With Baby Boomers Aging Fast, Firms May Face Labor Shortages

Article Title: "With Baby Boomers Aging Fast, Firms May Face Labor Shortages "

Author: SCOTT STODDARD
Section: Business & The Economy
Date: 3/6/2007

Dave Wilson looked forward to retirement after a 40-year career in aerospace that began with the program to send man to the moon. But it seemed every time the 73-year-old engineer settled into his rocking chair, Northrop Grumman would call and ask him to return to work. So far, he has gone back four times.

"I didn't go back for the money but the person who was asking me to come back was pleading with me to come back," Wilson said. "There was nobody who could have stepped into the - area that I was in who could have done the same thing."

From Boom To Bust

Companies will need more people like Wilson as they struggle to replace an estimated 80 million baby boomers - 45% of the labor force - who will reach retirement age over the next decade. With only 50 million Gen Xers coming up the ranks, shortages will be felt across the board, from nurses and engineers to government workers and sales staff.

"It's a big concern," said Jamie Hale, a senior work force planning consultant at Watson Wyatt, a human resources consulting firm. "Those companies that are most proactive about planning for future leadership replacements will have a competitive advantage."

To overcome the labor shortfall, analysts say companies will have to import more skilled workers from abroad, boost productivity and, perhaps most importantly, persuade key staff to postpone retirement.

"All companies . have got to find ways of expanding the working lives of the older generation," said Robert Christensen, director of human resources at Wiseway Supply, a Kentucky wholesale distributor of plumbing and electrical equipment.

"If we don't do that then we'll all be fighting for a limited amount of talent. We'll be robbing from each other," Christensen said.

About 40 of Wiseway's 105 employees are aged 50 or older, and Christensen said the company is trying to keep older workers by offering reduced hours and more flexible work schedules.

The problem isn't limited to the corporate sector. The Arizona Department of Corrections in Tucson has eased some rules to attract recruits to its training academy and is trying to gain approval for wage hikes to keep them from leaving to other law enforcement agencies.

"Our biggest problem is that we're losing people to retirement," said Alejandro Apalatequi, the department's recruiting sergeant.

Grounding Aerospace

Some companies might welcome the chance to trim their work forces and move more jobs overseas. But shortages of engineers and other skilled workers are a real problem for industries such as aerospace, which can't easily outsource work to other countries without jeopardizing national security.

The average age of aerospace workers has risen due to hiring cutbacks in the early 1990s and a movement of young engineers to fast-growing and more glamorous dot-com companies.

As a result, some 27% of aerospace workers will be eligible to retire by next year while the proportion of workers 34 years old or younger fell from 32% in 1992 to 16% in 2003, according to the Aerospace Industries Association.

"It's a real pinch for aerospace," said Jeremiah Gertler, AIA's assistant vice president of defense policy.

"It's not that the nation will be in immediate and grave danger but it will take longer and cost more to provide the cutting edge technology that is our real military advantage," Gertler said.

Most analysts say labor shortages won't be severe enough to harm the economy or reduce America's competitiveness.

Europe, Japan Worse Off

Countries such as Japan, Germany, Italy and Australia face much greater challenges because they have lower birthrates and less immigration, they say.

But for at least another decade, American companies will need to keep key employees like Wilson, who got another call in January asking if he would be interested in coming back for a fifth stint beginning possibly this month.

"I won't go back because I need to, but I'll go back to help out," he said.