A common question that comes up regularly during presentations is something along the lines of, “Will there be enough jobs in the future?” There’s not doubt that artificial intelligence and software are and will continue to impact the economy and employment. However, our office’s position and forecast for the next decade is that yes, there will be enough jobs in Oregon*. That said, longer run impacts such as job polarization and the like will continue to shift the nature of work, but there will be jobs. One reason why is retirements. Mark and I both tend to end presentations with our office’s big picture, long-run trend for job growth in Oregon. The most recent version looks like this.
We talk a lot about how growth has changed over the past 50 years and the impact of demographics. During the 1960s and 1970s labor force participation was rising as women and minorities entered the labor market in greater numbers than before. Additionally the Baby Boomers were entering their prime working years in the 1970s and 1980s. These demographic and societal tailwinds boosted growth. However over the ensuing decades these tailwinds played out. And now we’re talking about demographic drags as the Baby Boomers retire.
We feel strongly that near-term growth is likely to slow as the economy approaches full employment and we also feel strongly that the longer-term growth will be slower than we have become accustomed to historically. Our biggest forecast uncertainty is that transition period between today and 2020 or so.
However back to the longer-run look. We are forecasting net job growth rates of a little less than 1% annually from 2021-2026 (0.8% to be exact). This is slower than anything we have ever seen post World War II. However a lot of this has to do with demographics and retirements. For every retiring Baby Boomer, a firm has to hire 2 workers to see positive job growth. The first worker simply replaces the retiree, while the second represents net job growth. So while the topline, or total job growth numbers are subdued, it really masks the generational churn taking place under the water. Thus the total number of available jobs in the coming decade really is larger than the graph appears to show.
Lastly, it should be pointed out that these aren’t just any old workers that are retiring. They represent workers with a lifetime of experience and institutional knowledge for their industries and firms. Such workers cannot instantaneously be replaced. It creates challenges for businesses to adjust and adapt.
To summarize, I think our friends at Employment, Nick Beleiciks and Gail Krumenauer, wrote it best when talking about their occupational projections:
Opportunities will be created for younger workers as employers promote to replace retirees. It is likely that workers will be promoted more quickly than in the past and employers will have to work harder when hiring and training new workers, in order to replace the experience and institutional knowledge they’re losing to retirement.
This post is a preface to some work coming tomorrow that dives into the number of retiring Oregonians based on our office’s economic and demographic forecasts.
* That said, it doesn’t mean we shouldn’t continue to think about and plan for a future where employment may be considerably lower due to these impacts. They are likely to have a bigger impact in the future than they have historically, based on a lot of the current research. However these impacts are not likely to be next year or the year after, but a longer-run impact beyond our forecast horizon.