The Great Resignation Has Another Major Factor
Over the last couple months, we discussed how things are radically changing within the workforce. The remote work idea is not something that is going away. This is in alignment with technological trends. We are also seeing a few other factors entering the picture.
The bottom line is the balance of power is shifting. Companies enjoyed a 50 year run of things being in their favor when it comes to the employer-employee equation. Since the early 1970s, the workforce was overloaded with people. This caused a host of changes to take place in the relationship with employers. It is no surprise how workers got the short end of the stick.
Now, there is a paradigm shift taking place. The corporations were not prepared for it and are having a tough time. As stated, there are many factors that people are theorizing. However, all signs point to this being the case going forward.
Companies better adapt quickly or they are going to find themselves left behind. There is a major reason for The Great Resignation, one that is not really being discussed.
The Great Retirement
The Baby Boomers giveth and they taketh away.
A lot of this mess was caused by millions of Boomers entering the workforce 50 years ago. In the late 60s, the first wave of them entered, pushing the numbers up. Throughout the 1970s, they just kept coming. Millions upon millions. There was no end to them.
This also took place in the 1980s. We saw a run of near 20 years when tens of millions of people entered the job market.
Simple math tells us something was bound to go awry. If we start to look at those who first entered the work place in the late 1960s, that means they would start to exit in the early 2010s. That is something that started to occur.
Of course, just like there was wave after wave entering, many started to leave each year. This continued at a steady pace up to 2020. Then it accelerated.
This chart tells what was taking place but does not capture the full extent of the story. According to a study done by Pew Research, we find the numbers are rather large.
In the third quarter of 2020, about 28.6 million Baby Boomers – those born between 1946 and 1964 – reported that they were out of the labor force due to retirement.
That is a stunning figure. That was through the third quarter, 2020. We are now more than a year later. Even if things revert back to the original 2 million or so retirees per year from this group, we are now over 30 million Baby Boomers who retired.
To further show how much of an impact this is, let us look at the demographics.
This is the largest generation ever. As we can see, there were 85 million Boomers born. We also have a bit more than 24 million dead. Couple that with the 28.6 million who considered themselves retired (some might have died in the last year but not enough to make a difference in what we are discussing here), and we can see more than 52 million are no longer part of the workforce.
Obviously the acceleration of the retirement of many people is only increasing the overall impact of what is taking place.
People Opting For Things On Their Terms
Employers are going to have to adapt and they better do so quickly.
We have two major forces taking place right now:
The Great Retirement: People are retiring to live do what is important to them such as travel and spend time with family.
The Great Resignation: People are quitting jobs which do not fit their values, allow them to spend time with family, and generally abuse them.
The demographics are causing a massive shift. As the Boomers voluntarily leave the scene, they are taking a lot of experience with them. That means many Gen X and Millennials are able to move up quicker than they would have normally.
It will also feed into the remote work idea even more. These generations are not as technologically averse as the Boomers. In fact, the Millennials are quickly turning enterprises they control into high-tech operations. They will opt for technology to solve a problem before a person.
All this is telling us that what we are witnessing is "the new normal**. The demographic situation is not going to get better. The chart clearly shows that roughly 10K Boomers are retiring each working day. That means in by next weekend, 50K will have left on average. If the number continues higher over the 2020 pace, we could see that get near the 15K number per day.
Of course, something else that we regularly discuss is lurking around the corner. Companies are looking to solve their labor shortage problem by turning to automation. That is another variable that is going to radically alter the landscape throughout the rest of this decade.
There is going to be a tug-o-war going on with this for a while. It will not be settled anytime soon.
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