Outlines the two types of regional effects from the United State’s changing labor force participation rates due to demographic changes.

“In this brief, [the authors] examine how changes in the age distribution and in population sizes of racial and ethnic groups will affect dimensions of the labor force across geographic regions of the United States. Labor force participants are defined as people ages 15 or older who have or are seeking a job (excluding military or institutionalized people)” (p.1).

“[The authors] focus on projections based on a series in which fertility and mortality continue at recent rates for each age, race, ethnicity, and sex, and migration continues at an average level between higher and lower scenarios. Future participation rates are projected from the Bureau of Labor Statistics Current Population Survey 2003–12 age-specific participation rates. Though [the authors] do not explore other scenarios in this brief, changes in the demographic assumptions—particularly about future mortality and migration—will produce different effects from the ones discussed here” (p.2).

(Abstractor: Authors)

Major Findings & Recommendations

“The demographic predictors of labor force participation will produce changes in the labor force profiles of commuting zones in the United States from 2010 to 2030. The possible impact of those changes is more uncertain, and the ways in which individuals, employers, and state, local, and national governments choose to respond to changes in local labor force profiles will have a strong influence on such changes. Despite this uncertainty, [the authors] can anticipate two classes of effects and consider how they might play out. • Effects of falling labor force participation rates. The declining ratio of workers to people supported by workers will pose a challenge for the United States as a whole, as the productive output of the nation’s labor force participants is shared with a larger fraction of labor force nonparticipants. At the local level, some of these economic effects could be muted. Most government support for the retired population operates at the national level through Social Security and Medicare, so the fewer workers in Youngstown will not have to pay all the Social Security for Youngstown’s retirees. Also, the economies of some commuting zones with aging populations, such as the area near Orlando, Florida, have done particularly well in recent years because the investment incomes supporting the retired population have been growing faster than the wage incomes of the employed. Yet, commuting zones with rapidly declining labor force participation rates will face challenges related to issues such as declining home values from lack of demand. Lack of access to family support can also pose a challenge for nonparticipants who have no economically active family members nearby. • Effects of a rising number of nonparticipants. Growth in the number of nonparticipants will require an increase in services and infrastructure to support those nonparticipants in various ways. As [the authors] have shown, such growth will often occur in commuting zones that also have rapid growth in the labor force, so that the productive resources to provide those services and infrastructure should also be increasing, even as the demand for those resources increases. This required investment will pose a challenge to growing commuting zones or but also an opportunity for new economic growth (especially if supported by policy and planning)” (p.7). (Abstractor: Authors)