Baby boomers at a crossroads.

• Author: Challenger, John A.
• Position: Economics

IT WAS NOT that long ago when, as kids, everyone was trying to answer the question, "What do you want to be when you grow up?" Perhaps by the time you finished your first or second year of college, you actually had a fairly good idea of what career path you intended to take. If you were like most young people--with a somewhat narrow, shortsighted view of the real world--you may have envisioned that path as a straight line, ending with early retirement at age 55.

Little did you know that the career path actually would be a circle and, here we are, back at the beginning, still trying to answer that same question. Actually, the career path is not a path at all. It is more like a journey and it is one that is different for everyone. Some take a direct course from point A to point B, while many find themselves rerouted in mid flight. Some follow a precise map. Others just kind of meander, letting the road take them wherever it goes--sometimes stopping along the way to admire the scenery.

In this fiercely competitive global economy, where companies virtually are powerless when it comes to raising prices, experience is invaluable. Employment among 45- to 54-year-olds grew by 744,000 in one recent 12-month stretch. Those 55 and older saw their employment increase by 969,000. Meanwhile, the number of employed workers 25 to 34 fell by more than 300,000 during this same period.

In good times and bad, companies constantly are looking for ways to produce more goods with fewer people. So, the people who are going to be in demand are those who do not need costly and time-consuming training, understand how business gets done, and can do the work of two or three less experienced workers. In other words, seasoned professionals.

Age discrimination may never disappear entirely but, for many, it will seem as though it has, as employers fight it out to attract and retain workers in their 50s, 60s, and even 70s. Why such high demand for workers who historically have experienced the toughest time finding employment? The main factor driving demand for seasoned workers is the dilemma of skilled labor shortages. Yes, shortages. The government has estimated that, in less than six years, there will be nearly 168,000,000 jobs in our economy, but only about 158,000,000 people in the labor market to fill them.

A study by the Aspen Institute shows that the native-born workforce, aged 25-54, which businesses have come to rely on to fuel their expansions, surged 44% between 1980-2000. Over the next 20 years, however, the growth rate is expected to be zero. For some sectors, like high-tech, the shortage merely is a few years away and most likely will dwarf the shortages this industry experienced in the 1990s. Computer and technology-related jobs are two of the top 10 industries expected to experience the fastest job growth by 2012. The Bureau of Labor Statistics projects that over 1,500,000 jobs will be added in technology-related industries by 2012, including software publishing, technical consulting, and information services.

A trend that will accelerate the labor shortage is a steady decline in the number of people earning bachelor's degrees. Between 1980-2000, the share of workers with post-high school education increased 19%. Between now and 2020, the share of these workers will grow just four percent.

Contributing to this is a falling graduation rate. In 2002, 51%...