, the male labor force has been older than
the female labor force. This age difference reflected a pattern of women
entering the labor force, then leaving for a period after childbirth. The ages
of the male and female labor force are projected to diverge, reflecting the
higher participation of older women, the slowing in participation of younger
women, and the withdrawal of older men from the labor force.
Table 9. Median ages of the labor force, by sex, race, and Hispanic origin,
selected historical years and projected 2006
Group 1962 1966 1976 1986 1996 2006
Total 40.5 40.3 35.3 35.3 38.2 40.6
Men 40.5 40.4 36.0 35.6 38.2 40.5
Women 40.4 40.1 34.4 34.9 38.2 40.8
White 40.9 40.3 35.6 35.5 42.5 41.2
Black(1) 38.3 31.2 33 1 33.8 36.3 38.2
Asian and
other(2) (3) (3) 32.4 35.5 36.9 38.4
Hispanic
origin(4) (5) (5) (5) 32.6 34.1 36.4
(1) For 1962 and 1966 data are for black and other.
(2) The "Asian and other" group includes Asians and Pacific Islanders and
American Indians and Alaskan Natives. The historic data are derived by
subtracting "Black" from the "Black and other" group; projections are made
directly.
(3) Data for Asian and other are not available before 1972
(4) Persons of Hispanic origin may be of any race.
(5) Data for Hispanic origin are not available before 1980.
Historically, white participants in the labor force have been older than
the rest of the labor force. This is projected to continue, with the
difference reaching 0.6 year in 2006. Compared with the whites, black and
Hispanic groups are younger, reflecting their higher birth rates, and as a
result, youth claim a somewhat larger share of their respective populations.
Black participants in the labor force have been about 1.5 years to 2.5 years
younger than the overall labor force; this age gap is projected to continue to
2006. The group of Asians and other participants in the labor force have been
slightly younger the) the overall labor force, but by 1996, this group was
more than 1 year younger. This is expected to continue by 2006. Hispanic
participants generally have been younger, due to their higher fertility rate.
This group is projected to continue having a lower median age than the overall
labor force, but it is projected to age from a median of 34.1 years in 1996 to
36.4 years in 2006, reflecting the aging of earlier immigrants. The median age
of all race and Hispanic groups is expected to increase between 1996 and 2006.
Age composition. There are other ways to look at the age structure of the
labor force. For example, if the labor force is aging, the proportion of those
65 and older in the labor force would be increasing and the proportion of
those under 25 would be decreasing. Table 10 presents such information for the
population and labor force aged 16 and older, by sex.
[TABULAR DATA 10 NOT REPRODUCIBLE IN ASCII]
From 1976 to 1986 and to 1996, the proportion of those 65 and older in the
population increased, but by 2006, it is expected to decrease slightly. The
proportion of persons under 25 (specifically, 16 to 24) decreased between 1986
and 1996. However, the proportion is expected to increase by 2006. The
population is getting older, based on the median age, and younger, based on
proportions! For each successive decade, the proportion of 25- to 39-year olds
has decreased or is expected to decrease.
Looking at the composition of the population by sex, the same general
patterns hold. However, the male population has proportionately more youth
than the female population, reflecting their higher proportion of births and
slightly higher current immigration. Relatively more women are in the older
ages. This does not show the relative sizes of women and men's population
groups, as does table 2. It only indicates that the women's population is
older, that is, it has a greater share of their population in the older ages.
The age structure of the labor force, 16 and older is different from that
of the population, 16 and older. Fewer persons in the labor force are 65 and
older. The youth labor force is also a smaller share of the labor force than
of the population. Of course, those aged 25 to 64 must be a greater share.
However, between 1996 and 2006, the youth share of the labor force is
projected to increase. The baby-boom generation may be followed by observing
that in 1976, they were in the youth group, but by 1986, the share of the
labor force aged 25 to 39 had increased by 8 percentage points. By 2006, this
age group's share of the labor force should be less than it was in 1976. In
1996, 45 percent of the labor force was age 40 or older; by 2006, more than
half the labor force will be in this age category.
Historically, the female labor force has been young. In 1976, women 16 to
24 were 27 percent of the labor force, greater than the share for men. The
share of the female labor force aged 25 and older was thus less. Their share
appears to be evenly divided between the age groups 25 to 39 and 40 to 64, as
the proportions of women 65 and older in the labor force were comparable to
the figures for men. By 1996, these differences had narrowed significantly.
However, the differences in share at the older ages had increased and are
projected to continue increasing. The proportion of men 65 and older increased
between 1986 and 1996 and is projected to increase, while the share for women
declined and is expected to continue decreasing.
Economic dependency
In 1987, for the first time ever, more Americans were in the labor force than
were not. This status is projected to prevail throughout the entire projection
period, with the proportion of those not working to those who are working
reaching a low of 92.5 per 100 workers in 2006. This measure of dependency is
the number of those in the total population (including Armed Forces overseas
and children) who are not in the labor force per 100 of those who are in the
labor force. (See table 11.) For every 100 persons in the 1996 labor force,
about 96 were not. Of this group, about 45 were children, 28 were 16 to 64
years of age, and 22 were older than 64.
Table 11. Economic dependency ratio, 1975-96 and projected 2006, by age
[Per hundred in the labor force]
Group 1975 1980 1985 1990 1996 2006
Total population 126.3 108.9 103.3 98.3 95.5 92.5
Under 16 61.4 50.7 47.3 45.8 45.3 42.4
16 to 64 44.2 37.4 34.2 30.5 28.0 29.1
65 and over 20.7 20.8 21.8 22.1 22.1 21.0
Number of persons
in the labor force
per those 65 and
over not in the
labor force 4.8 4.8 4.6 4.5 4.5 4.8
Upon examining these ratios (the economic dependency ratio), for various
age groups, one can see that this drop is attributable to the change in the
number of children. As the number of births diminished and the baby boom moved
to ages older than 16, the total economic dependency ratio dropped. Most of
the 31-percentage point drop for the total population between 1975 and 1996
was because of the decline in the number of births. The portion of the ratio
attributed to children is projected to continue dropping, despite somewhat
higher fertility. The remainder of the historical drop is attributable to
higher labor force participation for women aged 16 to 64. The ratio for the
16- to 64-age group dropped 16 points, from 44.2 in 1975 to 28.0 in 1996. This
ratio is projected to increase, reflecting the projected decrease in
participation of men and of young women aged 16 to 24.
The part of the dependency ratio that has been steadily increasing is the
portion attributable to older persons. In 1975, this was by far the smallest
part of the dependency ratio, and by 2006, is expected to still be the
smallest proportion. However, between 1975 and 1990, the older persons'
dependency ratio grew 1.4 percentage points; it is projected to fall again, to
21.0 older retired persons per 100 workers in 2006--a level below that of
1985. With what we now believe to be the composition of the population after
2006, it is clear that the overall dependency ratio will rise some time after
2010; but it may never reach the levels of 1975.
For much of the open discussion about our aging population, the dependency
ratios in table 11 for the 65 and older population has been expressed, not as
nonworkers per worker, but as workers per nonworker. For the 65 and older
population, that number is shown in the last line of the table. It shows
remarkable stability over the 1975-2006 period.
The 2006 labor force is expected to have a greater proportion of women and
Hispanics than the 1996 labor force.
Between 1996 and 2006, 40 million workers are projected to enter the labor
force, 25 million are expected to leave and 109 million workers are expected
to remain in the labor force. As a result, the labor force in 2006 would be
149 million, up 15 million from the 1996 level. This represents a rate of
growth as slow as the growth experienced in the 1950s.
Footnotes
(1) The civilian labor force consists of employed and unemployed persons
actively seeking work, but does not include any Armed Forces personnel.
Historical data for this series are from the Current Population Survey,
conducted by the Bureau of the Census for the Bureau of Labor Statistics.
(2) The race and Hispanic origin categories correspond to those promulgated in
the Office of Management and Budget Directive No. 15, 1978. These categories
are being reviewed by OMB, and a new directive could be issued between the
time these projections were completed and their publication. The range of
alternatives being considered could change the relative sizes of the black and
Hispanic populations and labor forces.
(3) The projections presented in this article replace those described by
Howard N Fullerton, Jr., in "The 2005 labor force: growing, but slowly,"
Monthly Labor Review, November 1995, pp. 29-44. BLS routinely reviews and
revises its economic and employment projections every 2 years.
(4) "Population Projections of the United States, by Age, Sex, Race, and
Hispanic Origin: 1995 to 2050," Current Population Reports, Series P-25, No.
1130 (Washington, Bureau of the Census, 1995). The population projections are
based on estimates derived from the 1990 Census of Population and reflect
findings from the 1990 Census of Population. They are not adjusted for the
undercount.
(5) For a recent discussion of migration theories, see Douglas S. Massey,
Joaquin Arango, Graeme Hugo, Ali Koueouci, Adela Pellegrino, and J. Edward
Taylor, "Theories of International Migration: A Review and Appraisal,"
Population and Development Review, September 1993, pp. 431-66.
(6) The change in the population groups, 69 to 74 and 75 and older cause the
increase in participation for the entire 65 and older group to be less than
that for either age group.
(7) The projected labor force numbers are consistent with the new population
controls introduced in the January 1997 Current Population Survey. These new
controls had lime impact on the size of the aged 16 and older population, but
within race groups the change shifted populations from non-Hispanic to
Hispanic. For further information, see "Revisions in the Current Population
Survey Effective January 1997," Employment and Earnings, February 1997, pp.
3-5.
(8) For the most recent evaluation of BLS labor force projections, see Howard
N Fullerton, Jr., "An evaluation of labor force projections to 1995," Monthly
Labor Review, September 1997, pp. 5-9.
(9) Entrants and leavers are computed by comparing the labor force numbers for
birth cohorts at two points in time. If the labor force numbers at the second
point are larger, the difference is termed the "entrants." If the labor force
numbers at the second point are smaller, the difference is the "leavers."
These concepts understate the numbers likely to enter and leave the labor
force over the period covered by the two points in time, but are still a valid
comparison. As with measures of geographic mobility, which also do not measure
all the changes over a period, we do not call these net entrants and leavers.
For a further discussion of the methods, see Howard N Fullerton, Jr.,
"Measuring Rates Of Labor Force Dynamics," Proceedings of the Social
Statistics Section, American Statistical Association, 1993.
(10) In table 8, all racial and Hispanic origin groups have been adjusted to
place Hispanics together. This is different than how numbers are presented in
the other tables, specifically table 1.
Howard N Fullerton, Jr. is a demographic statistician in the Office of
Employment Projections, Bureau of Labor Statistics.
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