Looming labor shortage?

[REWahoo]

According to The looming U.S. labor shortage - MarketWatch, we're focusing on the wrong "jobs" problem.

We have a domestic economy that appears capable of adding 250,000 or more jobs a month for the foreseeable future. At the moment we are fortunate to have enough slack labor to fill most of these positions, but what happens after a few years of labor absorption when the baby boomer retirement movement really accelerates? Will paragons of the baby boomer era like Citigroup, Bank of America, AT&T, and General Electric, which combined have over 1.1 million employees, be able to find enough skilled workers to fill spots vacated by retirees?

The other issue is employment isn’t evenly distributed across industries and geographies. I have never worked with anyone over the age of 55. I am sure that Facebook, LinkedIn, Google, and Apple aren’t sweating the looming baby boomer retirement trend.

But what about employers in government, health care, and education in suburban and rural communities, where older workers are concentrated? Who will step in to take those jobs and fill tax coffers to pay for the health care and pensions of retirees?

When's the last time you saw something like this proposed:

We’re going to need a lot more automation and job destruction from tech and engineering companies.

 

[brewer12345]

This is a serious issue in my organization. More very experienced people retire every month and the replacements tend to be rather wet behind the ears.

 

[Sesq]

I am Gen X or formerly called the baby busters. I remember in school discussing this a professor who thought my career prospects would be enhanced because one day the boomers would vacate positions and there would be fewer of us to go around.

I think automation, down sizing, delayed retirement, globalization amongst other issues have kind offset this. That said, so far so good.

 

[jclarksnakes]

I just hope the school systems in Mexico can step up and provide the workers we will need for these skilled jobs.

 

[Alan]

This is a serious issue in my organization. More very experienced people retire every month and the replacements tend to be rather wet behind the ears.

The same in my ex-company, a real shortage of experienced engineers, and you just can't open the fawcet and produce more on demand.

 

[GrayHare]

Perhaps salaries will rise to meet demand of a few key engineering types, much like they did in the late '90s when Y2K brought Cobol and FORTRAN programmers temporarily out of retirement.

 

[donheff]

I have read about the potential impact but I wonder if anyone knows enough to predict accurately. I remember all the "Workforce 2000" sturm und drang in the early 90s. Employers in all sectors were petrified that they wouldn't be able to find enough workers. Turned out to be a big nothing burger.

 

[Midpack]

Before I retired, we had noticed far fewer applicants for positions requiring a BS or better. And even for $20-25/hr production jobs, the younger non-degreed generation doesn't seem to want shift work or factory environment (and our plant was relatively clean and quiet). They were more plentiful earlier in my career. But we will see.

In terms of overall labor, I read (and posted) and article a week or two back showing that the US was in a better position than almost all other developed countries (Europe, Japan, China all have larger "gray tsunamis" than the US despite our boomer generation). That along with our more open (legal) immigration would help us fill out labor requirements in quantity at least. Whether the future workforce has the skills required may be another matter...

 

[misanman]

A friend of mine retired last year but ended up getting restless. He's an engineer in his early 60s. He floated a resume on monster.com and got over a hundred inquiries. He started at a major manufacturer last week. Guess theres still good demand for certain skill sets.

 

[FUEGO]

Hmmm, sounds like I might have to hold on to my law license in ER and set up a little H-1B factory. I mean I want to help out however I can (as long as it is extremely lucrative).

 

[ziggy29]

Yeah, the labor shortage will probably hit right at the time I'm financially ready to FIRE and they will somehow ban early retirement as "unpatriotic" or something. Seems to be that I was born at the right time to get screwed by demographics in every possible way...

 

[REWahoo]

Seems to be that I was born at the right time to get screwed by demographics in every possible way...

Look on the bright side: you could have been born in 1924.

 

[Animorph]

We should be able to pick up lots of foreign skilled workers. I was working with a bunch of young overseas Indian and Chinese engineers before I retired, not to mention Turkish and Chinese already here in the U.S. on visas. All very young, but they'll ripen with age. Be nice to get someone to work here in the U.S. to pay my SS benefits, make stuff I can buy, and take care of me when I'm old.

 

[Gone4Good]

Let me suggest something radical:

- Boomers leave the workforce in greater numbers than people entering the workforce
- Demand for workers outstrips supply
- Desperate employers bid up the price of workers (wages rise)
- Higher wages increase the supply of labor through immigration and longer work hours
- Higher wages make greater capital substitution (automation) and outsourcing more economic lowering demand
- This process continue until supply meets demand

Crisis averted. Isn't capitalism wonderful.

 

[brewer12345]

Let me suggest something radical:

- Boomers leave the workforce in greater numbers than people entering the workforce
- Demand for workers outstrips supply
- Desperate employers bid up the price of workers (wages rise)
- Higher wages increase the supply of labor through immigration and longer work hours
- Higher wages make greater capital substitution (automation) and outsourcing more economic lowering demand
- This process continue until supply meets demand

Crisis averted. Isn't capitalism wonderful.

But that would not make for a good headline.

 

[audreyh1]

First, we need to get past the current 8%+ unemployment.

Then, companies need to get over their ridiculous age discrimination which is very short-sighted IMO. Just because younger folks are "cheaper" doesn't mean they are "better". There has to be a balance.

In the meantime, our high unemployment rate has been "enhanced" by tremendous productivity strides. This will have to continue.

Finally, the US will probably be more open to immigration for high-skill workers.

I'm thinking that in 10 years or less, older workers who can't afford to retire will find a much friendlier jobs market.

Does anyone remember how around 1997-2001, we had 5% unemployment or better? It dropped under 5% in 1997, and got all the way down to 3.9% at the end of 2000. Also 2005-2007. Companies were sweating the issues for a short while there - but then the problem "went away", and looks like it will be gone for a while.

Audrey

from Bureau of Labor Statistics Data

 

[teekaymn]

Love your posts (and your blog!), G4G. My son is going to be taking a summer macro econ class, and I intend to forward your post to him. I'll have him write it on the back of his hand so he's ready for that first quiz!

 

[ziggy29]

Another question is -- how much can the increase in demand be accommodated with productivity gains (Audrey alluded to that one) and jobs that can be done overseas in "cheap labor" nations? Any jobs that can be eliminated or done in places like China and India will be. And how much can the economy really grow long term if most participant in the labor market feel more and more irrelevant and redundant?

 

[l2ridehd]

The problem is actually worse then the article shows. If you want to see some very scary numbers. Look at the number of engineering degrees awarded as a ratio to the number of law degrees in the US, India and China. It will then become very obvious what lies ahead.

 

[FinanceDude]

I don't think we'll need any more engineers, our energy policy is one that requires no new engineers since we aren't being allowed to do anything........

 

[Ed_The_Gypsy]

I don't think we'll need any more engineers, our energy policy is one that requires no new engineers since we aren't being allowed to do anything........

We have an energy policy?

Oh, right: Hydrocarbons are bad. Nuke is bad. Green is good. (Expensive, but we can soak the evil capitalists to subsidize it.)

 

[ziggy29]

I don't think we'll need any more engineers, our energy policy is one that requires no new engineers since we aren't being allowed to do anything........

We have an energy policy?

Oh, right: Hydrocarbons are bad. Nuke is bad. Green is good. (Expensive, but we can soak the evil capitalists to subsidize it.)

A faint whiff of pork chops and bacon begins to permeate the room...

 

[Texas Proud]

Then, companies need to get over their ridiculous age discrimination which is very short-sighted IMO. Just because younger folks are "cheaper" doesn't mean they are "better". There has to be a balance.

One of the problems is that a large percent of the people think that old folks are 'expensive' and young folks are 'cheaper'....

This should not be the case... young folks are usually paid less because they do not have the experience of the older folks... but if you are doing the same job, there should not be a pay difference just because of age...


One of the big problems is that young folks do not know how to manage older folks... so it is easier to just get rid of them...

 

[ziggy29]

One of the problems is that a large percent of the people think that old folks are 'expensive' and young folks are 'cheaper'....

This should not be the case... young folks are usually paid less because they do not have the experience of the older folks... but if you are doing the same job, there should not be a pay difference just because of age...

Of course, in a broken system where health care is tied to employment and is expected to be the responsibility of employers, having more older workers also significantly increase the group rates the employer has to pay. This gives them more incentive to practice age discrimination than would be the case if we didn't have a silly system of health insurance linked to employers.

 

[Midpack]

One of the problems is that a large percent of the people think that old folks are 'expensive' and young folks are 'cheaper'....

This should not be the case... young folks are usually paid less because they do not have the experience of the older folks... but if you are doing the same job, there should not be a pay difference just because of age...

OTOH, 'young folks' may have more up to date skills and more initiative. Not universally true by any means, but I watched first hand several employees let their skills atrophy and refuse to initiate or even accept training to bring themselves up to date. I had a senior Engineer retire (early) because he refused to migrate from an outdated process control system to a newer and far better system. It was very sad, but he deserved to be 'pushed aside.'

There shouldn't be a bias against older employees (and there is indeed), but employers have a right to get the skills they're paying for. Unfortunately, the bias is there for a reason other than 'more expensive'...YMMV