Preparing for job market storm
By Gary Kaplan© Pasadena Star-News, September 21, 2008
Is the coming retirement of the baby-boom generation a demographic perfect storm for the nation's workplace? The dark and threatening clouds on the winds of a shrinking workforce could be the result of an often knee-jerk reaction to our struggling economy.
It’s no secret the nation's unemployment rate has bolted above the psychologically important 6 percent level for the first time in five years. It is likely to climb higher in the months ahead. The jobless rate increase from 5.7 percent to 6.1 percent in August could very well be a warning sign – Caution: Recession Ahead.
Last month alone, U.S. employers cut payrolls by 84,000 as a means of addressing their concerns about the economy and their own business prospects. This was the eighth straight month of job losses. This year, a staggering 605,000 jobs have disappeared – slightly less than the population of Alaska! Job losses have been widespread at factories, especially housing-related manufacturers and automakers. Construction companies, retailers, mortgage brokers, accounting and real-estate firms, the hospitality industry, and temporary-help firms have felt the squeeze. These losses have neutralized employment gains in government, education, healthcare, information technology, and elsewhere.
The negative trend is disturbing when you consider the economy must generate 100,000 new jobs each month for employment to remain stable.
We’ve been down this road before. Twenty-plus years ago, during President Reagan’s first term, unemployment in the U.S. climbed above 10 percent. But a severe slowdown in the economy, or a recession, will have a devastating impact on the overall employment picture, as we are seeing today. As demand for many goods and services slows, businesses must cut back on production and often lay off workers.
Cutting jobs is the easiest and the quickest fix because labor represents the biggest expense for any company. However, it is a troublesome time to be reducing payroll when opposing forces are at work.
Consider the all-important Boomers, those 76 million Americans born between 1946 and 1964 that have changed society, for better or worse, at every step of their lives. They make up fully one-third of the nation's work force and fill many of its most skilled and senior jobs. And, thanks to near-workaholic habits, they are among the most aggressive, creative, and demanding workers in the market.
As a demographic perfect storm appears on the horizon, the workforce will shrink, certain industries and professions will be hit with hurricane force, and many employers will feel the chill, unprepared for the results. We’re already witnessing cutbacks as countless corporations shed workers as quickly as possible. But as the current storm eventually clears, in a few years those same employers may be hard-pressed to find replacements because, as the Boomers retire, growth in the labor force will also slow.
Start with the numbers. About 76 million people – Baby Boomers -- were born roughly 60 years ago in this country, but only 46 million more are following behind in Generation X. That gap is troublesome at best, insurmountable at worst.
Traditionally, most people retire in their early to mid-60s. If that holds true, between 2008 and 2020 tens of millions of people will leave the workforce. Among the professions expected to be hardest hit by this Boomer exodus are airline pilots, teachers and professors, utility linemen, civil servants, education administrators, industrial engineers, and management analysts, just to name a few among many.
Now consider something more important – even foreboding – than the sheer numbers: the skills and experience those Boomers will take with them when they retire. They are the veterans of the workforce. They hold the institutional memory of thousands of companies. America is already facing a skills shortage, because of a lack of people trained in technical and scientific fields. What will happen as a flood of Boomers retires, washing away a vast amount of knowledge and skills at one time?
Those peering into a half-full glass might take solace in the perception that Boomers will work in large numbers as they hit the traditional retirement years. The fact is, however, whatever they say beforehand, very few people over the age of 65 will continue to hold their full-time jobs. Labor-force participation rates among seniors are far lower than they were in 1950, even though life expectancies have risen. In 1950, almost half of all men over 65 were still working. Today that figure is less than 20 percent.
The U.S. already boasts the highest productivity in the world with the leanest workforce. It’s a critically difficult time to be cutting manpower even more.
Now is the time to think strategically, to forecast for the long run, and to consider your employee and human resources decisions even more seriously than before. Think long and hard before you slash and burn your workforce. Remember that when the pendulum swings, and it surely will as it always does, maintaining your successful and experienced workforce, recruiting new talent to fill the voids, and even future growth, could be in peril.
It is time to build your farm team, while keeping a close eye on your bench strength. It is time to explore new strategies and practices to ensure survival and growth during these current economic trials. You have options at your disposal -- offering part-time work, job sharing, flex-time, consulting arrangements, extended time off, customized health benefits, along with a host of others. Remember, the Gen-Xers don’t hold a candle to the Boomers in numbers, so corporations will have little choice but to employ older workers, and that means redefining traditional work relationships to suit these seniors, while making the terms of employment much more attractive.
Despite the gloom and doom of today’s marketplace, it is not impossible to take cover from the storm. In fact, the proactive, forward-thinking employer is the one who will think strategically, while protecting the company payroll, retaining and even hiring new talent, and rolling with the punches, assuring a greater preparedness for the future and putting distance between the competition.
