Recession and the Aging Workforce
Global models are used to help reduce uncertainty by generating alternative scenarios against baseline forecasts (Hughes & Hillebrand, 2006, p 1). A recent article in U.S. News focused on retirement age which states in 2011 a Gallup poll noted that Americans expected to retire at an average age of 67 (U.S. News, 2012). It is believed that this trend is a result of financial insecurity due to a majority belief by workers that they won’t have enough money to live comfortably in retirement (U.S. News, 2012). Secondary to the issue of an aging workforce is an increasing number of college graduates entering the workforce (Foster, 2012). An aging workforce could equate to increased costs through prolonged funding of retirement accounts; increased healthcare costs due to a larger pre-existing conditions pool of coverage; higher wages for more senior employed individuals; and increased costs in training for emerging technologies (Foster, 2012). Using the IF modeling software, we explored the connections and interdependencies among components of the problem: an aging workforce and growing inventory of younger human capital. Using a working scenario: the Labor Retirement Age Multiplier in the IF modeling software, we explored what the impact would be if the retirement age continued to rise over time (Foster, 2012). We asked what the impact of a 33% increase in retirement age might have on several key areas through 2030. A 33% increase in effect moves the retirement age from 67 to 87 (Foster, 2012). This analysis seeks to determine what kind of impact an aging workforce might have on the labor market, consumption ratio to household income, and deaths (Foster. 2012). It is estimated that by 2030, the United States will see population grow by 18% or 55.1 million people, bringing total population to 364.758 million (Foster, 2012). In dealing with an aging workforce, we felt it important to understand the impact of mortality on the workforce itself (Foster, 2012). The results of this analysis were somewhat surprising in that there was a slight decrease in the mortality/deaths of those individuals who remained working over the current base analysis (Foster, 2012). Using the Labor Retirement Age scenario it is estimated that 58% or 211.3 million up to age 87 would be in the workforce by 2030 (Foster, 2012). Finally, using the IF modeling software we analyzed Consumption (household) Ratio to Household Income (Skilled/Unskilled) and found a slight increase in the consumption ratio to household income with an aging population in the workforce (Foster, 2012). This trend is easy to understand as more individuals in the workforce making income will typically translate into more resources available for consumption (Foster, 2012). Using the International Futures model, we are able to take these scenarios and begin to create interventions that deal with the results of given changes in the base or status quo.
Hughes, Barry B. and Hillebrand, Evan E. (2006). Exploring and Shaping International Futures. Boulder, CO: Paradigm Publishers.
U.S. News (2012). “The New Ideal Retirement Age: 67.” Retrieved on September 27, 2012 from U.S. News, May 8, 2012.
U.S. News (2010). “Why the Retirement Age Is Increasing.” Retrieved on September 27, 2012 U.S. News, November 15, 2010.
Foster, Philip (2012). “LDSL 718 – Major Project 1: Policy Structure Diagram” Assignment for Doctorate in Strategic Leadership, Regent University, Virginia Beach, VA.