Employees with jobs are now more at risk than ever before with the growing list of problems faced by employees at work and the challenges facing workers today. Job security is now a thing of the past.
One key response to this is for employees to mind their own business, future-proof their jobs, and secure their future income streams from potential shocks of organizational restructures, poor health, technology innovation, economic uncertainties, and poor management.
The other way is to love your current job as you prepare yourself for the future of work. There are 75 Ways to love your work (and be actively engage in your job without hating it!).
There are many reasons why employees must immediately take control of their financial independence and be the pilots of their lives.
Parents with teenage children can also use the information in Shocking Secrets Every Worker Needs to Know to guide their children in choosing the right careers and jobs.
1. Living in Times of Low Productivity Growth
According to Axios, “there’s a broad consensus among economists that the central problem facing the U.S. economy today is low productivity growth. It explains both slow-growing wages and the exploding costs of housing, healthcare, and education … No one knows with certainty why productivity growth has been slow since the 1970s.”
Since 2000, the Organization for Economic Co-operation and Development observed that productivity growth has declined or slowed down in many advanced countries. It has been particularly pronounced since the global financial crisis.
If economists can’t tell us with certainty the reasons for low productivity or economic growth, then we really have a problem. We are living in a time when there’s so much economic uncertainty that we need to understand what it means for us.
There certainly will be impacts on our finances and financial freedom.
In effect, employees will become more vulnerable when there’s economic uncertainty. They become stressed out. They worry about the future.
Pew Research found that Americans expressed widespread concern about the impact of emerging automation technologies. They are roughly twice as likely to express worry (72%) than enthusiasm (33%) about a future in which robots and computers are capable of doing many jobs that are currently done by humans.
By understanding this potential impact, we can reduce the level of stress and worry.
2. A Significant Impact of an Aging Population
The U.S. Census Bureau stated that people aged 80 and older are expected to more than triple between 2015 and 2050. This aging population is expected to grow from 126.5 million to 446.6 million. In some Asian and Latin American countries, it is predicted to quadruple by 2050.
By 2030, McKinsey predicted that there will be at least 300 million more people aged 65 years and older than there were in 2014.
The biggest force powering the decades-long expansion of labor pools was the entry of the baby boomer generation into the workforce. Baby boomers powered worldwide labor force growth in the 1970s and 1980s, but this is slowing.
As people age, their spending patterns will shift with a pronounced increase in spending on healthcare and other personal services. This will create significant new demand for a range of healthcare occupations. This includes not only doctors, nurses, and health technicians but also home-health aides, personal care aides, and nursing assistants in many countries. McKinsey estimated that healthcare and related jobs could grow anywhere from 50 million to 85 million by 2030.
As people get older, they consume less. Postwar consumption will be reversed. Industries will be cutting back on their production because consumer demand from Baby Boomers will be decreasing over time.
The impact of an aging population should not be underestimated.
Regardless of which generation we belong to, the impact of mass retirement by Baby Boomers will have profound impacts on productivity and economic growth, both of which are required to sustain long-term employment for workers.
Countries like Australia are trying to overcome an aging population through higher immigration of younger people. It requires more immigrants with associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment.
From a tax perspective, governments will receive reduced tax revenues from higher-paid Baby Boomers as they retire from the workforce. Baby Boomers generally have higher salaries when compared with Millennials or Generation Ys.
When taxation revenues fall, governments are forced to borrow more to fund their welfare schemes to pay retired Baby Boomers who become eligible for social security, aged pension, or welfare payments. This diverts much-needed productive investment dollars to non-economic producing activities.
3. The Workforce is Shrinking—Except for 55-Plus Workers.
It is reported by Bloomberg that by 2024 nearly one-quarter of the workforce is projected to be 55 or older. This is more than double the percentage in 1994. The fastest-growing segment of this workforce will continue to grow in the foreseeable future.
As Baby Boomers continue to head into retirement in bigger numbers, the overall workforce will be shrinking significantly. Pew Research found that the percentage of Americans who are actively looking for work or employed shrank from 66% ten years ago to 62.7% today.
The percentage of the labor force aged 55 and up has increased over the same time period from 17.6% to 22.8%. This may well be a positive trend for older workers as employers are more willing to hire them. This may make it easier for them to delay retirement or continue to work part-time in retirement.
4. Unemployment Lasts Longer for Employees.
Unemployment occurs when we are out of work, actively looked for work during the past four weeks, and currently available to start working.
According to Pew Research, the average length of time that workers spend unemployed has gone up. In fact, the percentage of unemployed workers who have been out of work for a year or more has nearly doubled from 9.1% in 2007 to 16.5% in 2017. The number of workers who have simply given up on finding a job, though they aren’t officially counted as unemployed, has shot up from 363,000 to 524,000 over the past decade.
Even if workers are safely employed today, it’s important to take precautions against unemployment, given how long workers tend to be out of work. Indeed, the average reported length of unemployment was twenty-six weeks as of October 2017. It is certainly a long time to live without a paycheck. That’s why it is so important to have an emergency savings account with enough money in it to pay for at least six months’ worth of expenses. Such an account can be a lifesaver if your job suddenly disappears.
5. Social Security and Pension Funds Are Running Out of Money.
The U.S. Social Policy Institute found that social security, aged pension, or welfare payments are lifelines for many retirees. Social Security keeps nearly 27 million Americans above the poverty threshold. In fact, nearly 40 million retired Americans receive an average of $1,335 a month from the social security program.
It is no surprise then that by 2034, the U.S. Social Security Trust Fund is predicted to run out of money. Without reform, welfare benefits will need to be cut by 23% in 2033, according to the Social Security Administration. In other words, after the depletion of reserves, continuing income tax revenues are expected to only be sufficient to pay for 77% of scheduled benefits in 2033.
One solution is to reduce or cut benefits.
Other solutions include raising the retirement age in an attempt to shore up the welfare program or to increase taxes to bring in more revenue.
With cuts to company tax rates and the retirement of Baby Boomers in large numbers, governments will find it difficult to balance their books without relying on financial borrowing in the near future. Future generations will be burdened to pay off these liability borrowings. It is then a question of fairness.
According to Gallup, if the Social Security system is not fixed, many of today’s employees will be in for a shock. This problem will be replicated in many countries.
6. Organizational Restructures Disadvantage Workers.
Organizational restructures and mergers and acquisitions will become more common as organizations adapt to the environment of low productivity growth. These companies restructure in an effort to save money or reduce expenses (especially payroll or salary costs).
As these restructurings become more prevalent, workers will naturally become more insecure about their jobs, incomes, and employment. They will worry more about job security and future income. Unfortunately, workers do not have control over these external activities that will impact their income.
Here are some recent restructures we have read about in the news:
- The Star reported that because Coca-Cola’s sales declined, it will restructure the business and cut 1,200 jobs to reduce costs.
- It was reported by Nasdaq that Hewlett Packard Enterprise plans to slash 5,000 jobs or almost 10% of its workforce in a desperate bid to contain costs.
- According to BioPharma, Genocea plans to lay off 40% of its workforce to save around $6.5 million a year.
- It is reported by FierceBiotech that Alexion is slashing its workforce by around 20% in a bid to save $250 million a year.
With the speed of digitization, organizations that don’t reinvent themselves quickly and constantly will not last long. Take for example Kodak, Blockbuster, Blackberry, and Nokia.
This is an extract from my ebook, Shocking Secrets Every Worker Needs to Know: How to Future-Proof Your Job, Increase Your Income, Protect Your Wealth in Today’s Digital Age (Kindle Edition), available from Amazon.
This is Part One of an eight part series.