demographic change and the workplace demography is destiny, open classroom northeastern university,...

Demographic Change and the Workplace

Demography is Destiny, Open ClassroomNortheastern University, School of Public Policy and Urban

Affairs

February 3, 2011

Robert K. TriestVice President and Economist, Research Department

Federal Reserve Bank of Boston

Note: opinions are my own and are not necessarily those of the Federal Reserve Bank of Boston or the Federal Reserve System.

Demographic change occurs slowly

• “Demography as destiny.”• 2001 Boston Fed conference:

– Seismic Shifts: The Economic Impact of Demographic Change

– (available at www.bos.frb.org/economic/conf/conf46/)

• Contrast with business cycle data:– Even current quarter GDP is hard to predict!

Prof. Bluestone used TV shows as examples of changes in U.S. family structure.– Leave it to Beaver -to- Modern Family

• Changes in U.S. workplaces as reflected on TV:– The Flintstones

– -to- The Office

The U.S. workforce has become:

•More diverse– Dramatic increase in representation of women– Increased share of minority groups– Increased share of immigrants

•Better educated– Increased rates of high school and college graduation.

•Older– Increase in average age and a flattening of the age

structure

Female labor force participation has increased while male participation has decreased

Source: Bureau of Labor Statistics

Youth labor force participation has recently been trending downwards

Source: Bureau of Labor Statistics

Convergence between genders in middle age participation rates

Source: Bureau of Labor Statistics

…with convergence continuing as retirement approaches.

Source: Bureau of Labor Statistics

Participation rates for 65-69 year olds are low but increasing.

Source: Bureau of Labor Statistics

…as is true of 70-74 year olds.

Source: Bureau of Labor Statistics

High school graduation rates have increased dramatically over time.

Source: U.S. Census Bureau, Decennial Census of Population.

College graduation has also become more common over time.

Source: U.S. Census Bureau, Decennial Census of Population.

30 years ago, college graduation was more common among men than among women.

Source: U.S. Census Bureau, Decennial Census of Population.

Among young cohorts, college graduation is more common among women.

Source: U.S. Census Bureau, Decennial Census of Population.

Management education was formerly male dominated.

Source: Claudia Goldin, “From the Valley to the Summit,” Regional Review, Federal Reserve Bank of Boston, Q1 2005

The share of women in many professional programs has increased dramatically.

Source: Claudia Goldin, “From the Valley to the Summit,” Regional Review, Federal Reserve Bank of Boston, Q1 2005

Increased educational attainment is associated with:

• Increased earnings.• Decreased unemployment rate.• Increased labor force participation rate.

Median Earnings of Full-Time Year-Round Workers Ages 25–34, by Gender and Education Level, 1971–2008

(in Constant 2008 Dollars)

Sources: The College Board, Education Pays 2010, Figure 1.6; National Center for Education Statistics, 2004; U.S. Census Bureau, 2003–2009; Bureau of Labor Statistics, 2010g; calculations by the authors.

Slide from The College Board, “Education Pays 2010”

Unemployment Rate by Educational Attainment

25+ Years (SA, %)

10050095Sources: BLS /Haver

16

12

8

4

0

16

12

8

4

0

No high school diplomaHigh school gradsSome collegeCollege grads +

Labor Force Participation Rate by Educational Attainment

25+ Years (SA, %)

10050095Sources: BLS /Haver

82.5

75.0

67.5

60.0

52.5

45.0

37.5

82.5

75.0

67.5

60.0

52.5

45.0

37.5

No high school diplomaHigh school gradsSome collegeCollege grads +

The labor force is becoming more racially and ethnically diverse.

Source: Bureau of Labor Statistics

The U.S. has entered an era of slow labor force growth.

Source: Bureau of Labor Statistics, Census Bureau

Changes in the age distribution

• Reduced labor force growth may produce a general shortage of workers.– But the reduction in birth rates has also

produced a flattening of the wage structure.– Will there be a surplus of older individuals who

would like to continue working?

Changes in the age distribution

• The flattening of the wage structure has reduced the economic return to labor market experience.– Research from “Population Aging, Labor

Demand, and the Structure of Wages,” joint work with Margarita Sapozhnikov.