Is the coming retirement of the baby-boom generation a demographic time bomb for the nation's workplace? Many futurists think so. They warn that employers...
First of two parts
DETROIT — Is the coming retirement of the baby-boom generation a demographic time bomb for the nation’s workplace?
Many futurists think so. They warn that employers are unprepared to lose the boomers, those 76 million Americans born between 1946 and 1964 who have changed society, for better or worse, at every step of their lives.
Boomers make up a third or more of the nation’s work force. They 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 on the market.
“Baby boomers are going to be retiring in droves starting with the end of this decade,” says Arlene Dohm, an economist with the Bureau of Labor Statistics in Washington, D.C. “There are certain industries and professions that are going to be hit very hard.”
But to others, the much-discussed and often-feared boomer retirement is the Y2K computer bug all over again — a catastrophe that never happens, a much-feared event that America passes by with not so much as a speed bump.
This camp holds that the free-spending boomers haven’t saved enough to quit, and, besides, they’re too work-obsessed to leave before they have to be carried out. Moreover, increased immigration will ease any worker shortages, and new technology will eliminate the need for some of today’s workers.
Uncertain futureWhich is correct? Nobody knows. Although those on the leading edge of the boomer generation are 58, just four years shy of being able to collect Social Security, nobody knows for sure what boomer retirement will mean for employers and employees. The graying of the boomers could go smoothly or disastrously or anything in between.
If you think it doesn’t affect you, think again, says University of Michigan economist Robert Willis. Everything from the financial health of countless companies to the solvency of Social Security is at stake as boomers retire in coming years.
“These are literally trillion-dollar questions,” he says.
Start with the numbers. About 76 million people were born in the United States between ’46 and ’64. But only 46 million more are coming along in Generation X, which follows the boomers. That gap is one of the things work-force planners worry about.
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 work force. Will there be enough replacements coming along to pick up the slack?
Maybe not. Up to now, many corporations have been shedding workers as fast as possible. But in a few years, those same employers might be hard-pressed to find replacements for the boomers.
Consider nursing. The average registered nurse, or RN, in America today is a little older than 45. Those nurses will be retiring just as demand for medical skills soars to treat America’s aging population.
Some professions, such as teaching and government work, saw waves of hiring in the 1960s and ’70s, and masses of those workers are already retiring. Others, such as commercial aviation, have lots of middle-aged employees because of union seniority rules that protect the more experienced workers from layoffs. Many of those workers will be leaving soon, too.
The federal Bureau of Labor Statistics has identified a range of professions expected to be hardest hit by boomer retirements. Among them: airline pilots, special-education teachers, industrial engineers, management analysts and photographers. But those are just a few among dozens.
Longer working careersYet not everyone is worried about a mass exodus. Immigration is running higher than expected, injecting new recruits into the work force. Productivity gains have eased the need for new hires. Some companies would probably be just as happy to trim their payrolls through boomer retirements.
Moreover, anxieties about their retirement savings have kept some seniors working longer than economists thought they might. A decades-long trend toward early retirement began to reverse in the late 1980s, and that appears to be continuing.
Then again, many boomers, like their parents’ World War II-era generation, feel a need to contribute to society through work. “We don’t want to sit on the porch and wait for the Grim Reaper,” says Joyce Gioia, a strategic-planning consultant with Herman Group in Greensboro, N.C.
Roger Herman, her partner, says people will continue to work in some format or another well into their 70s, 80s and even 90s. “A shift in personal values and well-being is influencing people to keep working,” he says. “They want to be active, engaged and productive.”
A recent University of Michigan survey showed the percentages of boomers who expect to work past normal retirement age continues to go up. About 57 percent of older boomer men and 45 percent of older boomer women say they expect to work past 62.
“All of these things are actually reducing the pressure on the labor force right this minute,” Dohm says.
Perhaps more important than sheer numbers are the skills and experience that boomers will take with them when they retire.
Boomers are the veterans of the work force. They hold the institutional memory of thousands of companies. If you’re an airline pilot flying a Boeing 747 to Asia, a registered nurse on a critical-care ward or a supervisor on a police homicide squad, chances are you’re a boomer.
America is already facing a skills shortage, because of a lack of people trained in technical and scientific fields. That will only get worse as boomers retire.
“A tremendous amount of knowledge is walking out the door in a relatively short period of time,” says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
“Corporate America is facing a potentially mammoth talent crunch,” the National Association of Manufacturers warns in a new report.
At Hayes Elementary School in Westland, Mich., teacher Kathleen Hofmeister, 56, handles her fifth- and sixth-grade classes with the maturity of a veteran. “You have a lot more background to offer the kids,” she says of older teachers.
Of course, younger workers bristle at the oft-repeated notion that boomers display more maturity and judgment. But Hofmeister’s principal, Linda Minsterman, says there’s an element of truth in that. Younger teachers bring the same passion to working with children, but new entrants often don’t have the same work ethic as older teachers.
“They call in sick faster than a more veteran teacher,” she says of younger workers.
Or consider the aviation industry. A lot of today’s senior airline workers — pilots, mechanics, air traffic controllers — got their initial training in the military during the Cold War. Younger entrants have all the required schooling, but they might lack some of the seat-of-the-pants knowledge that comes with military training and years of experience.
Others agree that important know-how might be lost when boomers retire.
“You bring on a brand-new mechanic, they’re properly trained, but to learn the nuances of that Boeing 747 takes years,” says Mike Boyd, an aviation consultant in Evergreen, Colo.
“Employers will need those older workers,” Herman says. “They will value their expertise, experience, maturity, wisdom and stability. … Boomers will not be cheap to retain, but their expertise may be irreplaceable.”
Changing needsYet not everyone frets about a skills shortage. Younger workers are more likely to have the computer skills that companies want today. Boomers’ skills may be valuable but increasingly obsolete in a few years.
Moreover, some of those hard-won boomer skills might be offset by the high costs of employing boomers, including higher health-care costs as boomers age.
Darryl Jenkins, a visiting professor at Embry-Riddle Aeronautical University in Daytona Beach, Fla., says he thinks the notion that boomers are too valuable to let retire is a joke.
“It’s a presumptuous position to take that the world will not survive without us,” he says. “Each generation is just as good or better than the previous one.”
Assuming boomer retirements create shortages, how will employers cope?
One way, say demographers, is that employers will try to keep boomers on the job by redefining traditional work relationships to suit older workers.
Among the options likely to grow more common: part-time work, job sharing; flex-time, consulting arrangements, extended time off and a host of others. Also expect to see more health benefits and other perks.
“The fastest-growing source of ‘new’ labor will be older people, including those already retired,” Concours Group, a Kingwood, Texas-based consulting firm, says in a new report.
“Corporations will have little choice but to employ more older workers, and that means making the terms of employment much more attractive to them.”
Fortunately, that’s what a lot of boomers want.
“I don’t think the boomers are ever going to retire in the same sense earlier generations did,” says University of Michigan demographer William Frey. “Boomers are the most educated to come into that age generation up to this date. Many more of them have had professional jobs. That means they’re going to want to stay engaged.
“They’ll retire but in a halfway manner, taking bridge jobs. They’ll be consultants. They’ll start up small businesses.”
Learning from the youngWorkplace relationships will alter in unusual ways.
“Expect to see younger workers, bred with technology, mentor older workers,” Herman says, a trend he calls reverse apprenticeship. Immigration might play a larger role in filling shortages. Expect the work force to be more diverse, more multicultural.
It might help that a lot of older, pre-boomer workers already are staying on the job into their 70s, 80s, and beyond.
“One human resources VP told me she had a problem with a 92-year-old guy who worked in shipping and receiving,” Herman says. “He was working too hard. The other employees were complaining they couldn’t keep up with him.”
But here’s an unpleasant truth: Not all boomers will be equally desirable. Frey says companies will sort out their “older keepers” whose skills or attitudes are worth retaining and shed their less-desirable workers.
Once they decide whom they want to keep, companies might offer them higher compensation to keep them around — or might retire them and rehire them immediately as consultants without paying benefits.
University of Michigan’s Willis notes there will be a huge range of differences among the boomers in retirement.
Auto workers who have labored for 30 years in a physically taxing job might not be so eager to continue working as a college professor who remains fit and alert past 70.
As with everything else having to do with the boomers, America should expect a variety of experiences — and lots of surprises.
Tomorrow: Boomers’ retirement woes.