I think that retiring the baby boomers is going to be one of the great challenges in America, that you cannot make fiscal sense out of the future of our children without taking on entitlements.
I recent spent some time on the Internet researching the pending labor crisis created by retiring baby boomers. It is surprising how much is available in the literature to describe this transformational challenge, and equally shocking the topic isn’t treated as a much bigger issue in the economic development profession. In my humble opinion, this is a tsunami that will swamp communities unprepared to deal with the new labor reality.
Snapshot Of The Problem
In the spirit of sharing, I thought you might find my notes valuable. Feel free to use them as you deem appropriate. I stayed pretty true to the actual words from the articles I read. So, if you want to use any of the following as quotes and need a citation, simply copy and past the statement in your browser to find the original article.
- There are 77 million baby boomers in the workforce who will be retiring in unprecedented numbers.
- US employers will need 30 million new college-educated workers by 2020. But, fewer than 23 million will graduate from college in the next 10-years.
- By 2018, the US may have 4 million more jobs than workers to fill them.
- When Boomers retire, they take with them institutional knowledge and skills. Rebuilding that knowledge and skill base can be time-consuming and expensive.
- All else equal, fewer workers means less economic growth.
- Companies are paying a tax on two fronts. They paid to hire and train employees, and now they will pay for the loss of experience and knowledge.
- As aging baby boomers begin retiring, the effects on the overall economy and on certain occupations and industries will be substantial.
- Professional occupations have a disproportionate number of older workers, particularly those requiring post-graduate degrees. The top 3 impacted occupations are airline pilots, management analysts and teachers.
- By 2018, all but the youngest baby boomers will be of retirement age.
- The Baby Boomer population could redefine our notions of later life stages by challenging expectations regarding part-time work, leisure, volunteerism, family roles and structures, and continuing education and skills development.
- Many U.S. companies and nonprofits have not trained, prepared, or secured sufficient numbers of mid-level managers to fill the executive ranks nationally. A talent pool shortage among those with executive quality potential significantly affecst the level of competitiveness of U.S. industries and the quality of service from the national public and nonprofit institutions.
- As boomers retire, expect wide-ranging effects: not only do retirees produce and contribute less in an economic sense, they tend to spend less as well — not a recipe for economic growth.
- The problem won’t just be a lack of bodies. Skills, knowledge, experience, and relationships walk out the door every time somebody retires—and they take time and money to replace.
- The mass migration of baby boomers into retirement will leave millions of open positions with only a fraction of qualified internal or external talent remaining with the capabilities to fulfill these roles. Organizations that are lucky enough to fill these roles will probably overpay to do so while those who can’t (or provide inadequate replacements) run the risk of losing their competitive advantage in the marketplace.
- As the Baby Boomers retire, immigration flows change, and the number of young people entering the labor force declines, the number of new jobs needed to maintain pre-recession employment norms will decline.
- Every person who will be hired in the next 25 years has already been born.
- In the US, the economic dependency ratio is increasing.
- In 2050, there will be 1.5 people outside the work force for every 1 inside.
The future belongs to communities who can provide companies access to top talent required to be competitive. Whether your community succeeds or fails is directly dependent on the strategies it adopts to address the impending labor shortage.
My recommendation is to focus on enabling residents of your community to achieve their American Dream. By reducing the barriers, your community will be attractive to retaining residents and attracting labor companies need. If it is a challenge to achieve the American Dream in your community, you will find it nearly impossible to provide companies with the labor pool they need. This means companies doing business in your community will be forced to leave in order to access required labor, and your community will be at a decided competitive disadvantage for new company attraction.
Every article I read on this subject makes me more convinced it should be a “sleep loss” issue for economic development professionals.
Get An Expert Perspective
I encourage you to listen to my recent podcast with Mark Lautman, author of the book – “When Baby Boomers Bail”. Mark has spent his career in economic development and has a very good handle on the challenges this demographic shift represents. I think you will find his advice both practical and helpful.
40 UNDER 40
If you know a rising star in the economic development profession, click the 40 Under 40 logo and nominate them for national recognition.