Boomers started turning 65 this year, and every day for the next 18 years, about 10,000 more will hit the age that historically has been associated with retirement, according to the Pew Research Center in Washington. Women's participation in the labor force may decline slightly during the next 40 years to about 57 percent because fewer will have jobs as they grow older, the Bureau of Labor Statistics projects.
Contracting Labor Force
All this means the workforce will expand 0.6 percent annually for the next 40 years, down sharply from 2 percent between 1950 and 1985, according to the bureau. The labor force has contracted 1.1 percent since 2008, mainly because the recession has forced people out of jobs and made it difficult for them to find new employment.
Future recoveries will likely resemble the current one and expansions after the recessions of 1990-1991 and 2001, when labor-force growth already had slowed to near 1 percent, with relatively modest jobs gains, Paulsen said. Increases in resources -- capital, land or labor -- "have been associated with every economic boom" in the U.S. and help explain why emerging markets sustain faster expansions, he added.
While U.S. GDP has grown at an average annual pace of 2.4 percent in the eight quarters since the December 2007 recession ended, that compares with an average of 6.3 percent after the July 1981 slump and 4.7 percent following the November 1973 contraction, both of which lasted 16 months.
'Vastly Greater'
Gary Burtless, senior fellow at the Brookings Institution in Washington, agrees that slower population growth affects the rate of economic output. Still, the recent decline in the workforce "is vastly greater than can be explained" by demographics and mainly reflects the inability of unemployed people to find work, he said.
Payrolls climbed by 75,000 workers in August after a 117,000 increase in July, and the unemployment rate held at 9.1 percent, according to the median forecast of economists surveyed by Bloomberg News before Labor Department data Sept. 2. In July, the number of long-term unemployed -- people without work for 27 weeks and more -- was 6.2 million and accounted for 44.4 percent of the jobless.
Some industries may benefit from the demographic shift, Faucher said.
"We'd expect to see strong growth in health-care spending, and I think we'll need to see strong growth in investment spending as companies will need to invest in technology to get greater productivity," he said.
Walgreen, CVS Caremark
Walgreen Co., the largest U.S. drugstore chain, and CVS Caremark Corp., the largest provider of prescription drugs, both say the aging population could boost sales.
"People reaching 65 have an average life expectancy of an additional 18.6 years and use three times as many prescriptions as the younger population," Larry J. Merlo, president and chief executive officer of CVS in Woonsocket, Rhode Island, said at a conference earlier this year.
About 70 percent of Americans aged 50 to 64 are very or moderately worried about having enough money in retirement, an April Gallup poll showed. People need about 70 percent to 80 percent of their pre-retirement income to live comfortably after they quit working, according to the Social Security Administration.