Changing Demography and Your Future

"What to Expect When No One's Expecting" By Jonathan V. Last is a brand new book about falling  fertility worldwide. I will be straight with you, I have not read it yet, but I will. As a demographer I can hardly ignore it as Mr. Last has a very credible platform. I just read the review in the Wall Street Journal and it is clear that the book also deals with the perils long and short term falling fertility in the United States. With all respect to Mr. Last, falling fertility in the United States is minor and very temporary. 

We are still producing plenty of babies. The number hovers around 4 million a year, a healthy crop by any measure. The U.S. record was set in 2007 with 4,316,000 live births. Contrast this with 1974 when we only produced about 3.2 million babies. So what is going on and why are smart people like Jonathon Last getting it wrong? Simple, the concept of shifting demography and generations of vastly different size eludes almost everyone.

Still with me? Fertility is measured by the productivity of women of child bearing age, 15 to 40 years old. If this number was constant and the number of live births dropped, the rate of fertility would drop also. However, this is not the case in the United States. We are filling up the fertile years with the biggest generation in U.S. history, Generation Y, but they have a slowed rate of out of wedlock pregnancies. Why? Changes in dating, use of the automobile and the influence of the internet would be a good guess. 

So what’s next? The largest generation in U.S. history,  83 million Generation Y's, aged now at 8 to 27 years old, is about to start to marry and , guess what? They will have kids!  Lots of them. 

We are not going to have a shortage of babies any time soon. The United States is very well positioned demographically. We could actually set records. Its all good.

When I was a kid, way back, almost before fire, I used to enjoy watching Roy Rogers, Gene Autry and The Lone Ranger subdue bad guys on their weekly television shows. The strategies were very simple and very similar for all three heroes. One technique called for the hero to chase the fleeing bad guy on horseback as he tried to escape on his own horse.  There would be a big chase scene and as the hero narrowed the gap, out would come the hero’s lasso. Before you knew it, the bad guy was on the ground, captured.  A second technique always followed a brief gun battle in which no one got hurt. The hero would carefully get into close range and shoot the gun out of the bad guy’s hand. It was amazing. There was never any blood, never. That would change.

A few years ago I was playing a combat video game in an arcade, while my daughters were frolicking with “Whack a Mole” and racing each other on motorcycles. I had an arsenal of weapons that could easily blow up advancing tanks and shoot down aircraft. I also had a machine gun that could mow down charging enemy infantry. The game was very graphic and very addicting. I played it over and over, killing thousands of the enemy. I finally stopped, out of embarrassment, when I noticed there was a line of kids waiting their turn.  I wondered why I was so driven to play. I didn’t feel this way about movies or television. I am not a psychologist, but I concluded that the simple answer was that instead of being in the audience, I had the leading, almost real, role in the performance.

To say that video games in the United States have become pervasive would be a gross understatement. NPD Group research shows that over 90% of kids two to seventeen play every day.  Will this fact shape their minds and influence their behavior going forward?  The technological advance of video games is staggering. Just how far are we from playing the games to entering the games in an altered state? Maybe we are already there. How much time do our kids spend in the ultra-violent games and what are they learning?

Here is an excerpt from my 2008 book The Age Curve, How to Profit from the Coming Demographic Storm: 

"The tragedy at Columbine High School in Colorado was a wake-up call for parents and teachers worldwide. A similar heartbreak occurred in a Finland school in 2007. The unconscionable is now becoming too common.  A close examination of some video games provides an insight into the near reality of the violence-filled cyber world a lot of kids live in.  In the video games, the victims get up to play again.  In real life they don't.  I am very concerned that there are more and more troubled young people who cannot tell the difference." (Page 207)

Sandy Hook is an exclamation point. We need to evaluate and regulate what we are allowing our children to participate in. This is a parenting issue and we have collectively failed. Further, we need to find any future Adam Lanzas and get them help. The issue can no longer be ignored. It is time to act.

Leadership Lessons (1)

Life Science Leader Magazine, Wednesday, 05 December 2012 00:00

 I was recently asked if the bad economy was a game changer regarding my demographic forecasts. My answer is simple, no. Bad economies come and go, but demographics are stable and predictable.

The bad economy is more of a delay of game than a game changer. Once the delay has ended the changes will be sudden instead of gradual. Housing, and more specifically foreclosures, is the issue. It has held our economy hostage. Currently the federal and state governments are forcing the big banks to clear the millions of foreclosures so expect the supply side of the housing market to drop like a stone. This will spike home values (and equity) so Baby Boomers can retire and move South by the millions. This reduces unemployment so Generation Y, now 8 years old to 27 years old, can move into the workforce with a vengeance. This means Generation Y will have money and start an era of consumption that the U.S. has never seen before. Game on!

Also, Asian immigrants to the U.S. have surpassed Latinos. This is worth watching very carefully. 

The best days for the United States are ahead of us not behind us. 

Generation Y is an interesting study in contrasts and should prove to be an exciting management challenge in a corporate environment. But before we can explore this incredible idiosyncratic generation let’s review a few of the demographic givens. Remember that Generation Y was born in the twenty years between 1985 and 2004 and is currently eight to twenty-seven years old.  Generation Y is a nice bell shaped curve with its peak in 1990 when about 4.2 million live births occurred in the United States. Generation Y is actually bigger than the Baby Boomer Generation born 1945 to 1964 by over one million. It will easily rival the Boomer Generation in consumption and influence.

Can we make some assumptions about Generation Y corporate behavior without pretending to be experts in psychographics? Yes, we can. Why? Because generation size relative to the size of the generation that precedes it precipitates predictable behavior, so demographics is the driver. Generation Y is a huge generation (79.5 million) that follows a small Generation X (69.5 million). This means that the job footprint left behind by Generation X as they advance past entry level into mid-career is too small to accommodate Generation Y as they enter the labor force en mass. Couple this with a down turned economy and Baby Boomers who should but can’t afford to retire and you have dismal job prospects for millions of Generation Y young people. This creates an employer’s market for the first time in twenty years and an environment where applicants are competing for positions. It would logically follow that the best and the brightest Generation Y applicants will accept skinnier offers, work harder, make fewer demands and in general be grateful just to get the job. Wonder why you are seeing attractive, blonde, blue eyed young women behind the McDonald’s counter for the first time in decades? It’s all about supply and demand. It was the exact opposite when Generation X entered the labor force twenty years ago following the huge Boomer Generation. For every ten jobs there were only eight Generation X applicants. This created an employee’s market where employers were forced to pay more for labor that was difficult to find and hire. This scenario sucked in entry and menial level immigrant workers like a vacuum and sent manufacturing off-shore.

Employers can now hire the best, brightest and most attractive young labor in twenty years. Will this create management issues? More than you know. We will have three distinct generations in the workplace and they are from different planets. The obvious difference of course is age but it doesn’t stop there. Cultural issues come into play. Let’s explore some examples:

Boomers are immigrants in the cyber world. They know enough to get by but they speak with a thick accent. Generation X is bi-lingual. Generation Y is native born and moves about the cyber world with a natural ease. They will be able to hack weak employer IT systems routinely. They will shock their Boomer co-workers as they text each other during meetings. Email and telephone are embraced by Generation X and Baby Boomers but they are foreign to Generation Y. Generation Y will be stunned by a hand written thank-you note especially if it is written in cursive, which they cannot read. Hold a meeting at a quarter of nine and Generation Y probably won’t show because they don’t know what that or even the phrase “clock wise” means. Are the “times a changing…”, yes. Appearances will be a real issue. Yes, Generation Y does believe that their piercings make them more attractive and they are not concerned with the long term consequences of covering their bodies with vivid tattoos. They are also very aware that their hair is messed up. It is the way that they style it and so what if it is blue? Generation X and Boomers basically dress alike but Generation Y men will add a new look and fashion statement to the workplace, pants that are falling off.  This might meet with some opposition.

Generation Y will not be tolerant of intolerance. They do not see a difference in race, color or ethic origin. They don’t even think about it. They will commonly date and marry inter-racially. They will demand transparency from their employers regarding humanitarian and environmental issues and it will be impossible to hide anything from them. Even a Generation Y worker who really needs the job will probably not stay with a company that he or she considers mean spirited or disingenous.

 Consider this, Boomers will begin to retire by the millions as the housing crisis eases up and they can sell their homes and access their equity. This will create a void in the United States workforce in the mid and upper levels.  Generation X, currently 28 to 47 years old, does not have the critical mass to satisfy the labor demand or fill the void. Employers will be forced to hire more Generation Y and accelerate their career advancement into mid-level and even upper-level management. Young people will manage older people and in some cases much older people. This will require special attention and training on the part of Generation Y managers in dealing with age related conflicts. The probability of a group of straight laced Boomers being managed by a young Generation Y woman with spiked green hair, covered in tattoos and multiple body piercings is not at all out of the realm of possibility. Should be fun.