News

Off Deadline: Silicon Valley has entered a tsunami decade of retirements

New report shows up to 300,000 employees will retire in the region

A virtual tidal wave of retirements will occur between now and 2025 as older workers leave the workforce in Silicon Valley, the Bay Area and beyond, according to a comprehensive new report.

Up to 300,000 workers will retire in Silicon Valley, opening a huge range of mostly non-tech jobs that may be difficult to fill with younger workers, the report states.

The effects will be far-reaching, impacting nearly every aspect of the lives of residents and business operations, according to the 12-page report from the Silicon Valley Institute for Regional Studies, which is affiliated with the industry-based Joint Venture Silicon Valley.

"While tech gets top attention in discussing the Silicon Valley economy, many retirees come from vital non-tech occupations, including teachers, doctors, nurses, public safety workers, construction occupations and local government," the report notes, citing California Employment Development Department projections.

"Replacing these workers will pose challenges in both the private and public sectors," it warns. "Challenges" often translates as "problems."

The report's principal authors are Stephen Levy, senior economist for the Institute and director of the Palo Alto-based Center of the Continuing Study of the California Economy, and Rachel Massaro, Joint Venture Silicon Valley vice president and senior research associate for the Institute.

"There are two enormous barriers to replacing the retirees," Levy said of the report's broad implications in a recent telephone interview. The first is the widespread shortage of housing and the second is recent federal anti-immigration policies, he said.

The Institute and Joint Venture issue regular reports on the area's economic trends. Last July the Institute reported on a modest slowdown in job growth and on the continuing "housing crisis" in the Bay region. Joint Venture earlier warned of a "shrinking middle class" in Silicon Valley.

Even though more workers 55 and older are working longer, retirements predictably will surge as the bulk of the baby-boomer generation moves into its 70s and beyond. "Baby boomer" is a loosely defined term usually applied to those born between the mid-1940s and the mid-1960s.

While the retirements will create job openings and promotion opportunities for younger employees, there are downsides, including a loss of experience and knowledge.

Because about three-quarters of job openings will be retirements, businesses will "need to focus on replacement needs in addition to new jobs and occupations," the report notes. "These replacement openings provide the broadest and deepest source of jobs for new and existing workers looking to move up as these replacement openings will provide the largest source of middle-wage opportunities in the coming years."

The percentage of older workers staying on the job grew from 38.5 percent to 42.8 percent between 2007 and 2016, the report notes. Silicon Valley led the nation in the percentage of older workers staying on the job. The job rate for workers ages 25 to 54 is 85.4 percent, about double the over-55 rate.

The report notes that if the stay-on-the-job rate continues increasing at its current (2016) level, the number of projected retirees would drop by about 6 percent, or close to 280,000, through 2025, rather than the higher 300,000. Big if.

The retirement surge will continue beyond 2025, but at a lower rate, the report states.

Where will the replacement workers live? The housing shortfall for replacement workers will be exacerbated because many retirees will remain in their Silicon Valley residences for some after retiring.

Absent a massive housing expansion in Silicon Valley, that means more workers will need to travel from other areas, a problem for near-gridlock freeways and highways serving the region already.

In 2015, more than 200,000 commuters traveled into Silicon Valley just from Alameda County, according to Joint Venture's 2017 Index.

Some relief can be expected from future "transportation investments," the report notes. It cites an "expanded Altamont Corridor Express (ACE) service, the new BART stations opening in Fremont and south, and the possibility of high-speed rail service from the San Joaquin Valley into San Jose." Those "all have the possibility of expanding where the Valley gets its workers. The commute-shed regions do, however, face the same demographic trends as Silicon Valley with an aging population and workforce," the report notes.

The report includes a breakdown of 2025 retirees by current ages. The bulk (about 170,000) are currently ages 55-64. Another 70,000 are now in the 45-54 range, and 60,000 are currently in the 65-74 range.

The report concludes with an "implications" section specifically "intended to stimulate discussion" about the workforce and economy. It projects that fully two-thirds of job openings will be for replacement jobs. Replacement job openings will also occur in some categories where there is no actual job growth.

Replacement job openings "are the opportunity side of the retirement wave in the sense that they provide a target for helping people move up while at the same time helping private- and public-sector employers fill critical positions," the report states.

"The challenge is that many retiring workers ... have skills and experience that cannot be easily matched by workers just entering the workforce. In the past, the Silicon Valley workforce has been aided by migrants from abroad and from other parts of the country. High housing prices and a less welcoming immigration policy, at least currently, make this solution harder in the years to come.

"Population and job growth is slowing here and across the state and nation as boomers age, birth rates fall, and immigration has stopped increasing. While this may make it easier for Silicon Valley to address housing and transportation challenges, success here is not easily accomplished." Is it ever?

Former Weekly Editor Jay Thorwaldson can be emailed at jaythor@well.com.

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Follow the Palo Alto Weekly/Palo Alto Online on Twitter @PaloAltoWeekly and Facebook for breaking news, local events, photos, videos and more.

Comments

12 people like this
Posted by Jeff
a resident of Fairmeadow
on Nov 3, 2017 at 6:29 pm

There are many dated concepts embedded in this article. The work environment, in high tech, should be based on the sharing of ideas...which can easily be achieved via telecommuting (no cars)...just sit at home, anywhere in the world, with video presence among the team members. Many of the jobs discussed here will simply evaporate (disruption). Manual labor will still be required, but the rates will rise dramatically to support it. Commuting from distant places can and will be solved with commuter trains and vans and flex schedules.

I find this discussion to be lacking in forward thinking.


10 people like this
Posted by And what about teleportation?
a resident of Adobe-Meadow
on Nov 4, 2017 at 6:36 am

@Jeff, I like it when news stories don't base things on unfounded predictions.


21 people like this
Posted by Squandered
a resident of Community Center
on Nov 4, 2017 at 9:46 am

The baby boomers have taxed us mightily and squandered the money. Most recent example: our recently added gas tax.

You think it goes to fix roads? Well, not so fast - it doesn't actually allow any new road construction. So we are paying the gas tax (again - this is the third gas tax squandered) and it will not improve congestion at all. And it is heavily regressive on the poor, on commuters, i.e. the young workers.


Want to relieve housing stress? Build transportation out to areas with lower cost land.

But will our state do so? No. The gas tax is squandered, and High-Speed Boondoggle doesn't serve regional rail needs. We could really use more lanes across the Bay and 3 or 4 rail connections to Livermore and Central Valley. But while regional rail plans die on the vine, the High-speed boondoggle soaks up time, money and attention, while providing no visible benefit to anyone, anytime.

The challenges facing younger workers? Our state politics. It is bad policy which is hurting younger workers. Frankly, the baby boomers can't kick the bucket soon enough, so that we can start to make the state work again.


17 people like this
Posted by Working till I drop
a resident of Midtown
on Nov 4, 2017 at 10:10 am

I'm 55 years old and at the tail end of the baby boomers. I grew up in this area and have been an apartment renter most of my life. Most of my paycheck is used to pay my rent, especially today with the rental market that favors property owners. I've had to live off of my savings during the times when the economy tanked and the companies I worked for laid off most of their workforce. Today, with most of my income paying my ever increasing rent and nothing left over for my savings account, I will not be able to retire until I drop dead. I wish I was one of the lucky ones who will be able to retire.


5 people like this
Posted by Working till I drop
a resident of Midtown
on Nov 4, 2017 at 11:58 am

@ Squandered: Why are you blaming the baby boomers who are largely a product of WWII? If you want to point fingers, blame Hitler. He started WWII which resulted in the death of over 60 million people, about half a million from the US. People had lots of babies (baby boomers) after the war to make up for the loss of lives. The world changed after WWII, largely because of new opportunities for the soldiers that weren't available before. Masses of people moved out west because soldiers from the midwest who were stationed in CA didn't want to return to the snow. Technology also changed. Most of the baby boomers weren't even 20 years old when the changes occurred. Every generation is responsible for changes, but it's unfair to blame one generation for all problems.

All presidents of the United States, with the exception of Obama and Bush, were not baby boomers, and the only baby boomer Governor of California was Arnold Scwarzenegger. The US government has largely been run by the generation born prior to the baby boomers.


3 people like this
Posted by Richard
a resident of Atherton
on Nov 4, 2017 at 12:24 pm

Am I the only one who hates the term "baby boomers"? Makes me think of B-52s dropping crying baby bombs. It makes me think of exploding babies.

The term "millennial" is almost as bad.

Either manual labor jobs are totally replaced by automation and self-driving trucks, creating mass unemployment and possibly leading to technocrat/cyborg induced mass sterilization and eugenics.
Or the tech bubble bursts and we stop giving ourselves over to robots because of tech monoliths like Google being so eager to "innovate" and sell their latest technological gimmicks.

I don't think predicting the future could get any more accurate than that.

I recommend the movie: Ex Machina


8 people like this
Posted by Working till I drop
a resident of Midtown
on Nov 4, 2017 at 1:23 pm

One last comment to Squandered:

What's stopping you from making changes now? Why wait till the baby boomers are dead, which won't be for a long time. In the meantime, those born after the baby boomers are now in their 50s. Are you also going to wait for them to die off before making any changes? And someday YOUR generation will be blamed for everything that is wrong in the world.

Here are a few leaders in the tech world that were born AFTER the boomers. They have a lot of money and can influence politics:

1. Jeff Bezos - CEO of Amazon
2. Mark Zuckerberg - Founder and CEO of Facebook
3. Jack Dorsey - Founder of Twitter
4. Elon Musk - Tesla

To quote Mahatma Gandhi: "Be the change that you wish to see in the world."


14 people like this
Posted by Huh?
a resident of University South
on Nov 4, 2017 at 4:12 pm

In one article, we hear that no one wants to hire the baby-boomers and they're lobbying for special age-protections in the law, and suing employers when they get laid off or fired. Then in this one, we hear that they're so valuable that industry will grind to a halt after they shuffle of to retirement homes.

Which is it?


6 people like this
Posted by stephen levy
a resident of University South
on Nov 4, 2017 at 4:49 pm

stephen levy is a registered user.

Hi,

I wrote the report and I want to respond to some of the comments.

The retirement wave is a workforce replacement challenge.

It is not now primarily about tech workers who are generally longer as a group.

It is about people in jobs like nurses, doctors, plumbers, public safety workers and thousands of others who will not or cannot work until they drop.

In our area only about 5% of residents over 75 work and not much higher for over 70. Many occupations are too strenuous for older workers.

Most of the people mentioned above will not be replaced by robots or work at home in the near future if ever. The actual evidence by the way on work at home in Palo Alto is about 5%.

Certainly with better transportation and more housing, some of those challenges can be met.

But the retirement wave is real.


11 people like this
Posted by Working till I drop
a resident of Midtown
on Nov 4, 2017 at 7:38 pm

Is the shortage of doctors due to those of retirement age retiring or because engineers make more than doctors? Doctors and lawyers used to be the top earners who could easily afford nice houses in Palo Alto but now the tech big wigs are the top earners. Why spend so many years (12) and $$$ studying medicine when it's much easier and quicker to earn an engineering degree.

If you don't want to loose the non-tech workforce, impose a rent control and stop allowing the big high-tech companies to take over. What do you expect when Palo Alto is surrounded by companies like Facebook and Google? How does anyone who does not make a salary in the high six figures stand a chance?


Like this comment
Posted by common sense
a resident of Midtown
on Nov 4, 2017 at 7:50 pm

Article on rent control on sf chronicle:

Web Link


10 people like this
Posted by @Working till I drop
a resident of Midtown
on Nov 5, 2017 at 1:35 am

Baby Boomers need to retire to make room for those of us waiting to be promoted into higher paying jobs.


11 people like this
Posted by common sense
a resident of Midtown
on Nov 5, 2017 at 7:49 am

Has there been an issue in filling openings are various government entities and non-tech businesses? I've read in the past that whenever there is a recruitment for a firefighter, there are plenty of applicants. I haven't seen the City of Palo Alto have any problem with hiring Assistant City Managers, PR spokespersons, etc.

So the facts don't seem to support the talking points in this article.


8 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Nov 5, 2017 at 8:58 am

Online Name is a registered user.

@@Working till I Drop, Baby Boomers aren't likely to go anywhere given the the new tax plan that the GOP is now pushing through that penalizes high earning, high tax Blue states by cutting the amount deductible for property taxes to $10,000, by halving the amount of mortgage interest one can deduct from $1,000,000 to $500,000, by eliminating the deductions for state and local taxes which includes the cap gains/income tax paid on home sales, eliminating medical deductions etc etc. etc. -- all of which makes housing less affordable.

Maybe if you had more Baby Boomers with social consciences still employed at the Big 5 local tech companies, we wouldn't have had the Fake News problem that influenced this past presidential election and made all those tax changes possible,


8 people like this
Posted by Working till I drop
a resident of Midtown
on Nov 5, 2017 at 2:17 pm

@ @ Working till I drop,

I don't have a high-level job that anyone is waiting for. It's really difficult for people of my age and experience to land a job in the high-tech industry. Walk into most of the newer tech companies around here and you won't see a lot of older employees, and those companies aren't likely to higher older employees. I know several high level workers in tech who were laid off and replaced with younger workers. It happens all the time. I really don't think you have to worry about the baby boomers keeping you from getting work - - just the opposite. There will be a high demand for health care workers and assisted living facilities to care for the aging population. Think about it - the bulk of the boomers are now in their 70s and the youngest are in their mid 50s.

@online name: what makes you so sure that all the boomers around here own homes? I don't, and I'd say that at least 80% of the kids in my Paly graduating class, and many of their parents, have moved away because they can't afford to live here. The new high-tech folks, like Mark Zuckerberg (not a boomer), buy up several houses on their street to build their mega properties, but I guess the baby boomer bashers are okay with that. There are boomers who have lived here for a long time, but I don't think there are as many as you imagine, and there's no reason they shouldn't be able to stay in their homes.

I would love to glimpse about 30 years into the future when the younger folks bashing us boomers will be middle-aged and dominating the workforce. Facebook and Google, now full of young, "hipster" workers, will have an older workforce and feel the threat of loosing their jobs to younger workers. It's not as far away as you think, so be careful with your boomer bashing!


9 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Nov 5, 2017 at 3:16 pm

Online Name is a registered user.

@Working till I drop, of course you're right that not all boomers own homes here. I've said good bye to too many boomer friends when they've gotten laid off and can't sustain the rents while the continue their long and often fruitless job search when they're replaced by younger, cheaper US employees and even younger and even cheaper Visa employees.

It's pretty sad when people have to worry they're too old at 35+. It's equally odd to think we're going to planning communities for those who'll be here for only 15 or so years (25-40 yrs old) before they too are forced out. That doesn't make for community stability.

I'm wondering how the new Comp Plan is going to account for the likely economic consequences of the GOP tax plan.


9 people like this
Posted by Anneke
a resident of Professorville
on Nov 6, 2017 at 1:29 pm

The so-called "Baby Boomers" have worked hard to bring the country back from a devastating World War II. Most of them worked (their whole lives) in regular jobs with regular salaries, not necessarily in technical jobs with extremely high paychecks, bringing up their families and contributing greatly to peace and wellness for everyone.

The Bay area, because of its enormous focus on high technology that rewards high salaries, is paying a steep price for this focus which has caused incredibly increased housing and rental prices, and is more than likely a prime reason for the high benefits of city employees, where this technical focus reigns.

What I am still amazed at, is that our transportation system has lagged terribly behind our Bay Area business expansion, causing many of the above problems. An excellent transportation system would allow workers and their families to live in excellent homes and communities a decent distance away from their jobs, balancing the overall housing market and its prices. It would also create much needed flexibility. For example, if the Hi-Tech business were to move away from the Bay area (remember Detroit), you can easily reduce transportation means versus reducing or continuing to occupy the homes that were built during high times.




6 people like this
Posted by fact checking
a resident of Fairmeadow
on Nov 6, 2017 at 2:57 pm

Anneke - "The so-called "Baby Boomers" have worked hard to bring the country back from a devastating World War II."

Nah, b. None of us worked in the 40's and 50's, the WWII recovery period (unless the very first boomer "worked" as a 14 yr old newspaper delivery-boy in '59)

Boomers worked during the period of recovery from Vietnam, Johnson and Nixon. The Vietnam War was financed by higher tax rates and gross inflation. Of course the real spike in debt came in the 80's when you-know-who tripled the debt, from 900 billion to 2.7 trillion.



Like this comment
Posted by Anon
a resident of Another Palo Alto neighborhood
on Nov 6, 2017 at 3:41 pm

"Posted by Squandered, a resident of Community Center, on Nov 4, 2017 at 9:46 am"

"The baby boomers have taxed us mightily and squandered the money. Most recent example: our recently added gas tax."

It is the trucking industry which benefits from fuel taxes. Most road wear is caused by heavy trucks, while fuel taxes over-tax light vehicle owners. Where do "baby-boomers" come into it?

"You think it goes to fix roads? Well, not so fast - it doesn't actually allow any new road construction. So we are paying the gas tax (again - this is the third gas tax squandered) and it will not improve congestion at all. And it is heavily regressive on the poor, on commuters, i.e. the young workers."

It is heavily regressive on anyone not driving a heavy truck, but, the trucking industry is politically powerful. I'm not sure why "baby-boomers" are particularly to blame for it. But, I can tell you from personal experience that some new, smaller cars get around 50 mpg when driven carefully. Make a statement to the trucking industry and drive a fuel-efficient vehicle.


"Want to relieve housing stress? Build transportation out to areas with lower cost land."

Great idea. One single track of a multi-track commuter rail line (e.g. Long Island Railroad) can move over 40,000 passengers per hour. Compare that to a freeway lane.

"Frankly, the baby boomers can't kick the bucket soon enough, so that we can start to make the state work again."

Because baby boomers are responsible for all the world's ills? You might want to read a little more history. For US history, I suggest reading Ron Chernow's "Hamilton" and "Washington" to start.


15 people like this
Posted by Sanctimonious City
a resident of Barron Park
on Nov 6, 2017 at 4:34 pm

Sanctimonious City is a registered user.

What a surprise.

The report authored by global elitists promotes the need for MORE immigration and MORE housing because of a mass retirement.

They neglect to point out that their age descriminating layoff inducing spolicies of outsourcing and offshoring are the reason for that cohort being pushed from the labor force.


16 people like this
Posted by Anke
a resident of Mountain View
on Nov 6, 2017 at 5:28 pm

"In the past, the Silicon Valley workforce has been aided by migrants from abroad and from other parts of the country. "

In other words, we've set up our region to require continuous substantial population growth in order to function, and then, oops, we reach a ceiling where population growth causes problems, not solutions. Imagine that.


4 people like this
Posted by Baby Boomer perspective
a resident of Duveneck/St. Francis
on Nov 7, 2017 at 12:54 pm

Baby Boomer perspective is a registered user.

Today I (a baby boomer whose kids are no longer in PAUSD schools) spent my morning volunteering at Gunn High School. Interestingly, I was joined by a group of parents and one other boomer whose kids (like mine) are also out of school.

I'm enjoying working in my community as a volunteer. I still have lots to offer. Giving back feels good.

I love our community and my neighbors--young and old--and I plan to work to help keep our community strong.

Let's stop wringing our hands, roll up our sleeves like our dedicated founding fathers did, and work together to create an amazing place for us all. That's how America works. We are nation with a form of government that depends on citizen participation and volunteerism. Read your biographies on the founding fathers and on most of the great leaders of the last century, including people like Martin Luther King. In this country, if you want to change the world, your best course is to work together with other good people to make the change you want.

Kvetching on the internet does NOT count as positively, productively participating. Get off your computer and out into the community. Pick some volunteer work that is meaningful to you and get DEEPLY involved. Try to understand the problems that need to be solved and bring people together to solve them. This show we make a better world for ourselves, our children and grandchildren. BE part of the solution. Everything feels better when you are doing what you can to help.


Like this comment
Posted by Neighbors Helping Neighbors
a resident of Midtown
on Nov 12, 2017 at 4:13 pm

Help for seniors & other demographics

Dear Baby Boomers and others,
We have a fantastic local nonprofit organization, Neighbors Helping Neighbors ( NHN). NHN serves mostly middle & lower upper income households. However, NHN's programs and services, there are no income restrictions.

NHN has a large Housing & Jobs Networks.

Here are some of the features, for the "private rental market" searches. It's FREE...

■ Relocation Packet - going prepared to view rentals gives you a one up on other applicants.
Blank Rental Application / Credit Report/ Proof of Income / Rental Resume

□ Relocation Supplies - Moving Boxes

■ Listings Alerts - Weekly rental listings for room rentals & or 1-2-3 Bedroom. Legitimate rentals.

■ Landlord Tenant Issues - Assistance w/letter writing, negotiations and more.

■ Roommate Matches - Based on personal & rental profiles, people are paired up with other renters for housing searches.

■ Rental Assistance/Application Fee Assistance/Utility Assistance - on a case by case basis applicants are considered for financial assistance with rent, 'first & last rent plus deposits. And financial assistance with paying application fees or utility bills.

■ Support of professional property management team.
NHN Housing Coordinator, Housing Consultants & Helpers - non paid volunteers help renters navigate housing search.


Like this comment
Posted by Neighbors Helping Neighbors
a resident of Midtown
on Nov 12, 2017 at 4:17 pm

Those interested in seeking help with jobs and housing contact, NHN.HousingProgram@gmail.com or 650-283-0270.


Like this comment
Posted by long view
a resident of South of Midtown
on Nov 12, 2017 at 5:23 pm

long view is a registered user.

@baby boomer perspective - when the gentrification of Palo Alto is more complete, perhaps the noise on Palo Alto online will die down. Or perhaps you will retrain to be a volunteer nurse because no nurses at current salaries can afford to live here, if they did not buy when you did. (I am assuming you are a home owner.) Meanwhile, as rents keep rising faster than our salaries, many of us curse our bad luck to have ever settled here. We enjoy an online break from planning our escapes. The trick is to find a job elsewhere where we can afford to buy. Also to get ready to say good bye to our friends and schools and other communities here. But the American dream is not about getting poorer and poorer every year. Mere survival is not about getting poorer every year. So our best choice is to flee. @baby boomer - have you rented a room at an affordable rate? Have you built a second unit to rent out? Either act could make a huge difference to someone who is already part of this community.


4 people like this
Posted by Horkheimer
a resident of Stanford
on Nov 12, 2017 at 10:06 pm

Never let a good crisis go to waste. If you don't have a good crisis, just make one up. Cultural Marxism 101.


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