The Perfect Talent Storm
I’m writing this post from 39,000 feet as I return to Chicago from a brief trip to Ft. Worth Texas where I had a honor of serving as the lunchtime keynote
speaker at the Aquire Structure 2011 Conference. Over the last two days the customers of Aquire had an opportunity to learn more about the technology that the company offers as well as some of the business challenges that have been overcome using their products. My speech was focused on the talent shortage that the US will be facing in the coming years, the root causes, and ways in which organizations are/should be proactively addressing the challenges that lie ahead. Below is a quick summary of the findings of the research used for the presentation.
Its hard to imagine that after two and a half years of dealing with the worst economic environment in the last 75 years and the millions of jobs which the economy lost along the way we can even begin to discuss a talent shortage , but all signs point to that happening. We’re staring down a perfect talent storm which is predicated upon three key points:
1. Shifting US Worker Demographics
With Millennials entering the workforce at a pace which is double that of the exit of Baby Boomers, at first glance it would appear that we will have a talent overage rather than a shortage. Unfortunately this generation is entering the workforce with a different skillset and level of experience which makes it difficult to fill the gap that will be left behind by the Baby Boomers. Additionally, based on historical and trending immigration patterns, the US workforce will add more than 24 million new workers across all ethnicities. According to the US Bureau of Labor Statistics, explosive growth in the Hispanic/Latino segment of our workforce alone will bring 14.7 million additional workers into the US employment ranks by 2020. Continuing diversity of our workforce will result in growth in the minority populations in our workforce from 18% of the total workforce to 37% between 1980 and 2020.
2. We’re Becoming Less Educated as a Society
Over a 20 year period the levels of participation in higher education across all ethnicities has grown by roughly 50%, yet due to the project growth in various demographic segments we will be adding newly minted college graduates at a rate which is lower than the growth in the population lacking a college degree. The percentage of the US working age population having attended any college let alone possess an associate, bachelor, or a graduate degree is projected to steadily decline while the population without a high school education will grow by 10%.
The largest areas of population growth in the US are those that historically been vastly underrepresented in higher education. According to a US Department of Education study, the percentage of working age Asian-Americans with a college degree in 2000 was 46% while 11% of Hispanic/Latinos obtained college degrees. Factor this along with the population growth trends and it becomes very easy to understand why we are becoming less educated while participating in higher education at historically high rates.
3. The Nature of Our Work is Changing
In 2005 McKinsey & Company performed a study which was published in the McKinsey Quarterly 2005 Number 4 called The Next Revolution in Interactions in which they analyzed the nature of the work that we perform. In their research they categorized all work into three groupings:
- Transformational: Jobs that involve extraction of raw material and converting them into finished goods. Jobs in this category include Carpenters, Production Line Workers, Fast-Food Cooks
- Transactional: Jobs that involve routine interactions. Examples would be cashiers, truck drivers, and office clerks operator.
- Tacit: Jobs that involve more complex interactions – knowledge jobs. Examples of jobs in this category would include executive/manager, Registered Nurse, Salespeople
The research performed by McKinsey found that between 1998 and 2004 transactional and tacit jobs were growing while transformational jobs were quickly vanishing due to either advances in technology and/or movement of many jobs to other parts of the globe where skilled labor was more abundant and less expensive. Of the remaining categories of jobs that showed growth, 7 of every 10 jobs was a tacit job – ones requiring more complex skills and higher levels of education.
Without getting too deep into the data, graphs, charts, and algorithms, the challenge ahead of us of fairly clear. With the combination of population growth , educational participation rates, and shifts in the type of work we perform its likely just a matter of time before the US labor market hits the perfect storm and we’re locked in a talent shortage unlike anything we’ve ever seen.