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The Baby Boomers account for 76M Americans and had been retiring at a rate of approximately 2M per year prior to 2020. Over 3M retired in 2020 in the wake of COVID. Not only do the Boomers outpace other generations in size, but they have also amassed wealth that complicates the LFPR. Boomers are retiring with an average net worth of $1.2M, allowing many to retire early.

With Boomers’ children standing to inherit these fortunes, many pursue part-time work or no work at all which negatively impacts the LFPR as well.

The LFPR (calculated by workers age 25 to 54) trended up through the 70s, 80s, and 90s, and peaked at 67.3% in 2000.²

In May of 2022, it was 62.3% due to many of the reasons we’ve already covered. In addition, due to a natural dip in the birth rate in the 70s, there simply aren’t as many people in the workforce.

Percentage-wise, these LFPR drops may not seem like a huge change over such a long time period, but it amounts to more than 17M workers.

To maintain our current population, the Total Fertility Rate (TFR) would need to be at 2.1 children born to each woman. In 2021, the TFR was 1.78. For comparison’s sake, Boomers were born into families that had 4 children on average, but Boomers only averaged having 2 children.³ In general, those children make up Generation X, which – with the smallest population (65M) of the four generations currently configured into the LFPR– cannot cover the gap left by the Boomers.

In the next article, we will look at trends in anticipation of this massive labor gap.

Sources:

  1. CNBC.com
  2. Census.gov
  3. Economicmodeling.com
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