In 2014, Harry Dent, an economic forecaster, wrote a powerful book called The Demographic Cliff that described how in the mid-20’s the US would experience a seismic demographic cliff of older generations retiring and fewer individuals from younger generations entering the workforce. Now in 2021, Ron Hetrick, et.al., picks up on this theme and describes how COVID-19 has exacerbated the demographic effects of the workplace, highlighting a projected growing problem for the American workforce, the Sansdemic: a lack of people in the workforce (Coffey, 2021). In a recent publication from Emsi, this new trend in today’s workforce has been called a “demographic drought” and affects business leaders’ hiring processes nationwide. What exactly is the Sansdemic and how was it caused? In this insight article, we clarify some of these questions and give insight into how business leaders might reevaluate some of their business strategies as a response.
A wise man adapts himself to circumstances, as water shapes itself to the vessel that contains it. - Chinese Proverb
What is the Sansdemic?
The Sansdemic is defined by Emsi as a workforce with not enough people (Hetrick et al., 2021). They share that although there are over 7 million job openings and 19 million Americans who have filed for “jobless benefits”, the number of people seeking new employment has dropped to lows “unseen since the economic depression of the mid-1970s” (Hetrick et al., 2021). This drastic drop in the number of individuals looking for work has affected businesses nationwide.
Small businesses and the Sansdemic
Small businesses in particular are facing challenges when it comes to hiring new employees. One of the reasons these small businesses find it difficult to hire new employees is because over a third of unemployed workers are on temporary layoff, meaning that they have “been told they have a job to return to when the business can recall them” (Ho, 2020). Because these small businesses are not able to compete with the wages and benefits offered by large companies, many individuals on temporary layoffs plan on waiting for their previous employment to re-open.
Large businesses and the Sansdemic
Large multimillion-dollar businesses are facing hiring challenges as well. As many employees have successfully transitioned to work-from-home life, businesses that are requesting employees to return to the traditional workplace have been met with increasing resistance. Consider Allied Universal: a major security services company. They are struggling to hire 30,000 new employees. Because of this, during their employment interview processes they have decided to “typically not let anyone go without making an offer if they are qualified and interested” (Vasel, 2021). More recently, 700 airline flights were canceled revealing “growing concerns of crew shortages” (Fike, 2021)
Our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant, and to face the challenge of change. - Martin Luther King Jr.
Causes of the Sansdemic
The Sansdemic is a complex challenge with multifaceted causes. All of the following causes are only pieces to a complex puzzle. Because there is no one single identified cause of the Sansdemic, we can conclude that each of these proposed causes interacts with the other proposed causes on this list.
Labor force participation rate 1947-2012 and projected 2022
Baby boomers leaving the workforce
The effect that the baby boomer generation had on the national workforce was great and still remains impactful today. Because baby boomers marketed themselves as being “in pursuit of opportunities,” employers were able “ to shop around for ready-made talent rather than develop it themselves” in a still-present “employer-friendly model of talent acquisition” (Hetrick et al., 2021). However, as the number of baby boomers in the workplace declines, employers must reconsider their hiring strategies in today’s new employee-friendly model of employment. Approximately 2 million baby boomers retire from the workforce every year. However, during the COVID-19 pandemic, 3 million baby boomers retired from the workforce due to the effects of COVID-19 (Coffey, 2021). These 3 million baby boomers who have retired due to the pandemic will need to be replaced in the workforce— however, the reduced number of individuals in today’s workforce do not provide these replacements.
Women leaving the workforce
Since the beginning of the COVID-19 pandemic in February 2020, over 2 million women have left the workforce. Many claims suggest this is due to the many childcare options being put on hold during the pandemic. This has drastically contributed to the Sansdemic faced by today’s employers (Coffey, 2021).
The involvement of women in the workforce took place right alongside the growth of the baby boomer workforce and nearly doubled the size of the workforce (Hetrick et al., 2021). This loss of workforce participation greatly reduces the number of individuals seeking new employment. Furthermore, “Nicole Mason, president, and CEO of the Institute for Women's Policy Research said some of the jobs women lost during the pandemic are not coming back even when restrictions are lifted” (Silva & Miranda, 2021).
“Jocelyn Frye, a senior fellow at the Center for American Progress” states that until childcare and schools can reopen “we're going to continue to see women continue falling out of the workforce and unemployment levels persist” (Silva & Miranda, 2021). Due to COVID-19 and its effects on childcare, many women have left the workplace and have unfortunately found themselves unable to return because of their former job’s dissipation or the “need to undergo new training” (Silva & Miranda, 2021).
Furthermore, “Stephanie Aaronson, director of the economic studies program at the Brookings Institution” shares that women “might find out that the jobs that they're eligible for pay lower wages than their previous jobs and that will be discouraging… in that regard... women could just end up with sort of persistently lower labor force participation than what we saw prior to the recession” (Silva & Miranda, 2021).
Fewer men participating in the workforce
Another trend that is contributing to the Sansdemic is the declining number of men in the workforce (Coffey, 2021). Emsi outlines several reasons that men have been leaving the workforce.
The first of these reasons is the large median boomer household net worth. “The median boomer household net worth is $1.2 million, a tidy sum that their children stand to inherit. For middle and upper-middle-class millennials especially, work may simply not be as attractive or as necessary a method of attaining their preferred lifestyle” states Emsi in their 2021 Article (Coffey, 2021). Because of this projected inheritance, many millennials are accepting alternative working positions such as part-time employment or managing their money so that they don’t have to return to the workplace.
Secondly, the 2008 housing crisis pushed many men in “full-time construction and manufacturing jobs into part-time work within retail and service sectors” (Coffey, 2021). However, when the housing crisis ended, many of these men did not return to working full-time. Lastly, in 2015 during the opioid crisis “over 2 million prime-age individuals were absent from the labor force due to opioids” (Gitis, 2018). As the opioid crisis continues to revenge the American economy, it is unlikely that these declining trends will continue.
Declining birth rate
The replacement level fertility rate, or the rate at which children must be born for the population to replace “itself from one generation to the next,” is 2.1 children per woman (Craig, 1994 & Coffey,2021). Unfortunately, America’s population hasn’t reached the replacement level fertility rate since the 1970s (Coffey, 2021). This has also made the age distribution of America unideal, meaning there are more middle-aged people than young people who could replace them in the workforce. As birth rates decline and the inability to maintain the current population numbers decreases, the workforce is left with unmet needs and unfilled positions (Coffey, 2021).
US birth rates (births per 1,000 population)
“The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.” - Peter Drucker
How will the Sansdemic affect the Nation?
Emsi summarizes the effects of the Sansdemic on the nation when they state:
“The coming Sansdemic is more than a challenge for HR directors or CEOs. It will affect the quality of life for everyone. When a shipping company is short thousands of truck drivers, it means packages arrive late and essential goods go missing from grocery store shelves. When hospitals can’t find enough nurses, life-saving treatments are delayed, and short-staffed, sleep-deprived medical teams make critical mistakes. When corporations can’t fill high-tech security roles, people are left vulnerable to data breaches and cyber-attacks. Fewer people also means fewer new ideas. Fewer students. Fewer people in research and innovation. Fewer skills in the job market. Fewer employees. Fewer products and fewer goods. Fewer opportunities for growth. As a result, the standard of living will stagnate or decline” (Coffey, 2021).
As this trend continues in the workplace and jobs remain unfulfilled, needs will continue to be unmet and shortages will continue to increase for American society.
How employers should respond
With these grim statistics in mind, how should employers respond? Should business leaders change their hiring practices and reevaluate how they motivate their employees?
The employee perspective
The COVID-19 pandemic has given employees nationwide a new perspective on their work and home-life balance. As many knowledge workers transitioned to working from home, they have found that they can remain just as productive and enjoy the flexibility working from home provides.
Many women who transitioned to working from home as a result of the COVID-19 pandemic, are preferring to work from home permanently. A Washington Post 2021 article outlines several reasons mothers are enjoying the benefits of working from home. These benefits include being present for family meals, being able to manage housework better, having more time with children, and having deeper connections with their children (McCarthy, 2021). These benefits apply to fathers in the now remote workforce as well.
Otherwise, employees who are not parents, are enjoying the additional freedom of mobility that is offered by remote work. A new lifestyle trend called digital nomadism has risen where remote workers occasionally relocate and travel whilst being employed. When not working, these individuals are visiting new areas and sightseeing where social distancing regulations permit (Sorensen, 2021). For more information on digital nomadism, read Arete Coach’s Insight article on the topic by clicking here.
All of these new opportunities for remote employees have a common thread: a new perspective on work-life balance. Employees are now looking for employment that enables them to meet their own personal and career goals. A Harvard Business Review article shares three things that employees are looking for when seeking new employment: flexibility, outcome-focused productivity measurement, and diverse teams (Minahan, 2021). Employees are no longer marketing themselves like the baby boomer generation. Instead, employees are establishing their needs and desires and then looking for companies that fulfill these needs.
“Change is the law of life and those who look only to the past or present are certain to miss the future.” – John F. Kennedy
The employer’s response
Today’s employers are facing the challenges of a declining workforce population, the changes in employee demands, and the challenges of the COVID-19 pandemic. However, employers who acknowledge these changes and respond accordingly can achieve great success.
Focus on the needs of the workforce
As the baby boomer workforce steadily decreases and the next generation of employees rises, employers must be aware of the changing perspective. The hiring sector is no longer in the employer’s favor. Employers must convince today’s workforce that their company provides a better experience than any competitor. Colleen Garrett, SHRM-CP, a recruiter at a retirement community summarizes this need when he shares that “naturally, recruiters are people-centric… 2020 wasn't just hard because of the pandemic, but also because of the economic fallout and all the people who are jobless or displaced in their career. It is our duty to go the extra mile, to understand their struggle and what their needs are…” (Maurer, 2021).
Today’s workforce desires the flexibility that working from home affords them. Because of this, employers should assess how much flexibility they can offer in their positions and if traditionally in-person employment needs to remain that way. Each job within an organization has its unique role and purpose. However, reevaluating these positions and their requirements so that they are aligned with current technological advances can increase employers’ ability to be flexible and increase job desirability for new employees.
Reevaluate benefits and wages
Because of the overwhelming amount of jobs available, today’s workforce has the ability to look for the jobs with the best financial outcomes for them. This increased competition for new employees should encourage employers to reevaluate the benefits and wages they offer. Many companies are offering increased wages and sign-on bonuses for new employees (Gabrielle, 2021).
Several companies are revamping their diversity programs. One of these companies is General Motors. One employee from General Motors states that “the leadership at General Motors both locally and company-wide are very progressive, supportive, and proactive. Benefits are great and the company is true to their values in every way” (Fluker, 2021). Today’s workforce has become increasingly concerned with the diversity of their employment and rightfully so. One method of hiring that discourages diversity is called pattern matching. This method of thinking can damage organizations’ innovation and financial performance, ultimately negatively affecting their employees. For more information on pattern matching and diversity, see Arete Coach’s insight by clicking here (Sorensen, 2021).
The executive coach’s response
As the Sansdemic grows, executive coaches should be aware of how it affects business leaders nationwide. Having an understanding of how it is affecting business leaders can help executive coaches work with their clients to develop personalized plans for greater success. Understanding the opportunities that business leaders have to change their hiring processes in response to the Sansdemic also allows executive coaches to encourage their clients to make corrective, and not reactive, decisions for their company’s well being.
The main takeaway
The modern workforce is changing. The employer now has to compete for employees instead of the former competition for employment within the workforce itself. Employers must now change their hiring strategies and reevaluate their former methods of recruitment to best suit the needs of today’s workforce. Successful business leaders must address these challenges and make the necessary changes to their hiring practices—otherwise, the workforce will continue to select jobs that better suit their needs for flexibility, diversity, and new performance measures.
People will try to tell you that all the great opportunities have been snapped up. In reality, the world changes every second, blowing new opportunities in all directions, including yours. - Ken Hakuta
Coffey, C. (2021, May 4). The Demographic Drought. Retrieved from https://www.economicmodeling.com/2021/05/04/demographic-drought/
Craig J. (1994). Replacement level fertility and future population growth. Population trends, (78), 20–22.
Fike, M. (2021, August 04). Canceled flights strand thousands. Retrieved from https://www.linkedin.com/news/story/canceled-flights-strand-thousands-5105284/
Fluker, D. (2021, May 8). 12 Companies Ramping Up Their Diversity & Inclusion Efforts - and How You Can Too. Retrieved from https://www.glassdoor.com/employers/blog/inspiration-for-ramping-up-diversity-inclusion-efforts/
Gabrielle, N. (2021, July 03). These 8 Companies Are Increasing Wages to Attract More Employees. Retrieved from https://www.fool.com/the-ascent/banks/articles/these-8-companies-are-increasing-wages-to-attract-more-employees/
Gitis, B. (2018, September 12). State-by-State: The Labor Force and Economic Effects of the Opioid Crisis. Retrieved from https://www.americanactionforum.org/project/opioid-state-summary/
Hetrick, R., Grieser, H., Sentz, R., Coffey, C., & Burrow, G. (2021). The Dem