Labor Shortage - You must be Kidding!

The US unemployment rate was 6.2% in July, the highest it has been in almost a decade. How can anyone be thinking about a labor shortage?

Those who look further than a few months ahead can see it coming. Smart recruiters are aware that the buyer's market they are now experiencing is only temporary. Maybe it will last another year or two, but a look at some simple demographics indicates quite a change.

In the September issue of Business 2.0, the cover article stated "During this decade and the next, the baby boom generation will retire. The largest generation in American history constitutes about 60% of … worker between the ages of 25 and 54." Check around your own office. How many of the staff members will be eligible for retirement with the next 10 years? Within seven years, 30 million people now in the workforce will be over 55. This is not a guess. These are hard numbers.

The group of young people that will replace them is simply not big enough. Up to this point, each new generation that entered the work force was larger and better educated than their predecessor. This simply won't be true this time around.

According the Bureau of Labor Statistics (www.bls.gov) the biggest increases in employment demand over the next decade will be in medicine and technology. The top seven growth occupations are all technology related and include the following: software engineer, support specialist, system software engineer, network and system administrator, network systems and data communications analyst, desktop publisher, and database administrator.

Employers will only have a few options for dealing with the shortage. Among them: increasing wages, seducing older workers to remain on the job, outsourcing, and petitioning legislators to increase quotas on skilled immigrants.

Of course, elementary economics won't allow for more jobs than workers. You won't see half empty offices. The market will adjust. Wages in the hottest professions will go up, enticing workers to change careers and get some additional training. Savvy employers will add benefits to entice workers to hold off on retirement. In addition, projects will get scratched, growth opportunities will slow just and economic output will settle into a slower rate of growth.

Before that time comes however, the job market will remain tight. The best we can do as employers and employees is to be aware that the change is coming, and prepare for it.