Today's Challenges

Every HR manager knows the drill: One of your best workers walks out the door, leaving you with a big pair of shoes to fill.

Despite all the time and money you will spend advertising, networking, and interviewing, there's no guarantee that you will find someone who has the skills that you need. Sometimes, there's simply no substitute for years of experience, contacts, and knowledge.

Unfortunately, this scenario is about to become a lot more common. Due to unprecedented demographic and economic factors, the labor market is becoming tighter at the same time as millions of experienced workers are retiring. As a result, finding skilled workers will be more difficult - and more essential - than ever.

The Retirement Wave

78 million baby boomers are approaching retirement. Never in American history has such a large cohort of people hit retirement - literally 7,900 people are turning 60 every day.

The retirement wave will wash over every part of the country and every sphere of the economy. Today, Florida is our oldest state. In 2000, it was the only state where at least 18% of the population was over 65. But by 2025, 39 states will have reached the same milestone - by 2025, there will be 39 Floridas.

Percentage of Population
Age 65 or Older

With so many workers nearing retirement, no industry will be spared. Some particularly vulnerable industries, in fact, are already struggling to maintain necessary staffing levels.

In the Federal Government, for example, 42% of non-supervisory and a whopping 58% of supervisory workers will be eligible to retire by the end of FY 2010. This is in addition to the tens of thousands of workers who have already accepted retirement in the past few years. According to Government Executive magazine, "The retirement rate across government has been steadily rising over the past five years. In fiscal 2001, 43,119 civil servants retired; by fiscal 2004, 55,769 had done so."

It's hard enough when an essential employee walks out the door. What will happen when millions of them do?

Tight Labor Markets

Any one who worked in HR in the 1990s knows how difficult it is to fill positions in a tight labor market. During the dot com boom, employers bid up wages and offered expensive benefit packages just to stay competitive.

Annual Labor Force Growth (%)

As hard as it was to attract workers in 1999, it's going to be even harder in 2009, and harder still in 2019.

That's because, with decreased birth rates, there simply aren't enough young workers to both fill the new positions that our economy is creating and replace older workers who are retiring.

Outside of general population growth, the major factor in labor force growth in recent decades has been the rapid entry of women into the workforce. In the last 50 years, the labor participation rate of women has nearly doubled. But with women now participating in the workforce at almost the same rate as men, this source of labor force growth has also been cut off.

Unemployment rates have steadily declined from their peak of 10.8% in 1982 to 4.9% today. By any standard, that is a tight labor market - a tight labor market despite a relatively weak economy, high oil prices, and the ongoing threat of terrorism.

Tight labor markets are here, and they're here to stay.

Staffing Shortages

According to the Employment Policy Foundation, if present trends continue, "the US will face a labor shortage of 4.8 million workers in 10 years, 19.7 million in 20 years and 35.8 million in 30 years."

To put this into perspective, America had never in its history experienced a labor shortage before 1994, and has never experienced a 10 million worker shortfall.

Shortages will be particularly acute for the skilled, educated workers that are essential to a high-technology economy. Because of decreasing birth rates, there aren't even enough young workers to replace older workers who are nearing retirement.

Moreover, many younger workers lack the basic skills necessary for today's workforce. A recent study by the Pew Charitable Trust found that 20% of students at four year colleges had only basic quantitative literacy skills, making them unable to even "calculate the total cost of ordering office supplies."

But there is a solution. Millions of older workers are eager to continue contributing their skills and knowledge. According to one recent survey, 69% of workers age 45 to 74 plan to work after retirement.

Who better to fill your staffing need than someone with years of experience, knowledge, and contacts? When an essential employee walks out the door, why not keep operations running smoothly with someone who already knows the field?

NOWCC can help you recruit and retain older workers. Our staff has over two decades of experience in providing human resource and payroll services to federal, state, and local government agencies. Our proven solutions are cost-effective and flexible. Find out how we can help you.