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Disruptive demographics

11/10/2014

Get ready for unprecedented changes that will transform how we work and live.

Jim Johnson is traveling the U.S. spreading the gospel – the gospel of changing demographics.demo

“Around the world and in every corner of the United States, we are in the midst of an unprecedented demographic transformation,” he said. “These forces are so dramatic that we call them ‘disruptive demographics.’”

In talks to community, government and business leaders, Johnson, the William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship, explains the demographic trends he identified by analyzing data from the U.S. Census Bureau, Bureau of Labor Statistics, IRS and other government agencies. They include shifts in geographic redistribution, racial and ethnic composition, age mix, family types, living arrangements and economic circumstances.

“These trends have major implications for companies, consumers and our global competitiveness,” said Johnson. “We are at the cusp of profound changes to the very way we live and work.”  He describes six significant trends.

  • The South rises – again. Reversing the mass exodus for much of the 20th century, the population in the southern United States is growing more rapidly than in other regions of the country. Between 2000 and 2013, over half of the net population growth was concentrated in the South — most of it in Texas, Florida, Georgia and North Carolina. The best opportunities for business growth are likely to be in this culturally diverse region.
  • The "browning" of America. By 2050, non-Hispanic whites will no longer constitute the numerical majority population of the United States. Foreshadowing this major color shift, non-whites – Asians, blacks, Hispanics and people of “other” and “mixed” races – have accounted for virtually all (92 percent) of the U.S. net population growth since 2000. Declining fertility rates among non-Hispanic whites and heightened immigration from Asia, Latin America and the Middle East are driving this shift in the racial and ethnic complexion of U.S. society.
  • Marrying “out” is in. A sharp increase in the out-marriage (people marrying someone of a different race) rate among immigrant newcomers and between those newcomers and the U.S. born population is partly responsible for observed changes in the racial/ethnic complexion of U.S. society. Among the newly married, the percentage marrying someone of a different race doubled between 1980 (7 percent) and 2008 (15 percent), while the rate for the currently married grew from 3 to 8 percent. Emblematic of how shifting marriage patterns will further enhance racial/ethnic diversity is this milestone: in July 2011, a majority of America’s newest members—children under the age of 1—were nonwhite for the first time in history.
  • The silver tsunami is about to hit. And it’s a global phenomenon. Japan sold more adult diapers than baby diapers last year. Globally, the ratio of children to elderly adults will be 1:1 in 2050, a dramatic shift from the 3:1 ratio in 2005. In the United States, Baby Boomers began reaching age 65 on Jan. 1, 2011, and will continue to do so at a rate of between 8,000 and 10,000 a day for the next 19 years. Thanks to advances in technology and health care, this huge population will live longer – to age 83 on average – and many will work longer, whether out of necessity or desire. Far more agility and flexibility in the workplace will be required to accommodate a significant number of employees, including more than 1 million millennials who will have elder care obligations – responsibilities that will become even bigger than child care in the future.
  • The end of men? Fewer prime-working-age men work today than in 1969. The ratio in higher education has been 60 percent female to 40 percent male for a decade. Poor performance in K-12 education, disability, incarceration and insufficient skills to make the transition to an information economy are among the factors holding men back. In part, as a consequence of these constraining factors, U.S. colleges and universities granted 572,000 more degrees to women than men in 2010. This fundamental shift makes accommodating and promoting women in the workplace even more of a strategic imperative for the future, along with the need to redouble efforts in K-12 education to increase graduation and college attendance rates of men, particularly men of color.
  • Grandparents are on their second “tours of duty.” There is a rise in the percentage of households where grandparents are raising grandchildren – and many of these grandparents are younger than 50. This factor, too, will add to the need for agility and flexibility in the workplace.

Johnson identified what these trends mean for business leaders.

  • Embrace immigrants and immigration. Young people are more likely to immigrate than older people. Their skills, their buying power and their contributions are needed to sustain Social Security, Medicare and Medicaid and to pay the bills in local economies as the silver tsunami prepares to hit.
  • Recognize that new businesses and consumer markets will be far more diverse. Immigrants are, on average, more entrepreneurial than the native born. Tact and respect are required to successfully tap into increasingly diverse markets. Business leaders – and especially marketers – will need greater cultural competencies, as the culture of doing business and attracting and retaining customers varies by demographic context.
  • Develop culturally sensitive succession plans. Plan now to ensure knowledge succession from one generation to the next. Seek new talent where no one else is looking. Talented minority candidates at elite schools are in high demand, but discerning employers can find talented young people at schools without big names and won’t face as much competition to hire them.
  • Agility, flexibility and accommodation are the order of the day. For the first time in history, there are four generations in the workforce – Pre-Boomers, Boomers, Generation X and Generation Y – all of whom bring different core values, communication and interaction styles, work ethics, values, leadership styles and perspectives on feedback and rewards. Businesses that take concrete steps to accommodate all four generations will be the most likely to succeed in the foreseeable future. Changing demographics demand a new way of doing business. If your management mantra is “it’s my way or the highway,” you’re going to be on the highway all by yourself.

“You have to buckle your seat belt to deal with these disruptive demographic forces,” Johnson said. “If you ignore them, you do so at your own peril. They will run you over if you don’t pay attention. I’m trying to help leaders to understand and strategize about how to embrace these challenges – and the opportunities that come with them.”

 

Jim Johnson is the William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship and director of the Urban Investment Strategies Center at the Frank Hawkins Kenan Institute of Private Enterprise.