Business contacts throughout the region have expressed, through the Atlanta Fed’s Regional Economic Information Network (REIN), a growing concern with an aging population and a shortage of qualified and interested younger candidates to fill positions vacated by retirees. A recent presentation spotlighted this trend in Florida. The report “Florida’s Economic Future & the Impact of Aging” by Florida’s Office of Economic and Demographic Research (EDR) notes that “population growth is the state’s primary engine of economic growth, fueling both employment and income growth.” The presentation reports two main concerns for the state: one is an aging population and a shrinking pool of workers, and the other is a growing need for services, natural resources, and infrastructure as the state’s overall population increases.
Florida’s population has grown from 15.9 million in 2000 to 18.8 million in 2010, a nearly 18 percent increase, and it is forecast to grow to 23.6 million by 2030. The population growth adds concerns for not only current older Floridians but also for future older residents, who will help further the demographic trend of an aging population and a labor force whose growth is slowing.
In 2010, Florida was one of seven states whose median age was over 40; at 17.3 percent, it is the state with the largest percentage of population age 65 or older. Of the nation’s top ten cities with the highest percentage of population age 65 or older, four are in Florida: Clearwater at 19.8 percent, Hialeah at 19.1 percent, Cape Coral at 17.0 percent, and Miami at 16.0 percent. Two years later, in 2012, the median age in Florida rose to 41, with six counties reporting a median age of 50 and older. Demographers expect Florida’s older population to nearly double between 2010 and 2040 (see the chart).
Supporting concerns expressed by REIN contacts, the EDR research reports that as approximately 4.8 million baby boomers are set to retire between 2011 and 2029, the share of workers to retirees will shrink. The chart below depicts the growth in population in the group ages 45 to 64 years (roughly speaking, the baby boomer cohort) since 2000, but it also shows a decline in residents ages 44 and younger, one reason for a declining potential labor force. This change in the composition of the population will cause the current ratio of three taxpaying workers to each retiree to decline to two to one by 2030.
The EDR also expects additional ramifications including weaker economic growth rates, potential upward pressure on wages to attract and retain skilled workers, and a growing retirement-age population, which could lead to a decline in consumer spending and changes in investment patterns. The EDR is also concerned about problems filling labor-intensive jobs such as firefighters, police officers, and construction workers. In addition, jobs will likely require increasingly specialized skill sets as technology advances.
By Marycela Diaz-Unzalu, an economic and financial education specialist in the Miami Branch of the Atlanta Fed