Boomers will make waves as retirement nears
Baby Boomers are a demographic marvel. They are members of the generation born between 1946 and 1964 when post-World War II parents decided it was time to procreate in large numbers. The boomers saw the dawning of the Age of Aquarius and now they're looking toward the sunset: the Age of Retirement.
Within the next five to 10 years, over 76 million baby boomers are scheduled to retire from the workforce, with only about 44 million of the younger Gen Xers left to fill those vacant positions.
With this workforce phenomenon scheduled to take place in the next decade, how are Northern Michigan businesses preparing to cope?
Laura Mitchell, Human Resources Manager at Wayne Wire Cloth Products, Inc. in Kalkaska, has pondered the implications of baby boomer retirement. Over 50 percent of Wayne Wire employees fall within the boomer demographic. Of its 402 employees, 241 are 40 and older.
Mitchell says the average employee age is 41.63 and that this trend is not going to have the same effect in Northern Michigan as much as it will elsewhere in the nation. The reason, she says, is there is a very large labor pool in the area that is either underemployed or unemployed.
"The predicted shortfall is not expected until 2012 and beyond, so between now and 2030, employers will need to focus on new technology and increasing productivity with fewer employees."
However, if the pool of applicants shrinks for unskilled jobs, then that would create some challenges, she said, adding she feels the employee shortfall will be felt most sharply in the medical and computer industries.
That testament is supported by the Bureau of Labor and Statistics (BLS) which projects that nine of the ten fastest-growing occupations are health and computer (information technology). If an industry's growth outstrips the number of available employees, then they will definitely feel the pinch of a smaller workforce.
Having researched the issue, Mitchell has some doubts as to whether boomer retirement will actually be as disruptive to the workforce as originally anticipated.
"I recently read an article where the Bureau of Labor Statistics (BLS) said that the current interpretation of the data on this topic is inaccurate. Apparently there are two sets of data supplied by the BLS and people have been subtracting numbers to come to their conclusions, which is comparing apples to oranges. The BLS has tried to correct this misconception through press releases and an article in the Monthly Labor Review (Feb. 2004), but this has not been effective in correcting the misnomer."
Attracting the MP-3 generation
Liz Sayre-King, President of Professional Solutions Plus in Traverse City, feels having a number of strategies in place to attract new employees will help employers cope with impending retirements.
She says companies need at least two strategies to attract good employees: The first is a good benefits package and the other is flexibility.
"Because there will be more blending of generations in the workforce, choices in benefits will be very important. The new HSAs (Health Savings Accounts) for example, would be very attractive to a young, healthy worker, but not to an older worker who may have begun to experience some health issues. So, it's best if a company can offer more than one health plan. Also, allowing employees options in different types of benefits, dental, vision, long-term disability, etc., will make a company more attractive to prospective workers."
Sayre-King points out that flexibility is important in a number of ways. Companies must be flexible in the non-insurance benefits that are important to a younger worker's quality of life.
She suggests offering a paid time off plan rather than a fixed vacation and sick-time policy. She believes offering leave and an intermittent leave of absence policy is very beneficial. She also suggests on-site daycare, and job sharing.
Ultimately, it is a matter of companies being sensitive to the needs of employees and then being creative when it comes to these types of benefits.
Another way companies can be flexible is by offering a variety of work, Sayre-King says.
"This is a generation that is quite comfortable multi-tasking, writing a report, listening to their MP-3 and instant messaging all at the same time. Performing the same task repetitively could be quite boring for them. Companies will need to look for ways to make the work challenging and interesting for their younger employees. Cross training will be important, as will be providing opportunities for growth."
Mitchell and Sayre-King concur that the burden of retirement benefits won't be as colossal as they could be with mass retirements on the horizon, especially considering the trend towards more progressive savings plans.
Sayre-King says, "Fewer and fewer employers offer traditional pension plans and are moving more toward savings plans, 401(k) or 403(b)-type plans. We believe this trend will continue."
Also, companies who provide health benefits to retirees are beginning to ask retirees to share in the premium costs.
"The cost to provide 100% of health care to retirees has become prohibitive to many organizations," Sayre-King noted. "Unless there is a major change in the way health care is paid for, these trends will probably continue also."
Mitchell says that the impact at Wayne Wire will be minimal, as they do not provide retirement benefits.
"We have had some retirees who left before 65 without health insurance, who then came back and worked part-time (some to cover their COBRA payments). We will likely continue to employ them as needed."
Statistics and anecdotal evidence all point to the fact that the retirement wave of the baby boomers will have some impact on the workforce. Just "where" and "how much" is a multifaceted issue that will affect different industries and different regions in singular ways. But one thing is for sure; between now and the onslaught of retirements, many creative human resources professionals will be devising unique ways to entice new employees to fill those job openings. BN