Retiring Workforce Woes
America is on the brink of a potential aging crisis. Baby Boomers are retiring. The birth rate is low and has been for decades. According to Pew Research Center, approximately one in five U.S. adults aged 65 and older were employed in 2023, nearly doubling the rate from 35 years ago. Additionally, according to recent government data, last year American women gave birth to 1.6 babies on average. That’s the lowest level since U.S. records began in the 1930’s - almost a century ago.
Stephanie Ferguson, U.S. Chamber of Commerce Director of Global Employment Policy and Special Initiatives, stated “America already has unprecedented challenges trying to find enough workers to fill open jobs.” There are around 1.7 million open tech positions worldwide in 2024. For the US, the estimated number of active tech job postings is 438,000.
The potential for a worker shortage is high and the need for searching, recruiting, and hiring new employees will increase, many of whom will lack the experience of the retirees they replace. As the number of retirees surges, outpacing the influx of new workers, we are predicted to experience multifaceted economic impacts. Without sufficient workers, organizations may struggle to maintain productivity levels.
With a smaller labor pool, we are expecting wage inflation as employers compete for a limited number of skilled professionals. With fewer workers, production costs could also rise, leading to higher prices for goods and services. This could contribute to inflationary pressures in the economy. The U.S. Bureau of Labor Statistics (BLS) indicates that labor shortages in sectors like healthcare and tech have already led to wage growth outpacing inflation in these industries.
Gaps in Leadership
According to data from the U.S. Census Bureau, about 10,000 Baby Boomers reach retirement age (65 years old) every day. This trend started around 2011 and is expected to continue until 2030, dramatically altering the demographic structure as a massive chunk of the population (71.6 million Boomers) ages. Forbes has described this as the “end of the Baby Boomer workforce” and the arrival of the “Silver Tsunami.”
In addition to the potential labor shortages, Boomer retirements will leave significant knowledge gaps in multiple industries, from hospitality and leisure to healthcare. Back in March of 2023, 2.2 million older workers retired earlier than expected, taking with them a multitude of valuable institutional knowledge and leadership. This is significant because 4 million Boomers are leaving the workforce every year. With Boomers making up nearly a third of the entire workforce and 56% of those people being in leadership positions, this means a massive amount of expertise is walking out the door.
Filling the Talent Void with AI
Given the slew of potential issues we are facing as an economy, how is America planning to address the aging crisis? Well, if the population isn’t growing, then to grow the economy we need to increase everyone’s productivity. This is where Artificial Intelligence (AI) comes into play. As Baby Boomers retire, there is a pressing need to replace their skills and knowledge to maintain productivity and economic stability. Below are a few of the ways AI can support the transition:
Automate Routine Tasks
By automating routine and repetitive tasks, AI can free up human workers to focus on more complex and strategic activities. This helps mitigate the loss of workforce by increasing efficiency and productivity and it isn’t such a radical idea. In the late 19th century, new technology such as tractors helped reduce the farm workforce by allowing individual farm workers to do the work previously carried out by many. Just as we used machines back then, AI can be used to automate existing jobs. For example, Robotic Process Automation (RPA) can handle administrative and operational tasks that don't require human judgment, allowing employees to concentrate on higher-value work.
Knowledge Transfer and Management
There is an expected knowledge gap predicted to happen due to 56% of the retiring boomers in leadership positions. However, AI-Enhanced Knowledge Management Systems can capture and organize the vast amount of knowledge held by retiring employees. These systems can store and analyze this knowledge, making it accessible to new employees. Additionally, AI can facilitate mentorship programs by matching retiring employees with newer ones and supporting the transfer of expertise through intelligent virtual assistants. By analyzing the skills and competencies of the existing workforce to identify gaps that need to be filled, it allows organizations to tailor their training programs to address specific needs.
Employee Retention and Engagement
Younger workers are typically known for high turnover rates, as the average tenure of a Millennial is 3.2 years—a long shot from the 8 years and 3 month average tenure rates that the Boomers set. AI can analyze employee data to identify factors that contribute to job satisfaction and retention, allowing organizations to implement strategies to keep their workforce engaged and motivated. Tools like AI Chatbots and Virtual Assistants can provide support and resources to employees, enhancing their experience. Gamification and microlearning techniques from AI make training more engaging and effective, increasing the retention and application of new skills. AI can provide interactive and adaptive learning experiences, helping employees quickly acquire new skills needed to fill gaps left by retirees.
Artificial Intelligence’s fast-evolving technology has great potential to make workers more productive, to make firms more efficient, and to spur innovations in new products and services.
Although there has been quite a lot of attention on the jobs that AI may displace in the future, Artificial Intelligence can be a force for good within the labor market, helping people achieve their own individual versions of work-life balance and fill in the gaps created by the labor shortages in our economy.