[jsfg_cinti] SENIORITY Who'll Sit at the Boomers' Desks? ... Interesting NYT Article.

FYI
Paul Berge

  SENIORITY
  Who'll Sit at the Boomers' Desks?
  By FRED BROCK
  NYT, October 12, 2003

  DURING the Clinton boom years of the late 1990's, in one of the tightest
labor markets in memory, corporate America was warned that if it did not
cultivate older workers, they would take their skills and move on.

  One recession and one so-called jobless recovery later, some questions
naturally arise: Was that warning ill founded? Was the tight job market at
the end of the 90's an anomaly? Will chronically high unemployment be the
norm for the near future?

  The answers appear to be no, no and no.

  In fact, the current level of unemployment, which has economists and
politicians in a lather, is likely to be the real anomaly. Conditions in the
late 90's may have been a reflection of job markets to come. And they are
coming very quickly.

  The reason, of course, is that the big baby-boom generation is starting to
retire. Its oldest members are about 57 and will be 65 in 2011. There simply
aren't enough workers behind them in the labor supply pipeline to fill their
jobs. Employers will have to try to retain older workers in some capacity or
lure retired workers back into the work force. Companies that have treated
their workers badly or engaged in even the subtlest forms of age
discrimination will regret it.

  So will companies that just ignore the problem. "It's stunning how many
corporations and chief executives have no idea what's coming; they're so
focused on their next quarter's numbers," said Paul Kaihla, a senior writer
for the magazine Business 2.0. Mr. Kaihla is the author of the cover
article, "The Coming Job Boom," in the September issue.

  "Some smart companies that know this is coming are treating their workers
well during this downturn and trying to retain older workers," he said.

  Mr. Kaihla calls the situation a "retirement time bomb" that will gut the
ranks of managers and skilled workers, particularly in technology. He cited
two companies - Intel and SAS Institute - that are likely to be hit hard but
are preparing to cope with the problem. "SAS, where 25 percent of its
workers will hit retirement age this decade, is a poster child of how to
treat workers well," he said. "It is designing policies to come up with
contracts or flexible hours for older workers. Intel, where 15 percent will
reach retirement age this decade, is retaining links with its retired
workers, knowing that it may have to turn to them when the crisis strikes."

  The wedge of this labor crisis is opening now, as some boomers take early
retirement. In fact, Mr. Kaihla says these early retirees are one reason the
unemployment rate is in the 6 percent range, instead of 8 percent as in some
previous downturns.

  "The labor shortage has been masked by recession," he said. "By 2005 it'll
be in full swing. By 2010 there will be a gap of five to seven million
workers, depending on whose projections you accept." He said some
projections show that gap swelling to a canyon of 14 million by 2020.

  "You can't have the vast majority of your prime-age work force retire and
not have it have an effect," Mr. Kaihla said. "Always before, the generation
coming in was larger than the previous one. That's not the case now. The
feeder pool isn't providing the kind of natural growth we've always had in
the work force.''

  He also noted that the growth rate for education among workers has leveled
off at about 60 percent - meaning that this share of workers has some
college education. "This is likely to get only marginally higher,'' he
added.

  Nowhere is the potential worker shortage more pronounced, Mr. Kaihla said,
than at federal agencies like the Defense Department, where half the
civilian workers are scheduled to retire this decade.

  He says that the coming labor shortage will put an end to outsourcing as a
contentious labor issue, and that Congress will increase the number of
skilled foreign workers allowed into the country. But neither outsourcing
nor immigration will make a big dent in the problem, he added.

  What does all this mean for the economy? "It means we're probably going to
have to settle for slower economic growth," Mr. Kaihla said.

  Some economists, however, aren't so sure. Henry J. Aaron and Gary
Burtless, senior fellows at the Brookings Institution in Washington, cite
the flexibility of the American work force as a factor that may soften the
effects of boomer retirements. "Workers may take higher-level jobs at a
younger age than we have traditionally seen," Mr. Burtless said.

  Both economists, though, agreed that the leveling off of the education
rate among workers could be a problem as employers try to fill positions for
skilled workers and managers.

  Much of this, of course, is good news for workers - especially older,
skilled ones - and bad news for employers. "This will surely put an end to
any forms of age discrimination," Mr. Kaihla said. "Companies that engage in
it are so blind; they are shooting themselves in the foot. Within a couple
of years or so they will be fighting for many of these workers and have to
pay a premium for them."

  For example, he said, the current jobless recovery has really been a
productivity recovery. "There are a lot of angry workers, because instead of
hiring new workers, many companies have worked existing workers - many of
them older - harder and longer," he said. "The minute the labor market
rebounds, they're gone - just at the time we're entering this period of
labor shortage."

  "There has never been," he added, "a clear example in modern economic
times of what we are facing."

  BEVERLY GOLDBERG, a vice president of the Century Foundation, a research
institute in New York, says the projections for labor shortages are likely
to be pretty much on target. "Demographics don't change," she said.

  Ms. Goldberg, the author of "Age Works: What Corporate America Must Do to
Survive the Graying of the Work Force" (Free Press, 2002), said Europe would
have more difficulty than the United States because its immigration policies
are more restrictive and its birth rates lower. She added, however, that one
problem in trying to import workers was that they often lacked the necessary
skills to replace older workers.

  She said the shortage was already painfully evident in occupations like
teaching, where people often retire after 30 years. "Teachers are retiring
in astounding numbers," she said. "New York City is combing the world
looking for teachers."

  She added: "At the moment, more companies than not are lulled into a false
sense of security. They have to face the fact that they're next."

  Fred Brock is an editor at The Times. His column on the approach and
arrival of retirement appears the second Sunday of each month. E-mail:
fbrock@xxxxxxxxxxxx

  Copyright 2003 The New York Times Company


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