Although in recent years illegal immigration has exploded as a nationwide concern, most of the discussion has been focused on the more politically charged issues. That debate, so far, has shed more heat than light on the topic.
As a result, the majority of boardrooms have not fully examined the impact to their companies and industries that could result from shifting demographics. There are some exceptions, such as those businesses more closely tied to immigrant labor, and some that are ahead of the curve, such as Coca-Cola, Cox Communications, McDonald’s, and Toyota. But the vast majority have largely ignored the issue. The demographic forecast calls for significant downsizing of population in the Northeast and Midwest and an opposite trend in the South and the Southwest, where the projected growth of the Hispanic population and a migration of the labor force is expected to double.
Business decision makers in and out of the boardroom should be aware of the narrowing window in which to formulate how they will grapple with the changing face of America. It raises strategic issues on several fronts, such as changing consumer market opportunities and the impact on regional economic growth; and on the organizational side, executive recruitment and workplace policies. As the first wave of baby boomers near retirement, corporate officers and their directors will no longer be able to ignore the social and economic impact of immigration—legal and illegal.
Like they did with the green movement and the aging workforce, corporate leaders need to formulate a strategy around the patterns of immigration that are known and predictable. Just as some corporations have embraced eco-friendly initiatives to open new markets, cut energy costs, and improve the quality of life for their employees and communities, once embraced, immigration may present as many solutions and opportunities as challenges.
Our True Demographic Threat
The long-predicted retirement of the baby boomers is about to turn our economic world upside down. These 76 million Americans, born between 1946 and 1964, will begin to retire in the coming years and into the decades of the 2010s and 2020s. Although many say they will continue to work after retirement, we can expect their economic contributions to be sharply reduced.
The enormity of the impact can be seen in the ratio of those people ages 65 and older to workers between ages 25 and 64. After decades of stability, that ratio is projected to grow by 30 percent from 2010 to 2020 and by an additional 29 percent from 2020 to 2030. Because of our earlier decades of reduced birth rates, there are simply not enough younger people in the workforce. In the next decade alone, America’s businesses and taxpayers will face a tremendous jolt. How are we to cover the retirement expenses and health care of so many more seniors? The unpleasant options—all likely needed—are cutting benefits, raising taxes, and incurring greater debt. As an offsetting factor, the need to exercise those options would be reduced somewhat if we could find ways to boost the number of workers or their average incomes.
The practical effect on businesses and government agencies is that labor-force growth is expected to plunge near zero between 2015 and 2020, according to the Bureau of Labor Statistics. That is the average trend for the nation, but in some states and in many industries, net losses in the workforce can be expected. In the coming decades, employers will face a major scramble to find replacements for their retiring workers. Among their strategies will be to delay retirements, bring back workers part time, resort to hiring from the ranks of the marginally qualified, and offer relocation assistance for recruits from states with deeper work forces.
The growing immigrant population is part of the solution to baby boomer retirements and already accounts for more than half of the workforce growth in the nation. But these immigrant workers cannot all be imported in a rush. Their preparation for our workforce requires time for training and adjustment, a process already underway.
Public attitudes toward immigration revolve around more than just workforce numbers. Also included is a package of beliefs about assimilation and economic viability. Many fear that immigration is accelerating and increasing without limit, thus producing a rapidly growing population of unassimilated foreigners. As a result, many unfavorable trends are worsening, the story goes, with dire consequences for the future: English is losing its status as the nation’s language, and in places like Miami and Los Angeles, Spanish has become dominant, at least in many neighborhoods. It is feared that a great many of these newcomers are incapable of ever joining the middle class. Others believe that with immigrants spreading throughout America, more places will lose their traditional English orientation, and poverty will grow, placing even greater pressure on already over-burdened taxpayers.
Some of these beliefs about immigration have been true in the past, but they exaggerate the trends and lead to damaging myths. In fact, new evidence despels some of the myths and shows that many of the true trends are already shifting. First, the rate of immigration is no longer accelerating as drama-tically as it has in the past. According to most experts, the flow of newcomers has leveled off and is slowly declining, a trend expected to continue for the next decade or more. The fear of unlimited expansion is simply untrue.
Second, Spanish usage has become predominant in some areas, but that is due to the clustering of newcomers born south of the border. With their accelerated arrival, Spanish increased. Now the flow is stabilizing and experts tend to agree that the children of these immigrants will be fluent and reliant on English.
Third, the pace of their economic mobility is astounding, as best exemplified by the rate of home ownership among Latinos. Few can afford to buy homes when they first arrive, but after more than 20 years of residence in the United States, fully 54 percent of Latino immigrants have purchased homes, not far from the national average of 68 percent. The concentration of recent arrivals created an illusion of growing poverty that does not describe the future. Immigrant parents can acquire useful workplace training, but they are not as likely to go back to school for advanced degrees. The need to replace skilled retiring baby boomers, the most highly educated generation in U.S. history, requires renewed efforts to raise education levels among our immigrant and minority youth. The importance of this goal has long been recognized, but Americans have yet to fully embrace it.
It counts now. The coming workforce collapse will require that we encourage more citizens to become better-trained workers. Young adults need to become middle-class taxpayers because the wellbeing of the rapidly growing number of seniors, expected to live longer than any previous generation, will depend on younger people’s ability to pay taxes to fund programs such as Social Security and Medicaid. And there is one additional benefit that will, quite literally, hit close to home. With so many baby boomers retiring, a great many will be selling the homes that they have invested in. The growing senior ratio also indicates a relative surplus of home sellers compared to the number of potential home buyers.
If the younger generation is under-educated and earns a lower income, how likely is it that seniors will receive offers to buy their homes at reasonable prices? Latinos are becoming a growing presence in the housing market—Spanish surnames account for 4 of the top 10 most common names among buyers nationwide—and the numbers are increasing. However, Latino home buyers, hampered by lower education and lower income, generally offer only three-quarters of the price of the average house sold. The good news is that higher education can make a big difference to home sellers. When Latinos have a college education, they purchase homes that are about 60 percent more expensive than if they only have a high-school degree.
From the standpoint of business and organization executives, it is essential to raise the skill level in an otherwise diminished workforce. Those young people are in school today, and the nation’s well-being depends on their success.
Immigrants play a vital role in meeting the challenge of our needs for workforce replacements, new taxpayers, and fiscally fit home buyers. Rather than focus simply on the number of newcomers, we need to focus on the education and assimilation of immigrant residents and minority groups already living here today. Investment in the younger generation has never been more crucial to the continued prosperity of America.
Dowell Myers is the author of Immigrants and Boomers: Forging a New Social Contract for the Future of America (Russell Sage Foundation, 2007) and a professor in the School of Policy, Planning, and Development at the University of Southern California in Los Angeles.