Ohio Companies Unprepared to Replace Retiring Workers

By Randy Tucker | March 26, 2012

Demographic shifts have left Ohio with one of the oldest workforces in the country and too few younger workers to replace aging baby boomers as they retire.

It’s a situation that has led many analysts to predict labor shortages and lost productivity as employers struggle to find people with the knowledge and skills to replace their most experienced workers, especially in skilled trades.

The long-term implications are especially pronounced in Ohio, where the population of prime working-age adults has declined faster than most other states.

Six of the top 10 metro areas with the biggest drop in their 45-and-under populations over the past decade are in Ohio, according to a recent analysis of Census data by the Brookings Institution.

The Dayton area ranked No. 5 on the list, losing 22 percent of its pre-retirement age population — in Ohio trailing only the Cleveland and Youngstown areas, which each lost about a quarter of their residents age 45 or younger from 2000 to 2010.

At the same time, the dramatic loss in younger workers has left Ohio with one of the highest concentrations of seniors outside of retirement havens such as Florida and Arizona.

While Ohio’s total population growth was flat over the past 10 years, the population age 65 and older grew by about 8 percent over the same period and now represents about 14 percent of the total population, according to a recent report from Miami University’s Scripps Gerontology Center.

“The recession has made everyone focus on job shortages, but we should be focusing on labor shortages,” said Suzanne Kunkle, director of the Scripps center. “At some point, the math just isn’t going to work out.”

As the gap in retirees and working-age adults widens, Kunkle said, Ohio will be faced with a limited supply of workers to keep up with demand for goods and services from retired boomers, who are living longer and healthier lives.

Kunkle notes that Ohio was already loosing younger workers at rapid pace before the Great Recession hit.

“We didn’t have much ground that we could afford to lose when the recession hit, and the recession just sped up the loss,” she said. “We’ve traditionally lost the younger workers, age 18 to 29. Now, we’re losing more of the middle-age workers than ever before. That means we’re going to need our older workers longer.”

The latest downturn has postponed retirement for many boomers, who continue to work to recoup lost wages and retirement savings.

As the economy improves, however, workers who have delayed retirement will begin to drop out of the workforce at the same time as those workers just reaching retirement age, explains Tom Maher, president of Manpower of Dayton Inc., the local franchise of international placement firm Manpower Inc.

“The real issue of (labor shortages) has been put on hold for a couple of years because of the terrible economy,” Maher said. “But I think we’re going to see a pretty good exodus from the workplace here in the next few years.”

Maher said many of his clients are faced not only with the challenge of finding qualified younger workers to fill positions vacated by retiring employees, they’re also struggling to retain the institutional knowledge that those retiring workers take with them.

“The knowledge transfer can be difficult,” he said. “If you have somebody that’s been on the job for 25 or 30 years, how do you take the knowledge they’ve gained over all that time and transfer it to another person?”

That’s a question that has perplexed local manufacturers for years. Skilled tradesmen don’t just appear overnight, said David Dysinger, a manufacturing manager at the family owned Dysinger Incorporated, a precision machining company in Dayton with just over 40 employees.

“It’s very hard to hire experienced people because there are more jobs than there are skilled people in the labor pool,” said Dysinger, who noted that it takes about 10 years for a new hire to become a “top notch” tool maker or machinist.

“That’s a real problem when you’re losing people who have 10 or 15 years of experience,” he said. “About the only way to overcome that is to remain committed over the long-term to investing your training dollars in your employees and creating a work environment where people want to stay. But that’s a long-cycle endeavor. There’s no quick fix.”

Dysinger said his company has been working to address the problem for years, and he cautions those companies that haven’t begun to take action.

“If you haven’t been working on this over the past few years, and you just start cold now and try to come up to speed, you’re going to have real problems in your business,” he said.

Dane Belden, president of McGregor Metalworking in Springfield, said about 15 percent of his workforce is 60 or older. He thinks he has about a two-to-three-year window to bring in younger workers and bring them up to speed before the older workers retire.

To that end, the company launched an internship program last year with local schools that has “provided good raw material for us.”

“We’ve had a large number of younger employees that have come into the company through internships,” Belden said. “We’re bringing on more people than are retiring. If we would have waited another five years, we probably would be having a more difficult time.”

Still, Dysinger and McGregor are the exceptions among companies facing unprecedented demographic changes.

A recent survey by international outplacement firm Challenger, Gray & Christmas found that more than 60 percent of companies are seeing signs of an upcoming shortage of talent. But only 32 percent are actively doing anything about it, such as rethinking their recruitment strategies or offering incentives for older workers to stay on as trainers and mentors, according to the survey.

CEO John Challenger thinks many companies have become complacent after years of warnings about pending labor shortages that haven’t yet occurred.

“We’ve been predicting labor shortages for some time, but, so far, the baby boomers have been defying those expectations,” he said. “We know, however, it’s coming. It’s a real risk for companies that are unprepared.”

Some companies have yet to take the first step of assessing future staffing needs based on the current demographics of their workforces, Challenger said.

“People should be looking at their workforces department-by-department or function-by-function to look at where they’re vulnerable,” he said. “If you look in a particular department and you see a preponderance of people getting closer to retirement; to take the time to address the issue and not let it go too far is just crucial.”

Topics Ohio

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