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Rachel Justis
Indiana Business Research Center
rmjustis@indiana.edu
812-855-8425

George Vlahakis
University Communications
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Last modified: Thursday, February 7, 2008

Kelley report: There will be fewer workers in the prime-earning 25-to-54 age group

Not just a concern in Indiana, but nationwide

FOR IMMEDIATE RELEASE
Feb. 7, 2008

BLOOMINGTON, Ind. -- More than half of the 50 states, including Indiana, will face the dilemma in coming decades of having fewer workers in the age group considered the prime earning years -- the 25-to-54 age group.

Population Change

This chart shows the change in Indiana's population for age 25 to 54 between 2005 and 2025

Print-Quality Photo

A new report, "Workers Needed: Please Apply by 2025 -- The Changing 25-to-54 Age Group," highlights a sharp decline in the number of people who will make up this key component of the workforce as a result of the exodus of many baby boomers.

"As America ages, we expect to see the nature of work change and the length of time workers continue working increase," said Rachel Justis, an analyst at the Indiana Business Research Center at Indiana University's Kelley School of Business.

"Indiana is projected to have 2.6 million people ages 25 to 54 by the year 2025 -- a 1.7 percent decline from 2005 levels. This is actually a rather modest decline given what we know about the aging baby boomers. But this change varies dramatically depending where in Indiana one looks," Justis added.

Her report appears in the new edition of INContext, a publication the IBRC produces in partnership with the Indiana Department of Workforce Development.

This age group is expected to change as baby boomers age, according to newly released population projections from the IBRC, she observed. Today, the largest segment of Hoosiers in this demographic group are 45 to 49 years old. By 2025, today's teenagers (13 to 17 year olds) will be between 30 and 34 years old and will make up the largest segment of the prime-earning-years group.

While seven Indiana counties will see the 25-to-54 age group increase by 10 percent or more, Justis found that most of the state will not be as fortunate. Thirty-two counties -- particularly those rural in nature -- will see this age group decline in size by more than 10 percent.

Hamilton and Hendricks counties will experience the largest rate of change, with increases of 49 percent and 37 percent respectively. Conversely, Rush, Martin and Benton counties could fare the worst, with projected declines of more than 20 percent.

"Although 15 counties will see an increase in the number of people in the 25-to-54 age group, virtually all counties will have a lower percentage of their populations in the 25-to-54 demographic by 2025 than they do now," she said. "This will occur because other age groups will grow at an even faster rate."

Population Change

This chart shows the percent change, by state, in population for ages 25 to 54 between 2000 and 2025

Print-Quality Photo

Exceptions will be in Monroe and Tippecanoe counties, due to the influence of IU and Purdue University on the local populations.

Indiana is far from alone in facing this issue. Using state-level population projections from the U.S. Census Bureau based on 2000 data, Justis found the Hoosier state in the middle of the pack nationwide. Twenty-four states expect larger declines than Indiana, including seven states with more than a 10 percent drop.

With a projected increase of 55 percent, Nevada leads the nation, followed by Arizona with a 49 percent increase. But as in Indiana, it's not that simple.

"The sheer amount of overall growth experienced in the West means that even these states will have a lower percentage of their population in the 25-to-54 demographic by 2025 compared to 2000," Justis said.

"The 25-to-54 group accounted for 43 percent of Indiana's total population in 2000. By the year 2025, we project it to shrink to 38 percent -- a 5 percentage point decline," she added. "Meanwhile, Nevada is expected to shift from 45 percent in 2000 to just 36 percent in 2025 -- a decline of 9 percentage points."

Even though 21 states will experience an increase in the number of people ages 25 to 54, all states will see a decline in that group's share of the total population.

"Of course, this could all change within the next 20 years if the rate of immigration of young people increases," she added.

Also in the latest issue of INContext is a report about food products manufacturing in Indiana and a profile of the Louisville Metro area.

In her report, "Indiana's Edible Industry: Food Manufacturing," Associate Editor Molly Manns recapped how well known the state has become for its brand-name foods, ranging from Clabber Girl baking powder in Terre Haute to Red Gold tomato products in Orestes.

According to the 2006 Quarterly Census of Employment and Wages, there were 487 food processing businesses in Indiana that employed about 32,000 people at an average weekly wage of $688. Food processing represented 5.7 percent of Indiana's manufacturing employment in 2006 and 1.3 percent of the state's total private employment.

INContext is available online at http://www.incontext.indiana.edu/. Established in 1925, the IBRC is an information outreach service of the Kelley School. It provides and interprets economic, demographic and social information needed by business, government, educational and other nonprofit organizations, and individual data users in the state and throughout the nation. Its research can be found online at http://www.ibrc.indiana.edu/.