The Myth of the Post Boomer Job Shortage

Play it again Mr. Twain
By Paul Herbig

“There are three types of lies in this world: lies, damned lies, and statistics.” Mark Twain

As a marketing instructor, I continually preach to my students one of the keys to success is to catch a trend early and ride its shirttails to riches. Some of the easiest trends to spot come from an analysis of demographics. It is easy to determine how many college students there will be 10 years from now, just count the 8-12 year olds and voila you have an excellent picture of what to expect. Along the same vein, though, demographics are statistics and, as Mark Twain so eloquently phrased it, sometimes you can twist the facts to read what you want them to. Beware!

My sermon this week is on the myth of the upcoming labor shortage Recently, the U.S. Bureau of Labor Statistics estimates a shortfall of about 10 million workers within the next seven years. “Between 2000 and 2010, the number of Americans between the ages of 55 and 64 will jump 47.2 percent, while those aged 25 to 34 will increase only 2.8 percent. The number of workers aged 35 to 45 will actually drop 13.7 percent.”
The study suggests employers may well face difficult challenges in recruiting and hiring people in the future..

The demographic that is causing this panic is the retirement of the baby boomers. The Baby Boomers, those born between 1946 and 1960 have been known as the pig in the python for their tidal wave effect on the social fabric of this nation ever since their births. The Baby Bust, Generation X as sometimes referred to, were born from 1963 to 1977 and consist of only 60% of the numbers the Boomers had. By 2010, it is estimated there will be 74 Million boomers compared to only 47 Million Busters. Herein lies the worry, those first boomers will reach retirement age in 2011 with the rest to follow for the next two decades. With such huge numbers of boomers retiring and considerably fewer busters, to many Chicken Littles, it is a crisis in the making.

Fallacies with this argument are many. 1) this assumption is predicated on the unrealistic expectation that the boomers will quit work at age 65. Unlike their parents and grandparents, many boomers will continue to work past 65, even though they may change the kind of work they do. The Retirement Confidence Survey released by the Employee Benefit Research Institute in April found workers expect to stay on the job longer to make up for any savings shortfall with 54% expecting to wait until at least age 65 to retire and 68% expecting to work for pay in some capacity after they retire. As the age to receive full retirement benefits edges upwards towards 70, many boomers will continue to work even after 65. With offshoring downsizing and downward mobility hitting particularly hard the professional class, many boomers will have minimal retirement savings and must continue to work just to survive. Retire at 65. I wish.

2) Not only will the general population continue to grow, so will the labor force The Bureau of Labor Statistics estimates that the labor force will rise from 153 million in 2000 to 159 million in 2010. The assertion that the labor force will be smaller in the years ahead is wrong since the baby-bust cohort will be followed by an even larger generation, the Baby Boomlet, Generation Y, the children of the Boomers, who are now in their teens and 20s.

3) The U.S. economy today is eight times bigger than it was at the end of World War II, but the workforce is only twice as big. Put another way, employees are roughly four times as productive today as they were in the late 1940s. If there had been no improvement in productivity, the economy would need four times as many workers as it now has in order to sustain the current level of gross domestic product. Continued productivity will limit the need for new workers (current productivity numbers of 3-4 percent mean a doubling every 20-25 years: that is, by 2030 it is likely we could have an economy twice as large as today manned by the same number of workers!).

4) Immigration, foreign workers in the U.S., and offshoring of U.S. jobs to other countries will impact both the work force and the number of jobs available.

The moral of the story is not to believe everything you hear or see unless you have had the chance to check the sources. Sometimes numbers do lie. Get in early on trends just make certain they are true trends!