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Retiring Boomers are a Talent Drain

March 06, 2013 By Lee Egerstrom, Economic Development Fellow

When policymakers scramble from crisis to crisis, they don't have time to plan for the future—until it becomes the next crisis. While Minnesota struggled through a decade of budget shortfalls, caused by "no-new-tax" policy and exacerbated by an economic downturn, we ignored looming problems caused by baby boomer retirements. In fact, by forcing experienced workers off public and private payrolls we accelerated the problem.   

Losing this segment of the workforce wipes out an enormous amount of “institutional memory,” observes Jim Monroe, executive director of the 13,000-member Minnesota Association of Public Employees (MAPE). “This hurts the private sector like it does the public sector. We are losing the people who’ve been getting things done."

At the same time, budget cutbacks, sluggish private sector hiring, and scaled back education budgets kept us from refilling the pipeline of human resources needed to replace retiring workers. “Right now, we’ve got people coming out of colleges and schools who are blocked from entering jobs where they are needed,” Monroe said.

The on-the-ground observations of the public employees’ leader squares with studies by the Minnesota State Demographer’s Office and by national studies from the Sloan Center on Aging and Work at Boston College.

Demographers and the Minnesota Management and Budget office revealed as much in a 2011 Workforce Report, examining the characteristics of the state's executive branch employees. Comprising all of the state agencies, the executive branch accounts for nearly 90 percent of the state-paid workforce (excluding MnSCU and the U of M). It found annual retirements doubled from 891 in 2000 to 1,623 in 2011. And the median age of the state's workforce rose from 45.5 years of age to 48 a year ago.

Regarding the pipeline for talent, Minnesota's state workforce had declined for three straight years and dropped by 4 percent between 2010 and 2011, while 58 percent of the hires in 2011 were described as "emergency, provisional, temporary or limited status. Details on 2012 are still being assembled.        

A particularly comprehensive study of Minnesota' public and private workforce came in 2008 from Boston College researchers. One key finding showed 50-59 year olds led in filling positions for protective services, healthcare practitioners and management; and people 60 and older led positions in management, building and grounds cleaning and maintenance, and protective services. Older Minnesotans are more likely to provide us with public services.

Boston College researchers found that Minnesotans in the 50-59 years of age range account for a quarter or more of all food manufacturing, public administration and transportation and warehousing positions. They also found Minnesotans in the 55-64 range make up the largest percentage of labor force participants working for the federal government.

The same challenges exist in the private sector. A 2009 Boston College study uses a national survey by Marcie Pitt-Catsouphes, Stephen Sweet and others, which found that 40 percent of U.S. firms anticipated their aging workforce would have a negative impact on business. Unfortunately, 68 percent of employers had not analyzed the demographics of the change.

Beyond the workforce, there are also social service obstacles Minnesota policymakers must address. Susan Browner, Minnesota State Demographer, said in a January interview with the nonpartisan Civic Caucus organization a mismatch exists in current public policies with needs resulting from changing demographics in Minnesota. 

“The problem becomes, not the demographic changes, but the mismatch (among) the services we provide, our expectations, our funding mechanisms, our funding streams and the demographic realities of today,” she told her Civic Caucus audience. “The problem is trying to bring into alignment our demographic realities today with the policies we have in place.”

Americans are living longer. We also have Americans working longer because they can’t afford the retirements they were working for all their lives.

Drawing from 2010 Social Security data, BC researchers found a quarter of all Americans 65 and older had earnings income from employment, down from 36 percent in 1962. At the same time, Economic Policy Institute (EPI) data found that people 55 years of age and older represented 20.1 percent of the national workforce in 2011. They represented only 14.3 percent in 1979.

There is an imbalance here that suggests more workforce pressures are coming, as MinnPost's Sharon Schmickle found while digesting a study from former state demographer Tom Gillaspy and state economist Tom Stinson.

With every passing day, with every impromptu late afternoon retirement cake, as experienced public employees walk out the door, the challenge of rationalizing Minnesota's workforce needs becomes more difficult. It's a problem far more complex than simply managing department budgets.

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