This slow transition in workforce demographics is a positive for the economy and can be healthy for employers if they take the requisite steps to adapt.
Noah Yosif
Weekly Economic Outlook
01/28/2025
The Great Unretirement (That Never Was)
The Covid pandemic encouraged millions of older workers to prematurely exit the labor force. Their behavior made sense at the time, considering that economic conditions were not guaranteed to normalize at the time, nor were their prepandemic employment prospects. However, during the Great Resignation, a brief uptick within the participation rate of older workers raised speculation of a broader “unretirement” among them, which would enable the labor force to maintain its prepandemic composition. Older workers never fully returned to the labor force after the pandemic; there is still a deficit of more than two million workers 55 years of age or greater within the labor force today. The lack of unretirement among older workers has major implications for employers and the labor market at large.
Fewer older workers could lead to workforce shortages, which would affect vital leadership and senior-level positions within individual companies. Similarly, fewer older workers could also lead to gaps within institutional knowledge which hinders workplace productivity as well as the capacity utilization of the broader U.S. labor force. And without a stable rate of replacement among younger generations, reduced output among firms would lead to lower economic growth. However, there is an important upside: With fewer older workers, younger counterparts have more opportunities to advance in their careers. This would increase competition for talent among firms which would lead to higher wages and labor churn throughout the economy. And while older workers may not be returning to their full-time roles, research suggests many are still eager to remain active through part-time or freelance work.
This slow transition in workforce demographics is a positive for the economy and can be healthy for employers if they take the requisite steps to adapt. Firms must maintain robust succession plans which ensure a smooth flow of knowledge retention among their experts. Furthermore, by prioritizing flexibility for the older workers who are gatekeeping this knowledge through phased retirements, part-time work, in addition to agile reward programs and workforce upskilling, companies can ensure that they have an orderly demographic transition within their workforce which mirrors the benefits that such portends for the economy at large.
Labor Force Participation Among Prime-Age and Older Workers
Source: U.S. Bureau of Labor Statistics and ASA Research Department
Weekly Staffing Research Outlook
01/28/2025
If the trend of rising worker confidence holds as the year progresses, a more dynamic labor market could manifest with clear rewards for staffing.
Max Aldrich
Good News for the Industry: Worker Confidence May be Rebounding
Over the past two years, pessimistic worker sentiment has slowed labor churn considerably. Staffing firms have felt the pinch in turn, as workers lack the confidence to seek new opportunities, and businesses lack the need to replace departed employees. While depressed turnover has been a consistent challenge for the industry, there are propitious early signals that worker sentiment is starting to rebound.Â
The ZipRecruiter Job Seeker Confidence Index increased 5.9 points in 2024Q4, boosted in large part by improving worker perceptions towards conditions in the job market—which previously have been not very positive. This data point is bolstered by other indexes such as the Eagle Hill Employee Retention Index, which fell by 6.2 points in the first month of 2025, which largely was also influenced by increased worker confidence towards opportunities in the labor market (as well as by falling satisfaction with company culture and provided compensation.)
Staffing firms should be tentatively optimistic about their short-term growth prospects in 2025. If the trend of rising worker confidence holds as the year progresses, a more dynamic labor market could manifest with clear rewards for staffing. As the swing in sentiment begins to stir up labor churn, the staffing industry will have the opportunity to meet freshly generated demand from employers and job seekers alike.
Job Seeker Confidence Increased to Close Out 2024
Source: ZipRecruiter Job Seeker Confidence Index 2024
Economic Calendar
Real Time Economic Calendar provided by
Investing.com.
