Future Labor Shortages Loom For Employers
How employers can plan for an aging workforce
People are getting old. Not just in the US but all over the world. The elder population, 65 and older, is the largest growing sector in all developed countries. According to Census Bureau projections, the US elderly population will more than double between now and the year 2050, to 80 million.
As far back as 1960, the American economy has benefited from the huge bubble of ‘baby boomers,’ those born between 1946 and 1964, as a primary source of labor. However, starting around 2010, an enormous demographic shift will begin, resulting in a large increase in the 65 and over age group and a decline in the 20-64 age group. This means starting in 2010 the labor force will begin growing at the same or a slower rate than the overall population.
These changes will result in labor shortages in all areas for employers. Even if baby boomers keep working past the age of 66, eventually their participation rates will decrease, affecting labor force growth. A second and less obvious force is the participation of women which has augmented the labor force with steady increases for the past few decades. This participation rate has leveled off, however, and will also decrease in the coming years.
According to the Census Bureau, 43% of the U.S. civilian labor force will be eligible to retire in the next 11 years. Yet, according to a recent survey by Manpower, 80% of American companies have no recruitment strategy and 72% have no retention plans. After consulting with dozens of companies, it is clear that many have simply put their heads in the sand hoping the forecasters are wrong.
Organizations need to investigate their own workforce’s demographics and develop an understanding of the immediacy of the baby boom exit. To help you think through strategies for your company, ask the following questions:
- What are your company’s demographics? Examine the age, gender, and years in position and anniversary dates of all employees. Exactly what talent will be needed ten years from now?
- What are your company’s retirement policies? Is early retirement encouraged or discouraged? Are their opportunities for part-time employment after retirement age?
- What programs do you have in place now to capture key competencies and critical work knowledge of employees who will be retiring? Is there a mentor program to develop employees?
- What is the gender breakdown? What programs are in place to correct gender imbalances? Are there programs that address the needs of women in the workforce? Though women make up about 48% of the workforce, many employers still have rigid schedules and expectations that are remnants of an all male workforce.
- Will your organization need to address global concerns due to off shoring or immigrant labor? As the aging trend is worldwide, there will be labor shortages for all skilled positions. The demand will be especially acute in the areas of skilled trades, technology and healthcare.
- Is your organization prepared to meet the needs of the over-65 customer segment? Smart employers are preparing for this large customer base with specialized programs and services. The boomers have discretionary money and the time to spend it.
There are four key recruitment and retention strategies that every business must consider to prepare for the future.
- Have a plan to address retiring boomers. Don’t let critical knowledge and experience walk out the door. Have them mentor employees and participate in training efforts.
- Offer choice, flexibility and responsiveness to today’s lifestyles. Research by Sales Power of over 3,000 companies demonstrates that younger employees gravitate to firms who can define a career path, not just a job. They will seek jobs that have meaning for them personally often choosing employment based on recommendations of their peers.
- Utilize the internet and technology to reach the Gen X and Gen Y employees. Corporate websites should include podcasts to interact with potential candidates. Online applications need to be addressed promptly; ideally within 24 hours. All applicants should be contacted personally by phone to establish a connection.
- Mentor, develop and train to grow your own. Everyone will be trying to recruit the best of the best in the coming years. Build the employee loyalty at your company by investing in training and development. Every company needs a Leadership Development Program that is personalized and customized for the employee base.
Companies who make investments in people talent will be rewarded with a solid employee base for the future. The goal is not to just have great employees but the best talent available.