Analysis of aging occupations

This article was published in the August 2006 South Dakota Labor Bulletin.

Planning for retirement has long been looked upon as a task of the employee. However, with a high proportion of maturing workers in our labor force, employers are beginning to realize the need to prepare for retirement extends far beyond their employees. With the bulk of the baby boom generation starting to slip into retirement years, businesses need to think fast and employ strategies that will help to mitigate the turnover and brain drain their firms will be faced with. Efforts to hire replacement workers could become more difficult, especially for occupations that require extensive training and/or postsecondary education.  Planning ahead will help to curtail the impact that retiring workers will have on the workforce. 

The Labor Market Information Center (LMIC) conducted a study to help businesses prepare for future worker needs due to retirements. Although LMIC collects and publishes occupational worker and wage data through the Occupational Employment Statistics (OES) survey (which is administered by the U.S. Bureau of Labor Statistics), current detailed occupational data by age is hard to come by. The only source of occupational data by age for South Dakota is the 2000 Census. Unfortunately, information was available for only a few detailed occupations; most available Census data was presented by occupational groups. Therefore, data for 94 occupational groups presented by nine age cohorts was extracted from the 2000 Census data, and then compared to occupational projections information produced by the LMIC.

Projections data is produced for over 700 occupations, estimating expected worker growth from 2004-2014, as well as the number of new workers needed. The new workers needed statistic represents the hiring both to meet job growth, as well as net replacement needs. Net replacement measures the movements of workers in and out of occupations. Some become employed in a different occupation as a result of a promotion, a desire to change careers, or the loss of an existing job. Others who leave an occupation stop working altogether because they retire, move, become ill or have another reason for leaving. This model attempts to measure replacement needs strictly due to retirement.

Please note that individuals who change employers but remain in the same occupation (the sum of which are often referred to as ‘turn-over’) are not included in counts of replacement needs, because job changes by these individuals have no impact on the number of openings for an occupation.

To provide an indication of the number of workers per occupational group who will need to be replaced due to retirement, the model assumed that all workers age 55 years and older (as reported by the Census data) will retire from their reported occupations sometime during the time period of 2004-2014 (the time period for the current projections data). These workers age 55 and older will be age 69 and older by the year 2014. To provide an indication of replacement needs due to retirements through 2014, the percent of workers age 55 years and older for each occupational group was applied to the replacement estimate for that occupational group.

Although both the 2000 Census and projections data sets use the Standard Occupational Classification (SOC) taxonomy to classify occupations, the data sets have differing methodologies. The projections data are produced using an econometric model and reference the 2004-2014 time period; the 2000 Census data was gathered via a household survey. However, comparisons of the data sets provide vital workforce information, including an estimate of future worker needs due to retirements.

The table below details occupational groups with the highest number of estimated annual replacements due to retirement for the period 2004-2014. This table lends insight into occupations that will have a high number of retirements each year. Retail sales workers; building and grounds cleaning and maintenance workers; cashiers; food and beverage serving workers; and cooks and food preparation workers will see some of the highest numbers of replacements due to retirements. For most of these occupations, preparation for the typical worker involves a short period of on-the-job training to learn the techniques and develop the skills needed for average performance. Employers who hire workers for these occupations should be able to find replacement workers more easily than employers who hire workers for occupations that require a longer training period. 

It is likely that some of these occupations employ workers who have already ‘retired’ from a primary career and are now working in a post-retirement, alternate occupation. Therefore, it is conceivably more beneficial to examine high skilled occupations that have a large concentration of workers who are nearing the traditional retirement age. The table below identifies occupations that have a high proportion of workers in the 55-64 age group according to the 2000 Census data and the skill levels that are associated with these occupations. Workers in this age category will primarily be leaving their occupation for retirement reasons instead of job changes, etc. Please note these workers would have been age 59 to 68 in the year 2004.

The skill levels noted in the table are derived from the Bureau of Labor Statistics’ Education and Training Classification System. This system identifies the most significant level of training required for entry into an occupation. Occupations that require short-term on-the-job training, moderate-term on-the-job training, long-term on-the-job training or work experience in a related occupation are categorized as “high school or less.” Occupations requiring an associate degree or postsecondary vocational award define the “some college” group, and occupations requiring a bachelor’s degree or higher (with or without work experience), master’s degree, doctoral degree, or first professional degree indicate the high skilled group “bachelor’s degree or higher.” This latter group will find it harder to replace retiring workers because of the high level of training and work experience required for entry into the job.  

The occupation with the highest proportion of retirement-age workers includes judges, magistrates and other judicial workers. Approximately 45 percent of the workers in this occupation will be included in the retirement wave that will occur in the next several years. Other professional occupations that will lose a significant number of workers due to retirement include managers, top executives, postsecondary teachers and social scientists. Workers with a combination of a bachelor’s degree and work experience will be needed to fill these positions, and the market will be competitive to find qualified individuals. Of the top 20 occupations with a high proportion of workers age 55-64, approximately half of them require at least a bachelor’s degree. 

Employment after Retirement

As mentioned in last month’s e-Labor Bulletin article, many people choose to work part time after retiring to supplement their income or to stay busy and socialize. For others, working part time helps to pay for high cost items, such as health insurance. Census data are used to identify those occupations that tend to employ a large number of workers who are 65 years of age or older, which is traditionally an age where most workers have retired. The table below shows the top 10 occupations which employ workers in this age group. 

Traditionally, workers in the agricultural related occupations tend to retire at a later age than workers in most other occupations. Therefore, these occupations likely reflect workers who have not yet retired from their primary occupation.

This trend is also apparent when looking at workers by ownership, which is detailed in the table below. Those ownerships with the largest percent of workers age 55 years and older included the self-employed and those working without pay in a family business. These ownerships are heavily weighted by farmers and other agricultural workers, including those who work without pay in the family business.  

However, looking at the number of workers age 55 years and older, all ownerships will have significant replacement needs in the coming years, particularly for the private, for profit ownership category. This information is also available by industry, as detailed in the table below. 

As the population ages, it is apparent more employers look to older workers to meet their workforce staffing needs. Older workers are experienced and have proven their dependability. Many older workers often look for flexible, part-time jobs after retiring from their primary occupation. Employers are eager to hire them because of the skill sets gained through years of work experience. However, these workers will eventually retire from the workforce and employers need to be prepared to replace them. If you would like additional information regarding this topic, please contact the Labor Market Information Center.

If you have questions or need more information, contact Bernie Moran or Jennifer Wegleitner of the Labor Market Information Center at (605) 626-2314 or e-mail them at bernie.moran@state.sd.us or jennifer.wegleitner@state.sd.us.