State labor force growth slowing, study shows

A Kelley School of Business study predicts Indiana will see a slowdown in labor force during the next three decades as baby boomers approach retirement and a decades-long increase in female labor force participation appears to be ending.

The slowdown emerged between 2000 and 2010, according to projections released Nov. 13 by Kelley’s Indiana Business Research Center and produced for the Indiana Department of Workforce Development, according to a press release.

“A rapidly expanding group of retirees coupled with a slowly growing labor force will create several challenges over the next few decades,” Matt Kinghorn, state demographer for the Indiana Business Research Center, said in the release. “Achieving goals such as increased educational attainment and sustained productivity gains will be crucial to ensuring that living standards continue to improve for all Hoosiers.”

Indiana’s labor force grew by an average of 310,000 workers per decade between 1950 and 2000, a change the study said was caused by a population increase in the baby boomer generation and the increasing number of women choosing to enter the workplace.

Between 2000 and 2010, the state’s labor force grew by about 132,000, the smallest decade gain since the Census Bureau began collecting such data in 1940.

During the next decade, Indiana’s labor force growth is expected to decrease to less than 120,000. Growth is expected to stall between 2020 and 2030, the study projects. During this period, the study suggests the baby boomer and baby-bust generations will find themselves on opposite sides of the traditional retirement age.

During the next three decades combined, Indiana’s total labor force is expected to grow by 150,000, according to the release.

This decrease in growth is not only seen in Indiana. Rather, it is part of a national trend. The Bureau of Labor Statistics show national labor force growth decreased to an average annual rate of 0.8 percent last decade. Between 1950 and 2000, annual labor force growth had an annual average rate of 1.6 percent.

After 2030, the study projects Indiana’s labor force will begin to pick back up, but slowly.

“Employers can respond to a tight labor market in a number of ways including aggressive recruitment, investing in productivity gains, developing training programs internally or with partners, increasing the hours worked by existing employees, loosening hiring requirements and raising wages,” Kinghorn said.

— Mark Keierleber