The economic news is dismal. Real growth is decelerating, and the economy seems to be teetering toward a recession. Unemployment is 9 percent, with 14 million Americans looking for work. And a broader gauge of unemployment, which includes those who are underemployed and those who have given up looking for work, pegs the rate even higher — 16.5 percent.
Things look dark, according to economists whose research shows that high unemployment persisted for a decade in developed economies that faced similarly severe financial crises. But demographers predict another future, one that could see the creation of many more jobs than are currently anticipated.
The baby boomers, at the center of so many other trends throughout their lives, would once again be the reason. They may cause a job boomlet simply by aging and needing care. Here's why: the "dependency ratio." That ratio — a measure of the number of dependents each worker must support — has been declining for more than a decade. But it is expected to rise around 2015 as a huge wave of baby boomers begins to retire. Furthermore, the dependency of each retiree (over 65) is three times that of a child (under 20) because the older person consumes three times more in goods and services than the child. So as boomers retire and age, they will create far more job openings than just the ones they leave.
The number of retirees per worker will increase from the current 21 per 100 workers to 31 per 100 workers by 2025, and to 35 per 100 by 2030. These increases are huge, and the adjusted dependency ratio (multiplying the retiree number by three because they consume three times as much as kids) will be off the charts relative to the 1980s and 1990s.
About 10,000 citizens are reaching the age of 65 daily. As they retire, the health care and social assistance industry is expected to grow by 24 percent, or 4 million new jobs by 2018 relative to 2008, to meet their needs. And this number excludes the number of existing jobs that will have to be filled because of workers retiring.
Since the number of additional workers needed will be over and above the estimated number of young Americans and immigrants entering our labor force, unemployment will fall. Furthermore, the "consumption basket" of retirees consists of medical services, leisure activities and housing, which cannot be imported. More American workers will have to be employed if retirees are to expect the same level of care and services as previous generations of senior citizens.
The U.S. economy needs to employ an additional 7 million workers to bring the unemployment rate below 5 percent, which is the unemployment rate during normal economic conditions. If the demographers are correct, many of the unemployed might find jobs sooner than forecast by economists.
Murad Antia is an instructor in finance in the College of Business at the University of South Florida.