HireCentrix - ViewPoint
Lately there has been much discussion of the impending doom to be caused from an upcoming Labor Shortage- Why? Is it because there is some truth behind it? Some defined element of reality or just another wave of hysteria that makes for good reading. Let’s calm down for a moment and look at a few concepts.*1
In 2006 baby boomers represented about 22% of the population and as such, do make up a large portion of our society in terms of numbers. Their looming retirement creates a strong rationale for fear and apprehension as we worry about them abandoning us; decimating the workforce and its ability to remain viable.
Fortunately, upon closer inspection there are several reasons why an impending labor shortage might just be more hype than reality.
Firstly, Baby Boomers currently represent over 40% of the workforce, but in 2000 15% of the population was 55 or older, and it is anticipated that by 2015, the over 55 crowd will make up at least 20 Percent of the working population. This simply represents what most of us already know; that Baby Boomers are postponing traditional retirement as the very concept of retirement continues to evolve.
According to AARP, of the population currently between the ages of 50 and 70, 69% plan to continue working through retirement, or to never retire in the first place. Furthermore, almost half of this surveyed population stated that they intend to work well into their 70s. For many, the cost, and/or lack of medical insurance and financial security creates a necessity for postponing retirement. For others, it is plainly the desire to continue working due to the work ethic, good or bad, defining that generation. Others simply just want to stay active and keep their head in the game.
There are of course other factors to consider in the hysteria that contributes to our “impending” war for talent!
Ever notice that most things we get hysterical about do not happen? Remember Y2K? How may people do you know that died as a result of that catastrophe? That’s what I thought.
For example, advancements in technology have enabled employees to do the workload of more than one person or position. Many companies now hire individuals expecting them to perform in more than one job as multitasking is the catchphrase. (Have you read The World is Flat by Thomas L. Friedman? (If not you are way behind the curve.)
Now let’s look at supply & demand! As the Boomers age and their consumer spending weakens, it will probably have some impact on the growth of new businesses and as a result, new jobs creation. With the community having less need then there is ultimately less demand due to the smaller generations evolving and an aging workforce.
Just looking at housing alone there is and will continually be a growing reduction in construction as we anticipate job losses in the 1 million mark in the upcoming year. (Especially in the housing market;) (2008)
Naturally, this doesn’t only affect construction because if you consider Reaganomics and the trickle down effect (in reverse), this will affect every company that depends on construction, i.e. - manufacturers, the sale of building materials, real estate, mortgage and financial. Quite frankly, the list is almost endless as businesses that depend on those affected industries will also be impacted.
Eventually this leads to what many refer to as a recession; which I prefer to call a Market Readjustment.
Every 10 plus years or so the market has to purge itself, cleanse of the excess waste in commerce and quite frankly, the ill-advised decisions made by those whose thinking patterns are driven by greed. Look for example, the mortgage industry. Would YOU lend $450,000 to a person with no money down, bad credit and no documentation on income? I did not think so.
Market readjustment allows for the market to balance itself out. As the strong, ethical companies survive, those that have the “extra baggage” will subsequently have to pay for their mistakes and make deep cuts in the employee population.
Not to pick on the "geniuses" of the mortgage industry, we have seen the effect of their gluttony and lack of judgment; 21,000 jobs were affected just in the month of August 2007, alone- The industry alone has already lost close to 90,000 jobs. That is 75 percent more than the entire year of 2006, and a quarter of these came just in this one month. (See http://ml-implode.com for the daily carnage)
Continuing down this path, The National Bureau of Economic Research focuses on 5 different areas before calling a recession: real GDP, real income, employment, wholesale & retail sales, and industrial production.
Looking at several factors here, the view indicates that there is more than a 50 percent chance that a recession is imminent. The factors still to be seen are how companies will adjust to the crunch financially, if the market can handle this speed bump and if the Federal Reserve decides whether or not to fiddle with natural progress; as they did in 2003- which gave us a softer recession than it ultimately could have been.
Not to depress you, but in my opinion, the party is over. Please consider just the following three points:
• The Treasury Bill has fallen, (2008)
• The yield on three-month Treasury bills tumbled down to a whopping 2.51 per cent - 123 basis points below the close of 8-24-07 which is a sharper fall than during the October 1987 crash.
• The Credit Crunch is already affecting commerce and industry as a vast amount of companies are finding difficulty in raising short term capitol.
Is a recession a bad thing? Probably not, as the economy has been over-inflated for many years and the time for adjustment has arrived. (it will appear to be the worst thing during the time of course)
Today for the survival of the fittest, a “recession” will bring back a balance to a very inflated and over-saturated market.
Actually I suspect that America is in dire need of a “recession”; it is what’s necessary to keep economic growth stable and consistent.
As American economist and political scientist Joseph Schumpeter theorized -
“recessions are processes of creative destruction in which inefficient firms are weeded out. Only by allowing the “winds of creative destruction” to blow freely could capital be released from dying firms to new industries.” Also, recessions will benefit the economy by purging the excessive baggage, leaving it in a much more secure condition to allow for new growth and development.
Hopefully the Feds agree to the natural progression instead of succumbing to relentless pressure from the public.
Yes, it does have its short term implications and there is no disputing that fact; but in reality, for the long haul of protecting our nation, today’s economy needs that cold shower.
History has a habit of repeating itself.
Even during the Industrial Revolution when industrial growth was at its highest levels ever, there were issues that created labor crunches. The Plague, Deadly Flu, Small Pox, tuberculosis, typhoid, cholera, just to name a few – and of course there was the mass migration to the “New World”.
Still, as humankind continued to balance itself out and industry continued to grow and prosper- industry found a way to make good with what they knew. Brilliant minds found a way to invent technology for less human intervention and more dependence on machine.
Ever notice how nature abhors a vacuum? Where there is a need sooner or later that need will be met by someone who has courage and thinks differently. I often tell my kids, the job they will have tomorrow has probably not even been invented yet.
There are of course other factors that will be explored in a future article regarding why an impending labor shortage might just be more propaganda based, fear mongering and bluster, than reality based.
It will of course include areas of the weakening dollar, strengthening of foreign competition, continued advancement of off-shoring employment, the growing national deficit, immigrant labor, long term unemployment (which has had recent record highs) and the advancement of technology.
In conclusion, we must remember that the main concern today isn’t whether or not there is going to be an impending labor crisis; but more importantly how many companies are preparing their business for a more senior friendly environment?
What are they doing to meet the needs of those individuals who can contribute so much to their organizations? It is very important to consider this as seniors plan to delay retiring as the baby boomers are a new workforce that many are not prepared for. Are you creating an organization that will attract and retain your share of the almost 76 million boomers?
Consider the following questions:
• Will you make your company friendly enough to make sure your Baby Boomer will want to stay and not leave to your competitor?
• Have you developed training and mentoring programs for your Baby Boomers and Generation X & Y’s to enhance their skills?
• Are you providing opportunities to your Boomers to develop new skills as they seek to add more value to your organization?
Are you willing to address these issues? If not, are you willing to pay the price for being unprepared?
Can you see the value in having your most valuable asset, your current employees, feeling loyal and grateful for the opportunity that education offers? (Did you know that over 75% of employees would like the option to go back to college, especially individuals in their 30’s and 40’s, but financial obstacles make it difficult?)
These are important issues that will enhance your business. I strongly suggest that you focus on adapting to a senior friendly environment; the benefits will be colossal and when the competition cries of the labor shortage you can sit back and be glad it does not apply to your organization.
* 1 (For accuracy please note that this series was originally written in during the years of 2006-2008
Part One of the series There is no (pending) labor shortage! Get over it
ABOUT KAREN MATTONEN, CAC, CSP
Karen Mattonen started a career in Human Resources when she served as a Recruiter for Snelling Corporation. Leveraging her tenure with Snelling, Karen founded Advanced Career Solutions in 1997 focusing on the HVAC and Mechanical Construction industry. Her reputation for excellence is echoed in the satisfaction of clients and candidates she has serviced nationwide. Furthermore, Karen is esteemed for sharing her expertise in Recruitment Education, Ethics and promoting self-regulation for the Recruiting industry.
She has a new and future-oriented vision of what recruiting can and should become: a profession we can be proud of for its ethical standing, professional conduct and ability to build great organizations. Her doing-well-by-doing-right philosophy is shaking up the status quo in an industry that needs to be shaken. She does this with conviction, leadership, and a distinctive voice that cries out for change.
Outside of the HR community, Karen Mattonen has been cited by Microsoft as a resource in how to use Microsoft Outlook as an ATS. She has also served as the Marketing and Public Relations Director for the 3rd largest city in Utah.
Her passionate and tireless advocacy has led her to create HireCentrix - The Pulse of H.R, Regulation, Retention, Recruiting and Risk Management www.hirecentrix.com. Hirecentrix is a company dedicated to providing training to the HR, recruiting and staffing industries, which includes a special focus on the ethical and legal dimensions through offering a full service resource for individuals to share and communicate, obtain current and accurate information, acquire and provide education and learning within the quickly expanding, diverse and rapidly changing Recruiting and Human Resource climate.
Karen has achieved accreditation as a California Accredited Consultant (CAC) through California Staffing Professionals. She has also gained her Certified Staffing Professional Certificate (CSP) through American Staffing Professionals. (www.americanstaffing.net)
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