U.S. labor churn from aging population seen peaking in 2023
The U.S. Bureau of Labor Statistics report on the change in monthly employment commands a significant degree of attention from financial markets, politicians and the business community. And for good reason. Labor market ebbs and flows can dictate the fate of the economy and politics.
Labor market churn is made up of many factors including people who first come into the labor force when they start looking for work, those who find a job, and people who drop out when they retire, die or even become incarcerated.
More than 10,000 people are now retiring each day. But this daily retirement figure may fall by close to 2,500 people from an expected peak in the year 2023 to the year 2042, according to new data projections from the St. Louis Fed. This will establish a lower hurdle for the U.S. economy to overcome to achieve monthly employment growth.
More simply put, if 100,000 workers retire in a given month, the U.S. labor market needs to gain 100,000 jobs just to break even. If in the near future, fewer people are retiring, the number needed to reach par will be easier to achieve.
St. Louis Fed economist Guillaume Vandenbroucke used age- and gender-specific mortality rates from the Human Mortality Database to compute how many workers between the ages of 40 and 65 are expected to still be alive the next year. The study found that the number of people turning 65 each day will peak at 11,573 in 2023 and then decline.