Demographic Change and the Workplace Demography is Destiny, Open Classroom Northeastern University, School of Public Policy and Urban Affairs February 3, 2011 Robert K. Triest Vice 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 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 year olds are low but increasing. Source: Bureau of Labor Statistics

…as is true of 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”

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.