Labor Force Projections to 2020: A More Slowly Growing Workforce

The projected labor force growth over the next 10 years will be affected by the aging of the baby-boom generation; as a result, the labor force is projected to grow at a slower rate than in the last several decades Mitra Toossi Mitra Toossi is an economist in the Office of Occupational Statistics and Employment Projections , Bureau of Labor Statistics. T he recession of 2007–2009, a sluggish labor market, crises in the financial and credit markets, and weakness in the housing sector have combined to create great uncertainty about the future of the U.S. economy and labor market. However, despite all these problems, a positive force in the economy is the size and demographic composition of the U.S. population, which together determine the growth and composition of the labor force. As suggested by the saying " Demography is destiny, " 1 demography is a key driving force in the growth of the U.S. economy, the growth of the labor force, and almost all social and economic trends. Compared with the labor force of the past decades, today's labor force is older, more racially and ethnically diverse, and composed of more women. 2 These trends are expected to continue to shape the future of the workforce; however, the U.S. labor force is expected to grow at a slightly slower rate than in previous decades. The annual growth rate of the U.S. labor force over the 2010–2020 period is projected to be 0.7 percent, lower than the 0.8-percent growth rate exhibited in the previous decade. The labor force is projected to increase by 10.5 million in the next decade, reaching 164.4 million in 2020. This 6.8-percent increase in the size of the labor force is lower than the 7.9-percent increase posted over the previous 10-year period, 2000–2010, when the labor force grew by 11.3 million. (See table 1.) The slower growth of the labor force is primarily the result of a slower rate of growth in the U.S. population and a noticeable decrease in the labor force participation rate. The civilian noninstitutional population 16 years and older had an annual growth rate of 1.1 percent from 2000 to 2010, but is projected to grow by a lesser 1.0 percent during 2010–2020. (See table 2.) In addition, the labor force participation rate started a downward trend in 2000, and the decrease accelerated during the 2007– 2009 recession and its aftermath. As a …