The voices of Urban Institute's researchers and staff
February 6, 2015

Migration won't trump aging to maintain local workforces in most places

February 6, 2015

Some states—such as Michigan—have been losing population for most of the past three decades. Others—especially sunbelt states such as Arizona and New Mexico—have been steadily gaining residents.

Population trends tie into a major concern about our country’s economic future: will there be enough workers—that is, economic activity—to support the future elderly in their retirement? Boomers and their children are expected to live longer than past generations, and over the next few decades, the number of workers per retiree will fall from 3 to 2.

Concerns about declining workers per retiree can be acute at the local level, where governments may be digging out from unfunded pensions and liabilities while also trying to fund ongoing services. With fewer taxpaying workers per retiree, localities may find themselves circling into a budget black hole where they cut spending and lose workers to areas that are investing.

Is it possible that migration will dig some areas out of this hole? Using our new interactive tool called Mapping Americas Futures, we can test different assumptions and see how communities around the country might be affected by aging and migration scenarios.

Age: A powerful predictor of work behavior

If you know nothing else about me except that I am 45 years old, you are probably confident that I am working. But if you know only that I am 70, you are just as confident that I am not working.

This pattern is borne out at the national level. Despite some recent increases in labor force participation at older ages and less work among the young, the participation rate of those age 25 to 50 has been roughly 8 in 10 for decades. The rate then falls rapidly from age 55 to 70. By age 70 and older, work rates fall to under 2 in 10.

We also know that, as baby boomers age, we can expect overall labor force participation to fall rapidly, even if 60 year olds work at slightly higher rates than in past generations.

But this phenomenon is not evenly spread across the country. In some places with a large population of fiftysomethings and few twentysomethings, there is a cliff of labor force nonparticipation approaching, assuming no one moves.

How migration fits in

Of course, migration matters too. As domestic and international migrants flow into certain areas, the overall size of the working-age population will increase. But since about 20 percent of the working-age population is out of the labor force, some migrants will also be nonworkers.

The bottom line: some places, like Youngstown, Ohio and Saginaw, Michigan, will see fewer workers for every adult not in the labor force because of both falling participation rates of residents who stay and out-migration of working-age people.

Other places, like Washington, DC and Atlanta, will enjoy more stable labor force participation rates because of steady increases in both the working-age population and nonparticipants.

Some expanding areas, like Las Vegas and Orlando, will see decreases in participation rates and big increases in the numbers of nonparticipants, because of high in-migration of older people.

Overall, the striking finding is births, deaths, and moves make little difference to the simple age pattern described above. Even if work at older ages continues trending upward, declining work at younger ages may well leave many places with fewer workers per resident. In other words, net out-migration will likely not trump aging. This means local leaders better start planning.

Photo by Alex Brandon/AP

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