In a Forbes article titled, Baby Boomers Retiring Rapidly: Are Successors Prepared written by Maureen Metcalf, Forbes Council Member and CEO of Metcalf & Associates, she refers to research by Bonnie Hagemann and co-authors in their book “Leading with Vision” that baby boomers are leaving the workforce at a rapid rate of 10,000 per day or approximately 1 baby boomer every 9 seconds.
In our compensation consulting work, we’re seeing this phenomenon unfolding with our private and public sector clients. We have a public government client that experienced an average $3.75 hourly pay difference between leaving employees’ average pay and their new hires’ average pay in 2018, and they are on-track for a $2.44 difference in 2019. This may not seem like much money but it equates to $640,000 annual wage savings in 2018 and approximately $724,000 savings in 2019 based on a 15% turnover rate.
Some clients are redistributing these baby boomer exodus wage savings to help fund higher annual employee pay adjustments. The 2019 annual WorldatWork Compensation study is projecting a national average of 3.3% for employee pay adjustments in 2020. The represents a new historical high after years of 3.0% or less average annual employee pay adjustments to base pay.
Human Resource and Compensation professionals need to help their management teams with strategic redistribution of baby boomer wage savings and succession planning during the next ten years. The 3rd and 4th quartile wages will be out the door during the next decade and its recipients will be on the beach, traveling in an RV or parachuting out of a plane like past president George H.W. Bush did to celebrate his 90th birthday on June 12, 2014.