This document discusses the growing economic insecurity faced by many Americans due to factors such as long-term unemployment, declining incomes, and rising healthcare costs. It notes that over 20% of Americans experience a major loss of income each year, higher than in previous recessions, and that nearly half would struggle financially within two months of a loss of income. This economic uncertainty has implications for businesses, lowering productivity and increasing health issues among employees. It poses challenges for human resources departments in terms of employee engagement, training, and career development programs in an environment where job security and traditional incentives are diminished.

1. The Coming Challenges for Human ResourcesReynolds AtkinsJuly 2010

2. ThemesEconomic Security Index (ESI)Developed by political scientist Jacob Hacker and colleagues at the Rockefeller Foundation

3. ThemesESIMeasures major loss of income (> 25%) due to either decline in income or significant out-of-pocket medical expensesHacker’s chart shows in excess of 20% of Americans in this category, higher than in previous recessionsESI linked most prominently to rate of unemployment, but at all levels of unemployment economic insecurity has risen dramatically since 1985A Spring 2009 survey of US households showed just under half would experience economic hardship in two months or less following a major interruption in income

4. ThemesImplicationsLoss of income resulting from unemployment and disability routinely top list of Americans’ leading economic concerns Our employees bring these insecurities with them to the workplaceUncertainty about long-term employment prospects a significant source of discontent in even the healthiest companies Rockefeller Foundation American Worker Survey, February 2007“Compared to 10 years ago, do you think American today have…”Less economic security 65%More economic security 19%About the same economic security 16%

5. ThemesImplicationsWhether one is employed or unemployed, chronic economic insecurity is corrosiveIts effects can be felt in:Lowered productivityIncreased medical claims for everything from mental health services to gastrointestinal disordersExcessive absenteeism“Presenteeism”Performance problems

6. ThemesImplicationsA distracted, uneasy, risk-averse workforce hardly the platform on which to build a widespread economic revivalFew companies seem to be engaging in an open dialogue with their employees about what the academic and author Richard Florida has referred to as “The Great Reset”Employees no longer expect reassurances that their positions are secure – such reassurances are increasingly empty -- but they do want reliable information – financial, market, long-term growth -- on their companiesEven if such information is incomplete or unsettling, it helps dissipate some of the uncertainty

7. ThemesImplicationsWhat is the role of Human Resources in an age of diminished expectations among employees?Creativity and employee engagement likely casualties of lengthy salary freezes and benefit reductionsWhat happens when traditional incentives disappear?Will companies invest in training and developing their employees as they seek to compete more aggressively internationally?Will the long-expected departure of Baby Boomers from the workforce actually materialize, at least in the large numbers predicted early last decade?Recent studies of Boomer retirement patterns suggests upwards of 65% expect to work well into their 60s

8. ThemesImplicationsAs complicated as these “macro” issues are – inter-generational cooperation, stagnant wages and incentives, retirements and succession planning, growing mismatches between skills required and skills available -- how much of the traditional Human Resources “tool-kit” continues to work:Performance management programs when performance standards are constantly shifting and incentives have been sharply reduced?Career management (and what is a “career” these days) and rotation programs?One-size-fits-all total reward programs?Investment in employees – training and development, tuition reimbursement, seminars and executive education programs?

9. ThemesUnemploymentWhat happens to a formerly robust economy when it loses 8 million jobs in a little over eighteen months? New jobs will open in the U.S. But many will have different skill requirements than the old ones. “In a sense” says Gary Burtless, a labor economist at the Brookings Institution, “every time someone is laid off now, they need to start all over. They don’t even know what industry they’ll be in next.” And as a spell of unemployment lengthens, skills erode and behavior tends to change, leaving some people unqualified even for the work they once did well. from “How a New Jobless Era Will Transform America”Atlantic Magazine, March 2010Predictions like this will do little to allay workforce insecurities

10. Themes UnemploymentTo return to the 5% level of unemployment that existed prior to the recession will require the creation of 10 million jobsThat is 1.5 million new jobs each year just to keep up with new entrants into the labor marketEconomic Policy Institute expects unemployment to stand at roughly 8% in 2014 “We haven’t seen anything like this before: a really deep recession combined with an extended period, maybe as much as eight years all told, of highly elevated unemployment,” [Heidi] Shierholtz told me. “We’re about to see a big national experiment on stress.” - Atlantic Magazine, March 2010

11. ThemesUnemploymentIgnoring for the moment the appalling waste of human capital and the thousands of individual and family tragedies these numbers represent, they pose a particular challenge to Human Resources departments:Companies and organizations where new jobs are being created are seeing an large number of candidates who have been out of work for two or more yearsSkills and capabilities atrophy if not used, requiring in many cases extensive retraining for those fortunate to find employmentResearch into long-term unemployment found that young adults experience lasting changes in behavior and mental health, e.g., depression, excessive drinking

12. ThemesUnemploymentTo the extent that more qualified candidates (and even those with jobs) can choose to relocate , less desirable regions and cities will find the quality of their labor pool compromised making it difficult to attract new businessesInstitutional memory has been diminished in even our more stable enterprises leaving new employees to largely struggle on their own to adapt to often chaotic workplace culturesThe sheer crush of unqualified applicants for virtually any job advertised

13. ThemesUnemploymentLong-term unemployment remains the most significant social, economic, and political challenge facing this countryThe negative effects of extended joblessness can linger for years even after employment is foundGrowing awareness among our political elites – witness the recent extension of unemployment benefits – that unemployment (and the threat of unemployment) and the attendant financial insecurity it brings continue to undermine the still-nascent recoveryA protracted period of high unemployment will change the expectations, behavior and character of a generation of young adultsNegative effects already evident among many “blue-collar” men