Supporting Older Workers in a Changing Labor Market

California's population is changing, bringing new economic challenges and realities for workers, businesses, and the state. Notable changes include the rising age of the state's population and its falling labor force participation. With little or no population growth in recent years, the state's labor force is both shrinking and aging at the same time.

Over the last two decades, labor force participation has fallen over 4 percentage points (from 67% to below 63% today), a decline attributable to the aging of California's population. Adults aged 55 to 84 work at much lower rates than younger adults. Yet older Californians are also working longer than in past decades, as many put off retirement. For example, the rate of adults ages 55 to 84 in the labor force has climbed by 4 points since the early 2000s.

Rising labor force participation among older Californians could reflect the changing dynamics of work. Factors like flexible work arrangements, remote work, and improved health may allow adults to work longer by choice. Indeed, over 40% of older Californians with at least some college education work-which may reflect the prevalence of these factors for their type of work. Over time, however, a notable dichotomy emerges when we pull apart changes in workforce participation: among Californians aged 55 to 84, those without a college degree have become more likely to work, while those with a college degree have become less likely.

The fact that older Californians with less educational attainment are working more over time-and the most educated working less-suggests that economic sufficiency is influencing whether Californians work or retire as they age. This concern is consistent with PPIC's statewide survey findings that over one third of workers with a high school diploma or less report worrying every day or almost every day about having sufficient funds for retirement.

To better understand these trends and the policy levers to support older workers-and California's economy-we convened a group of policy experts, practitioners, and advocates to provide insights into the challenges facing older adults in California's workforce.

From this conversation, several notable insights emerged:

• Necessity outweighs opportunity. The rising cost of living and other financial pressures push more people to work out of necessity. Older adults seek access to meaningful and fulfilling work, but opportunities are limited by health and disability, skill mismatch, and less supportive work environments.
• Barriers impede work-and well-being. Age discrimination in hiring and workplace culture remains a significant problem. Furthermore, older workers may face challenges such as physical health, disability, and caretaking responsibilities.
• Educational and economic divides shape barriers and opportunities. Workplace flexibility and remote work may benefit only some types of jobs and workers with certain skills, often mirroring educational and economic divides.
• Skills may not match job opportunities. Older adults hold valuable experience but that does not always align with current market needs, a challenge compounded by the mismatch of skills against developing technology. To address these gaps, Californians will need accessible training and lifelong learning programs, tailored to the specific needs of older adults.
• Supportive work environments and workforce development policies can help address barriers. A workplace culture that is willing to adapt to shifting needs as workers age is essential; for example by providing accommodation and flexibility. AI brings new risks and fears to the labor market-but also offers new opportunities.

As older adults work longer-and become a larger and larger share of the state's workforce-understanding how to better support their careers and benefit from their contributions is crucial for the state's long-term economic success. Policymakers, businesses, advocates, and researchers can each aid by helping to understand and align future economic opportunities with the skills, needs, and desires of older workers. Leveraging the experience of California's older workers while preparing future generations to enter the workforce will be key to powering the state's economy in a time of demographic transition.