Impact of the Baby Chapter | 1 Boomer Generation ❖ How important are Boomers to the Texas economy? Not surprisingly, recent recessionary Introduction economic conditions have played havoc Americans born between 1946 and 1964 with Boomer retirement. Employers across — the Baby Boomers or “Boomers” — have Texas indicate that their Baby Boomer had a significant impact on national and workers are not retiring — for now. state demographics. History has shown the However, employers say they still worry enormous effect of this generation on social about an impending worker shortage once services, education and the labor market. older workers finally decide to retire. Now, as they ready for retirement, Boomers Meanwhile, people in their 30s and 40s pose concerns for workforce development have been flooding into the Lone Star and planning, corporate succession planning State in such huge numbers that the largest and the social safety net. generation of workers in Texas is now from While individual situations will vary Generation X. This is a uniquely Texas and personal finances will influence phenomenon. large numbers of Boomer decisions, Still, when the Boomer cohort demographic actuarial tables have been eventually begins large-scale retirement telling us that growing numbers of this from their primary jobs, the numerical demographic cohort could begin retiring in labor shortage is likely to be larger than any 2010. experienced during previous generational transitions. Bill Gates once suggested that the top programmers employed at Microsoft were anywhere from 30 to 300 times more productive than the ones with the fewest skills, least experience and little firm-specific know-how. CHAPTER 1 | 5 Worker Demographics in Texas, by Age Group 5 4 (in millions) 3 2 Number employed 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Born in 1930–1945 Born in 1965–1980 SOURCE : U.S. Census Bureau, American Community Survey Born in 1946–1964 Born in 1981–1994 Figure 1.1 end of the skills-based occupational | What’s Happening employment hierarchy retire, they will be The record number of births after harder to replace. Occupations involving World War II and the increased life complex nonroutine cognitive knowledge, expectancy as a result of medical advances abstract thinking, independent judgment have resulted in a disproportionally high or intricate and nonroutine manual skills percentage of older workers in today’s (e.g., surgeons, systems analysts) are more workforce. These workers will soon at risk of shortages. The supply of persons retire in record numbers. In lower skill with the requisite education, training, occupations, no significant reduction in know-how, and proficiencies is far smaller. output is anticipated when less-experienced While employers may treat turnover (due workers replace retiring Boomers. Job to retirement or other causes) in low-skill openings at the low end of the skill occupations as a trivial matter, they are spectrum won’t stay vacant very long likely to want to retain the services of their because there is no shortage of people who hard-to-replace senior knowledge workers meet the minimum requirements for these who add significant value. jobs, which demand routine manual tasks On the flip side of this argument, and little cognitive knowledge. New hires age and tenure are not necessarily the shouldn’t take long to become proficient at determining factors in productivity among these jobs because the required tasks can be knowledge workers, so it’s rational for mastered after a short demonstration, and employers to let some of their older the pace of work and the work activities knowledge workers retire, even if they are set for them by workflow design (e.g., are somewhat more productive than the customer-initiated orders at fast-food companywide or industry average. That establishments). they may generate more output or add However, when workers at the high more value than their younger co-workers 6 | CHAPTER 1 may be offset by seniority- or longevity- “You’re experiencing something so based wage premiums, the higher cost of different from the rest of the country, providing “senior” health care coverage, or Texas is really an anomaly,” said Rebecca their disruptive effects on the productivity Ryan, economist and generations expert of others (e.g., presumed resistance to with Next Generation Consulting in change, technophobia, personality clashes Madison, Wisconsin. She said the most with younger workers, resentment from likely immediate result within the Texas having to report to younger supervisors). work environment is “stagnation” at work For now, Census Bureau analysis of the — where older workers hold on to their workers in the Lone Star State from 2008 jobs and younger workers in Generation X shows that Texas has a unique situation and the Millennial generation (those born with four generations in the workforce at 1981 to 1994, also called Generation Y) the same time: become frustrated as their careers stall due to congestion of upper level jobs with older • Silent Generation (born 1930 to 1945 workers. and making up 4% of Texas workers) “Boomers are scared as their retirement • Baby Boomers (born 1946 to 1964 and plans are in flux. Generation X and making up 36% of Texas workers) Millennials are seeing their career plans • Generation X (born 1965 to 1980 and on hold because those positions ahead of making up 38% of Texas workers) them are not opening up because people • Generation Y or Millennials (born aren’t moving on,” Ryan said. “While the 1981 to 1994 and making up 22% of average age of workers in other states has Texas workers) been drifting up, Texas seems to be getting A national survey by the Pew Research younger. This will probably mitigate some Center found that Baby Boomers say they of the worker shortage in Texas when older are opting to delay their retirement by workers retire.” several years. If Baby Boomers and even Silent Generation workers delay their retirement by about five years, then the | The Data Texas workforce that is already congested with four generations working together Texas is generally regarded as a young could become more congested this decade. state, a perception buoyed by the median Meanwhile, a unique situation unfolded age of the population, which is 33.2 years, in 2008 as Generation X surpassed the or 3.5 years younger than the nation as a Baby Boomer generation for the largest whole, according to the Census Bureau. number of workers in Texas, according to Almost 28% of the Texas population is the Census Bureau (see Figure 1.1). younger than 18, which is more than 3 “You’re experiencing something so different from the rest of the country, Texas is really an anomaly.“ — Rebecca Ryan, Next Generation Consulting in Madison, Wisconsin CHAPTER 1 | 7 years younger than the national average. (know-how) they’ve accumulated over so A younger and growing population is many years on the job. More than 29% largely viewed as a positive sign for future of Boomers have a Bachelor’s degree or economic prosperity. higher, making them the most highly But Texas is also home to 5.2 million educated cohort in American history. Baby Boomers, roughly 29.1% of the White men, who comprise the largest 16-and-older population, who comprise group of retiring Boomers, attained about one third of the state’s civilian labor more education than most groups in the force. Though that percentage is lower replacement pool of workers. Older white than the national average (78.2 million men also accumulated vast amounts of tacit Baby Boomers nationwide comprise 31.7% knowledge acquired through many years of of the noninstitutionalized 16-and-older on-the-job learning. population, or labor force eligible), it Employers say that replacing Baby represents an entire generation of Texas Boomers is already proving to be a workers about to retire. problem. Multiple surveys of human These numbers do not tell the whole resources managers show that newer story. In 1964, Boomers represented nearly workers often lack the specialized 40% of the U.S. population and about education or appropriate college degrees 35.9% of the national civilian labor force. and even lack adeptness with “workplace To visualize their enormous demographic fundamentals.” The characteristics of the impact, imagine the noticeable bulge younger Generation X and Generation of a pig passing through a python that Y further concern employers. These swallowed it whole. younger generations include more female workforce members. Though these women The numerical effects of Boomer have high rates of college degrees, they retirement are compounded when lack degrees in scientific and engineering compared with skill shortages. “Baby fields. The younger generations also have Boomers are going to be retiring in droves high proportions of Hispanic and African- starting with the end of this decade,” said Americans populations, which in the past Arlene Dohm, an economist with the have had below average graduation rates Bureau of Labor Statistics in Washington, for high school and college. These patterns D.C. “There are certain industries and provided much of the impetus for the professions that are going to be hit very Texas “Closing the Gaps” initiative, which hard.” encourages more young Texans to attend As they moved from infancy into college. adulthood, Boomers in sequence In the wake of an increasingly strained the capacity of public education, competitive global economy, companies’ postsecondary education, the labor focus on the bottom line also affects the market, and the housing market. Today, future of the talent pool. After years of they are the largest cohort in the labor downsizing through layoffs of middle force. As Boomers exit the workforce, managers and technical and professional they will strain the Social Security system. workers, employers are growing anxious Meanwhile, the economy will lose their to find appropriate successors.