Baby Boomers Face Retirement, Workforce Faces Impact

Friday, April 08, 2011

With some 76 million baby boomers who began attaining age 65 on January 1, 2011, many will be faced with a decision to remain in the workforce or exit with limited defined benefit pensions and diminished defined contribution plans. To see the potential impact of such a monumental change on the current labor force, in 1978 Boomers made up 45% of the work force. Now consider the knowledge gap that Boomers will leave in many organizations if they elect to exit either into full or partial retirement.

As a paradox, even in the current period of persistent high unemployment, organizations are struggling to fill skilled and professional level openings. An article published on CNNMoney.com, by Chris Isidore, a senior writer, dated March 11, 2011, reports that employers in the manufacturing section are having trouble filling skilled jobs such as “welders” and “laser cutters”. It is not an issue of a lack of applicants; it is an issue of a lack of applicants with the required skill set.  In the same manner that organizations plan for business continuity in the event of a natural or even man-made disaster; organizations must plan for the potential skilled labor shortages.

One approach is to outsource certain sub assemblies of a job to smaller nearby shops. Issues concerning quality control could be addressed by establishing a long term working relationship with several of these “feeder” organizations. Another approach is to maintain a working relationship with former employees who now may be retired. Offering those employees an opportunity to return to the workforce, even on a part-time basis, could be one source of trained workers to supplement an organization’s regular employees. In an article posted to the, December 23, 2009 issue of Benefits and Pensions Monitor, a Canadian publication of Pension Fund Investment - Employee Benefits Management, the Desjardins Financial Security's ‘2009 Rethink Retirement’ survey reported that employers appear to be seeking out retirees in an effort to fill vacate positions left by departing baby boomers. Consideration will have to be given to any potential impact on retirees’ current retirement benefits and the accrual of future benefit credits.

Although we have been talking about welders, the same could be true of software developers. The U.S. H-1B Visa program allows upwards of 65,000 foreign professionals sponsored by a U.S. employer to work in certain specialized occupations. The visa can be valid for up to three years and may be extended for another three-year period. The H-1B Visa program has been and is currently used extensively in the technology industry.

Certainly one option is to retain current skilled workers within an organization. That is often difficult during periods when there is insufficient work to accommodate all of the workers. Faced with losing valuable skill sets, organization may consider reduced work schedules, as many did during the recent downturn. Ron Scherer, a staff writer for The Christian Science Monitor, reported on February 8, 2009 that one organization had reduced workers’ hours in an effort to retain those skilled employees.

With indications that the US economy will continue on a sluggish path to recovery, that recovery may not be complete for several years into the future. That being the case, organizations may need to review and redefine their talent acquisition and retention model to include alternative recruitment and retention practices.