Gen-X, Gen-Y, Baby Boomers … What do they have to do with business?
According to national labor statistics, a significant portion of the US skilled workforce (manufacturing and professional) is approaching or has already reached traditional “retirement age”, 65 years old. When they retire, will the next generation be ready to take over?
This is not a statistical anomaly. It is a consequential impact of the Baby Boomers (born in the 1950s) reaching retirement age. Considering just the work segments involved in Professional, Scientific and Technical Services, the share of the workers aged 55-64 has increased by 45% over the period of 2000-2007. This statistic was one of several highlighted in a July 2010 Industry Sector Report published by The Sloan Center on Aging & Work at Boston College. That report points not only to the problem, but also discusses some of the “organizational responses” (mitigation efforts) currently being undertaken.
The 2010 Sloan Center report described changes that have occurred from the height of the dot-com era (2000) to just prior to the current recession (2007). While the economy has shifted since 2007, the relevant workforce statistics have remained relatively constant … we are all still getting older.
Projecting the key age-shift trend from workforce distribution graph above, it is easy to infer that it is likely to continue for at least another decade. The retirement-ready workforce will continue to grow relative to its current levels and relative to other segments of the workforce.
This generalized increase in the “senior” population has an obvious cost impact on our social support and health systems. It additionally has significant potential for an impact on business. Included in this work resource population are the managers and the subject matter experts that many businesses depend on. Who will fill their positions?
In the Portland, Oregon, metropolitan area, specifically Multnomah and Washington Counties, the workforce distribution appears to be shifted even more than the national average (toward that pre-retiree group).
Worksource Oregon, in their 2008 Employer Survey for Region 2 (Multnomah & Washington counties), highlighted that more than 40% of local businesses surveyed are already responding to this shift and are planning to take (or have already taken) steps to guard against the ensuing knowledge / skill losses. Many are attempting to retain these “senior” workers with flexible working arrangements and other accommodations to encourage their retention. Several businesses are instituting in-house mentoring programs to raise the skills and subject matter knowledge of mid-level employees.
These are admirable steps taken to mitigate this population shift issue. Luckily, most businesses do have the raw (mid-level) talent who can step up to fill these gaps that would be left by the over-55 age group as they leave the workforce.
The next question is: Do these companies also have the resource pool available to backfill those mid-level positions? Unfortunately, this answer is not as encouraging.
In Multnomah and Washington counties, there are already significant skill gaps between the abilities of available workforce and the skills that employers are looking for. Job-specific experience is a requirement for more than 80% of the professional/technical job openings in this area. At this time, there is not a new population of skilled local workers ready to step up to fill the next wave of mid- and entry-level positions.
It is time for local companies to accept that this is a resource crisis that looms at the horizon. The available resource pools are small today and they will only get smaller as the years progress.
As they are doing with the impending impacts of their aging workforce, companies should also address their downstream needs for additional entry-level, skilled workers. On-the-job training programs, mentoring initiatives and apprenticeships are all steps that can have a positive impact on this resource need. The longer companies wait to start their mitigation steps, the greater the impacts can be.
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Additional information related to this topic can be found in:
“Talent Pressures and the Aging Workforce: Responsive Action Steps for the Professional, Scientific, and Technical Services Sector”, a report written by Stephen Sweet, PhD and Marcie Pitt-Catsouphes, PhD with Elyssa Besen, Shoghik Hovhannisyan, MA, and Farooq Pasha, MA. Published by The Sloan Center on Aging & Work at Boston College, July 2010.