Changing Demographics and Workforce Trends

KMSA

April 22, 2004

Nancy Laprade

nancye.laprade@ky.gov

Education Cabinet - Kentucky Workforce Investment Board

FIVE NEW RULES…

New Workforce Rules for the New Demographics and the New Economy of Kentucky Ron Crouch – Kentucky State

Data Center

#1: Kentucky is experiencing growth in the mature workforce

The Kentucky population grew by 356,473 (9.7%) between 1990 and 2000 with a 46% increase in the older baby boomers

(ages 45-54) 7% decrease in the baby busters (ages 25-34)

This decline resulted not from out migration, but from a smaller population cohort replacing the larger younger baby boom cohort born between 1955 and 1964

Implications of Rule #1:

This aging workforce reality will require employers to retrain and retool their mature workforce as skill requirements change more rapidly in the knowledge economy

As people live longer, they will have to work longer so they don’t run out of income before they run out of life (1/5th rule)

By 2005, out of 100 people age 65...

Only one will have a net worth of $5 million or more

41 will still be working 54 (over half) will be broke

“Investing in the Future,” by Curt Hage, Community Banker, Jan. 2002

Information courtesy of Ed Barlow, Creating The Future, Inc.

#2: Bubba is in trouble…

Kentucky is moving from a muscle power economy to a knowledge economy

Converging economic factors - Globalization Science and Technology

Increasing rate of change and use of technology Organizational Dynamics

Close to customer Speed to market Changing relationships with employees

Implications of Rule # 2:

Continuous education (life long learning) and higher skill levels are becoming more and more critical if workers and businesses are to compete in the knowledge economy

As the Kentucky population ages, the need for service sector jobs requiring higher levels of education (i.e. health care) will increase

Implications of Rule # 2:

Changing relationships between employers and employeesOutsourcing… contract work

Workers will have to become more responsible for their own learning and career development

#3: Kentucky’s women enter the workforce at higher numbers than men

Between 1990 and 2000- The female workforce in Kentucky grew by

129,464 women (17%) The male workforce grew by only 79,122 (8%)

Women are becoming better educated than men and moving into more white collar jobs

Implications of Rule #3:

The female workforce may need more services such as child care or adult day care

Some worry about a growing divide between male and female workers with women being better prepared for the the knowledge economy than men

#4: Kentucky’s workforce will become more diverse

Between 1990 and 2000 Kentucky’s population grew by 9.7% while the Non-Hispanic White population grew by 6.8% Black population grew by 12.6% Asian population grew by 75.1% Hispanic population grew by 172.6%

Implications of Rule #4:

Employers will have to rely more and more on minority workers and understand cultural differences and diversity issues

This could be a particular challenge for aging white workers who have not had to deal with diversity issues to any significant degree

#5: The workforce shortages will be even

more dire in Kentucky than the U.S.

According to the U.S. Census Bureau the number of prime age workers will grow by 7.1

percent total in the U.S. over the next 25 years, while the prime age workers will be down 11.5

percent in Kentucky.

The discrepancy lies in higher immigration and fertility rates in the U.S. as a whole.

Skilled Worker Gap

By 2010 there will be a “skilled worker gap” of 5.3 million workers in the U.S., and by 2020 this gap will reach 14 million jobs.

By comparison, what employers experienced in 1999 and 2000 was a minor irritation. The shortage won’t be about having to cut an extra shift. It will be about not being able to fill the first and second shift too.

Anthony Carnevale, Educational Testing Service

Implications of Rule #5:

We must “leave no worker behind” Skills gaps will be even more significant

than the projected general shortage of workers

A global war for talent will exist as developed and developing economies pursue workers with advanced skills

Implications of Rule #5:

Employers will need to rethink working arrangements for the aging workforce as they work longer Part-time Flexible work schedules Project work Phased retirement

Part-time by choice

70% of part-time workers in their prime working years (ages 25-65) are working part-time by choice

Of the more than 9.5 million working part-time by choice, nearly 40% of those workers are working part-time for reasons related to work-life balance- childcare, personal or family obligations or education Employment Policy Foundation – November 2003

AARP Policy Paper

Aging and Work- A View from the United States Sara Rix, Ph.D. February 2004 www.aarp.org/ppi

Labor Force Participation Rates of Persons Aged 45 and Older by Sex

Actual 2002 and Projected 2010-2050(in percentages)

Source: U.S. Department of Labor, Bureau of Labor Statistics, January 2003; Toossi, 2002.

Sex and Age 2002 2010 2015 2020 2050

Both Sexes

45-54 82.1 83.8 84.1 84.0 83.4

55-64 61.8 60.9 61.6 60.8 60.3

65+ 13.3 14.8 16.2 16.3 13.4

Men

45-54 88.5 87.8 87.3 87.3 87.1

55-64 69.2 67.0 66.8 66.1 66.2

65+ 17.8 19.5 21.0 21.0 17.3

Women

45-54 76.0 80.0 81.1 80.8 79.9

55-64 55.1 55.2 56.7 55.8 54.7

65+ 9.9 11.1 12.5 12.6 10.1

AARP Conclusions

Anticipated labor demand coupled with a huge supply of older men and women who say- at least at the present- that they want to work in retirement would seem to point to increases in the labor force participation of older Americans

In closing…

The key economic and workforce development strategy for the 21st century is aligning with a world that will be characterized by complexity, diversity, and extraordinary pace of change.

Ed Barlow, Creating the Future, Inc.