2006: A Ticking Time Bomb? 3-2-1 Blastoff

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Let the celebration begin. Hayley Mills, Sally Fields and Patty Duke turn 60 this year. So do Presidents Bush and Clinton, Donald Trump and Cher. Joining them will be the front edge of millions of aging Boomers who are anticipated to retire or change careers in unprecedented numbers. This is the leading edge of a series of events and workforce trends that author-workforce expert Ira S. Wolfe has called The Perfect Labor Storm.

Let the celebration begin. Hayley Mills, Sally Fields and Patty Duke turn 60 this year. So do Presidents Bush and Clinton, Donald Trump and Cher. Joining them will be the front edge of millions of aging Boomers who are anticipated to retire or change careers in unprecedented numbers. This is the leading edge of a series of events and workforce trends that author-workforce expert Ira S. Wolfe has called The Perfect Labor Storm.

Wolfe, founder and president of Success Performance Solutions, recalls six years ago when he first warned about skilled worker shortages. “I received many comments like “interesting” and “thought-provoking,” he recalls, “but many executives and business owners chose to ignore the warning.” Today, stories about skilled worker shortages is front-page news and time to fill open critical positions is growing longer and longer. “The Perfect Labor Storm,” Wolfe contends, “is no longer just a forecast for the future but an imminent threat for the present.”

Wolfe offers highlights of a few stories he believes will dominate the news in 2006 and beyond.

A Shrinking Workforce

The number of U.S. workers between ages 55 and 64 will grow 51 percent to 25 million by 2012, meaning the fastest-growing portion of the work force is the one at most risk of retiring soon. At the same time, the number of workers between ages 35 and 44 is expected to shrink by 7 percent.

New Skills Required

While many workers continue to use skills learned in an Industrial age, consumer demands have changed. Jobs now require skills for service and knowledge, not manual labor. In 1955, 40.5 percent of the U.S. workforce was engaging in manufacturing, construction, and mining. By the end of 2005, those industries employed only 15.8 percent of the workforce. Service-producing industry sent paychecks to 41.8 percent of workers.

Is Education The Answer?

Many point to better education as the solution. But education has its own problems. Today's workforce is the most educated in the world. That is all about to change. U.S. high school students are getting their lunches eaten when it comes to math and science scores compared to the most advanced economies of Europe and Asia.

No Industry Left Behind

Nearly every industry is predicting severe employee shortages, including manufacturing. Despite over 2 million layoffs, 500,000 vacancies exist for manufacturing jobs. Why? The available worker, including the employed, doesn’t have the right skills. The same forecast holds for healthcare, construction and technology.

Ticking time bombs: health care and pensions

For the first time in history retirees are living longer after retirements then they worked for the company or paid into social security. Many organizations including the government are facing huge funding shortfalls. The rules about retirement haven’t kept up with life expectancy.

As a result, public pension and health benefits for the elderly are on track to double while at the same time the old-age dependency ratio (nonworking older person per workers) will double.

Living Longer Costs Money

The health care consumption level of a 70-year-old far exceeds the consumption level of a 30 year old. By one estimate, the average elderly American consumes 37 percent more than the average worker.

As a result, Americans will be expected to pay more for their own health care and more for their dependents through more out-of-pocket payments and increased tax bills required to fund public supported health care.

Consumer-Driven Health Care

Shifting responsibility for health care to the consumer may be the right thing to do but employers and the government are asking a lot when lay people are expected to shop for a provider, decide when to seek care, wait weeks or months to get an appointment, juggle the appointment time with the demands of working, and navigate a complex system of bills and payments.

At least 77 million people in the U.S. -- or two out of every five adults -- have a hard time paying for medical bills or have accrued debt as a result of health care expenses. Two-thirds of people, which includes many workers, with a medical bill or debt trouble go without care because of cost. Meanwhile their health deteriorates. Minor ailments become severe and chronic conditions evolve into acute emergencies.

More than Pocket Change

Losing experienced workers is only part of the problem. Replacing them comes with a high cost. At a time when the cost of doing business is rising and profits are squeezed, the average "cost-to-hire" and "time-to-fill" in 2005 was $7,123 and 37 days, respectively. The number goes up exponentially when recruiting and hiring knowledge workers. (Source: 2005 SHRM Human Capital Benchmarking Study)

Wolfe says, “this combination of an aging population and a shrinking workforce will increase the pressure to reduce pensions, delay retirement, increase outsourcing and open up immigration.”

For more workforce facts and demographic trends, visit http://www.perfectlaborstorm.com.

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