by Aaron Jodka
Almost every day another article in the business press reports on Millennials (the generation born between the early 1980s and late 1990s/early 2000s), and rightfully so. They are the largest part of the labor force, and depending on which articles one reads, they are either innovative and creative or lazy and spoiled (or somewhere in between). Hundreds of thousands of apartments have been built nationally in this cycle, and many are targeting these highly educated young people. And that focus has not been lost on office investors and developers, across the country or in the Boston area.
In offices, space utilization—the amount of space per worker—has steadily declined in recent years as overall work spaces get smaller and common areas grow larger. Technological advances and changes to the way people work today are also contributing factors. These tighter working arrangements are par for the course for a Millennial: After all, they’re used to studying in the library or the quad in college, and can easily adapt that environment to the office. But for older generations, these arrangements can be challenging.
Maybe it’s time for space planners, designers, employers, landlords, and investors to start thinking a bit more about the needs of the older workforce—the Baby Boomers. They’re staying in the labor force longer than before, as they are healthier and more active, and some have limited savings for retirement. Either way, as the chart below shows, the overall labor force participation rate (the ratio of people in the workforce within a demographic cohort) has steadily declined since the 1990s, more rapidly in the aftermath of the Great Recession. This is a combination of a tough job market for lower-skilled workers, those aging out of the workforce thanks to retirement, and other factors, such as disability. However, slicing this data further shows that those aged 55-plus are participating at a record level, hovering at around 40%. Contrast that to the larger trend, or even to the rate for those Millennials, whose participation at around 81% is lower than the late ’90s rate of 85%. Yes, there are lots of Millennials to pay attention to, but the changing workforce has many faces and demographics to consider. The real estate community may be wise to keep that in mind: A 55-year-old today could very well be in the workforce for another 10 years or more.
Sources: Census Bureau, Bureau of Labor Statistics, Colliers International As of July 2016