By Curt Long
Toward the end of last year, the U.S. Bureau of Labor Statistics (BLS) released its latest labor force projections through the next decade (2028). Many of the forecast changes are already well underway and represent the interactions of demographic, technological, policy and economic forces, to name a few. While no one has a crystal ball, the projections serve as a useful starting point for credit unions to consider the potential changes to their own labor forces, and how they must change to attract and retain talent in order to better serve their members well into the future.
One of the more significant evolutions in the labor force will come as no surprise: aging. The relative sizes of the baby boomer and millennial generations are expected to lead to significant increases in their respective age cohorts (see chart below). The latter will be responsible for more than 4.6 million estimated new workers in the 35- to 44-year-old category by 2028. But whereas the influx of millennials to the workforce has received no shortage of attention from media and employers alike, the much larger change at the upper end of the age spectrum probably deserves more consideration than it is receiving. The 65-and-over category is anticipated to grow by more than 60 percent — or 6.1 million workers — by 2028. If these forecasts bear out, that age cohort will represent nearly 10 percent of the overall labor force.
Not only will the labor force become older, it will be more diverse. The number of laborers is expected to grow by 8.9 million by 2028, and 5.4 million of those are expected to be female. Labor force participation rates fell by roughly the same amounts for males and females following the financial crisis, but since 2015, the return of females to the labor force has been far more dramatic. While numerous theories were offered as to why males were not returning to the workforce at the same rate as females (the appeal of video games being one notorious example), researcher Ernie Tedeschi from Evercore ISI has identified a more likely candidate: a rise in stay-at-home husbands. Others have focused attention on the role of more family-friendly work policies.
Meanwhile, the racial diversification of the labor force is also expected to continue. Non-Hispanic whites made up 74 percent of the workforce in 1998. That has since fallen to 62 percent, and the BLS expects it to decline to 57 percent by 2028. Among minority groups, the largest increase is expected for Hispanic workers, whose share of the labor force will grow from 17 percent to 21 percent over the next decade, according to those estimates.
These labor force projections are then broken down by industry. The expected changes for depository institutions are striking (see chart above). More than 50,000 jobs will be lost in aggregate over the next 10 years among banks, thrifts and credit unions, with those losses concentrated among frontline staff. This would represent a dramatic reversal for credit unions, whose payrolls have grown by nearly 20 percent over the past five years. However, employment at banks and thrifts has shrunk slightly over that time. Clearly, BLS envisions that the combination of automation and reduced reliance on branches will lead to a dramatically lower demand for tellers and customer service representatives.
If these forecasts are correct, credit unions will need to determine whether this presents an opportunity to join the herd in pursuing cost savings for their membership, or whether they can distinguish themselves from the crowd by offering a more personal touch.
Curt Long is NAFCU’s chief economist and vice president of research.
This article was published in the November-December 2019 edition of The NAFCU Journal magazine.
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