The share of workers in the U.S. labor force that are “prime working age” (ages 25-64) has significantly fallen since the mid-1990s, and older workers now make up a greater share of the workforce, according to an Aug. 23 report from the Employee Benefit Research Institute.
At the same time, the labor force participation rate for ages 65 and older hasn’t recovered to pre-pandemic levels, while the rate for those under age 25 nears record-low levels.
“Despite the difference in labor force participation (LFP) rates between 1975 and 2023 being less than 2 percentage points, significant changes in labor force patterns and composition have occurred over the past several decades,” said Craig Copeland, director of wealth benefits research for EBRI.
For instance, LFP rates decreased for men and increased for women during that time, though both have been lower in recent years.
In addition, the decrease among ages 25-64 has been driven by the smaller number of people in those generations, which means that younger and older workers will need to cover the shortage. So far, workers over 65 have filled the labor force gap, particularly since the share of workers under 25 remains low.
By 2023, ages 65 and older made up the largest share of the U.S. population, and ages 16-24 made up the smallest share. Ages 16-19 had a major decline at the beginning of the 2000s.
Looking ahead, age will play an important role in companies’ workforce development plans, Copeland said, particularly as baby boomers grow older. Generation X is smaller, which means a decrease in the share of workers who are ages 55 or older is “imminent,” he said.
Among U.S. adults between ages 20-54 who are out of the labor force, 72% said either caregiving responsibilities or personal health issues were the main reasons for not seeking work, according to a survey by Artemis Strategy Group and the Bipartisan Policy Center. A lack of access to paid family and medical leave was a major barrier, they said, pointing to flexible work arrangements and paid leave as the most important benefits for improving labor force participation.