...in the future. (See chart 1.)

[GRAPHIC 1 OMITTED]

The 0.6-percent annual growth rate from 2005 to 2050 reflects a projected population of 322.6 million and a labor force participation rate of 60.4 percent in 2050. The period to 2050 will witness the baby-boom generation ascending the age ladder until the group moves out of the labor force, bringing to an end one of the major drivers of labor force growth over the post-World War II period. (See table 1.)

Because labor force growth is one of the major determinants of long-term economic growth, projections of the labor force shed light on the future path of the economy and its ability to create goods and services. The Bureau of Labor Statistics carries out medium-term, or 10-year, labor force projections every other year. Every several years, longer term projections of the labor force are carried out to elicit possible future paths of labor force growth. Several key factors are expected to continue to affect the composition and growth of the labor force in the next 50 years:

* The impact of the aging baby-boom generation on the labor force. The impact of the baby-boom generation on the composition and growth of the labor force will continue to be a key factor. As this large cohort ages, the increase in the share of the older labor force and, eventually, the exit of the baby-boom cohort from the workforce will be the main factor in lowering the growth of the labor force.

* The stabilization of women's labor force participation rates after years of remarkable increases. The growth rate of the labor force was much affected by the sizable increase in the labor force participation of women during the 1970s and 1980s. However, women's labor force participation rates appear to have peaked at 60 percent in 1999. Every year since then, the participation rate of women decreased, reaching 59.3 percent in 2005.

* Increasing racial and ethnic diversity. The labor force is expected to become even more diverse than it is now. Minorities, with higher population growth through immigration, higher fertility rates, and higher labor force participation rates, are projected to expand their share of the workforce considerably in the future.

The labor force of the future will be determined primarily by the dynamism of U.S. population change. The diversity of the Nation's population has affected the size and composition of the labor force in the past and will continue to do so in the future.

Chart 2 presents a snapshot of demographic change in the United States since 1920. The chart shows the waves of change that have been the result of differing birthrates during the past eight or nine decades. The following features are evident:

* A reduction in birthrates--the "birth dearth"--in the late 1920s and early 1930s

* A surge in birthrates--the "baby boom"--in the 1946-64 period

* A slight reduction in birthrates again--the "baby bust"--from 1965 to 1975

* An increase in birthrates again--the "baby-boom echo"--during the late 1980s and the 1990s.

[GRAPHIC 2 OMITTED]

Even if all other variables are kept constant, the differing birthrates of the U.S. population throughout the past eight or nine decades, and the resulting boom-and-bust waves of population change, would greatly influence the demographics of the present and future workforce.

The current projections of the labor force reinforce the results of previous BLS projections, revealing a population, and consequently a labor force, that possesses the following characteristics of change over the next 50 years:

* The aging of both the population and the labor force will result in a slowing down of the growth rate of the labor force.

* The share of the labor force aged 55 and older is rising rapidly, a direct result of increases in life expectancies and decreases in fertility rates of the U.S. population. By 2020, the share of the labor force held by those 55 years and older is projected to be nearly 24 percent.

* Significant numbers of the older age groups in the labor force will be retiring, resulting in a loss of much-needed skills and significant amounts of institutional knowledge.

* The share of the youth (16 to 24 years) workforce is projected to decrease until 2020 and to grow very slowly after that.

* The share of the prime-age (25 to 54 years) workforce is also projected to decline up to 2020 and to grow slowly after that date.

* Both the population and the labor force are projected to become even more racially and ethnically diverse.

* The median age of the labor force is expected to increase, reaching 42 years in 2020.

* The economic dependency (see pp. 37-38) of the U.S. population also will increase substantially.

Labor force projections

BLS long-term labor force projections are carried out by applying population projections produced by the U.S. Census Bureau to BLS projections of the labor force participation rate. (1) The assumptions about the population and the labor force participation rate that underlie the current BLS long-term projections of the labor force to 2050 differ from those of the previous BLS study conducted in 2002.

Assumptions about the population. The previous BLS long-term labor force projections were based on long-term Census Bureau population projections, weighted by 1990 census weights. (2) The previous BLS long-term labor force projections from 2000 to 2050 were extensions of the 2000-10 interim projections. (3)

The current BLS labor force projections to 2050 are based on interim population projections of the Census Bureau, in turn based on Census 2000. (4) The current long-term labor force projections through 2050 are extensions of the 2004-14 projections published in the November 2005 issue of the Monthly Labor Review. (5)

Census Bureau interim population projections are based on assumptions about future fertility and mortality rates of the U.S. population. Assumptions about immigration to the United States, which has a significant impact on population growth, are added to the assumptions about fertility and mortality. Indeed, of the preceding three factors--assumptions about fertility rates, assumptions about mortality rates, and assumptions about immigration--all of which are the basis of the calculation of the future population, none is as important or as uncertain as the assumptions about immigration.

Assumptions about the labor force participation rate. In the previous BLS long-term labor force projections, the detailed labor force participation rates were projected from 2000 to 2015, but were held constant from 2015 through 2050. As a result, any projected changes in the aggregate labor force participation rate and in the labor force between 2015 and 2050 reflected only changes in the composition of the population by age, sex, race, and ethnicity.

In the current set of long-term labor force projections, detailed labor force participation rates were projected from 2004 to 2020. Consequently, during this period, any changes projected in the labor force are the result not only of compositional changes of the population, but also of changes in the detailed labor force participation rates of the various age, sex, race, and ethnic categories. However, the latter changes are based on the past labor force behavior of those categories and are often assumed to approach zero beyond a certain point in the projection horizon. Accordingly, changes in the aggregate labor force participation rate and in the labor force between 2020 and 2050 will reflect only changes in the age, sex, race, and ethnic composition of the population.

Major factors affecting labor force change

Population growth and changes in participation rates are the main factors in the growth of the labor force. However, most of the changes in labor force growth are a result of changes in the population. During the 2000-50 timeframe, the projected overall decline in the participation rate is expected to exert a relatively insignificant influence on the labor force, whose growth will likely be due mostly to the impact of population growth.

The Census Bureau carries out long-term population projections of the resident U.S. population. The conversion from the resident population concept of the Census Bureau to the civilian noninstitutional population concept of the BLS Current Population Survey (CPS) takes place in three steps. First the population of children under 16 years is taken out of the total resident population. Then the population of the Armed Forces, broken down into different age, sex, race, and ethnic categories, is subtracted. Finally, the institutional population is subtracted from the civilian population for all the different categories. Thus, the civilian noninstitutional population comprises all nonmilitary persons 16 years and older who are not inmates of penal or mental institutions, sanitariums, or homes for the aged.

Population

The many demographic events since the beginning of the 20th century have led to significant changes in the size and composition of the population. Table 2 portrays the civilian noninstitutional population by age, sex, race, and ethnicity from 1990 to 2050, and chart 3 shows the noninstitutional population and the labor force in 1950, 2000, and 2050 (projected).

[GRAPHIC 3 OMITTED]

The civilian noninstitutional population was 189.2 million in 1990, 212.6 million in 2000, and 226.1 million in 2005, an increase of more than 13.5 million over the 2000-05 timeframe. The growth rate of the civilian noninstitutional population was 1.2 percent on an annual basis during 1990-2000 and 1.2 percent again between 2000 and 2005. The rate is projected to decrease to 1.0 percent over the 2005-10 period and to slow even further over the decades that follow. The civilian noninstitutional population is expected to grow at an annual rate of 0.8 percent over the 2005-50 period, reaching 322.6 million in 2050.

Table 2 also shows the shares of the civilian noninstitutional population for several age groups. The 16- to 24-year-old age group made up 16.2 percent of the population in each of 2000 and 2005. This group's share of the population is projected to decline to 14.4 percent in 2050. The share of the 25- to 54-year-old age group was 55.9 percent in 1990 and 56.8 percent in 2000 and is projected to be 46.3 percent in 2050.

The 55-years-and-older age group accounted for 26.5 percent of the civilian noninstitutional population in 1990 and 28.8 percent in 2005 and is projected to be 39.4 percent in 2050. The share of those aged 65 years and older also is expected to increase, and the share of those under 25 years is anticipated to decrease. From 1990 to 2005, the share of the former group in the population increased. In sharp contrast to the pattern for the youngest age group, the 65-year-and-older civilian noninstitutional population is expected to grow steadily and increase its share of the population from 15.5 percent in 2005 to 25.3 percent in 2050.

With the passage of each decade, immigration will continue to change the size and composition of the population in various ways. Immigration is expected to spur the growth rate of certain racial and ethnic categories, such as Asians and Hispanics. Immigration also affects the age composition of the population. Immigrants to the United States are predominantly younger than the native-born population, so their entry into the country adds to the population of the younger age groups. Immigrants offset the slow growth of the native born population and lower the average age of the working-age population.

The rate of growth of the Hispanic population is expected to be greater than that of all other racial and ethnic groups. Hispanics constituted 12.9 percent of the share of the civilian noninstitutional population in 2005 and are projected to increase their share to 16.3 percent in 2020 and reach 23.2 percent by 2050.

Labor force participation

Table 3 shows the labor force participation rates of the different age, sex, race, and ethnic groups for the years 1990, 2000, and 2005 and the projected rates through 2050. The civilian labor force participation rate is the proportion of the civilian noninstitutional population that is in the labor force. Overall, changes in the labor force participation rate over time are fairly consistent across the different age, sex, race, and ethnic groups. The overall labor force participation rate was 66.5 percent in 1990 and peaked at 67.1 percent during the period from 1997 to 2000. Every year after 2000, the rate declined gradually, from 66.8 percent in 2001 to 66.0 percent in 2004 and 2005. According to the BLS projections, the overall participation rate will continue its gradual decrease each decade and reach 60.4 percent in 2050.

Labor force participation rate by sex. Men and women have differed in their labor force participation rates throughout the history of U.S. labor markets and have affected the overall labor force participation rates in different ways. Historically, the labor force participation rate of men has been decreasing since the 1950s as a result of various factors. For example, the Social...

NOTE: All illustrations and photos have been removed from this article.



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