The Future Isn’t Going to Look Like You Think
Issue 91, January 19, 2023
Organizations founded on exponential growth are in for a wake-up call. In reverse-trend thinking, some experts believe that good enough is just good enough. Entrepreneurs believe that there are no limits to growth. What do we believe? It requires a deeper look at what is going on in our global population shifts to really understand future growth…or constriction. We wrote about this in our book, The Truth About Transformation, detailing the facts about the future population shift, re-sizing of markets, the demise of data point over generalizations, and the revelations of transformation hidden in plain sight.
Your market and workforce are going to look very different in the future. Demographic factors and variables must be considered in context of your own organization, whom your organization serves, and whom your organization employs. Stresses and tensions to find the right individuals with the right skills in a constantly evolving competitive environment are made even more complex by shifting and changing cultural attitudes and demographic shifts.
Consider the implications of the most significant demographic changes underway across the globe. Immigration, migration, changes in family structures, the changing role of women in the workforce, increasing mobility, declining birth rates, growing diversity, and generational shifts are just a few of the factors to watch and understand. Each of these megatrends relates to your current and future workforce and customer base, and should guide you in determining where your organization may be heading.
According to Darrell Bricker and John Ibbitson, authors of Empty Planet, the global population will peak around the middle of this century and then begin to decline especially in what we consider to be the most affluent places on the planet. According to the authors, Japan, Korea, Spain, Italy and much of Europe are facing long-term reproduction rates that won’t be able to sustain their current population levels.
The Future by the Numbers
According to Pew Research, “For the first time in modern history, the world’s population is expected to virtually stop growing by the end of this century, due in large part to falling global fertility rates.” According to the United Nations, by 2100, the world’s population is projected to reach approximately 10.9 billion, and most of this growth will take place in low-income and lower-middle-income countries.
That means the world’s poorest countries have some of the fastest growing populations: the population of low-income countries, located mostly in sub-Saharan Africa, is projected almost to double in size between 2020 and 2050, accounting for most of the global increase expected by the end of the century, says the UN. “Four of the 10 most populous countries in the world will no longer be among the top 10 in 2100 – and all four will be supplanted by rapidly growing nations in Africa, according to recently released population projections from the United Nations. Brazil, Bangladesh, Russia, and Mexico are among the world’s 10 most populous countries today. By 2100, they are projected to be overtaken by the Democratic Republic of the Congo, Ethiopia, Tanzania, and Egypt – none of which are currently in the top 10,” adds Pew. On the flip side, the biggest population loss by 2100 will be China with 374 million fewer people. These population shifts will affect each country’s economy, growth, healthcare, education, and prosperity.
These may seem like factoids that have little relevance to your daily life or business focused decision making but think about it: Eight of the top ten fastest growing populations will all be in Africa. The other two nations on the list are Pakistan and the United States, which are projected to see population gains of 182 million and 103 million people, respectively. The United States population growth is becoming more and more diverse changing long held perceptions of which race and ethnicity are in the majority. Projections by the UN are supported by the recent US Census and show that whites, Hispanics, and Asians will become nearly at parity.
The UN puts the population future more bluntly, “Sustained, rapid population growth adds to the challenge of achieving social and economic development and magnifies the scale of the investments and effort required to ensure that no one is left behind. Rapid population growth makes it more difficult for low-income and lower-middle-income countries to afford the increase in public expenditures on a per capita basis that is needed to eradicate poverty, end hunger and malnutrition, and ensure universal access to health care, education and other essential services. Lack of autonomy and opportunity among women and girls can contribute to high fertility and rapid population growth.”
The Truth About Transformation reveals how population shifts will run counterintuitively to popular belief. Awareness of population shifts is critical in planning for the future. Decreasing birth rates and overall changes in population impact organizations who rely on population growth for their growth across a marketplace and the needs of that increasing population for organizational growth.
For example, a deeper look at the world population reveals that there are two billion children in the world today aged 0-15, according to the UN, and that number is expected to remain constant in 2100. So, pause on that thought a moment. According to the Brookings Institute, a staggering 60% of Africa’s 1.25 billion people are under the age of 25, the youngest population in the world. The disconnect is that the median age of leaders in Africa is 62. Thione Niang, co-founder of Akon Lighting Africa states, “In many cases, the younger generation is more knowledgeable, equipped, and prepared to address the fast-moving issues of today than the establishment leadership. The generational showdown is hovering on the horizon.”
Ibbitson and Bricker believe that a smaller global population will result in some real benefits: “Fewer workers will command higher wages; the environment will improve; the risk of famine will wane and falling birthrates in the developing world will bring greater affluence and autonomy for women.”
They predict enormous disruption as well. Already in Europe and parts of Asia, “an aging population and worker shortages weaken the economy and impose crippling demands on healthcare and social security.” Opportunity knocks for the innovators in wellness and healthcare services and products to serve the needs of an aging population and the institutions that serve them.
So, back here in the U.S., we are facing a new challenge based on population shifts; there is a smaller share of our population than before the pandemic available to work. Jerome Powell, the Federal Reserve chair recently said “The country has a “structural labor shortage” that is unlikely to be resolved anytime soon. What are the implications of this? As reported by The New York Times, “a smaller pool of workers makes it harder to rein in inflation because companies have to raise pay — and, most likely, prices — as they compete for workers. And beyond the inflation debate, an economy in which fewer people are working is one that cannot grow as quickly as in the past.”
A Quick Word About the Boomers
We are on the precipice of a huge shift in the status and situation of boomers (born between 1946 and 1964). Individuals 65+ are projected to make up 20% of the U.S. population by 2029. To put it into perspective, 250,000 Americans celebrate their 65th birthdays each month, states Investopedia.
Here are a few fun (or sobering) facts from Lauren Kemp, Communications and Marketing Specialist at J2T.
- Boomers are twice as likely as millennials to start a new business, and 45% consider themselves entrepreneurs.
- They control more than two-thirds of the disposable income in the United States.
- Their spending power is expected to increase by $24 trillion by 2032.
Yes, but. Boomers will dramatically change our workplaces in the near future. Today, we have a five-generation workforce, and the boomers are finally beginning to retire … about a decade late. In fact, 75 million boomers are expected to retire by 2030. On the surface that seems to be a normal turn of events. People age and they retire. But this time it’s going to and be different. With The Great Retirement, there is such a massive number of boomers leaving the workforce that their children, the millennials, and younger generations will be hard pressed to pick up the slack.
Connecting the Dots
Kemp adds, “The mass retirement likely will lead to an even wider workforce gap as companies will need to fill positions made available after the boomers’ retirement.” These workers generally hold higher positions, which will leave a significant knowledge gap in organizations as institutional knowledge retires along with them. Maybe that’s not such a bad thing. An older demographic’s basis of knowledge aligns with the past. A legacy perspective will hold back any organization and stifle transformation.
As an example, consider the disconnect in today’s work environment where older leaders are calling their workforces back to the office based on the belief that on-site collaboration and interaction result in better creativity and innovation. The core issue is an antiquated idea of measuring performance by physical presence, not the efficient use of time. Our tech savvy younger generations are already questioning this concept, scratching their heads, and becoming disconnected from inflexible leadership. We’ll deep dive into that dynamic in a future newsletter.
Organizations focused on long term growth strategies and challenges will need a skilled workforce, regardless of where employees live. If there are fewer local qualified individuals (who also command higher wages), organizations will need to source employees elsewhere to aggressively compete with other organizations. And that alone compromises the argument for having an only on-site workforce. Again, more on that later.
How will the boomer retirement shift impact life and the economy? Here is a highly selective list of some of the implications.
- Consumer spending will be affected, as retirees produce less and consume/spend less money.
- It will free up jobs for younger employees.
- As of July 2020, 52% of adult children live with their parents.
- Boomers will spend more on their adult children; a substantial percentage of parents provide some financial support for their adult children, including student loans.
- An older population requires and consumes higher levels of service resources across society than younger generations do.
- An expanding older population increases demands on a shrinking younger generation resulting in need gaps, societal stress, and changed priorities.
- Life expectancy is increasing but the quality of life is unknown, resulting in new societal demands for care.
- As reported by Scott Williams, pharmaceutical company EMD Serono in Time, ““Family caregivers will make up a silent support army — without them, health and social systems within our aging societies would be absolutely overwhelmed.”
On the Horizon
Most organizations don’t recognize the need to apply critical thinking to determine how population change will impact a business or even society across countries, regions, and continents. An older population creates challenges for acquiring and retaining the appropriate modern skills and expertise needed by an organization. Younger workers might think, “The population is aging, ok, that means the population is getting older, there isn’t any impact on me. I don’t think it’s a problem.” The truth is that an older population will affect everyone. How we move through life stages personally and professionally shifts across the spectrum of ages, and if we are smart, we pay attention to these changes and learn from them. Not unexpectedly, an aging population also begs for the skills and services this growing market needs, particularly assistive services needed to care for older individuals. Younger generations may aspire for cool careers that are no longer in demand, but instead redirect their attention to careers that an aging population market actually needs to survive.
At 2040, we help organizations who are struggling to fill a variety of roles as they seek to take advantage of technologies to grow and transform. Planning a future workforce should start now to meet operational and growth needs. How we work will be different. The Industrial Age model is a relic; human workers are no longer cogs in the wheel. However, robots are. When humans are liberated from repetitive tasks the belief that all work must be physically conducted in a shared space, whether that be a factory or an office building, is under review. Many older leaders want workers in the physical fold while many younger workers rebel as they have discovered new ways to perform with an improved work/life balance. The jury is out on how to find common ground between two different work views. Enlightened leaders will redesign an organizational model to embrace both perspectives without negative consequences to the maintenance and growth of a highly skilled workforce.
We suggest taking a lead from the UN, “A path towards a more sustainable future requires demographic foresight, which involves anticipating the nature and consequences of major population shifts before and while they occur and adopting forward-looking and proactive planning guided by such analysis. In working to achieve sustainable patterns of consumption and production and to reduce the impacts of human activity on the environment, it is important to recognize that plausible future trajectories of world population lie within a relatively narrow range, especially in the short or medium term. Over the next 30 or 40 years, a slowdown in global population growth that is substantially faster than anticipated in the United Nations projections seems highly unlikely. Even though the pace of global population growth will continue to decline in the coming decades, world population is likely to be between 20 and 30% larger in 2050 than in 2020.”
Get “The Truth about Transformation”
The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.