Economic and Demographic Trends. SUNY Critical Issues in Higher Education November 8, 2012

Transcription

1 Economic and Demographic Trends SUNY Critical Issues in Higher Education November 8, 2012

2 Introductions 2 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 3 Research Framework: Population Aging Trends Implications for Higher Education A Chancellor s Perspective: University of Arkansas Human Resource Insights: University of Michigan Q&A

4 Population Aging: Trends and Economic Impacts November 8, 2012 David Richardson Senior Economist TIAA-CREF Institute

5 TIAA-CREF Institute Research Discussion 5 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 6 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

8 U.S. Population Distribution 2025 projection 8

9 U.S. Population Distribution 2050 projection 9

10 Comparative USA Experience 10

11 Comparative USA Experience 11

12 Comparative USA Experience 12

13 Projected US Dependency Ratios 13 Source: Congressional Research Service, 2006

14 Some Myths Exposed 14 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 15 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 16 State and Local Budget Pressures Revenues Property Taxes Sales Taxes Income Taxes Expenditures Public Education Medicaid Other Spending

17 Potential Higher Education Effects 17 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 18 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.

19 A Chancellor s Perspective November 8, 2012 G. David Gearhart Chancellor University of Arkansas

20 University of Arkansas 20 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)

21 University of Arkansas 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.

22 University of Arkansas 22 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.

23 University of Arkansas 23 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 Nationally, the percentage of full-time faculty members age 70 or above has gone up three-fold since 1995.

24 University of Arkansas 24 Several studies have determined that the average age of American professors is rising. A 1999 survey reported that 32% of the nation's fulltime faculty were 55 or older (among 33,785 faculty at 378 colleges and universities), compared with 24% in 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.

25 University of Arkansas 25 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?

26 University of Arkansas 26 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?

27 University of Arkansas 27 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?

28 University of Arkansas 28 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.

29 University of Arkansas 29 In 2002, we had 898 faculty: 519 tenured, 177 on tenure track, and 198 were nontenure track. In 2012, we had 1,130 faculty: 566 tenured, 198 on tenure track, and 366 nontenure track.

30 Human Resource Insights November 8, 2012 Laurita Thomas Associate Vice President for Human Resources University of Michigan

31 Implications for HR Leaders in Higher Education Strengthening leadership Support for competence to interdisciplinary focus on strategic research outcomes Fostering collaboration across boundaries Incentives for entrepreneurship and innovation in all areas Reduced hierarchy that supports rapid response, opportunity and change Implications Agility in administration, contracting and partnering Investment in lifelong learning, development and growth Cultural competence for an increasingly global university Development and investment that supports high levels of performance and productivity

32 The HR Response to Challenges 32 Extensive external benchmarking (private and public) of business and other processes Shared services and shared staffing models Outsourcing for cost and process efficiency Professional contingent workforce Workforce segment rationalization/ reduction Response Leadership development Faculty and staff retirement planning programs Targeted faculty and staff recruitment/ retention initiatives Enhancement of institutional forecasting Greater institutional accountability through standardized and validated metrics

33 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 34 Q & A