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michaelhopkins
FM Editor
Member Since:
06 Dec 2005
Posts:82
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25 Apr 2006 6:19 PM |
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Demography Hits Biz: New Fed Study Warns of Bigger Boom Impact
Bloomberg News reported last week that a new Federal Reserve study concludes that "the retirement of the Baby Boom generation will force far-reaching adjustments in the way the economy works." It added that the study, prepared by Brookings Institution economists (entire paper is here), claims that "forecasts for everything from growth and employment to corporate profits and interest rates will have to be recast" downward much more than had been expected.
"While economists have known for years that the coming retirement of the baby boomers would be a drain on the labor force, the Fed study suggests that the U.S. is already feeling the effects and the impact in the next decade may be much bigger than previously thought."
More grist for the workforce-is-falling mill.... Worth pointing out here that not everyone agrees with this view of boomer cohort aging. The most commonly cited counterpoint is a study by Wharton professor Peter Cappelli titled, "Will There Really Be a Labor Shortage?" (See a report on the study here.) But the study dates to 2003. We'll try to track down Dr. Cappelli for an update.
Meanwhile, FutureMonitor Trend Survey respondents are already convinced, no Fed help needed, of the consequentiality for business of the world's aging population. See the post about their take over here. Not that demographic changes can't be consequential without a labor shortage being part of the mix.
Anybody have more info/viewpoints on just how seriously the aging baby boom will cut the labor pool?
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tjcher
Member Since:
26 Apr 2006
Posts:1
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26 Apr 2006 2:30 PM |
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No doubt there will be an effect, including some things we are unlikely to have anticipated. I have seen several "retirees" officially retire, but then take on new more part-time kinds of work and they have wound up working well into their 70's. I think this is some of the argument that Cappelli makes, and I agree that this is likely to be the case. However, this won't cover the total shortage in labor force we are likely to face.Perhaps the biggest issue in my mind will depend on the KIND of work. For example, more and more people are getting college degrees (and not just in the U.S.) and more and more people are going on to graduate degrees (and not just in the U.S.). We are already seeing the global shift in labor pool for certain kinds of work (like software development and call centers for service and support for technical products) and perhaps the largest oversight will be trade professions like plumbers, construction workers, people knowledgeable about HVAC, etc... I'm not sure there is an adequate workforce ready to replace this tier of retirees.
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emc2emc2
Member Since:
26 Apr 2006
Posts:1
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26 Apr 2006 8:17 PM |
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The boomers seem to fall broadly into three categories:1. Those who have fared poorly and will continue to work in some capacity until they die2. Those who financially COULD retire but won't because they enjoy work in some form 3. Those in between who can leave, and will leave.I am not aware of any study with stats for these categories but I would guess that the majority of boomers are in 1 and 2. This would suggest that consumption, tax receipts and materiality should continue even if reduced somewhat. Boomers already have felt compelled to flood the market with self help books and "here's how I did it" tomes which I guess will continue. That activity is actionable well into ones 80's. This and other service jobs bode well for continued employment. The boomer departure eventually will come through death but immigration and other social trends will change the impact of that event.
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spflw
Member Since:
27 Apr 2006
Posts:1
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27 Apr 2006 6:03 PM |
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There are two things that are not being considered here. First, technological innovations that always seem to arrive just in time, i.e. it used to be a garbage truck, a driver and two or three guys hanging of the back. Now it’s a garbage truck, a driver and an automated arm to lift and empty the can. Second, economic incentives will keep boomers working longer and will draw immigrants to the U.S. to fill both high tech and low tech jobs. Think globally, there is a world wide labor pool that is under utilized. There may be problem spots but this is not going to be a huge crisis.
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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27 Apr 2006 6:38 PM |
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Agree that there are likely to be shortages in the "trades," in part because of declines in union-based apprenticeship programs and technical schools. Disagree regarding the overall educational outlook, at least in the U.S. Two-thirds of the jobs really being added to the economy call for a college degree, yet only 30% of Americans get that degree by age 30. Many continue on to obtain undergraduate (and graduate) degrees, but the total proportion of degree holders is around 34%, and isn't rising very fast. Those numbers don't add up to a well-educated workforce. The Employment Policy Foundation projected that the U.S. workforce will be 6M degree holders short of full complement in 2012.
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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27 Apr 2006 6:42 PM |
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We agree! There are a number of things that could decrease or even eliminate any looming shortage. The key is that "we" -- meaning our corporations, our governments, and we as individuals, need to prepare. Companies, in particular, should start now to change some of the well-established practices that will make it difficult for them to tap into the variety of labor pools that will be available in the future. For example, many companies have pension policies that would prevent them from tapping into retiree talent -- a key source for the future. That will take time to change -- and they should start now. They'll need management approaches and metrics that allow, even encourage, flexible working arrangements. And they'll need educational capabilities. One point in your comment that is perhaps a bit overly optimistic is that more people are getting college degrees. That is true, but its still far, far short of the number of college educated employees our corporations would prefer to employ. The Employment Policy Foundation predicts a shortage of 6 million degree holders by 2012. There's little doubt that corporations will have to downgrade their hiring specifications in many cases, and be prepared to provide training in the specific skills required. In short, we certainly can avoid a crisis, but it will require some action on all our parts now to do so. The workforce IS changing, and the employment practices that we will need over the next decade are not the ones that most companies have in place today.
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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27 Apr 2006 6:47 PM |
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In a variety of surveys (including by AARP, SHRM, and our own) a consistent 75% of Boomers say they plan to work in retirement, and 25% of Boomers say (admit?) that they'll have to work for financial reasons. That leaves half the generation in the "maybe" category. If they "keep that promise" to continue working, the projected skills and labor shortage is much alleviated, especially in the short-term. More god news: the best educated Boomers are most likely to say they intend to keep working. My concern is that employers will not do enough to retain and accommodate working retirees - and too many will sour on the arrangement and retire anyway.
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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27 Apr 2006 6:51 PM |
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A fast-globalizing labor pool certainly offers relief for employers and economies seeking skilled labor. But the U.S. immigration policy (shortsightedly) restricts the inflow of skilled workers, and meanwhile people from abroad who come to the U.S. for college and graduate education are returning home at a record rate. I wish I could have faith in technological innovation as a solution, but I fear a parallel to George Bush claiming that technology will solve global warming....
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Croaky
Member Since:
29 Apr 2006
Posts:1
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30 Apr 2006 1:01 AM |
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To this discussion, I say: "never fear, the Millennial generation is here!"
As real as the demographics of the Baby Boomer generation are, I'd say worries about the labor market over the span of the next decade are overstated. The best thing companies can do is put their hopes into the current crop of men and women graduating from colleges around the United States.
I put great weight into the work done by Neil Howe and William Strauss in Generations and Millennials Rising, and having grown up in the Millennial generation myself, I can say with conviction that my peers are extremely motivated, hard-working, and groomed for success.
The Baby Boomers did a wonderful job preparing Millennials for the world, but generational cycles say that Millennials will have a far more powerful, positive impact on business, government, and education than Xers, Baby Boomers, or Silents. We're crafted more in the mode of the G.I. generation (JFK) and Republican generation (Thomas Jefferson) than anyone under the age of 80 or so today.
We're institution-builders, and my guess would be that our productivity will far outweigh any perceived labor shortages. The message business leaders need to hear is, "we're ready for the responsibility."
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learner
Member Since:
25 Apr 2006
Posts:1
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20 Jul 2006 6:07 AM |
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I preface these remarks by saying have have not checked the exact demographics so these comments are based on my gut feel. I do run a teacher supply store, have a wife who is and has been a professor of education for over 25 years and I have two daughters who are teachers. I believe that means I have an educated gut feel.
An area that has not been looked at closely may be the teacher population. There are more teachers than any other professional in the U.S. I believe. This means that the coming retirement of the boomer crop of teachers is going to have an major impact on school systems everywhere.
The boomer teachers are different than the young teachers of today:
- The percentage of boomers that are teachers is higher, I would bet,
than the following generations. So just finding one to one replacements
for boomer teachers is going to be difficult.
- The Baby Boomers are probably the most educated generation the US has ever seen. So as they are replaced the quality of teacher may decline.
- Most boomers taught in order to bring a second income into the home or secondarily they returned to the classroom after a divorce.
- Today's teachers are more often single than before and they stay single longer. This means that they will have less discretionary income to spend on supplemental materials for the classroom and their students.(better sell the store then, hey)
- It also means that they will have a tendency to move for better pay or conditions more frequently than a married or divorcee with children(boomer teacher). Unions and strikes will not be needed to push up benefits and salariy demands, a mobile work force will do that.
- Shortage of teachers will mean a change in how schools are organized and staffed. New models/alternative approaches to primary and middle school will be required. this will probably mean more independent study at the higher levels.
- This could mean an increasing use of self paced computer programs for education especially as AI improves.
- However at the same time we are going to need to invest in a new educational infrastructure to support this change in educational models we will probably be in the throws of a recession/depression caused by runnaway spending by the present administration
- Conservative politicians have made teachers a scape goat for so many years that it has become ingrained into the conservative mind set. It is unlikely that this mindset will lead to increased funding as needed.
the are more issues here but this is enough to start the wheels moving.
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