Labor Shortage Looms as Baby Boomers Retire
Posted on March 15, 2012 by author in Small Business News & Advice
Despite the largest unemployment figures of our generation, America’s economy is already feeling the strains of a skilled labor shortage. We hear from our clients daily that they’re struggling to fill positions because the skills that the unemployed masses have are not aligned with the skills these companies need to propel their businesses forward. Many economists, social scientists and human capital experts cite the economic recession and the reduced focus on education in the math and sciences disciplines, but the shortage is being amplified the most by the retirement of highly skilled Baby Boomers (those born between 1946 and 1964).
Regardless of the significant impact that workers from the eras titled Generation X (those born between 1965 and 1983) and Generation Y (or Millennials, those born between 1984 and 2002) have had on the way today’s businesses are run, those combined populations are much smaller than the Baby Boomer generation, exasperating the situation. According to the U.S. Bureau of Labor Statistics and the Department of Labor, 2012 is forecasted to have the largest workforce in U.S. history, with more than 162 million workers. Unfortunately, with 165 million jobs projected to be available, our economy is projected to fall short by 3 million people. This means three million jobs will remain unfilled due to a lack of workers. That’s just in general. If we were to match people skills to job need, the situation becomes more grim, as the shortage will rise to a need of 10 million skilled workers by 2020. Experts continue to agree that businesses must prepare for the impending labor shortage.
As the Baby Boomers retire, they are taking with them a breadth of knowledge, skills, and experience that is not able to be backfilled by the current Generation X and Y job applicants. This shortage of qualified job applicants has already put a great deal of pressure on companies. As the economy continues to improve and even more jobs are created, the situation will expectedly worsen.
Retirement is only one reason why companies lose highly skilled workers. What can companies do now, to prepare for the loss of their most highly skilled workers? We advise our small business clients along these points:
- Identify the critical skills essential to your business’ strategic success and the people who possess that knowledge
- Develop succession planning and cross-training strategies
- Keep your existing workforce happy… not just through compensation, but through benefits and perks that meet their unique needs, such as by offering financial planning services, telecommuting, professional development opportunities, etc.
- Remain adaptive to different styles of work, e.g., older workers tend to perform best in the early morning and younger workers in the late afternoon/evening, so implementing a flex-time schedule could help leverage the existing talent
- Prepare to allow the retiring generation to work part-time and/or be re-hired quickly, as needs arise
Let us know how you’re preparing your business to avoid a potential skills shortage in the comments below.