What do Boomerangs and Baby-Boomers have in common? Simply put, both are driving wage rates higher.
In today’s rapidly changing economy, new trends are emerging and with each trend comes drastic ripple effects on business and, more specially, labor supply.
Jobs that were once outsourced overseas at a breakneck pace are now “Boomeranging” back stateside. This is increasing the demand of an already limited supply of talent producing upward pressure on wage rates.
In addition, more and more Baby-Boomers are retiring every day. As they exit the employment market the pool of talented professionals shrinks. Hence, their departure is creating a scarcity of talent and pushing wage rates up.
Businesses, big and small, have actions steps they can take to lessen the effects of an impending exit of a Baby-Boomer or when circumstances dictate that they participate in the “Boomerang” job market.
Jobs are coming back. Many of the jobs that were outsourced overseas are now “Boomeranging” back and creating an increase in the demand for talent. The zeitgeist during the turning of the century, where everywhere you looked businesses were closing their U.S. operations in favor low-cost labor has slowed and in some cases reversed. This is great to see but it is not without some formidable challenges for businesses seeking to bring back these jobs. Much of the talent that occupied these roles has moved on to new occupations while, with the roles a decade removed, individuals who may have pursued these roles in the past have chosen new careers. The result leaves us with a smaller pool of talent for the “Boomerang” jobs and a growing list of businesses vying for this talent. Today it is as difficult for many businesses to find a skilled professional as any other role for which they are recruiting. The net result is an increase in demand of an already scarce resource and hence rising wage rates.
Baby-Boomers are leaving the employment market in droves. The quantity of Boomers retiring is great, but the quality of their talents and the contributions they make has a much more significant impact on businesses. Losing an employee with decades of experience within an industry or functional area can be a staggering blow to a business. This reality is being played out over and over again. Its impact on the supply side of talent is real, causing businesses to increase wages and offer “stay” bonuses to Baby-Boomers in order to keep them. And, in some cases it has Baby-Boomers boomeranging back into the job market.
Call to Action
While there are other supply and demand determinants that are affecting the employment market and hence the wage rate, the exiting of the Baby-Boomers from the employment market and the challenges surrounding the recent surge in “Boomerang” jobs are just two signals of an employment market that is poised to overheat. Businesses can help themselves by:
1) Crafting an apprentice, mentorship or training program to fortify their business and support the newly created positions they seek to bring back “in-house”
2) Establishing and executing effective succession plans (look for our next blog on Succession Planning) that examines all roles within the company, expanding beyond the traditional key members of the organization.
By committing to and taking these action steps businesses, big and small, can better position themselves for the future and distance themselves from their competitors.