Are Aging Baby Boomers to Blame for the Labor Shortage?

“Since November 2017, population aging has continued to exert a strong downward pull on the [labor force] participation rate," a Boston Fed study found.

  • A study by the Federal Reserve Bank of Boston found that retiring Baby Boomers are leaving a significant gap in the workforce, pandemic or no pandemic.
  • Restaurant owners need to understand what kind of jobs Gen Z workers are looking for and rethink company culture accordingly, two industry experts advise.

Related: How to attract workers back to the restaurant industry

Rather than unemployment benefits and “lazy” people who “don’t want to work,” could aging Baby Boomers be to blame for the labor shortage? According to a study by the Federal Reserve Bank of Boston (Boston Fed), the answer is mostly yes.

The December 2021 study, titled “Population Aging and the U.S. Labor Force Participation Rate,” finds that retiring Baby Boomers have left a significant gap in the workforce. And that would have been the case with or without the COVID-19 pandemic.

“The labor force participation rate dropped sharply at the beginning of the pandemic, and as of November 2021, it had recovered only about half of its lost ground,” the report notes. “The failure of the participation rate to get closer to its level immediately before the pandemic has puzzled many analysts.”

But it’s not so puzzling, the study’s authors maintain, if you compare the labor participation rate of November 2021—when unemployment was at 4.2%—to the participation rate of November 2017, when unemployment was at the same level, instead of to the February 2020 level, right before the pandemic started.

“Since November 2017, population aging has continued to exert a strong downward pull on the participation rate, so that participation is now close to what one would expect, given the current unemployment rate and the current age structure of the population,” the study concludes.

Related: Survey: Where have all the hospitality workers gone?

There are probably multiple factors, of course, including concerns about contracting COVID-19 and parents who have to juggle their jobs with unpredictable school schedules and limited childcare options. But most schools have gone back to in-person classes. “Moreover, claims that generous unemployment insurance payments have reduced individuals’ willingness to work have been undermined by the sluggish recovery in participation after these payments ended,” the study says.

The main problem seems to be Baby Boomers aging out of the workforce, with too few younger workers to take their place.

Last year Baby Boomers were between the ages of 57 and 75, with an average age of 66, as Meredith Sandland and Carl Osbourne, co-authors of “Delivering the Digital Restaurant: Your Roadmap to the Future of Food,” explained in a recent article for Nation’s Restaurant News.

“When a generation that makes up one-fifth of the U.S. population and one-third of the working-age population retires, the labor force feels it,” Sandland and Osbourne wrote. “Statistically, the older an individual is, the less likely he or she is to work. Labor force participation rates peak around 75% in the 25-54 age cohort, while 55-64 drops to around 60%; 65-69 drops to around 30%; 70-74 drops to around 15%; and above 70 is half that again. Whether these individuals don’t need to work, can’t work, or are discouraged by ageism in hiring is irrelevant. They simply aren’t present in the workforce, and every day more and more Boomers are aging into these categories.”

But there is some hope for the future, the Boston Fed report adds. “Individuals with college degrees tend to have higher [labor force participation rates] than individuals without them, so ongoing educational gains in the population should raise participation,” the study predicts.

Although younger college graduates won’t likely be numerous enough to completely fill the labor gap—there are only 9 Gen Zers for every 10 Boomers—restaurant owners need to understand what kind of jobs these potential workers are looking for.

Related: Focus on creating employee satisfaction to retain a happy, motivated staff

“Odds are high the answers will be people, culture, community, contribution … and learning,” Sandland and Osbourne explained in the NRN article. “This newest generation to enter the workforce is just at the start of their working life—help them understand how working with you will give them a solid foundation for their career.”

Young Americans “want to work at places that share their values,” Sandland and Osbourne continued. They “tend to be more global and progressive, to care more about diversity and inclusion, and to want to have an impact that goes beyond economics. Your restaurant doesn’t have to operate as a non-profit to draw their interest, but it does need to give back.”

They recommend several ways to appeal to younger workers:

  • Use your website’s “About Us” section to explain how your restaurant gives back to the community.
  • Get to know younger people and find out what makes them tick. Seek “reverse-mentoring” from your youngest employees, preferably under 24, or ask a child, grandchild, niece or nephew “what makes work compelling to them and their children.”
  • Since Gen Z is a generation of digital natives, look for ways to digitize your processes for recruiting, hiring and training employees, as well as scheduling their work hours and paying them.

In the meantime, focus on boosting employee productivity wherever you can. “What are your employees doing that they could be doing more efficiently or don’t need to be doing at all?” Sandland and Osbourne said. Adding technologies like pay-at-the-table, scheduling software and programmable ovens can also save labor hours.

“The labor force is not going to suddenly grow dramatically and make your labor shortage headaches go away,” they added. “Accept the new normal and change your business processes and culture to match the expectations of today’s workers.”