Beginning later in this decade, the retirement of the baby boomer generation may usher in a worker shortage. How employers prepare for and respond to it may have a lot to do with their future success.
"The first baby boomers will start retiring about 2008," says Bill Chafetz, principal with Deloitte Consulting. "There's really a looming skills gap. It's a numbers game, but it's also a quality game," he says.
The phenomenon is a product of the expected retirements and the decrease in the growth of the labor force.
"The growth rate was 1.7 percent between 1960 and 1970, and 2.6 percent between 1970 and 1980," says Mitra Toossi, an economist in the Office of Occupation Statistics and Employment Projections of the U.S. Bureau of Labor Statistics. "That had to do with the baby boomers being right in the prime age groups, and the participation of women,"
But the rate dropped to 1.1 percent in the '90s, and is expected to remain there until 2010. After that, says Toossi, the rate is projected to drop to 0.6 percent.
How deeply companies feel the crunch will depend on which industry they're in. Most lacking, says Deloitte's Chafetz, will be technical workers and research scientists in the pharmaceutical industry or life sciences, engineers in the technology sector, and top salesmen across all sectors.
"Manufacturing has a bunch of things going against it," Chafetz also says. "It tends to have an older workforce and to not be the most attractive occupation for younger people. Because of heavy unionization and the norms in pay and benefits, manufacturing industries tend to produce people who have fairly rich retirement plans and so they're able to retire."
Also hit by the shortage will be some segments of the health care sector such as direct patient care, for example.
The federal government, says Chafetz, is already facing a crisis as thousands of federal employees are eligible for retirement over the next five years.
April 15, 2005
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