Mark Lautman CEcD
One of the huge challenges that communities are facing is related to the evolution of their workforce. In fact, most experienced and productive workers are retiring and becoming dependents faster than new qualified workers are being educated and trained to replace them. Beyond full employment of the qualified workforce, the community no longer has enough qualified workers to grow the economy. Therefore, economic development is, essentially, impossible. An inverted dependency ratio means that the number of people in the community capable of working is smaller in proportion to the number of people who can’t or will not work. The pie chart of the population today can be described as balanced. Roughly half the residents are dependents (the left side in blue). The other half of the workers are in green and red. Ten years from now, the population pie in this case will not only be bigger, but the dependents will have increased in proportion to the workers. This basically shows the impact of workers retiring and becoming dependents faster than young dependents leaving home and becoming workers. Think of a region’s population consisting of four quadrants, two on the dependent side and two on the worker side. On the dependent side, we can identify two catagories: those too old to work and those too young to work. On the worker side, the two catagories are those qualified to work and those unqualified. For the purpose of this discussion, let’s define unqualified to be anyone earning less than 1.5 times the poverty rate—or those without the education, the skills and the experience to earn 1.5 times the poverty rate or more. Looking at the population pie, starting at 12 o’clock and going clockwise down the worker side, you have a gradient starting with the oldest, the closest to retirement, the most experienced, the most productive, and some would say, the hardest working part of the workforce. As you move down around the right side of the workforce gradient, the workers get generally younger and less productive until you get to the borderline “unqualified.” Your workforce can be thought to be consuming more goods and services than they produce. Sometimes highly qualified workers find themselves pushed back into the unqualified quadrant because their industry is destroyed by technology, global competition or a degrading business climate. Industry destruction and the resulting skills mismatch can cause a dramatic simultaneous contraction of a community’s qualified quadrant and an explosion of the unqualified sector overnight. Moving down the unqualified quadrant to the bottom of the pie chart, the population of working-age residents grows generally younger, less capable and less motivated, until somewhere toward the bottom, you cross into the quadrant of dependents, who are too young to work. These would be the teenagers who are capable of working, but still in school. Continuing up the dependent side through the too-young quadrant, the population gets younger and more dependent until you reach totally dependent newborns. At that border, of the too-young quadrant and the too-old quadrant, would be the most recent newborn, and next, the old person to die. The quadrant of the too-old has a gradient beginning with the totally dependent, oldest most feeble and nearest to death at 9 o’clock. With the retired elders getting younger and more capable, more productive and more likely to be able to work until we are back where we began—those workers ready to retire.