There are big changes coming to the American workforce. While many organizations are watching the economy, there’s another change — almost a revolution — quietly taking place right under our noses.
That change is the massive shift in workplace demographics, with four specific trends to watch:
- Over 40 percent of Americans will be leaving the workforce in the next decade for new opportunities.
- Women are voting with their feet and leaving the corporate world.
- The old minority is the new majority; 95 percent of U.S. population growth is attributed to ethnic groups.
- Temporary worker demand is rising with predictions that 50 percent of the workforce will be contingent workers by 2027.
Are organizations prepared for the shift to come? Let’s take a closer look at how these workplace trends will impact the workforce.
Baby Boomer retirement means 40% of the workforce will be gone in the next decade
In the past, people retired, on average, at age 60. The Baby Boomers (born between 1946-1964) talk about retiring at 66, except if they don’t, because they need the salary, or just like working. If they do, we are looking at losing approximately 40 percent of the workforce within the next ten years.
If Baby Boomers retire, organizations will lose a lot of talent. Retiring Boomers are going to be hard to replace because Generation X is small, and also because Generation Y has a different concept of how they want to work.
If the Baby Boomers don’t retire, organizations are not in the clear. Healthcare and pension costs are going to skyrocket and organizations will have personnel challenges that range from keeping an older workforce up-to-date and figuring out the protocol when a Boomer reports to someone who’s young enough to be his granddaughter.
The fact is, Baby Boomers aren’t the only members of the workforce fleeing the scene. Women are also leaving the corporate workforce. In both instances, the Baby Boomers and the women who are leaving may end up starting their own companies, becoming the competition of the very organizations they decided to leave. Has your leadership team started planning for these changes?
Women are leaving the corporate world and becoming your competition
Whether it’s law, technology, administration, or management, Gen X women (born between 1965-1980) are voting with their feet. They are leaving their jobs because they’ve decided that they do can better by consulting or creating start-ups.
Why are women doing that? Because in 2012, women held 14.3 percent of executive officer positions at Fortune 500 companies and are still paid only three-quarters of what their male colleagues are paid. These statistics don’t match up, considering that according to the 2010 Census, today’s young women are just as likely as men to hold bachelors’ degrees, 50 percent more likely to have a graduate degrees than men, and more than 40 percent of women are now their families’ main breadwinners.
You can see why this trend of women leaving corporate life to consult is just going to accelerate. In a sense, organizations are training their competition. Right now, there are 8.6 million women-owned businesses in the U.S. Between 1997 and 2013, when the number of businesses in the United States increased by 41 percent, the number of women-owned firms increased by 59 percent — a rate 1½ times the national average. Additionally, with wealthy American women now in control $14 trillion dollars in assets; this is going to be a real game changer.
With women leaving the workforce, and the Baby Boomer retirement exodus on the horizon, what exactly will the future workforce look like? For one, minorities will make up the bulk of it.
The old minority is the new majority
The U.S. has always been known as a melting pot; diversity is its strong suit. However, when it comes to the workforce and corporate America, diversity has been lacking. No longer. Minorities are becoming the majority and that means the majority of consumers, clients and leaders in the workforce.
Plus, since the majority of older people in the U.S. are white, and the majority of younger people are not, we’re looking at a potential new kind of divide that’s both racial and generational.
The statistics say it all. 95 percent of U.S. population growth is currently attributed to ethnic groups. People of color who make up the workforce is 36 percent , though only 21 (not 21 percent) are Fortune 500 CEO’s.
In the next ten to thirty years, census data says that there will be 0 percent ethnic majority in the U.S. The growth in the working-age population will be as much as 83 percent . Projections also say that by 2020, minorities will make up 40 percent of the civilian labor force. Despite the demographic shift, Harvard economist George Borjas projects that by 2030, the children of today’s immigrants will earn an average of 10 percent to 15 percent less than non-immigrant Americans, based on former trends.
What will this look like for the future workforce? Looking to education trends can give us insight. Hispanic and black youth are graduating college at far lower rates than their white peers. These facts may indicate that our future workforce will be less educated and lower paid.
This more diverse workforce will change the dynamics of the workplace in more ways than one. How people work is also diversifying. There is a steadily rising demand for temporary (or contingent) workers — a stark difference to the workplace reality of previous generations.
Temporary worker demand is rising
The rise of temporary workers is a workforce trend that’s here to stay. According to the U.S. Bureau of Labor Statistics, temporary workers make up 19 percent of all new jobs in the U.S. That number is going to continue to grow. By 2027, more than 50 percent of the US workforce will be so-called contingent workers.
What is causing this loss of permanent positions? For one, the economic downturn has made employers reluctant to hire. As this lack of hiring continues however, the trend of contingent workers seems to be shifting the workplace culture altogether. Companies also are facing new healthcare requirements for full-time workers, which in certain organizations, is an expense they are not able to, or willing to, pay.
This shift is also generational. Gen Y (born between 1981-2001) is more technologically and geographically mobile. They value flexibility, which project-based work allows. Work-life balance is important to the younger generation, so being a temporary worker allows them to make their own schedules, work from anywhere, and travel as they desire.
Handling a constant turnaround of employees and the impact of that constant turnaround on the organizational culture requires careful thought and preparation.
It’s time to get ready for the workforce of tomorrow
Organizations have a lot to consider. The future workforce is going to look and function entirely differently. There are a few key players that may be leaving the workforce altogether. Baby Boomers are reaching retirement age, and women are realizing that leaving the corporate world and starting their own businesses actually offers them more opportunity for achievement. Both of these groups are primed to become the competition of the very organizations they decided to leave. Filling the slots of Boomers and women will be a more diverse workforce, made up of minorities. However, they won’t be minorities any longer. This new workforce may be less educated, and may make lower wages than the previous workforce. The workplace itself is even changing. With temporary and contingent workers on the rise, organizational culture will shift tremendously, and the workplace will become a much more fluid concept.
I urge organizations to take a long-term, strategic look at their hiring policies and make it a priority to prepare for the workforce of tomorrow. It’ll be worth your time.
Experis: “The Aging Workforce: An Underutilized Resource”
Pew Research Center: “Minorities Account for Nearly All U.S. Population Growth
Intuit 2020 Report: “Twenty Trends That Will Shape The Next Decade”
Metlife: “America’s Gen X”
Catalyst: “2012 Catalist Census: Fortune 500 Women Executive Officers and Top Earners”
Catalyst: “Women’s Earnings and Income”
Russell Sage Foundation: “The Rise of Women: Seven Charts Showing Women’s Rapid Gains in Educational Achievement”
Pew Research Center: “Breadwinner Moms”
Investment News: “10 Essential Financial Facts About Women”
Center for American Progress: “The State of Diversity in Today’s Workforce”US Department of Labor: “Employment Outlook 2010-2020”
National Bureau of Economic Research: “Economic Progress of Immigrants”