economic and demographic trends - tiaa · future challenges facing your organization and interpret...

Economic and Demographic Trends SUNY Critical Issues in Higher Education

November 8, 2012

SUNY Presentation | November 8, 2012

2

Introductions

Moderator:

Ron Pressman, Executive Vice President & Chief Operating Officer, TIAA-CREF

Panelists:

David P. Richardson, Senior Economist, TIAA-CREF

G. David Gearhart, Chancellor, University of Arkansas

Laurita Thomas, Associate Vice President for Human Resources, University of Michigan


3

Today’s Discussion

•  Research Framework: Population Aging Trends

•  Implications for Higher Education

–  A Chancellor’s Perspective: University of Arkansas

– Human Resource Insights: University of Michigan

•  Q&A

Population Aging: Trends and Economic Impacts November 8, 2012

David Richardson Senior Economist TIAA-CREF Institute


5

TIAA-CREF Institute Research Discussion

The Impact of Demographic Change on Financial Security and the Business of Higher Education

•  A critical factor common across much of our research is the economic effects of an aging society.

• The Global Population is slowly aging.

– Declining fertility rates

– Greater longevity

• Should (and can) Higher Education leadership take proactive measures to insure against any potential negative economic impacts of an aging society?


6

Some Facts about Aging Societies

•  The United States is getting older, but not as quickly as

many other countries.

•  Globally, two contributing demographic factors:

–  Individuals, on average, are living longer.

– Households, on average, are having fewer children.

•  In the near term for the U.S., additional pressures from

the baby boom cohort.


7

U.S. Population Distribution - 2000


8

U.S. Population Distribution – 2025 projection


9

U.S. Population Distribution – 2050 projection


10

Comparative USA Experience


11



12



13

Projected US Dependency Ratios

Source: Congressional Research Service, 2006


14

Some Myths Exposed

The Committee found no evidence that

•  Asset prices will collapse as Boomers move into retirement,

•  National productivity will decline if more people work for more years,

•  Younger workers will be displaced if older workers spend more years in the labor force.


15

Potential Macroeconomic Effects

Real Income

•  Wages

•  Investment Returns

Federal Budget Pressures

•  Expenditures

–  Social Security and Medicare

– Other Spending

•  Revenues

–  Payroll Taxes

–  Income Taxes


16

Potential State and Local Effects

State and Local Budget Pressures

•  Revenues

–  Property Taxes

–  Sales Taxes

–  Income Taxes

•  Expenditures

–  Public Education

– Medicaid

– Other Spending


17

Potential Higher Education Effects

•  Budgets

–  Public v. Private?

–  Endowment management

–  Tuition management

•  Workforce Management and Retirement

–  Composition of Total Compensation

–  Retiree Health Insurance

–  Compression of elderly morbidity and mortality

–  Issues of cognitive decline

•  Reluctant Retiree Issues

–  Programs focusing on older workforce

–  Impact of Social Security and Medicare reforms


18

Final Thoughts

•  At present, the USA is in relatively good shape compared to many other countries.

•  In the near term, concerns over the impacts of the aging of the baby boom cohort and the rapid ramp up of the elderly dependency ratio.

•  The largest impacts on the Higher Education Sector may be due to fiscal pressures, both at the Federal and State & Local levels:

–  Potential reforms to Social Security and Medicare

–  Potential loss of fiscal capacity at State and Local level

•  Higher Education leadership should (and can!) be proactive in developing policies that help mitigate the potential negative impacts of an aging society.

A Chancellor’s Perspective November 8, 2012

G. David Gearhart Chancellor University of Arkansas

University of Arkansas

• Average age of our current employees is 46

• Average age of our classified staff is 45

• Average age of our faculty is 50

• Average age of our non-classified staff is 43

• Average age of our executive staff is 52 (44 percent over age 55)


20


•  20 percent of our employee population has 20 or more years of service and is eligible for retirement benefits.

•  While the aging Baby Boomers are expected to retire at an increasing rate, the economic crisis has delayed expected retirements at the U of A.


21


Organizations like ours may need to offer options such as:

•  phased retirement

•  targeted-training opportunities

•  flexible scheduling

•  telecommuting

•  part-time and temporary hours

•  wellness and other health-related programs.


22

Amid an aging American work force, the graying of college faculties is particularly notable. According to data from the Bureau of Labor Statistics, the number of professors ages 65 and up has more than doubled between 2000 and 2011.

Nationally, the percentage of full-time faculty members age 70 or above has gone up three-fold since 1995.


23



Several studies have determined that the average age of American professors is rising.

A 1999 survey reported that 32% of the nation's full-time faculty were 55 or older (among 33,785 faculty at 378 colleges and universities), compared with 24% in 1989. In the same decade, the number of college professors who were under 45 had fallen from 41% to 34%.

The Faculty Retirement Survey indicates that in 1977 the median age of faculty at four-year institutions was 40; in 1996 it was 48.


24

Mental acuity and physical health: Are they to able to get to class and effectively teach or are they missing too many days? Do they still have the mental acuity to lead discussions, hold lectures, grade essays, and remember students’ names?


25


Use of technology: As more and more students expect to communicate through technology, are older faculty up to speed on Blackboard, Facebook, and other emerging technologies, applications, and programs? More importantly, are they willing to get up to speed if programs are in place?


26


How does the graying of faculty affect tenure of new faculty? Is this essentially a contract for life? Can we afford to provide it? Does it ensure a right to continue teaching and research long after production has declined?


27


Age Discrimination Act of 1994 made it illegal to force tenured professors to retire at the age of 70.

Increasingly, though, we are seeing many universities moving away from creating tenure track positions to hiring more adjunct faculty to keep costs down.


28


In 2002, we had 898 faculty: 519 tenured, 177 on tenure track, and 198 were non-tenure track.

In 2012, we had 1,130 faculty: 566 tenured, 198 on tenure track, and 366 non-tenure track.


29


Human Resource Insights November 8, 2012

Laurita Thomas Associate Vice President for Human Resources University of Michigan


Development and investment that supports high levels of performance and productivity

Investment in life-long learning, development and growth

Agility in administration, contracting and partnering

Cultural competence for an increasingly global university

Implications for HR Leaders in Higher Education

Strengthening leadership competence to focus on strategic outcomes

Fostering collaboration across boundaries

Support for interdisciplinary research

Incentives for entrepreneurship and innovation in all areas

Reduced hierarchy that supports rapid response, opportunity and change

Implications


32

The HR Response to Challenges

Enhancement of institutional forecasting

Faculty and staff retirement planning programs

Leadership development Targeted faculty

and staff recruitment/ retention initiatives

Extensive external benchmarking (private and public) of business and other processes

Outsourcing for cost and process efficiency

Shared services and shared staffing models

Professional contingent workforce

Workforce segment rationalization/ reduction

Response

Greater institutional accountability through standardized and validated metrics

Action Steps for HR Leaders: What Can You Do?


33

Scout: Develop a deep understanding of current and future challenges facing your organization and interpret the HR implications

Engage: Convene teams of HR community members and commission research and white papers on these key topics and challenges

Connect: Gather local and regional HR leaders to share contemporary solutions that address the challenges

Build support: Educate senior leadership concerning the potential of HR to develop solutions that address the organization’s challenges


34

Questions and Discussion

Q & A

economic and demographic trends - tiaa · future challenges facing your organization and interpret...

Documents