A summary of economic events, data, and trends published by the Community Research Institute. The Workforce Without the Baby Boomers

Transcription

1 Allen County Insight A summary of economic events, data, and trends published by the October 2014 On the web: In this Issue Focus on... Baby Boomers and Labor Force Also... Employment Wage and Income Labor Force Review From the Director Labor Force Participation and the Baby Boomers CRI Staff Ellen Cutter Valerie Richardson Ashley Wierzbinski Allen County Insight is brought to you by The Community Research Institute at IPFW with the support of the Allen County Commissioners Introduction In this issue, the quarterly focus takes a look at labor force participation, with the introductory article on population projections, especially in the working age groups populations and the impact of Allen County s Baby Boomers. This newsletter is also available on our website: The Workforce Without the Baby Boomers In this issue s Director s Corner, Ellen has discussed some of the changes seen in the last ten years in the labor force participation rate. Without claiming any expertise in demography or population projections, this section attempts to explore what some of these changes may mean to Allen County s workforce. We have all heard that the Baby Boomers (i.e. those born between 1946 and 1964) represent a large percentage of the population and their actions have always had a significant influence on the economy, particularly housing, schools, purchasing power, and so on. Since the Boomers began to turn 65 in 2011 and reach traditional retirement age and since the youngest boomers turned 50 this year, what might this mean for Allen County? As the chart to the right illustrates, in sheer numbers, the age group 65 and over is projected 1 to increase over 42,000 in 2010 to almost 59,000 by 2020-just 6 short years away- an increase of almost 17,000. From that point, the population age 65 and over will continue to rise to over 75,000 by 2030-almost 20% of Allen County s population. What does this mean for the Allen County work force? First of all, although the Baby Boomers are entering the traditional retirement age, the population between the ages is projected to Percent of Population 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% Allen County Population Age 65 and Over 80,000 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 10% 30, , p 2020, p 2025, p 2030, p Allen County Population Age 65 and over Percent of Allen County Population Age 65 and over p indicates population projection Source: U.S. Census Bureau and Indiana Business Research Center be about the same in 2020 as it was in In reality, the growth in the working age groups is basically flat for the next 15 years. By 2030, Baby Boomers will have moved into traditional retirement age for the most part. This projection is shown in the following chart. This chart also demonstrates that Allen County s working age population had been increasing as the baby boomers moved through the decades, but with no large demographic group immediately behind them, the population growth flattens out. 1. Source of projections: Indiana Business Research Center

2 Allen County Population and Projected Population for Age Groups and , , , ,000 80,000 60,000 40,000 20, , p 2020, p 2025, p 2030, p Age Group Age Group p indicates population projection Source: U.S. Census Bureau and Indiana Business Research Center Since 2006, there has been an increase of over 1,000 persons who are age 65 and over working in Allen County. It is too early to tell why there are additional seniors (those 65 and over) working; it could be a number of factors that might be short-term. Examples of this might be the need to work past retirement age to make up for lost assets the Great Recession or unmet retirement needs due to an inability to save. Perhaps it is a desire to continue work, or it could be just the sheer numbers of Boomers. In 2006, seniors represented 3.5 percent of those employed, in 2013 seniors made up 4.3 percent of Allen County employment. It is unknown what local employers think about people working past the traditional retirement age. With no increase in the horizon in the working age population in Allen County, there may be a place for Boomers who want to continue working, providing a source for continued institutional knowledge and continued expertise, as well as meeting additional employment needs. Allen County at a Glance Employment and Labor Force Allen County and Fort Wayne MSA Employment Fort Wayne MSA Annual Employment 210, , , , , , FW MSA, Not Seasonally Adjusted Allen County, Not Seasonally Adjusted FW MSA, Seasonally Adjusted Allen County, Seasonally Adjusted 195, , , Data a similar source (BLS CES) indicates that average employment in 2014 for the FW MSA has been 3.8 percent higher in the first seven months of 2014 compared to the same period in Labor Force (Not Seasonally Adjusted) August 2013 August 2014 # % Allen County 175, ,139 5, % Fort Wayne MSA 206, ,791 6, % Indiana : 1.7% U.S. : 0.3% Source: U.S. Bureau of Labor Statistics, LAUS Current Employment March 2013 March 2014 % Allen County 172, , % Fort Wayne MSA 194, , % Indiana : 1.2% U.S. : 1.7%

3 Wages and Income Avg. Annual Wage 2013 (BLS,QCEW) Per Capita Personal Income 2012 (BEA) Real PCPI 2012 (BEA) Median Household Income 2013 (Census ACS) Allen County $40, % $37, % NA NA $45, % Fort Wayne MSA $39, % $37, % $38, % $46, % Indiana $41, % $38, % $39, % $47, % U.S. $49, % $43, % NA NA $52, % s August 2014 August 2013 Allen County FW MSA Indiana U.S Source: U.S. Bureau of Labor Statistics, LAUS Note: Data is not seasonally adjusted. Percent Unemployment s, Seasonally Adjusted Allen County Indiana FW MSA US 4 August 2012 August 2013 August 2014 Source: U.S. Bureau of Labor Statistics, LAUS; Seasonally adjusted data for Allen County and FW MSA calculate by CRI. Employment by Industry Allen County Employment by Industry (p) (p) (p) 2014 Wages Construction 7,841 7, % 7, $47,342 Manufacturing 27,053 28,578 1,525 6% 24,475 4,103 $55,798 Wholesale Trade 8,877 8, % 10,020-1,161 $50,024 Retail Trade 19,947 20, % 19,216 1,117 $24,307 Transportation and Warehousing 6,325 6, % 6, $44,017 Information 2,990 2, % 3, $55,129 Finance and Insurance 8,258 8, % 8, $61,379 Real Estate and Rental and Leasing 1,945 1, % 1, $33,400 Professional, Scientific, and Technical Services Management of Companies and Enterprises Administration and Support and Waste Management and Remediation Services 5,509 5, % 6, $52,141 1,736 1, % 1, $59,132 10,273 12,039 1,766 17% 9,695 2,344 $24,351 Educational Services (Private) 3,215 3, % 2, $29,447 Education: Public (Elem, Secondary, College & University) 9,353 9, % 9, $37,318 Health Care and Social Assistance 29,877 30, % 27,686 2,546 $43,412 Arts, Entertainment, and Recreation 2,325 2, % 2, $16,885 Accommodation and Food Services 15,483 15, % 14, $13,879 Other Services (except Public Administration) 4,990 5, % 4, $25,675 Government, other than state and local education 8,168 8, % 8, $45,053 Other (Agriculture, Mining, and Utilities) % $65,597 Total, Allen County 174, ,412 2, % 169,920 10,492 $39,990 Sources: Employment: EMSI Class of Worker QCEW Note: Wages include all employees, including part-time. (p)= preliminary

4 Allen County Business Dynamics- 3 rd Quarter 2014 A quarterly review of events occurring with the business establishments in Allen County The following reflect business dynamics events that have been registered by CRI as a third quarter event. Note that the project may have been announced in a prior quarter, but CRI attempts to report the project in the period in which some tangible action occurred. Note also that CRI does not collect data on industries related to retail, restaurant, accommodations, as well as a few other sectors. Our focus in on base industries, such as events occurring in manufacturing, insurance, defense, logistics, medical devices, food processing, as well as events that occur in the major employers. Our information is supplied by the news media, press releases, and information obtained by reputable sources. If you are aware of any additional changes, please contact us at cri@ipfw.edu. Event People/ Jobs Investment in Millions Company Acquisition 267 WaterFurnace Renewable Energy Closing 96 NCI Fort Wayne (formerly NYX) Expansion 18 Unknown Redimed Expansion 320 $6.0 Expansion 0 $2.0 Parkview Hospital Shared Service Center (Lutheran Health Network) Expansion 0 $18.0 Edy s Grand Ice Cream New 75 $28.1 North American Cold Storage Note: Business dynamics data is continuously revised and updated. Director s Corner: The Impact of Retirement on s and Labor Force Participation According to the U.S. Bureau of Labor Statistics, at the start of the Great Recession in December 2007, the U.S. unemployment rate was 5.0 percent. It peaked at 10 percent at the end of 2009 and steadily declined to 6.7 percent at the end of Concurrent with the decline in unemployment rate has been a decline in the labor force participation rate (LFPR), measured as the proportion of people ages 16+ who are working or actively seeking work. Between late 2009 and 2013, the national LFPR moved 65.0 to 62.8, a decline of 2.2 percent. 1 This represents the measure s lowest point since Analysis the Federal Reserve points out that labor force participation has been in decline since 2000 when it peaked at 67.3 percent. However, the decline was accelerated by the Great Recession indicating that there are both short-term and longer-term factors at play which explain this trend. U.S. Unemployment and Labor Force Participation Rates, Seasonally Adjusted Labor Force Participation Rate Source: U.S. Bureau of Labor Statistics, Current Population Survey Labor Force Participation Rate 1. U.S. Bureau of Labor Statistics. Current Population Survey.

5 Federal Reserve economists examined the Bureau of Labor Statistics micro-data to understand these factors. Here s what they found: Longer-term factors: Nonparticipation due to (1) disability and (2) schooling has been steadily rising since Shorter-term factors: Discouraged workers also drove down the LFPR, but only during the height of the recession. Since 2012, the participation among this group has remained flat while retirements have spiked. In fact, the Fed estimates that 80 percent of the decline in LFPR since the start of 2012 can be explained by retirements. 2 The Federal Reserve researchers note, As of 2013, roughly 5 percent to 6 percent of individuals in the working-age population are out of the labor force because of disability, 16 percent to 17 percent are out of the labor force because of retirement, and the rest [about 14 percent] have left the labor force for other reasons. 3 Within the other reasons group, there are (1) discouraged workers who want a job, (2) those that are in school and would like a job eventually, and (3) those that are not in school and do not want a job. The proportion of potential workers who are in school has continued to rise since the end of the recession, indicating a small silver lining in the decline of LFPR. Some are getting education to improve their skills before entering or reentering the workforce. At the same time it is important to note that BLS numbers show a steep decline in participation among year olds, since 2000 (65.9 to 54.8, down 11.1 percentage points). As noted earlier in this edition of Allen County Insight, the lack of granular, regularly released data at the makes it difficult to pin down exactly how these national trends are manifested locally. Regardless, it is clear that despite renewed confidence among discouraged workers the economy as a whole will be powered by a declining share of workers as the Baby Boomer generation plunges deeper into retirement. 2. Fujita, Shigeru. (February 2014). On the Causes of Declines in the Labor Force Participation Rate. Federal Reserve Bank of Philadelphia. 3. Ibid.