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Demographics are Destiny and Costly

A Wave of New Employees will follow the Silver Tsunami, Rapidly Retiring Generation

August 24, 2016
AB 2835’s (Cooper) estimated $350 million annual cost will only grow as new employees become the new norm. Cities will face workforce demands as baby-boomers turn retirement age.
 
Workforce supply issues will be amplified by proposed burdensome and costly requirements for new employee orientations. The Public Policy Institute of California (PPIC) has reported that large numbers of Californians are reaching retirement age.
 
The numbers are astounding and foretelling of not-so distant workforce issues that will face nearly every industry, including public service. According to PPIC, the total number of adults age 65 and older will reach 8.6 million by 2030, totaling 19 percent of the population. This research came to no surprise, as the Pew Research Center reported in 2010, that roughly 10,000 baby boomers will turn 65 years old every day for the next 19 years.

PPIC: California’s senior population will nearly double by 2030
 
PPIC-CA-senior-population-by-2030.jpg
 
SOURCE: PPIC via State of California, Department of Finance, State and County Population Projections by Race/Ethnicity, Sex, and Age 2010-2060, Sacramento, California, December 2014. NOTE: See Technical Appendix A for detailed tables and Technical Appendix B for data and methods used to generate the projections.
 
While the focus of this demographic trend will surely be on providing a high level of care to seniors, public agencies (cities, counties, schools, special districts, etc.) will be tasked with training a wave of new employees. Measures like AB 2835 will hinder efforts to introduce new employees into the workforce to meet the growing demand. AB 2835 requires public agencies to provide all newly hired employees with 30-minutes of paid time to allow each recognized labor union an opportunity to organize new members.   Under this measure, the local agency will not only have to pay each new employee to attend, but would have to pay each union representative to come and present to their respective bargaining unit. Some cities, depending on size have as many as 15 different bargaining units — making compliance for this proposal an incredible cost driver and a logistical nightmare. The Department of Finance estimated that to implement, the Aug. 1 version of AB 2835 would cost $350 million annually for both state and local agencies, with approximately $70 million being the local cost. It is unclear whether the cost estimate accounts for demographic trends but nonetheless they will be a cost driver.
 
Preliminary results of an internal League survey, with over 100 city respondents, found that the average expected staff turnover over the next five to 10 years is 37 percent, varying little between city size and staff. One city reported an expected staff turnover of 67 percent and many others estimate 50 percent or more due to expected retirements. While the real number of retirements will vary by staff size, the growing number will require a number of new employee hires.
 
AB 2835, which is a band leader in the “Dance of Bad Ideas” that comes at the end of the two-year legislative session, is worse in context with demographic trends.
 
Next Steps
 
Cities are urged to send letters opposing AB 2835 to their senator. A sample letter, along with the League’s opposition letter, is available at www.cacities.org/billsearch by plugging AB 2835 into the search function.


 
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