What got you interested in studying the workforce and the changing demographics? What got you going on that?
Well, I think I’ve always been curious. Frankly. I’ve spent my whole career in consulting. I’ve always been in a situation of working with different companies on different issues at different points in time.
The workforce issue came up because a client asked a question. We were talking about the demographic shifts. The client asked, ‘How is that going to affect employment practices?’ I said, ‘I don’t know.’ So we set off on a journey to figure that out.
Of course, once we got into it, it got more and more complicated the more we looked at it. It turned out to have implications not only for straightforward things like hiring practices and so forth, but it turned out to have a lot of implications for what people want people work and what the meaning of work is. How all that stuff is changing.
How long ago was that when you asked that question?
It was probably about five years ago. I’ve been looking at the workforce for five years. I’ve been enjoying every minute of it.
How important is your education background? I know you have an MBA from Harvard. How important is that? Because if we were to go and study the workforce for five years, you think our opinion would be enhanced by credentials? Or could we do the same thing?
Well, it’s a very good question. I think that by now, being as old as I am, I suspect the educational background is less important than the body of experience I’ve had over the course of my life. So I think education helps you get a good start. But at some point, if you’ve been a curious person, learning from the world as you go along, you’ve picked up more from that than you did in the education.
In my case, I’ve been very lucky. I’ve worked with organizations all around the world. I’ve done a lot of work in Asia. A lot of work in Europe. I think it’s more that body of experience about organizations and how they work that’s been helpful than perhaps the MBA specifically.
So if we were to go and try to make this our career, basically we’d just have to know our stuff?
Well, exactly. I think you have to have something you can have a strong leg on.
You’re the co-author of the book Workforce Crisis. I was wondering if you could explain the workforce crisis. What it’s all about and why we should be worried about it.
Absolutely. Actually, you should not be worried about it (laughs). You should be delighted being as young as you are.
Basically, what the workforce crisis means is that anybody who wants to work going forward, young or old, will probably we able to find a job. There should be good jobs out there for anyone who wants to participate in the workforce.
The people who are worried and should be worried are corporations. Because there won’t be enough people. Particularly not enough people with a college degree. So the essence of the workforce crisis is that we’ve had a lot fewer children over the past two or three decades. Birth rates have fallen substantially. That’s now catching up with us. The smaller groups of people with lower birth rates are now entering the workforce. And it’s happening right about the same time as a big group of people, the boomers, are leaving the workforce.
So people in their twenties today can just about replace the boomers. Just about, but not quite. But that assumes you have the same level of skill and experience, and it doesn’t allow any room for growth. If organizations want to grow, hire more people than what they have today, which presumably all the organizations will do, we are going to be short.
So for young guys like us, what do you suggest? Do we hop on with some corporation and ride it out for three or four years and be at the top of the pyramid? What’s the deal?
Well, that’s a good question. I think it depends a lot on what you enjoy. The reality is you’re not in all likelihood, ideally suited to the way you prefer to work. The reality is corporations were designed by your grandparents. And your parents, more or less, went along with the rules as they were stated.
So corporations to you are probably going to seem pretty stuffy. They’re hierarchical. they have very rigid decision making processes. They’re slow. I think a lot of people in their twenties just are very frustrated by that.
My message is a couple of things. One is I hope some of you stay in corporations. And I hope you help change them. Because corporations need to change. So they need your passion and your energy to change and do things in different ways.
On the other hand, I think realistically, a lot of folks in their twenties are thinking more about entrepreneurial activities. Doing things on their own, being their own boss. Because they don’t want to be in the corporate world.
So how do the opportunities out there, with the internet out there, how does all that affect people like us? The Gen Y’s that are seeing corporations? Because both Zach and I stuck around for a year and were driven insane by the companies we worked for out of school. Now we’re out doing this. Entrepreneurial. Exactly what you said. But I don’t think we’d be able to do this without the opportunity afforded to us by having an online presence. Sponsors and stuff like that. So from here forth, with this mindset that this generation has, how do the opportunities out there affect our decisions?
I think in a very positive way. For a couple of reasons. One is, I don’t know if you would think of it this way, but from my perspective, let me talk about it in two dimensions.
One is if you go into a corporation. If you go into a corporation, you are by definition going to think differently than the people in the corporation. Because you have very different habits and practices and ways of getting things done than most people in corporate life today. So at a minimum, you’re going to bring a breath of innovation into corporations.
On the other side, if you decide to do something on your own, the internet and all of the advances that surround it make it much much better for you. Again, I think one of the things that many people miss is that it’s not just the technology that’s changed. Let’s see since the dot-com bust. There’s a lot of other things that have changed too.
For example, when we had the first internet bubble, a lot of people, normal people, weren’t comfortable using the internet with their credit card. They didn’t make purchases on the internet. Today, almost everybody does that. So consumer behavior has matured a lot over the last five years in addition to technology.
So a lot of things are coming together. Consumer behavior, advertiser behavior, technology, wireless broadband access. I mean, all sorts of things coming together to make this a great time for entrepreneurial activity that centers around the internet.
It also is another great time to capitalize on this crisis. It seems like our sponsor, Jobing.com, are going to make a killing out there placing people in these jobs.
Right. There’s no question that companies that are in the business of finding workforce and making the connection to corporations are in a great business. Because companies are going to need every applicant they can find. It’s particularly tight for college grads. So companies that specialize in finding college grads are in a very good position.
If you look at the percentage of young people who get college degrees, today, believe it or not, it’s only about a quarter of you with degrees. 26%. A lot of people are surprised by that because it seems like everyone you know goes to college. But the reality is they don’t all finish. So by the time people turn 30, only about 26% of the people have college degrees.
It’s expected that it will increase a bit over the future. So let’s say it gets up to 28%-30%. But we’re at a time where the economy is swinging dramatically in the U.S., away from blue collar jobs, and much more towards jobs that require college education. So we’ve got an economy that wants a college educated workforce, and only about 25%-30% of the people who have college degrees. It’s a real mismatch.
How is that going to evolve then? Do the companies have to change? I know that you wrote about Simon Cowell and how he dropped out of high school.
It’s interesting to speculate about that. One thing I tell companies when I advise them is you better be prepared to educate your own workforce. You are almost certainly going to have to hire people below the level of formal education that you would like. And you’re going to have to provide that education. Whether you pay for them to go back to school or you do it through in house training, somehow companies are going to have to participate more in education. That’s one point.
The other thing that is interesting to me, is that maybe over time, college degrees will become less important because more companies will hire people with only high school degrees. It may have a little bit of an ironic blowback. If there aren’t enough college grads, and you have to hire high school grads, does the college degree become less valuable? I don’t know.
It will be interesting to see. It might open up a lot more opportunity for people that don’t have the finances to go off to college. As long as they have that ambition and drive.
It could be. It really could be.
It’s all about the value you bring, I guess.
I wanted to talk about our generation a little bit. We’re kind of impatient.
Yes you are (laughs).
It seems like there’s almost a crisis in itself where we can jump around so much that we would never be able to make up that gap of knowledge that we’re missing with the baby boomers leaving and us just getting in. What’s wrong with our generation? Why are we not satisfied with where we’re at?
Different people have different theories about that. My work indicates that one of the big influences on you guys is that you have a real sense of wanting what you’re doing today to be both meaningful and enjoyable. You want to live in the present. You’re much less willing to say that I’m going to do something that I really hate for twenty years with the hope that it will be fun twenty years from now.
Which, believe it or not, this was a mentality that other people took. They really did say, ‘I hate my job. But I’m going to stick it out for twenty years.’ You guys probably couldn’t even imagine that.
Now why do you feel that way? I personally think some of it is the events around things like 9/11. I think that you have grown up in a world which the idea that inexplicable things could happen at any point and time is very much part of your reality. I don’t think it’s made you pessimistic or fearful, but I do think it’s given you a sense of what I would call immediacy. You want today to be a good day. You don’t want to differ today being a good day into some indefinite future.
That’s a good answer. If you could meet one person who would it be?
Oh boy! (laughs) Oh I don’t know. Probably Bill Clinton. I’ve never met him. I’d be interested to.
What would you ask him?
I would ask him about our international relations. One thing that really concerns me as I travel around the world is how Americans are viewed today. I’m deeply concerned about the fact that it’s not good. I think the whole issue of how do we repair our stature in the world, how do we develop friendlier relationships, greater sense of allies is something that Clinton was particularly good at. I think he was quite skilled at it. I’d be interested to see his point of view in what the steps might be going forward.
Is that going to carry over to doing business online or internationally? Do you see that overseas marketplace expanding in the future? I know that we’re already doing business overseas, but do you think that will grow and become more common?
I do think so. I think we’ll increasingly see business done across national boundaries. Although I wouldn’t get completely carried away by that. The reality is a lot of business still occurs within a national market. But certainly having friendly relationships with other areas and being able to do the trade where it’s important to do is a really key thing going forward. We have to think of ourselves in a global context.
So if you could go back, I know that you have two children around the same age I’m going to ask this question about, but if you could go back to when you were 22 years old, and just tell yourself one piece of advice, what would you tell yourself?
Well, it would be to do something you love. To do something you really enjoy doing. I grew up in a blue collar family and had a father who worked in the auto industry. He was one of these guys who did something he hated for whatever it was, thirty years. And he actually told me to be sure to do something I love. I think I have. I really have loved my work over many years. I think that’s really the key to it. Enjoy it. Be curious about it.
One of my real pet peeves is that whenever I find someone who says they’re bored, I frankly tend to think that they’re not that bright. It’s hard to be bored if you’re always curious and looking for the next thing.
I’d say enjoy it. Be curious about it. Keep moving forward.
I think that theory of doing what you love is becoming more accepted today.
I think it is too, which is good.
How do people do that? What are the common elements that go into finding something that you love? And how do people actually go about doing it?
I think one of the things that’s really important to think about is, this may be a bit of an odd answer, is the temple that you like. We’ve done a lot of research about what are the employment practices that people enjoy most. What you find out is that there is no answer to that question. Because what you enjoy most might be very different from what I enjoy most.
The companies that tend to have the happiest employees tend to be ones that do things pretty weird. They tend to be out on a spectrum. They tend to attract people who like that end of the spectrum.
So in my case, before I went to college, I worked at a weekly newspaper. It was a blast. But if you think about a weekly newspaper, it has a distinct rhythm. It goes through a measured period and builds to a crisis the day before the paper comes out. Everyone is working until four in the morning and that sort of thing. You get the paper put to bed and the next day you come in and eat doughnuts all day and relax and tell jokes. Then you start up again.
I knew when I was looking for a job I wanted something that had that kind of rhythm. That wasn’t a strict 9-5. That wasn’t the same thing every day. That had that kind of relaxation. I was lucky enough to find that career in consulting, which is also, if you think about it, project based. You have crisis, downtime, etc.
So I think part of the reason I’ve always liked it, in addition to the intellectual part, is I’ve always liked the rhythm. It’s worked for me. But it wouldn’t necessarily work for everybody. There would be a lot of people for whom that rhythm would be stressful and unpleasant.
One tip I would give is when you think about it, don’t just think about the work itself. Think about the rhythm of the work and how you want to live your life.
I was going to ask when is the time for young people to take advantage of this workforce crisis. Is it now? Is it in the next five years? Is there a specific window that these companies are going to be looking for people?
It’s a good question. It’s definitely getting worse all the time. To put it on a spectrum, five years ago when I started doing the research, people laughed. Why are you wasting your time? Ridiculous issue. No one had a problem. About a year ago, technically from an economist perspective, the line between supply and demand crossed. We switched over into a supply constraint, from a labor perspective market in the United States about a year or a year and a half ago.
Even that’s very unequal. You go to some parts of the country, in fact you’ve probably been there, where jobs are still tight. It’s hard to get a job. But you go to other parts of the country, the West Coast, the East Coast in many cases, and workers are tight. It’s hard to find labor.
Essentially it depends a bit at the moment on the job and the geographic location. But over the next three or four years, it’s going to become much more widespread for most occupations and most geographies.
Is there a theory that technology or more women in the workforce or people living longer, staying at their jobs longer are going to make up for that a lot? Obviously you probably take that into consideration, but do people believe that there are going to be specific areas worse than others because of the nature of the job? Jobs that are even far less desirable at our age is the reason they’re going to have problems with it?
Right. That’s a really interesting question and a whole set of dimensions to it. So let’s take each one.
Technology. Probably not. That’s probably not going to make a huge difference. The reality is we’ve actually had extraordinary gains in productivity in the U.S. over the last decade or so. Historically, productivity is usually around 2.5 or 3 percent. It’s been almost as high as 4 percent. It’s been significantly above average for the last decade or so. No one expects that it will stay or continue on at that level. It will probably fall a little bit going forward. That modest level of productivity increase has been factored into the workforce crisis assumptions.
Could there be years where you have a productivity blip? Yeah. Sure. But over the long term, it’s very unlikely that technology will materially change the projections. So that’s one.
Second. Women. That’s an interesting issue. Because right now more women get college degrees than men. It’s actually about 60-40. Women, particularly when you begin to look for college educated people, become an important piece of the puzzle.
The reality is women are actually getting out of the workforce more than they’re getting in. The trend toward more women being in the workforce is slowing and if anything, reversing.
I like to say that young women today in many cases have been given the gift of taking the right to work for granted. When I was thinking about entering the workforce, I didn’t really think about it. It was almost, I don’t want to sound too corny, but it almost a cause. I was going to enter the workforce. I would have felt like I was letting someone down if I didn’t.
I think women my age feel like we’ve broken down some barriers and proved some things and so forth. The reality is that young women today don’t feel that way. They don’t wonder if a woman could be a CEO. They know they can. They’ve seen it. They don’t wonder if a woman could be the head of state. They know they could. They’ve seen that. So there’s no question out there. There’s no sense of whether a woman could do it. Do they have to prove it? There’s nothing to prove. It’s been proven. Women can do it.
And so now it becomes a question of choice. Many families today, and I don’t think it’s women alone making the decision, but many men and women together as a couple are choosing that they don’t want both partners to work. They want one partner to stay home with the children. So a high percentage, almost 40 % of all women drop out of the workforce when they have children.
So to answer you question, we don’t expect women to solve the problem. If anything they’re making it worse by dropping out.
Immigration probably won’t solve the problem. Because one, we’re tightening immigration rather than loosening it. And second, unfortunately the people who immigrate to the U.S. tend to have lower education levels. So they may solve one aspect to the problem, but they certainly aren’t solving the college problem.
So there aren’t a lot of options out there. The fastest one for any company is to extend the retirement age. There’s no question. The easiest, simplest thing for anyone to do is to convince people who are thinking of retiring to work a couple more years. That’s easy. They’re already educated and trained. If they could work a couple more years, you’ve bought yourself some time.
The second thing you have to do is you have to be really good at attracting you guys. I say to companies that if they want young talent, you better be absolutely the best there is because they’re going to have their pick. They can pick and choose and work for any company they want to. So you better be really good if you want to attract top young talent.
One question that I forgot to ask you. When I was reading your blog this morning, you said that having social capital these days is more important than having financial capital. I was hoping you could elaborate on that.
Well, financial capital is becoming more readily available. It used to be that people had their own financial capital that they put into the system. Today, the prevalence of venture capital funding…that might be something that you’re less aware of. Venture capital funding is a relatively new concept. It used to be you had to have access to your own money in some way in order to start a business. Today, anyone can start a business if they have a good idea and a good business plan. But to make that business work, they probably have to have a number of connections. They need to know people who can both help them with the design and the concept, but more importantly can help with the execution. So I thinking getting the social capital is really the key to successful entrepreneurship today.
Cool. We’re trying to make this into something greater than it is. This is a selfish question, but do you have any suggestions for us? You know what we’re doing- trying to create a resource for other young people to determine their career direction by. So we’re struggling with how we can take this thing to the next level. I was just wondering what suggestions you might have or some thoughts.
Well, is there a service you can provide to them? Are you finding as you go through this that there is some issue that they’re running up against in particular? Maybe it is tapping into a social network. Maybe there is a creation of some kind of network that people can tap into that will help them get further along the line in their career.
We were talking about that because we’ve come in contact with so many people in so many different industries. And one of the things we really enjoy is connecting young people to the opportunity out there, based on an interview we had. That’s one angle.
I do think there is a lot of opportunity around entrepreneurship. I’m not quite sure what the opportunity is, but I do think a lot of people for a variety of reasons want to do things that are more entrepreneurial. So if you begin to think about that, there’s a whole host of services that you need to have if you’re going to be entrepreneurial. Starting from mundane things like copy shops to the advice associated with it. The finance associated with it, etc.
I think anything that has the idea of ‘How do you help a small business, or how do you help someone start a small business?’ is a great idea. It actually is not specific to your generation. I don’t know how many folks you have talked to who are late fifties or sixties, but a lot of them want to start their own business. They’re very excited about doing something entrepreneurial. A lot of people in their forties want to do something entrepreneurial. They’re starting to feel scared about being in corporations. Corporations are starting to worry that they’re getting to a point where it’s too risky to stay in the corporation. Because if something should happen, they wouldn’t have enough options. So doing something entrepreneurial feels more enticing to them.
Anything you can think of around those areas would be good.
So we have the entrepreneurial and the jobs. Those are two markets that are…
Booming. Absolutely booming.
When we talk to young people it seems like a good way to help them, it’s almost when they make the move from college to the workforce, they’re so disassociated being a freshman and thinking about what they want to do. And then being an adult, it’s almost like, I feel like we’ve been talking to these kids on our campus days, and not to sound mean, but they’re idiots when you talk to them about what they actually want to do. I don’t know if college used to be harder to get in, but it’s almost like college is a second high school. They go into it, they spend a lot of money, but they don’t have any expectations of themselves or the school. And they just go through it. All of a sudden they’re done.
We’ll interview these kids and they’ll say, ‘I want to do this. I want to do that.’ And we’ll ask them ‘How do you think you’re going to do that? How are you going to meet the people you need to meet to get into that profession?’
They’ll say, ‘I don’t know. I haven’t even thought about it. I’m just going to school. I’m here taking my classes.’
It’s almost like if someone could make it more relevant to them, or real to them, or ease that transition of being a young adult or even a child, to being an adult. To be spending their own money and make real decisions. It’s almost like we’re immature for longer because. I don’t know if that’s because we live longer, or wait longer before we start families, but we stay younger for longer.
I think that’s well said. Maybe because you have the safety net. I want to say that 60% of all college students say they expect to go home after college. The average time they stay is over a year. You’ve got 60% of those kids are actually going to go home and hang out for a year while they figure out the things that you’re talking about.
Whereas, thirty years ago, that wouldn’t have happened. Not necessarily because the parents would have objected, but the kids wouldn’t have wanted to. A lot of people who are baby boomers today, a lot of baby boomers didn’t like their parents. They couldn’t wait to get rid of them. They couldn’t wait to escape the house.
Today you have a situation where most young people like their parents, like their families, and they’re happy to go back home. So I think you have that safety net factor as well in addition to the longer life expectancy. I do think that contributes to it. I think there’s less of a sense of a hurry. That you have get everything done in twenty years or twenty five years. Heck, you’ve got seventy years. You’ll probably work for seventy years! So jumping in with a big hurry doesn’t necessarily strike people as something they are highly motivated to do.
Off the top of your head, do you know if more people are going to grad school?
More women are going to grad school. More men are going, but at a slower rate. The gap there is widening even further. Right row the gap is 60-40 as well. The growth in women is faster. It’s almost, it’s kind of odd, but it almost begins to feel to me that education is a luxury that women are afforded. There’s nothing crisis that you have to do, so we’ll let you go to school.
But young men, for whatever set of reasons, are jumping out there much earlier. A lot of them drop out of college and never finish. A lot of them decide not to go to graduate school.
So they’re jumping into the workforce earlier, or just jumping out of college earlier?
I don’t know the answer to that. I don’t know the answer to that. I think in a lot of cases they jump into the workforce. We may as a society be a little more tolerant to paying for our daughters educations. We may expect our sons to get cracking and earn some money. I don’t know what it is. I haven’t looked at that in detail. But it is an interesting trend under way.
That’s interesting that you’re talking about safety nets. A lot of the people we’ve talked with have had that safety net, and once it’s pulled from under them they scramble and put their head down and go for it. It’s like if we didn’t have that safety net of going back home or going to grad school and prolonging that decision where you’re ultimately going to have to do something, it would be interesting.
I think it’s much as socially acceptable to graduate college and go home afterwards than it is now for whatever reason.
Right. It basically just wasn’t done. I just can’t think of anyone I knew who did that. It’s just not done (laughs). Of course now it’s quite socially accepted.
I think what you say about women in the workforce, that you were more a cause when you were younger, is really interesting and makes a really good point. Because it’s almost like a dangerous topic to approach because it could be politically incorrect to say. There are fundamental differences. I don’t mean psychologically, but women do, if some point they want to have families and go through the pregnancy, which does affect your work life. For a long time it was socially, fundamentally unable to get in the workforce because of that. So they had a cause and a reason to go out and prove they can do a job as well as a man. Now they’ve proven that, but not fully. Women still don’t make as much as men. Now it’s getting easier to say that we’ve proven that, and now that we have, we can afford to not work if we don’t want to. Because the fact is that we do need to raise children and a kid if we want that family. So because they don’t have that cause to light the fire under them, to make certain sacrifices, it’s much easier. I don’t mean it in a critical way, but it’s easier to acknowledge the fact that some of the cultural significances we’ve been trying to overcome or ignore or whatever.
I think what women have shown is that if they grit their teeth, so to speak, they can do it. But it’s hard. I know many women my age who have had their daughters tell them, and mine has told me, ‘I admire what you did, but I would never live that life.’ They’ve seen it. They’ve seen it up close and personal what the life looks like.
I went back to work three days after my daughter was born. I was running the North American business at a large corporation at the time. And I went back to work. I had to.
That kind of thing, you certainly can do it. It’s possible. The question becomes, ‘Do you want to do it?’
I think for women my age, many of us didn’t ask the question. We didn’t ask if we wanted to do it. We did it. I think we’ve given women today the gift of saying, ‘Does this make sense for me? Does this make sense for my family, my husband?’ Many of them are choosing that it doesn’t. I think that’s great. I absolutely think it’s great.
I’ve never had a child, but I imagine that’s the kind of thing that if you told a young woman that, that you went back to work three days after you had a child, they would be like, ‘I can’t believe you did that. I couldn’t do it.’ And they’ll say things like that when you could do it, but it’s going to be really hard and you’ll be miserable doing it for awhile, which you probably were. It’s one of those things that if you have the cause and the fire and the reason to catalyze you, you’re willing to make that huge sacrifice. You could do it. Believe me, you could. It just sucks. So if you don’t have to do it, you’d prefer not to. It’s one of those kind of things.
Absolutely. That’s exactly right.