The Effects of Baby Boomers Retiring Will Have on the Economy Research Paper

The Effects of Baby Boomers Retiring Will Have on the Economy - Research Paper Example At each stage, of its life cycle, the baby boom generation has changed the market for many products, altered the demand for public services, as well as the nature of the labor force. This paper delves into the effects the baby boomers’ retiring will have on the economy of the United States over the next 20 years. Introduction In the world’s history, baby boomers (who represent 28% of all the United States’ adult population) have been one of the most productive generations. This generation took advantage of subsidized scholarships and school loans from the government, which enabled them to get proper education, which in turn helped them to secure high paying jobs in all sectors of the US economy with tremendous added gains from globalization and newer technologies (Talbott, 2010). Social scientists, analysts, and policymakers have developed a great interest regarding the effects of the retirement of baby boomers on the economy of the US and the nation at large. Th e year 2005 marked the commencement of the exodus of baby boomers from the labor force. Since then, every seven seconds, a baby boomer attains the retirement age of sixty years, and this process will continue for the next twenty years. These retirements foreshadow a diminution of workplace knowledge as well as knowledge-based experience at a time when such experience and knowledge are more and more vital to the economy of the US as well as to the organizations that comprise it (Beazley, Boenich, and Harden, 2002). Estimates by the Employment Policy Foundation indicate that with baby boomers reaching the age of retirement, by the year 2012, businesses will experience a severe shortage of six million employees, and this number will increase to thirty-five million employees by the year 2030. Slower workforce growth implies that there will be slower rate of growth of the economy, and consequently, the living standards of everybody in the nation will be lower. Essentially, the baby boom generation’s retirement threatens to limit the potential of the economy of the United States, reducing the speed limit on how fast it can grow. Economists projects a considerable decline in the growth of the US economy to 2.2% by the year 2015, compared with a typical growth of about 3.2% during the last forty years (The special committee on aging, 2007). According to Gordon (2005), over the next next twenty years, a great number of baby boomers, roughly seventy million baby boomers, some highly skilled, will start leaving the job market of the United States of America gradually, with only forty million employees coming in. Following this retirement, skill shortages throughout the whole economy will get to critical levels. Woodruff (2011) points out that reports from the Pew Research Center indicate that for the next twenty years, over ten thousand baby boomers will be retiring daily. This retirement will have a remarkable effect on everybody and on all measures of the United States’ economic output (Talbott, 2010). For instance, it will lead to a slowdown of about 0.5% in the growth rate of in the workforce every year from its average 1.6% per annum since 1950-2007. The decline in the growth of the workforce in the United States is an indication that the nation’s labor supply may be inadequate to sustain the standards of living (Jarvik, 1980). The special committee on aging (2007) reports the fact that the aging and retirement of baby boomers will have potential impacts on the economy of th