American Workforce’s Incoming Generation Most Diverse, Startlingly Least Educated

By Roy Maurer Jun 22, 2010

Seismic changes in the racial makeup of the U.S. population have led to the American labor force’s incoming generation being the most diverse in history, while at the same time being the least educated, leading to a dire forecast for the nation’s global competitiveness.

A group of panelists discussed this and other related issues at “The New America Policy Summit on the Changing Demographics of a New Generation,” sponsored by the National Journal Group in association with the Society for Human Resource Management (SHRM) June 17, 2010, in Washington, D.C.

Pointing out that two-fifths of the Millennial generation, or Gen Y—the generation currently entering the workforce—is non-white, according to 2009 statistics, SHRM President and CEO Laurence G. O’Neil stated that the demographic change will “have huge implications for our workforce, our education system and our domestic policy.” He added that “SHRM’s 250,000 members, HR professionals from every industry, are on the front line of this change every day.”

The panel exchange that followed included a presentation by William H. Frey, demographer and senior fellow for the Metropolitan Policy Program at the Brookings Institution, and lively discussion about education reform, workforce training initiatives and racial inequality in American society.

Based on the 2000 census, the U.S. workforce (generally ages 25 to 64) is in the midst of a sweeping demographic transformation. From 1980 to 2020, the white working-age population is projected to decline from 82 percent to 63 percent. During the same period, the minority portion of the workforce is projected to double from 18 percent to 37 percent, and the Hispanic portion is projected to almost triple from 6 percent to 17 percent. By 2042, the U.S. population will be more non-white than white, making it a majority minority population.

This demographic shift can be traced to two primary engines: Larger numbers of younger Americans are ethnic minorities, and increasing numbers of white workers are reaching retirement age, together making up the so-called “browning” and “graying” of the population. The aging of the Baby Boomers, who are beginning to enter retirement, and the influx of immigrants, mostly from Latin America and Asia, will generate major change ramifications to the labor force for years to come.

“As these largely white Boomers retire, the working-age population will decline by about 5 million whites, and the rest of the working-age population will gain about 15 million minorities, 90 percent of which in the next decade will be Hispanics,” Frey said.

The educational attainment of the fastest growing segments of the new labor force is especially startling. Just 39 percent of Hispanics in America in 2010 have a high school education, and only 13 percent are college graduates, with dropout rates in the Hispanic population particularly high.

Substantial increases in those segments of America’s young population with the lowest level of education, combined with the coming retirements of the Baby Boomers—the most highly educated generation in U.S. history—are projected to lead to a drop in the average level of education of the U.S. workforce over the next two decades unless the educational level of all racial and ethnic groups is improved.

The projected decline in educational levels coincides with the growth of a knowledge-based economy that requires most workers to have high levels of education. At the same time, the expansion of a global economy allows industries increased flexibility in hiring workers overseas. As other developed nations continue to improve the education of their workforces, the United States and its workers will increasingly find themselves at a competitive disadvantage, the panelists said.

Businesses “are looking down the pipeline to see where they’re going to get their workforce, the skills that those individuals are going to have, what their success rates are going to be in post-secondary education, and they’re very concerned, because they do see the changing demographics,” said Karen Elzey, vice president and executive director of the Institute for a Competitive Workforce at the U.S. Chamber of Commerce. “The question is, What role can [businesses] play in being able to support effective policies that allow them to get their workforce here? If they can’t get their workforce here, they’ll go [elsewhere] and get it,” she said.

Larger corporations are embracing the demographic changes, Elzey said. “They see the need to have a more diverse workforce and the value that a diverse workforce will bring to them in terms of the clients and vendors they are going to work with,” she said.

Corporate America has begun to adjust to labor force changes with an increased use of contingent workers, telecommuting, and workplace flexibility and diversity initiatives, she said.

On the other hand, American companies are struggling to find native-born workers with an expertise in science, engineering and math and “will look for the best and the brightest from wherever they can find them,” she added.

Roberto Rodriguez, special assistant to the president for education on the White House Domestic Policy Council, addressed the Obama administration’s education and workforce reform goals, including pushing for 60 percent of the population to hold college degrees by 2020, a 20-point uptick from 2009 rates.

“We clearly must do better,” Rodriguez said, by raising the bar of the quality of the workforce through strengthening workforce training and remediation for displaced workers and shoring up the nation’s community college system.

Roy Maurer is a staff writer for SHRM.


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