Studies and experts have long heralded the coming of a severe labour shortage as the Baby Boomers begin to retire, and subsequent generations don’t have the numbers to fill the resource gap.  I too have echoed this demographic cliff:  there won’t be enough people in the workforce to do the work that must be done; organizations will have to retain older workers or there will be many jobs that simply go unfilled for lack of applicants.

My thinking on this looming crisis is now beginning to evolve.  Yes, you can still demographically project a decline in the number of people in the work force, but it is more gradual than originally envisioned. More important, projections of workforce gaps appear to ignore dynamics that will help address worker shortages – productivity gains and the virtual workforce.

You see, our economy has never stopped gaining productivity and efficiency since the dawn of the industrial age.  Peter Cappelli of the Learning Forum points out that just since the end of World War 2, the U.S. economy has grown eight-fold but its workforce has only doubled.  If you do the math, it means each employee is four times more productive today than 65 years ago.  

From my own experience, I can look back on how many people it took to produce a corporate publication in the 1980s.   One or two public relations people to draft and edit copy, a photographer, clerical person to type a clean version of final copy for the typesetter, who then retyped it into a compositor to product print galleys, before an artist laid out camera-ready artwork.   Most were regular employees of the company, though you could outsource much of this work too.   Once the artwork was done, it went to a printer who produced film and plates for the four-color printing process, involving another 3 or four people.  Finally there was the distribution of publications via mail and courier.

Today, the same work can be done digitally, sometimes by one individual with a design program and access to an astounding bank of photos and graphics.  Distribution is just one click, with printing left to the option of the reader, though more people prefer to read publications on-line.  The result:  headcount, production and distribution times are a small fraction of what they were just 30 years ago.

Productivity gains aside, there’s another trend that will also have a profound impact for employers.  The ability to access skills very differently than companies have in the past. 

Using my corporate publishing example, virtually all of the skills in that scenario can be had through online or freelance basis.  In fact, there are business networks and dedicated websites that enable people to establish profiles of well-defined services that companies can access.  That way, skills such as accounting, planning, presentations and communications of all types can be contracted and produced remotely for a client organization.  No overhead, salary or benefit burdens.

From short-term contracts and freelancers, to online services and offshore resourcing, employers can build a virtual workforce to augment their regular workers, some of may also work remotely, either for lifestyle reasons, or because they are on a shared office schedule to save overhead costs.

What all of this change adds up to is that companies faced with a demographic cliff actually start doing things differently than they have in the past.   They don’t necessarily back fill every vacant position just because a worker has retired or left.  Rather, employers, more than ever, consider redistributing a departed employee’s work to other staff, and jettisoning work that does not need to be done.  Outsourcing of tasks to specialty firms, or to virtual online employees as described earlier, are also options.   The key consideration is whether the work can be done effectively at a lower cost.  Once again, work forces get smaller, but produce as much or more.

Notably, though sales are recovering in US companies after a rather stark recession that began in 2008, employers are holding back on hiring.  Employment numbers do not appear to be marching forward as robustly as sales, implying that employers want to push productivity over bigger payrolls at this time. 

What does all of this mean to the experienced worker who wants to stay in the work force, or is trying to find another job?  It doesn’t necessarily mean there won’t be available work, but your working relationship with an employer may change dramatically.   Where long term employment with one organization was once the standard, employment is becoming more term-oriented, by contract, and on a project, assignment or as-needed basis.   Moreover, an increasing amount of available work may come to workers online, rather than in-office.

For some, this shift in the relationship between worker and employer is an exciting prospect for a diversity of new experiences.   For others used to steady employment with one employer, it could be culture shock, at least initially, followed by survival of the adaptable.   For all of the Boomers, the employment scenario will never be quite the same.