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 firstname.lastname@example.org.