The baby boomers will be retiring in the next five years creating huge amounts of open employment positions for people graduating from college. This is good news for younger workers who have been forced into declining wages and bleak job prospects. In states like Michigan nearly half of all college graduates are leaving in order to find better employment.
The good news is that by 2012 there can be as much as 21 million vacant jobs with only 17 million workers available to fill these positions (Technology Industry Association, 2006). That will leave a 3 million person short fall in the labor market which will likely soak up all the skilled talent available.
Data from the 2000 U.S. Census estimates that the baby boomers are made up of approximately 82,826,479 people. Around the year of 2010 there will be a demographic shift from the older work to the younger worker. America will lose a lot of knowledge but will have a younger workforce with more energy.
Some of the hardest hit areas will be insurance, telecommunications, retail, automotive, and aerospace (Allier & Kolosh, 2005). These industries are losing large amounts of intellectual capital that won’t be easily replaced. Likewise older people have gravitated to these jobs when they were expanding and have made excellent wages.
With a smaller workforce the wages will begin to creep upwards for younger people based on the mechanics of supply & demand. If there is a massive shortage of qualified workers turnover will increase and so will wages. Companies must increase wages and perks in order to retain talent and avoid the problems associated with lost intellectual capital.
China is a good example of how wages can increase quickly. China has an 8% shortage of skilled workers and in these fields wages have increased as much as 40%. Therefore for each percentage of shortage in labor wages will rise roughly 5%. If the Bureau of Labor Statistics projects that there will be 162.3 million workers after 2012 but there is a need for 165.3 million there will be a 3 million worker shortage. That means there is almost a 2% shortage which would raise wages around 10%.
All of this adds up to great news for qualified workers. Jobs will be plentiful for those who have an education, wages will be high, and there is a greater likelihood that by 2022 housing will become cheaper as Baby Boomers move into assisted living arrangements. It is a second growth spurt where wages and standards of living will actually exceed the 3.5% inflation rates.