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I stand by my 2001 prediction.
This "storm" is unlike any other
in our history. Like the devastating weather
convergence of 1991, when three weather systems
collided and combined in the North Atlantic
Ocean to create one of the fiercest storms
ever recorded, this labor storm results from
the collision of several history-changing
events: growing skilled worker shortages,
changing workplace demographics, and global
competition. This storm will touch every industry,
region, age group, family, and ethnic group.
It's happening now. Employers field generational
clashes in the workplace while employees cope
with competing demands of job and family responsibilities.
There is a dearth of applicants for healthcare
and trade jobs. Either you or someone you
know has felt the impact of outsourcing, downsizing,
and layoffs.
I, and other prognosticators, warned of this
impending catastrophe. Did you take action?
Probably not. After all, you have more pressing
fires to put out today. You think planning
for a future crisis is a luxury you can't
afford. Think again.
A 1995 survey conducted by Eckerd College
Human Resource Institute predicted that in
2005 the top five concerns for human resources
staff will be the skill level of the available
work force, managing change, information technology,
an aging work force, and management issues.
With the exception of rising health care costs,
this forecast is nothing short of remarkable.
In 1995, the issues facing human resources
managers included managing change, skill level
of the work force, rising health-care costs,
management issues, and work ethics, values
and attitudes. Remarkably similar. How is
it that a problem predicted 10 years ago still
leaves business employers with their collective
back against the wall? Why were such obvious
signs ignored or poorly managed?
A 1995 survey conducted by Eckerd College
Human Resource Institute predicted that in
2005 the top five concerns for human resources
staff will be the skill level of the available
work force, managing change, information technology,
an aging work force, and management issues.
With the exception of rising health care costs,
this forecast is nothing short of remarkable.
In 1995, the issues facing human resources
managers included managing change, skill level
of the work force, rising health-care costs,
management issues, and work ethics, values
and attitudes. Remarkably similar. How is
it that a problem predicted 10 years ago still
leaves business employers with their collective
back against the wall? Why were such obvious
signs ignored or poorly managed?
The answer is buried in this demographic reality:
aging baby boomers represent a greater segment
of the general population than has ever been
recorded and it is only growing. This means
healthcare will remain an employer's biggest
challenge with the 21st century workforce.
The statistics are stunning. Twenty percent
of the population, 71 million people, will
be 65 or older in 2030. Traditionally, lifelong
healthcare and retirement for older Americans
has been funded through taxes and increasing
worker productivity. Again, statistics illuminate
the problem. Since 1900, the number of older
adults has increased eleven-fold, from 3.1
million in 1900 to 35 million in 2000. Four
of every 10 people in the work force will
be older than 45 in two years. By 2010, one
of every five employees will be aged 55 or
older. By the middle 21st century, there will
be more seniors than children. That statistical
milestone is less than 50 years away. Who
will pick up the tab for a growing population
of dependent seniors? Can we expect that of
a shrinking workforce?
Let's look at social security. When social
security legislation was enacted in 1945,
the ratio of contributing workers to each
beneficiary was 41.9:1. That ratio dropped
to 16.5:1 in 1950. The current ratio is 3.4:1.
Social security trustees predict the ratio
will drop to 2:1 in 2040. These numbers reduce
the issue to this: how will we afford to keep
an aging population healthy?
Then, there is the issue of "replacement
workers." The ratio of entry-level wage
earners to retirees has dropped from 9:1 in
1955 to 4:1 in 1995, with projections that
the ratio will further decline to 2:1 by 2020.
The labor market, which grew at approximately
1.2 percent a year in the 1990s, is expected
to decrease to 0.8 percent from 2000 to 2010,
and 0.4 percent and 0.2 percent in subsequent
decades. Are you beginning to get the picture?
The buzz from "Perfect Labor Storm"
detractors, who call the impending crisis
more hype than fact, is baby boomers won't
retire. That's true. Many boomers strive to
stay active and, frankly, many of them aren't
financially able to retire. But, boomers will
continue to work only if they receive ample
compensation and benefits including flexible
schedules to allow for leisure activities
such as traveling and visiting grandchildren.
For employers, it means dishing out mucho
bucks for compensation and insurance coverage
for the graying workforce. Employers who think
health care costs are high now ain't seen
nothin' yet.
Effective and efficient business management
has never been so important. All inefficiencies
will be magnified on the bottom line. That
means zero tolerance for poor performing employees.
By 2005, more and more companies will screen
out job applicants who are a poor fit in favor
of those who do. High performance expectations
coupled with clear, specific goals will become
the norm. Management skills will be based
on employee retention and performance, in
addition to sales and production figures.
Salary increases will be linked to job performance
that exceeds expectations. Competition among
employers to attract skilled applicants will
heat up, and job hopping will increase. This
means only the "best places to work"
will survive. As for health care costs, my
advice is to build higher costs in the budget
until there is a societal solution to caring
for an unprecedented aging population.
Currently, the norm is to increase co-pays
and employee contributions to manage health
care costs. When all is said and done, these
cost containment strategies essentially take
money out of the employee's take home pay.
With more and more unhappy employees looking
for new jobs and a shortage of skilled and
talented workers, this strategy will likely
backfire.
Really, really smart employers will put as
much, if not more, emphasis on hiring the
right people, and then holding them accountable
for performance productivity. Just think -
if every employee who shows up for work does
the job well, maybe human resources staff
will have time to work on a health care solution.
Sidebar: A quick peek at how an aging workforce
affects the bottom line.
Chronic conditions are the major cause of
illness, disability, and death in the United
States . Among people 45 years and older,
hospitalization rates are higher for those
with arthritis and hypertension-the two most
common chronic conditions for that age group-than
for the general population. Almost 100 million
Americans have chronic conditions, with projections
that, by 2040, approximately 160 million people
will be so afflicted. The cost for treating
chronic conditions was $470 billion in 1995.
By 2040 that cost could be as high as $864
billion.
Coronary heart disease is the leading cause
of premature, permanent disability in the
United States ' labor force. More than one-fifth-22
percent-of workers with heart disease have
work-related limitations.
Diabetes, an insidious disease, breaks down
the body's systems. Diabetic workers use more
health care services and are less productive
than non-diabetic workers. Diabetic workers
incur more than twice as many physician visits
every year. Twenty-four percent of workers
diagnosed with diabetes report being hospitalized
in the past year.
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