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Ready for a Worker Shortage?

Has the jobs situation got you down? Just wait another six years. By 2010, the U.S. will have 8 million more jobs than there are workers to do them, according to Bureau of Labor Statistics (BLS) forecasts. Of course, that's cold comfort to anyone who's out of work, or even to someone who's working but desperately needs a change. But it should be of some balm to older workers -- the very group that tended to get short shrift in the dot-com boom -- says business researcher Bob Morison, an executive vice-president with Concours Group, a research, education, and management-consulting firm in Kingwood, Tex.

Companies will need to do a better job of reaching out to mature workers if they want to stay competitive, Morison argues in "It's Time to Retire Retirement," a piece he co-wrote for the March issue of the Harvard Business Review. As the article's title suggests, one of the changes Morison and his colleagues foresee is that companies will have to stop nudging employees out the door when they turn 65.

Yet Morison doesn't think the U.S. should rely only on demographics to change the employment outlook. He would like to see political and corporate leaders take a more active role in helping to create jobs.

Recently, BusinessWeek Online reporter Eric Wahlgren spoke with Morison about what needs to be done to help Americans find work now, as well as what the labor picture might look like in a few years. Edited excerpts of their conversation follow:

Q: The economy is bouncing back, yet we aren't seeing many jobs being created. Why?

A: We may be just waking up to an unprecedented circumstance: We're seeing productivity gains to such an extent that labor hasn't had to rise. One reason is pure technology. The second is business reengineering, or the designing of business processes to make better use of computers and communications. If you do reengineering right, you need less labor. And the third contributor -- but it's really overstated in terms of numbers of jobs affected -- is the outsourcing of jobs overseas.

Q: So what do you think it's going to take to kick start job growth?

A: Large employers are cautious. They like to see a steady stock market, steady corporate growth, and steady profit growth. One thing that could cause a breakthrough is lower health-care costs of full-time employees. The cost of a new full-time employee is very high. A lot of the costs are in benefits.

Q: What else?

A: One way of looking at this, instead of just focusing on creating jobs, is thinking about creating workers. The truly unemployed are the underskilled. If you're skilled and educated and you end up being restructured out of a job, odds are you will probably end up finding a job.

It's not easy to change overnight, but we need to have a better education system. Also, we need to have better tax or other incentives to encourage companies to provide retraining. Giving large corporations tax breaks in hopes that they will trickle down to jobs growth is optimistic, to say the least. In the long run, we really would do better with incentives to enable people to maintain, upgrade, or change their skills.

Q: What role should government have in helping to spur job growth?

A: I'd like to see it playing the right role, which would center on providing for better education and providing more incentives to companies to be good educators. It drives me nuts, for instance, that government is cutting back on state and community-college programs for nursing and medical assistants when we have a shortage of nurses in this country.

Q: Let's fast-forward six years or so. You say there will actually be a shortage of workers. It seems a little hard to imagine now.

A: Back in the 1970s, you could hire two baby boomers to replace one retiree. Now, you have a disproportionately high number of retirees and a shortage of younger workers.

The numbers aren't going to lie. The Bureau of Labor Statistics initially said there would be a shortfall of 10 million workers by 2010. Now they're saying it will be 8 million. There are some variables. Productivity is one. We have the immigration factor. And we have jobs moving offshore. For certain types of jobs, we can fill the gaps. The 8 million shortfall might turn out to be more like 5 million. But will it be zero? Definitely not.

And it's not just a matter of numbers. In some industries, like health care, there may be an absolute shortage. But for nearly all industries, there is going to be a shortage of skills.

When a sales exec retires, the 24-year-old sales trainee can't be a one-for-one replacement, at least not initially. The older exec has institutional knowledge of how an organization works, has leadership skills, and has contacts developed over a career. In many ways, the technological skills are the easiest ones to replace.

Q: You make the case that to be competitive, businesses will have to reach out to a group that they may previously have taken for granted -- workers over 55. Why?

A: Those people will be a major supply of potential skills and labor. People over 55 constituted something like 18% of the workforce in 1970. In 2000, they were somewhere under 11%. By 2015, the number of workers over 55 [people who are 43 today are the youngest in this cohort] will be 20%. Basically, companies will have to get used to doubling their proportion of mature workers.

Q: You say that companies can't afford to alienate this group. But isn't it true that no matter how badly workers may have been treated, they'll stay -- or come back -- if the price is right?

A: The labor market is one of supply vs. demand, and you need money to fill in the gaps. But we see that there's going to be a win-win situation between companies and mature workers. On the business side, businesses are going to need workers and their skills.

On the employee side, a lot of people want to work. They don't want to spend 20 to 30 years in a planned golf-course community. They enjoy being valued for their skills. Plus, they also enjoy the social benefits of being in a work environment.

Q: Why do you think the notion of retirement as we know it -- leaving work at 65, selling the house, and moving to a condo in Florida for a life of blissful inactivity -- is outdated?

A: There are reasons people are going to want to work, and there are reasons businesses are going to need them. Retirement is a rather arbitrary construct. It filled a need in the Great Depression. Retirement became institutionalized in the U.S. through Social Security, when we wanted to move older workers out of the way so younger workers could have jobs. There's nothing magical about the age 65 or 62, the average age at which an American retires.

The other thing that we think is going out of style is spending the first 20 years of your life doing education and your next 40 years doing work. People change careers. They go back to school. People have a much richer mix of education, work, and personal pursuits.

Let's get rid of retirement so we can enable people to change their mix. For starters, we should remove impediments in tax laws against using mature workers.

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