As many older workers are turning 65 and considering or entering retirement, employers are experiencing labor shortages that could impede production growth, increase inflation, incentivize automation, and hurt social services that are funded through payroll taxes, says Patrick Jones, executive director of the Institute for Public Policy and Economic Analysis at Eastern Washington University.

Mike McBride, business and industry analyst for Spokane Workforce Council, says this year is interesting because it’s the first time that more people are turning 65 than are turning 18 nationwide.

“That trend will continue through the rest of the decade and actually expand with more people turning retirement age than turning working age,” he says.

The Silver Tsunami is another term used to describe the increasing age of the population, says McBride.

Jones agrees that this trend is going to continue into the foreseeable future. “So count on the great tide to keep on flowing,” he says.

The overall workforce participation rate is 61.8% for people aged 16 years and older in Spokane County, according to data from the U.S. Census Bureau’s 2021 American Community Survey.

For comparison, the nationwide workforce participation rate is 62.6%, according to the most recently available data from the U.S. Bureau of Labor Statistics.

Jones says total job numbers in Spokane County have recovered from pandemic-era net losses of over 10,000 jobs, and Spokane County has an unemployment rate in the range of 3%.

Yet, despite a growing population, low unemployment, and a growing number of jobs, Spokane County has a declining workforce participation rate.

“When it comes to the labor shortage, retirements are the number one impact,” says McBride. “The millennial generation was much larger in the U.S. than in any other Western nation around the world. We’ve had a real big advantage in that regard, but with the baby boomer generation retiring, that’s going away quickly in terms of the number of people in the labor force.”

Jones says a growing economy requires a growing workforce.

“It’s pretty clear that if we have a declining participation rate with a moderately growing population, we are going to have difficulty filling jobs,” says Jones.

Altogether, Jones says he expects the Spokane economy will experience wage inflation, which then will lead to overall inflation.

Jones says this is actually already happening here with wages in Spokane County rising faster than in prior years at about 6% year-over-year in 2022.

“Another consequence is this will give incentives to employers to substitute machines and computers for people,” adds Jones.

To overcome labor issues, employers could look for solutions to incentivize different population groups back into the labor market, says McBride.

Jones agrees and says there are many ways employers can change the trajectory of the workforce participation rate in Spokane County, which is projected to fall to between 57% and 58% by 2030.

Jones says companies can retain older adults with partial retirement and flexible scheduling options. If there were 3% more older workers in the workforce, that would equate to about 3,800 more people working by 2030, he says.

Employers could also encourage youth participation by promoting apprenticeships and internships and having a willingness to teach and train new workers. Three percent more workers in this group would add about 1,400 people by 2030.

Bringing women’s participation rate up by 2% would add about 6,000 people to the labor market in Spokane in 2030. Jones contends that businesses could support this through child care expansion and offering hybrid work schedules to encourage more women in the labor market.

He also suggests that employers could recruit people with disabilities, become well-versed in their needs, and have some type of accommodation in place. Spokane has a significantly higher share of disabled people at 14.2%, compared to the U.S. rate of 10.7%. A 3% gain in the workforce would be about 1,500 workers, he says.

Lastly, Jones says there are fewer foreign-born people in Spokane compared to statewide and national immigration populations. According to Spokane Trends, Spokane County’s share of the population who don’t speak English at home is 7.7% in 2021, compared to 20.8% in Washington state, and 21.6% in the U.S.

Jones says that companies can encourage greater participation from this group with community outreach and connecting with organizations that serve them.

If employers are able to engage more workers, “We could get our workforce participation rate away from the trajectory we’re on now and back to growth. If not growth, then at least no more decline.”

Jones contends a higher workforce participation rate in Spokane County would boost production in goods and services and would, in turn, lead to higher output per person and then a higher income per person.

“I would hope that one of Spokane’s goals is to see higher incomes per person,” says Jones.