Reshaped labor market spurs workplace change

After the Great Recession, economists and pundits described the slow-growth economy as the "new normal." In the job market, this translated into spotty employment gains, anemic wage growth, swelling ranks of underemployed, a declining labor force participation rate and persistent long-term unemployment. While the recession hit every part of the population, the impacts differed by age, gender and ethnicity and were more transitory for some groups while more long-lasting for others.

Many described the resulting environment as a buyer's market for employers who could be choosy about who they hired and how much they paid. But nothing stays the same forever and some observers see a new "new normal" on the horizon, driven less by the impacts of the recession and more by the unstoppable force of demographics.

It has already changed the job market in several ways, with more change to come, challenging stereotypes and impacting both job seekers and employers. The workforce is increasingly older and increasingly female, according to the U.S. Bureau of Labor Statistics (BLS). In addition, the BLS sees a slowing growth of the total workforce. Some even see a looming shortage of workers.

"For the first time in more than 30 years, employers are going to have to learn to compete for workers," predicted Steve Hine, research director at the Minnesota Department of Employment and Economic Development. Over the next few years "the tables are going to turn, going from extreme surplus to extreme shortage" of workers, tilting the odds more in favor of qualified job seekers, he said. "It's going to be a very different set of challenges than any we have faced."

The demographic tsunami called the baby boom generation is driving much of the change. While the recession did not cause the increase in older workers, which the BLS defines as 55-plus, it did accelerate a trend that began even before boomers started crossing that age threshold more than 10 years ago. Boomers are hitting the traditional retirement age of 65 at the eye-popping rate of 10,000 per day but increasingly choosing to remain employed. As a result, the fastest growing segment of the workforce is older workers, who now make up more than 20 percent of the workforce.

During the recession, younger people with little or no work experience were at a "competitive disadvantage" compared with more experienced workers, Hine said. Teenagers looking for their first job and 20- to 24-year-old new graduates suffered the highest unemployment rates both in the state and nationwide during the recession and still today, according to BLS data.

As the tail end of the boomer generation crosses the 55-plus threshold in a few years, with lower labor force participation rates than younger workers, the total workforce will grow less rapidly. In Minnesota that has already started to happen, Hine pointed out. During the 1980s and 1990s the workforce grew by 40,000 a year, but since 2000 growth has fallen below 10,000 per year. Hine said that in the next 15 years, Minnesota faces the "distinct possibility" of experiencing no net growth in the workforce in some years. "It's going to be a very different set of challenges than any we've faced," he said.

Hine thinks employers will have to become more flexible in their hiring practices. Instead of expecting very specific skills in a new hire, they will have to consider increased training. He also predicts employers will have to start looking at ways to keep older workers on their payroll by offering more flexible work arrangements and making part-time work more attractive by incorporating some level of benefits traditionally reserved for full-time employees. Finally, employers will also increasingly have to rely on foreign born workers immigrating to the region, a historically important source of labor force growth in the state.

The older and increasingly female workforce has also led to a handful of age discrimination complaints filed by women that also charge gender discrimination, according to Cathy Ventrell-Monsees, senior counsel at the U.S. Equal Employment Opportunity Commission. These cases are considered "intersectional discrimination." Such dual-factor discrimination has traditionally involved charges of either race and age discrimination or race and gender discrimination but not age and gender discrimination, making it a new combination of factors for the courts to consider, she added.

Employers get into trouble, she said, when they simply try to move older workers out to make way for younger workers. Instead, she advised, employers should practice succession planning and knowledge management to avoid charges of age discrimination.

Brad Allen is a freelance journalist and former investor relations executive for companies including Imation Corp. and Cray Research. His e-mail is brad@bdallen.com.