The composition of the knowledge workforce was in flux before the current recession. Many of the knowledge workers were Baby Boomers—who were preparing to retire. With insufficient numbers of Gen Y’ers to fill their shoes, many of these jobs were destined to be unfilled. To compound the issue, a growing percentage of young adults—especially men—were shunning the college education needed for much knowledge work. For some Gen Y’ers, not going to college was a matter of choice. For others it was an economic mandate as the cost of higher education became more and more difficult for many middle-class families to afford. And for those who do go to college, the percentage of U.S. students who study technical fields including science, engineering, mathematics and IT (SEMIT) continues to decline.

The good news is that foreign nationals are increasingly filling this breach. For example, while foreign-born people represent for only 13% of the U.S. population, according to an April 12, 2009 article in The New York Times, they accounted for 24% of the nation’s scientists and engineers as of 2007. Foreign nationals are particularly well represented at the highest levels of their professions, accounting for 42% of all current U.S. master- level engineers and 60% of PhD-level engineers (and a similar percentage of U.S. university SEMIT masters and PhD candidates as well as 28% of U.S. physicians, and 26% of all U.S. Nobel prize winners). According to a 2007 UC Berkeley report, “America’s New Immigrant Entrepreneurs” (America’s New Immigrant Entrepreneurs) foreign nationals are among the founders of one out of every four U.S.-based technology startups).

The bad news is that America, in its infinite wisdom, is trying to reverse the slide in domestic SEMIT enrollment not by aggressively encouraging and preparing U.S. citizens to study these fields, but by making it increasingly difficult and less attractive for foreign nationals to come to or to remain in the United States

Although the recession will certainly not change everything, it will change a lot. Think the Baby Boomers will retire soon? It is hard to believe recent surveys that suggest that most still plan to do so. After all, the majority were ill prepared to fund retirements even before the recession decimated the values of their small nest eggs and their homes (at least the percentage of their home values that were not encumbered by second mortgages).

And then there are the Gen Y’ers who are finding few jobs. New graduates who are all but locked out of the formal job market are either:

• Returning to school (which is good for the future of the economy;
• Being forced to take jobs that are either below their skill levels or, often, totally outside their chosen field (which is bad for the future); or are
• Temporarily dropping out of the workforce altogether (even worse for the future).

The composition of the post-recessionary workforce is further clouded by a number of anomalies that are either unlike previous recessions, or of a much different magnitude. Examples include:

• White collar unemployment has dramatically grown (driven partially by the financial services industry meltdown), in addition to the traditional decline in manufacturing jobs;
• The collapse of the financial services industry will certainly force students and recent graduates to reassess career choices and may prompt them to look to new areas of study (hopefully SEMIT) and industries (such as new-generation manufacturing sectors);
• Many of the manufacturing jobs that are being lost in this recession will not come back to the United States. Meanwhile, many of the entry level knowledge jobs for which these displaced people can be most easily retrained, are increasingly susceptible to being offshored. The prospects for highly touted green collar jobs remain uncertain;
• Traditional layoff patterns are changing, with companies increasingly laying off younger workers before older (more expensive) workers (a factor that is at least partially attributable to fear of age discrimination suits and the unwillingness to lose critical skills) and of laying off men faster than women (a pattern which, while occurring across all educational levels, is particularly pronounced among college graduates); and
• A housing market-induced decline in worker mobility, which makes it particularly difficult for people in economically distressed areas to move to more promising localities.

What does all this mean for the workforce of the future? Although I will look at this in much greater depth in future blogs and reports a few implications jump out.

Consider, for example, the dramatic reduction in the percentage of men that are graduating from college (compounded by a growing percentage of men being laid off). This has the potential of effectively reversing traditional gender roles. It will certainly have profound implications within business, where more and more men will report to women managers. It may have even greater societal implications, with women playing greater roles in local and national politics and a rapidly growing percentage of men playing primary roles in raising families and caring for parents.

A significant delay in the retirement of Baby Boomers (to the extent it occurs) has the potential of helping many companies in the near term, but of creating big corporate, societal and economic changes over the long term. The good news for companies is that a significant delay in Baby Boomer retirement will bail many out of their failure to plan for huge demographic shifts and the associated loss of institutional knowledge. But the negatives are numerous. First, aging workforces will cost companies much more in salary and benefits. More importantly, higher costs, combined with an anticipated slow recovery, will dramatically limit job openings and advancement opportunities for younger workers. Some careers will just be delayed. Others will be permanently sidetracked. But companies with be deprived of a critical supply of management talent and families and communities will be deprived of the income associated with productive careers.

U.S. students’ rapidly declining interest in SEMIT is even more portentous. First, technology-based industries tend to create large numbers of high-paying jobs and generate large volumes of high-margin exports. Worse still, even the most staid industries are being forced to become technology industries. The future of autos, we are being told, is in new, fuel-efficient designs. Even utilities are being forced to go high-tech, with the need to move to clean coal and renewable energy sources, and to build and manage smart infrastructures. Hopefully, factors such as declining financial industry opportunities, growing interest in sustainability and new education incentives and programs (such as those that encourage math and science education) will increase domestic interest in SEMIT education and careers. If not, the U.S. will hopefully recognize the necessity of encouraging and better utilizing the gift of foreign-born talent that is being nurtured by our universities.