Changing Demography and Your Future

The United States Labor Force

Human Resources Perfect Storm

I remember going into a McDonalds Restaurant about ten years ago and ordering a double cheeseburger. I really don’t like McDonalds’ food but it was convenient and I was hungry and to their credit the food is consistent. It’s about a three or four on a scale of ten whether you buy it in Paris or San Diego. I don’t like stuff on my double cheeseburgers so this requires a little diligence when ordering. “I would like a double cheeseburger plain and a small diet Coke, please.” Experience had taught me that this simple wording would get me what I wanted about nine out of ten times. In this particular case I got a blank stare. “I just want a plain double cheeseburger without ketchup, onions, pickles or mustard.” The stare became more vacant and a conference in Spanish ensued behind the counter. Others joined in including a manager looking type but the resolution did not come until we employed sign language. I was not in Mexico City. I was on Interstate 95 in Connecticut.

This begs the question-Why had McDonalds staffed this restaurant with a non-English speaking help when 95% of their customers spoke only English? Answer? They had no choice. The huge bell shaped curve of eighty million Boomers had aged out of the entry level labor force that would have supplied McDonalds with an English speaking staff. It was 1997 and it was Generation X’s turn to supply entry level labor. The bad news is the fact that Generation X is about ten to fifteen percent smaller in critical mass than the Boomer and was fully employed doing more fun stuff than working at the bottom of the food chain in fast food. So McDonalds and other fast food chains had to import their labor and radically automate to stay in business. The good news, now ten years later in 2007, is the fact that Generation Y(now twenty-two and under) will be supplying English speaking home grown entry level labor to fast food restaurants in vast overflowing quantities.

The real bad news is the fact that Generation X has taken its devastating deficit and aged forward. They are currently about twenty-two to forty-two years old. This will precipitate Labor’s Perfect Storm and create havoc for Human Resources executives throughout the country. I don’t use the word havoc lightly. Labor’s Perfect Storm is not even my phrase. I do a lot of keynote speaking and for some reason Human Resource organizations and associations find me particularly interesting. Maybe because they know change is in the wind? A few weeks ago I had an email exchange with Sue Meisinger, the President and CEO of The Society for Human Resource Management. This is a huge national association, probably the biggest, that deals directly with human resource issues. She used the words “Perfect Storm” to describe the impending talent shortage facing the United States. “Perfect Storm” is not good. Ms. Meisinger further explained that she and her colleagues have been aware of this looming crisis for some time and knew that the real issue was shifting demography. They even had a nationally famous demographer and generational marketer, Ken Dychtwald, speak at their annual meeting about a year ago. What is striking here is the fact that Sue Meisinger and her constituents get it. They are anticipating a problem and (gasp!) preparing for it. I can not say the same for the C-Level executives at Wal-Mart or General Motors.

Labor forces can be resilient if the supply of labor is consistent across all ages. In the United States the labor is unevenly distributed. We are heavy between the ages of 42 to 62(Boomers) and light between the ages of 22 to 42(Native born Xers). For the sake of argument we could say that sixty percent of our labor is Boomer and forty percent of our labor is native born Xer. I stress the title of native born Xer because Generation X shares the twenty-two to forty-two age segment with millions of Latino immigrants who flooded into the country to take the jobs that Generation X did not have the critical mass to fill. In addition to this imbalance another critical issue exists. Generation X is virtually devoid of any skilled technical labor like electricians, auto/truck mechanics, body shop technicians, plumbers, HVAC techs, carpenters, cabinet makers, machinists, heavy equipment operators, police, firefighters and truck drivers. The aforementioned are Boomer trades and professions. When the Boomers retire so do these skills and services. It won’t be a question of what it costs to get things done it will be a question of can you get it done at all.

So what does all this mean? Well in simple terms we will not have enough people to run business and industry as we know it. On the bright side the skilled technical trades will eventually (within ten years) be satisfied by Generation Y who are filling public technical schools with the best candidates they have seen in twenty years. The real long term issue will be the shortage of mid to upper level non-technical talent and management. The shortage of management has the potential to cripple commerce and even government, because you can’t run a successful company or organization without good management. This of course points up the incredible importance of successful recruitment and retention. This could lead the way to the Human Resources Department finest hour. Companies and organizations will compete for Human Capital more intensely than they compete for sales or results. Talent will be at a premium like never before. This should move Human Resources into C-level prominence with ease if the CEOs and boards of directors wake-up in time. However all bets are off and nothing can stay the same.

The Human Resources Department itself is not immune so you can expect dramatic fallout as Boomer staff bail out because of the increased pressure to perform. Human Resources will need to market themselves and their organizations in a new way. The communications and attitudes that precipitate “Applications now being taken.” Will need to be abandoned and replaced with professional effective competitive persuasion at every level. It’s a new ball game.