HR Hero Line

Effects of Baby Boomers Leaving the Workplace

While demographics may not be destiny, current trends point to a significant worker shortage in the next decade. This article discusses some of the possible results of these trends and potential employer responses.

Learn more about the multigenerational workplace with Diversity Insight

Where have all the workers gone?
The generation of the Beatles, bell-bottoms, and, yes, disco is doing it again. More than 70 million baby boomers are set to leave the workplace in the next decade or so. Again, by sheer weight of numbers alone, the baby boomers will dramatically affect life in the United States.

Labor statistics indicate that by 2010 there will be millions more jobs available than there are people in the labor force. That’s a result of a number of factors, including projected job growth along with the loss of the baby-boom generation from the workforce. The simple fact is that the generations following the baby boomers aren’t large enough to provide all of the workers necessary to meet the needs of U.S. employers.

Along with the projected lack of workers of any skill level, there remains significant concern that the workers won’t have the skills necessary for the 21st century’s high-tech jobs.

In testimony before the U.S. House of Representatives’ Committee on Education and Labor on February 7, 2007, Lynn Karoly, a senior economist with the Rand Corporation, discussed three key factors expected to affect the American workforce in the near future: significant demographic shifts as baby boomers leave the market, the continuing acceleration of technological change, and the continued globalization of the business marketplace.

Taken together, those factors present a near future in which employers face increased global competition and rapidly changing technology with a decreasing pool of available workers.

Concerns about the future loss of the baby-boom generation in the workplace may be another form of boomer hubris: “You’re going to miss us when we’re gone.” Perhaps it’s only another tempest in a teapot. Does anyone remember Y2K?

Employers, however, don’t have the luxury of ignoring this potential dramatic change. A failure to plan could have dramatic results. In the rapidly approaching workplace of tomorrow, the ability to attract and retain new and skilled workers may make the difference between success and failure.

Action items for employers: Start planning now
While many researchers predict significant future worker shortages as a result of demographic shifts, you should come to your own conclusions. So many other factors could affect the future workforce needs and a specific employer’s needs, such as immigration, globalization, job creation, and job loss, that each employer should review the facts and its market to make a determination about its needs.

If you conclude that there in fact will be a shortage of skilled workers when baby boomers eventually retire, you can begin to deal with these possibilities now rather than when it might be too late.

Stop the brain drain
Baby boomers leaving the market in significant numbers will result in a loss of corporate knowledge. They take with them their education and skills learned on the job. In addition, however, they will take their knowledge about the internal workings of the business.

Every business relies on a cadre of employees who know how to get things done there. That can be as simple as which coworker to ask for which supplies. It can be as complex as guiding a new product from development to production in the shortest period of time. That information isn’t written down and can’t be learned in school; it’s learned on the job. When a boomer walks out with that information in her head, the knowledge walks out with her.

While you can’t stop the brain drain, you can plan for it. First, carefully review succession plans. Many large corporations have succession plans for their CEO. Some form of succession planning can take place at all levels.

When there are significant chances that senior workers will be leaving the workplace in the next few years, efforts should be made to make sure that they pass on as much of that corporate knowledge acquired during their years of hard work as possible before they leave. Senior employees should be encouraged to mentor their replacements so that hard-learned knowledge of how things actually get done is passed on to the next generation.

Just as there have been studies indicating that baby boomers may not be that interested in fully leaving the workplace, 21st century employers may not be that interested in having them leave the workplace completely.

To reduce the pain of business knowledge leaving in a rush, you may seek to encourage retiring boomers to extend their stay before retiring, either working full- or part-time. In addition, if you can’t find necessary skilled workers, you may be forced to keep or employ boomer workers who already have the education and skills necessary.

You may take steps to entice potential retirees to stay in the workplace longer. That could mean such things as offering bonuses conditioned on remaining in the workplace. It also will mean, however, making the workplace more enticing for older workers.

Older workers may seek to reduce their time at work. That desire may result in part-time or temporary work arrangements, telecommuting, or even alternative work arrangements such as independent contractor status.

Your policies may need to be revised to reflect the needs of the older group of workers. For example, medical benefits may be more important to older workers than younger workers. They also may be more costly, however, unless some controls are adopted. Older workers also may require more family leave, not only for themselves but also to care for aging parents or siblings.

Retaining or hiring older workers will increase the potential for age-related lawsuits. With the mixing of generations, you’ll need to deal with a multigenerational workforce. Policies regarding discrimination and harassment should be revised to reflect a new emphasis on age-related issues.

You may want to provide training in the workplace to deal with multigenerational communication issues and to reduce incidents of age discrimination. In addition, you’ll want to provide a mechanism to carefully analyze termination decisions and other adverse employment decisions relating to members of the age-protected class.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including discrimination

Prepare for competition for workers
Employers competing for a smaller group of available employees must ensure that they are competitive. Policies and practices should be reviewed and revised as necessary to make the employer as attractive as possible to applicants.

Some of the policies put in place to replace boomer workers such as benefit and leave plans and alternative work assignments also may attract the new generation of workers who value flexible employment.

Often, scarce resources drive up the cost of those resources. If you are considering paying more for workers, consider alternatives to increased annual salaries or hourly wages. Signing bonuses or even a guaranteed bonus to be paid at the end of the first complete year of employment may be better alternatives.

You also may find yourself using more inbound immigrant workers. Legal assistance will be necessary to navigate the waters of H-1B visa programs or their equivalent in future years.

Cast a wide net
Manage your hiring practices to cast the broadest net possible. That may include more focus on Internet hiring. If Internet hiring is used, you should consider how best to control the application process to avoid discrimination claims and to capture equal employment opportunity (EEO) data as necessary or required by government contracts.

Along with Internet hiring, you should review your use of recruiters. While employers often use recruiters to fill executive-level positions, recruiters who can access a large group of potential applicants for lower-level jobs also may be valuable.

Prepare for a diverse workforce
It’s likely that the worker shortage will be remedied to a certain extent by a more diverse and international workforce. If employers are increasingly relying on diverse applicants for a workforce, a failure to provide equal opportunity in the workplace is punished not just by lawsuits. It’s punished by an inability to compete for the most qualified applicants.

As in dealing with older workers, you must review your discrimination policies to make sure they cover adequately all the diverse members of the workforce who may be protected by law.

You can use a number of methods to achieve an equal opportunity workplace. Regular supervisor and employee training probably will be necessary. EEO policies should be widely published and rigorously enforced.

In addition, you’ll want to establish or maintain easily accessible paths for internal grievances. You also may consider doing periodic surveys of employees to try to ferret out employment problems, including EEO problems.

Become a learning institution
Due to a potential lack of workers with the necessary education and skills, you must be prepared to meet the educational and skill needs of your new workforce, including workers for whom English is a second language.

As a practical matter, in today’s rapidly evolving technology workplace, even a worker who comes in with all the skills necessary may need to be trained a number of times during employment. Consider partnering with educational institutions to provide the skilled workers you need.

You also may need to provide on-the-job education either directly or through a partnership with an outside educator. You should maintain or create programs to encourage workers to take advantage of outside educational opportunities.

Get ready for alternative work styles
To meet the need for employees and the demands of those employees, you may find yourself increasingly using alternative work arrangements. That could include part-time or temporary employees, telecommuters, or independent contractors. Carefully review policies relating to contingent workers.

Benefit policies must state clearly which employees are entitled to benefits and differentiate between independent contractors, part-timers, and temporary employees.

All independent contractor relationships should be reviewed to ensure that the relationship is one of independent contractor and not employer-employee. Too often, employees are misclassified as independent contractors. The legal implications of such a misclassification can be significant, including tax, benefit, and potential employment discrimination law liability.

Technology may replace some of the need for new workers. Computers may handle tasks that were performed by multiple employees in the past. Advances in robotics may eliminate the need for some factory workers.

It’s very likely, however, that the ability of businesses to succeed and compete in an increasingly globalized economy will be directly affected by the inability to obtain, train, and retain the best skilled workers. An employer that recognizes that need and makes the changes necessary to compete for and retain the best available workers will have a significant advantage in the global marketplace.