The aftermath of the events of September 11, 2001 have changed our lives forever. In addition to a heightened level of fear and anxiety, the stock market and our economy suffered immediate damage. Businesses lost money and, in many ways, hope. Industries hit hardest immediately decreased their workforces by thousands. Other businesses followed suit and the unemployment rates in many parts of the country hit the highest levels in years.
Our economy has enjoyed a period of unprecedented growth and, according to Jeff Sachse, Labor Economist with the Wisconsin Department of Workforce Development; it is unfair to draw comparisons between short-term impacts and long-term outlooks, especially when you talk about the current recession. “Economies cycle. If you use the analogy of the stock market, it makes a lot more sense. The stock market has hit numerous peaks and valleys. For example, in spite of the market crash of 1987, the market itself has still grown. And while unemployment rates in October and November of this year are up, they are still lower than they were in the early 1990’s,” said Sachse. Sachse also pointed out that one of the first indicators of an economy in a recession is a decline in personal income. That hasn’t happened yet. Jobs are still out there and high paying jobs are still available. In fact, the manufacturing and construction industries posted increases for the first time in 5 months in the third quarter.
In the long run, demographics will play a tremendous role in the success of our economy. As immediate decisions are made because of recent events and economic swings, Sachse encourages Wisconsin business owners and decision makers to “remember the long term outlook of the state of Wisconsin.” The baby boomers are beginning to retire. In the next ten years, the rate of people retiring will equal the number of people entering the workforce. After that time, more people will exit our workforce than enter it. Businesses that don’t recognize this alarming demographic trend are digging themselves into a hole.
So what can you do? First, don’t panic. Before making the choice to furlough a significant part of your workforce, consider the long-term implications. You may be a manufacturing company and decide that you need to cut your cost of labor. What do you do? Many start cutting people in a reverse seniority order. What does this mean? You are jeopardizing your future. What are you going to do in the next 10 years when 40% of your labor force is ready to retire? Who have you developed in your organization to maintain the level of experience your customers depend on? One strategy is to focus on building the skills of your workforce, rather than eliminating part of your workforce. Take advantage of the brief slowdown to cross train employees in different areas. Work on improving your quality by trying new processes and implementing new programs. Develop a mentoring system and help your less experienced employees learn from your experienced employees. Let’s face it…for the past few years, we’ve all been too busy to do many of these things.
Take the time you have now to focus on strategy. Our labor market will continue to grow because an aging population uses more services. If you’re in the service or healthcare industry, recognize that the future is bright. Those retiring baby boomers are planning on enjoying their retirement and will need your services to make this happen. So increase training and education in your workforce and know that the seeds you plant today will assure your success tomorrow.
What do you do if you have no choice but to reduce the size of your workforce? Try shorter-term solutions. For example, consider offering part time or job sharing opportunities on a voluntary basis. You may be surprised by the number of people that would like an opportunity to work part time. In addition to saving dollars in wages, you may also save significant dollars in benefit costs. Consider realigning your workforce. Perhaps there is an area that you could use some additional help – cross train people in that area and use a contingent workforce to meet the demands in other areas.
These are hard times and there are many difficult decisions to make. Recognize that a turn around is more likely than not. Before you panic, take a moment to look forward and make decisions that will assure you a successful 2002 and beyond.