The Flight of the Baby Boomers

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The Flight of the Baby Boomers

  1. 1. The Flight of the Baby Boomers Retirement Costs and Labor Shortages Presented By Jack Szczepaniuk July 29, 2008
  2. 2. Summary           What is a Baby Boomer? It’s a matter of Generation The Baby Boomer Exodus The Gap Labor Shortages Bridging the Gap Retirement Costs for the employer Baby Boomer Plans Retirement Costs Conclusion
  3. 3. What is a Baby Boomer?        Someone who was born between 1946 and 1964 Sudden rise in birthrate following World War II Shared Events • Vietnam War • Civil Rights Movement Idealistic personality Not a homogeneous group (Gerosimplification) Two distinct Baby Boomer Groups 77 Million born during the generation
  4. 4. It’s a matter of Generation The Silent Generation (GI) [1925-1945] Slow progress, step-by-step, low risk, trust government, work hard • “children are to be seen and not heard” • The Great Depression • Social Security and the GI Bill were enacted Generation X [1965-1981] Reactive, values tangible rewards, skill development, crave feedback • Cold War era • Fall of the Soviet Union • Ronald Reagan era Generation Y (Millennials) [1982-present] Civic, technologically saavy, inexperienced in dealing with difficult social issues • the internet •9/11 and the War on Terror
  5. 5. Year-to-Year Births in the U.S. [1946-1994]    Baby Boomers Generation X Generation Y
  6. 6. The Baby Boomer Exodus   A person may begin collecting Social Security at age 62 First Baby Boomers are turning 62 this year (2008);  7,918 people turn 62 each day, or 330 every hour < http://www.census.gov/ipc/www/usinterimproj/>
  7. 7. Situation      About 40% of U.S. workers will be over 55 y/o by 2010 About 75% of Baby Boomers plan to work beyond retirement age Many are choosing to gradually leave the workforce, rather than in one step A third of workers will be forced to retire early due to lay-offs, downsizing or illness 60% of new jobs in this century will require skills that are today possessed by only 20% of workers
  8. 8. Workforce Make-up
  9. 9. The Gap    Significant generational differences between Baby Boomers and X/Y workforce Technological differences Cultural and Political differences
  10. 10. Generational Gap (Online Use)
  11. 11. Labor Shortages     Five Industries face acute shortages of skilled workers  aerospace and defense  health care  insurance and financial services  public education There will be “wars” for attracting labor within the next 5 to 6 years Labor shortages may occur in specific geographic areas Age discrimination may prevent older people from re-entering the labor market
  12. 12. Labor Shortages (cont)    The future workforce will need to:  Make up for the knowledge and skills that were lost through the retirement of the Baby Boomers  Be able to succeed in a more globalized environment, full of technology Little is taught about Foreign economies to children and teens Math and Science levels of American students are a step behind
  13. 13. Future Labor Shortage The shortage of skilled and unskilled labor will be setting in within the next couple years
  14. 14. Labor Growth Rate    The labor force grew 1.6% per year from 1950 to 2000 Growth in the labor force has slowed to 1.1% this decade Overall growth in the labor force from 20002050 is expected to be 0.6%
  15. 15. Bridging the Gap     Companies (HR departments) must plan for an approach on two fronts  Relations between soon-to-be retirees and new Gen X/Y employees  Rising immigrant workforce Companies must support older worker employment Companies must recruit highly skilled immigrant workers in order to be competitive Must uphold diversity programs in order to retain highly skilled immigrant workers
  16. 16. The Elderly Proportion Growth in the proportion is due to:  Retirement of the Baby Boomers  An increase in health and life expectancy  Changing fertility patterns
  17. 17. Possible Plans for Baby Boomers  Extension of employment beyond retirement age    Gradual Retirement    Voluntarily Official change in retirement age Phased Retirement – Reduced commitment to work before full retirement Cyclical Life Plan – periods of work/leisure over long period Functional and Schedule Flexibility
  18. 18. Retirement Costs for the Employer     Legacy Costs – costs handed down from predecessor or past Legacy Costs may include retirement packages, which threaten older, established companies Newer, smaller companies won’t feel as much of the brunt Costs incurred to replace a retired worker’s knowledge and skills
  19. 19. Strain on Public Employers      The longer Baby Boomers live, the costlier retirement benefits become Taxpayers will not be able to cover the increasing cost of retiree benefits State governments signed a 30-year bill in promise of spending $2.73 Trillion on retiree benefits Governmental plans are lightly regulated As of 2006, $370 Billion has been left unfunded
  20. 20. Retirement Cost Woes     Social Security is the largest source of income for about 50% of retirees Today, there are 3.3 workers paying into the system for every 1 receiving benefits Within the next few years, the ratio will be 2:1 By 2017, taxes will not be enough to pay for Social Security Benefits for all retirees
  21. 21. The Future of Medicare  Baby Boomer account for the surge in enrollment beyond 2010
  22. 22. Conclusion       Over 77 Million people were born in the Baby Boom generation The first Baby Boomers are retiring this year Exit of the Baby Boomers leaves a void in experience and knowledge Companies must “bridge the gap” between Gen X/Y and Baby Boomers, and recruit highly-skilled immigrant workers Some alternative options for Boomers Costs for companies and the government will be unavoidable
  23. 23. The Flight of the Baby Boomers Presentation by Jack Szczepaniuk Information, data and graphs are referred from the following sources: Baker, James P., Lui, Elwood, Poirier-Whitley, Kirstin, Griffin, Sarah Heck (Summer 2008) Everything You Always Wanted to Know About a Public Employer’s Ability to Modify Retiree Benefits but Were Too Afraid to Ask. Benefits Law Journal, 21(2), 83-98 Giancola, Frank (Summer 2008) Should Generation Profiles Influence Rewards Strategy? Employee Relations Law Journal, 34(1), 56-66 Hines, Andy (July-August 2008) Consumer Trends in the Three Different “Worlds”. The Futurist, 18-23 Lee, Shelley A. (May 2008) Sandra Timmermann on Boomers Ready to Launch—and What That Means for the Rest of Us. Journal of Financial Planning, 16-20 Nguyen, Bao Q. (Summer 2008) Tomorrow’s Workforce: The Needs for Immigrant Workers and Strategies to Retain Them. Public Personnel Management, 37(2), 175-184 Rappaport, Anna (Third Quarter 2008) The Future of Retirement: An Exploration and Comparison of Different Scenarios. Benefits Quarterly, 40-61 Walker, Lewis J. (June 2008) Capturing the Boomer-Care Flag: The Misalignment of Compensation and Consumer Need. Journal of Financial Planning, 28-31. Year-to-year births (1946-1994) and Future Labor Shortage from the Bureau of Labor Statistics Pre-retirement and Retirement Population (2002-2020), and General Labor force Composition from the U.S. Census Bureau

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