What’s your retirement plan? I don’t mean your 401(k), pension or whatever else you’ve got. I’m talking about the plan you have in place as more and more baby boomers retire.
The retirement of the adults in the baby boomer generation has been coming for a while. The earliest were born in 1946, making the oldest among this group 77 and the youngest 58, so they’ve certainly earned the chance to retire. What’s somewhat of a surprise, though, is that the pace of retirement has increased since the pandemic started.
We saw it as early as 2020. According to the Pew Research Center, shared in the third quarter of 2020, 28.6 million baby boomers were no longer in the workforce because they retired, a 3.2 million year-over-year increase. The number of baby boomers retiring has grown each year by 2 million on average since 2011, the year when the first in this generation turned 65.
The New York Times reported in December 2022 that among people aged 65 and older, labor force participation rate is down below pre-pandemic levels, a drop of roughly 900,000 people.
We don’t know exactly how these retirements will play out over time, but even without the acceleration from the pandemic, we knew this time would come. There are still plenty of Gen Xers, millennials and now Gen Zers of working age who can fill the roles of retirees — but hold on a second.
Thanks to another pandemic-related complication, many people lost and/or switched up their careers over the past couple of years. They’re no longer doing the things they were doing before. Also, because of all the COVID-19-caused deaths and long-term health issues, earlier retirements, laid-off workers not returning and other factors, companies have had to work very hard to try to fill open positions.
Business Insider reports that the U.S. unemployment rate in April reached its lowest point since 1969. People aged 25 to 54 make up a higher share of the workforce today than they did before the pandemic.
“The Congressional Budget Office projects the potential labor force to expand by a mere 3.6% between 2022 and 2031 — one-eighth of the pace in the 1970s,” according to the article. “Over the following decade, that growth is projected to slow even more, to 2.9%. That means employers face decades of an essentially stagnant labor pool.”
I hope that you’ve already started planning for retirements at your company. You’re going to need to figure out who is going to fill in as people at or near retirement age decide it’s time, but that’s just going to take care of empty seats. That doesn’t account for the loss of institutional knowledge that will come when people retire, so there must be transition plans to help those who are promoted and taking on new roles to settle in and succeed.
Retirements will happen across all levels of the industry, from the C-suite to the property level. That’s going to create opportunities for upward momentum, both for internal promotions and external hires, throughout a company, potentially opening up more positions down the line.
During the Great Recession, employers had their pick of a wide, deep pool of potential employees desperate for a job. Now, we have a completely different situation. With all these open positions, hoteliers will need to be even more competitive for skilled employees at each level of their companies.
"When labor supply is plentiful, it's easier to do the business practices that are optimal for the business," said Aaron Terrazas, the chief economist at the job-search site Glassdoor, in the Business Insider article. "But when labor is scarce, companies need to be more active in listening to what their employees want."
Companies had a taste of this with the labor shortages during the pandemic and the recovery from it, and it sounds like there’s more to come. If you want to stand out among other hotel companies and other industries, look at what you’re offering and how that compares to businesses that are enjoying a fuller workforce. What are they doing that’s both attracting and holding on to employees?
Look at what you’re paying, which I know is already higher than what you used to pay. Look at your benefits. Look at what flexibility for scheduling or remote work you offer. Look at your corporate culture. When you review all this, does it match up with what employees are looking for?
All of this is going on as we approach a potential recession. It’s impossible to predict how that could play out, but in recent downturns, hotel companies cut jobs. When the pandemic started, the layoffs and furloughs were almost immediate. Hotel demand came back much faster than anyone predicted, and hotels were dealing with leisure guests and not enough employees to serve them. One downturn isn’t exactly like another, but I would warn you against any knee-jerk reaction to start cutting jobs again lest you find yourself even further down the labor hole.
You can reach me at bwroten@hotelnewsnow.com as well as Twitter and LinkedIn.
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