The “Demographic Cliff” Goes Well Beyond Traditional Undergrads

Scott JeffeVice President, Research (Graduate and Online)June 23, 2021

A new report makes it clear that the coming demographic cliff has big implications for adult student enrollment, graduate student enrollment and online enrollment – in addition to traditional undergraduate education.

I recently had a chance to sit down with Rob Sentz, the author of The Demographic Drought, a new e-book from RNL’s strategic partner Emsi. The report’s subtitle—“How the Approaching Sansdemic Will Transform the Labor Market for the Rest of Our Lives”—gives an interesting preview of what is inside.

Watch my conversation with Rob Sentz about The Demographic Drought, and keep reading for insights and excepts from our discussion.

The first thing that struck me was that while enrollment management and other institutional leaders have long had their eye on the “demographic cliff” and its impact on traditional undergraduate enrollment, there has been far less planning going into what that drop off (what Sentz calls the sansdemic—“without” + people”) will mean for employers as well as colleges and universities that can help them confront the coming challenges. In short, the sansdemic will require employers to do far more than they have had to do over the last fifty years to retain employees—train them, retrain them, upskill them, and keep them generally happier than they’ve had to. And this can be good news for colleges and universities.

Sentz points out that employers have a lot to learn from colleges and universities that confronted their enrollment challenges by embracing adult students, online students, graduate students, and other populations. Employers will need to consider creating an environment that is conducive to older workers who have a lot of knowledge and expertise but may need technical skills, may want to work part-time, may want to work from home, etc.

Higher education also has a lot to learn from the most innovative employers. There is no guarantee that the rising need for continuous reskilling and upskilling will benefit colleges and universities if they are not perceived as responding to the needs of the “market” (something Susan Aldridge discussed in a recent white paper for RNL.) This means being industry-specific, consumer focused, and affordable. The rise (and success of) coding boot camps is an early indicator that Americans in need to retraining do not automatically think colleges are any more the “gold standard.” The report lays out a “perfect storm” of factors that are occurring—which the pandemic has only accelerated:

Past: Accelerating exodus of Baby Boomers from the workforce.

Demographic Cliff: Boomer Retirements

Present: Record low labor force participation, particularly among Millennial males.

Demographic Cliff: Labor Force Participation 1947-2012 and projected 2022

Future: Lowest recorded birth rate, ever.

Demographic Cliff: US Birth Rates

3 commonly suggested “solutions” and 3 areas of focus for institutions

Sentz also commented on three of the most common solutions that thought leaders and policy makers raise:

  1. Increased immigration: good idea but only a temporary solution.
  2. Encourage and support increased birth rate: good idea but too late—would have had to begin 20 to 40 years ago.
  3. Increased technological solutions: already happening, but most technology solutions lead to the need for more (but different) people.

Sentz went on to detail just exactly how and why none of these things will solve the challenges that we confront quickly enough to be a comprehensive solution. He closes with three areas of focus that have huge implications for colleges and universities that are adept enough to do them:

  1. Recruit (both colleges AND employers) beyond traditional demographics.
  2. Reskill and upskill your employees regularly.
  3. Retain your employees (and students) by consciously understanding their needs and demands.

Sentz closes the report with a simple message that we would all benefit by recognizing: Value people more.

See what kind of market insights we can provide, and read excerpts from my conversation with Rob Sentz

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You can watch my full interview with Rob Sentz above, but here is a transcript of our conversation.

Scott Jeffe: What is a sansdemic?

Rob Sentz: I think for the past year we’ve been inundated and heavily introduced to the idea of a pandemic. And if you think about what the word pandemic is, it means all people, so something that’s affected all people across the globe. As we looked at what was actually happening in the economy, we thought about public health a lot, but when we were thinking about the economy, there’s this weird phenomenon that we continue to see where we thought if the economy is having a hard time, then there’s going to be a lot of people looking for jobs. But we actually saw the exact opposite. We started to explore it and we came across this idea that there’s actually too few people. So sansdemic means “without people” to contrast it with “all people.” Or perhaps better, too few people. So the idea of sansdemic is just too few people for all the things we need done.

Scott Jeffe: I want to pick up on that before we close, but our audience is largely higher ed leaders. And so the impact of the demographic cliff on higher education enrollment is frequently discussed by folks who are probably listening to this. But your focus is a lot broader. Can you explain? This goes much, much beyond higher ed.

Rob Sentz: Higher ed really kind of picked up on this topic, I’d say 5-10 years ago, it was starting to come in. You had Nathan Graw with his book, which is great, especially the community college world, highly familiar with high school enrollment, and we’re seeing those numbers go down. So it’s definitely been a topic in higher ed. What we were doing is looking at these broader trends, and we saw three key factors happening all at once. Last year, essentially moved 3 million baby boomers out of the economy where typically only 1.5 or 2 million leave. Many of those people are not even 65 yet. So a lot of people who are in senior level positions still have quite a few years left to be in the labor market left. Then you couple that with the lowest labor force participation rate of working age people.

So between 16 and 65, where we just keep seeing that sort of plummeting labor force participation rate, which means working age people are out. We’ve talked a lot about women leaving the market. Two and a half million women left the market. But what hasn’t been discussed as much as really since the 1980s, we’ve seen the labor force participation rate of prime age men go down and it’s not really rebounding. And then finally we just saw the lowest birth rate we’ve ever seen. So our TFR, our total fertility rate, which needs to essentially be above two to stay at replacement, is essentially at 1.6. And we’ve been in that way since the 1970s. So that’s about 50 years of not replacing our population.

Scott Jeffe: My focus for my entire career has been on adult undergrad, grad, online, post-traditional. I always say the only thing that I am not expert in any way on is the 18-year-old coming through the doors. And what was interesting to me about the report was I think that a lot that has been written on this subject, the primary focus, as with most things in higher ed, has been on what’s it going do to traditional undergraduate. And the way you laid that out with the baby boomers finally leaving, even in larger numbers than normal, the lower participation rate in the workforce to some extent, even generation X, but millennials and so on. And then the lower birth rate, which really is the demographic that gets so much attention.

But it seemed to me that there’s a lot to be said in this topic for those in higher education that are focusing on the adult, the graduate, the online, all those things that it links over to that skills, the re-skilling, up-skilling and all that. I have a question for you about that a little bit later, but that’s what made it so really interesting to me and so relevant for the focus… Look, RNL focuses on everything, but my particular focus there.

And it made me think of another thing. About four or five years ago, I conducted a survey of education and training leaders at fortune 500 companies in the west. And what we repeatedly heard these officials say was that their education and training budgets, and even tuition reimbursement dollars had been caught, or certainly not added to, because they couldn’t afford to invest in new employees that were likely to leave in the first year or so. They actually went on to say that they were resistant to hiring people for entry-level jobs without previous experience, because for the same reasons. Can you talk more about what you said in the report, but how the sansdemic is going to force a rethink amongst our employers for those types of policies?

Rob Sentz: I think what’s very important to understand in this moment is we’ve developed a habit. I’d say really, since the 1960s, of having plentiful supply. The baby boomers were essentially 76 million people moving through the economy. And we really did reach sort of the pinnacle of higher ed institutions nationally. I’d say since after the civil war, until the mid 1980s, we were sort of building institutions. If you just look at the historic colleges, when they had the Morrill Act, establish colleges all over the country, community colleges really came in the sixties and seventies. So we’ve really been building that up. And that was sort of marching right alongside of the growth in population that we were having. The baby boomers really accelerated that, and there was a plentiful supply of people to create that sort of ecosystem.

Women were entering the market in ways they’d never been before. We had a lot of people on population growth, plus women just entering the market in ways they hadn’t before. So all of a sudden institutions can spring up and it’s like, wow, we’re seeing full enrollment. Also businesses, like the example you gave, businesses could say, well, when we put a job ad out there, we see 20 people apply to it. And so what we’re doing is we’re saying, well, here’s somebody with 10 years of experience. Here’s somebody who has a degree. Here’s somebody whose been in the industry, we’ll hire that person. Labor was something almost it was like off the shelf. A lot of people were going to school. We doubled the size of the labor force and you could just sort of take your pick.

What we’re arguing right now is the thing we’ve been so used to really since the 1960s, we need to start to rethink. Before the 1960s, if you think about earlier 1930s, 1940s, it was very typical for a company to hire a young person. Let’s say I’m out of high school and a company like GE says, you seem smart, we’ll give you a job, entry-level. I’m manufacturing something, I’m doing some accounting, maybe I’m doing some sales and they essentially trained you. That’s where you got that concept of, “I’m a GE Man.”

I think we’re going back to a labor issue where companies are going to have to think about “the GE Man” versus I just hired “off the shelf.” Make a good job posting and get somebody. I think that’s why they oriented away from the internal training because they can make an ad and just find somebody.

Scott Jeffe: I think it’s going to be a sea change. It really is interesting. I was interested in that the report includes quite a bit of information about how the pandemic is impacting the sansdemic…what you wrote about the COVID paradox was fascinating. You alluded to this right in your opening, 19 million people filed for unemployment. But there were 7 million open positions. So what do you think higher ed’s role is now and in the future?

Rob Sentz: Higher ed’s role has a lot to do with that retraining and re-skilling, so I’m painting in broad strokes here. Are there people struggling? Yes. Are the people who are unemployed and can’t find the thing that they really want to be doing? Yes. So for higher ed, how do we help people who have been dislocated, impacted, and are struggling? We’ve got to connect to those people.

I think second is if you go back to the GE illustration, well, GE should be hiring, or whatever company it is, GE should be hiring that person in that entry-level spot and thinking about helping them and training them. Because really what we’re saying is every person you come across has double the value that you think they have. If that person doesn’t have all the skills that you ultimately want, you probably should hire them and then help them get the skills that they need. That’s a great position for a lot of schools to be, to say we’re going to help you retain your employees. We’re going to do it through training and helping them upscale so they can pay them more and make more money over time.

Scott Jeffe: Look, how many papers are there out there now about this re-skilling, up-skilling issue world? Economic Forum did a great thing. My friend Susan Aldrich wrote one for us last month that came out of her work at Drexel over many years. But one of the things that I think is really profound, and it comes right out of us here at RNL, is we’re about to publish a report that presents the findings of a survey of 1,500 prospective graduate students who planned to enroll within the next year in graduate study. One of the first questions was what do you plan to pursue? And here’s the headline. You’re getting the headline before the report is produced. Fifty percent are planning to enroll in a master’s program. Ten percent are planning to enroll in a PhD program. Forty percent are planning to enroll in a non-degree option.

I’ve done survey work like this for my entire career. Most of the 20 years I’ve been doing this, we were doing primary market research for specific colleges that wanted to understand how to serve these and what I can say from just that result, the last study I did was probably two years ago, and that non-degree was 20, maybe 22 or 23 percent. So this survey conducted in January and February, this year, I think that’s an immediate sign that this is not theoretical anymore. This is real. And I have been saying for this entire career, when the economy gets bad, people go back to school, but you wrote in the report and I completely agree that this is not happening. So what is going on there?

Rob Sentz: Why they’re not going back to school is fascinating. We did say the reason people aren’t interacting in the market as much was things like furlough, fear, kids at home. And then the government essentially staying highly involved in the economy so there’s enough money out there that you can just go get that you don’t have to get a job. The government’s paying people to not work.

So I think that is playing on some of the things we’re seeing in higher ed right now, where a lot of people don’t necessarily need to be in the market, which means they don’t need to be in school and maybe they’re waiting it out. While I keep getting this money and while the kids are at home, I’m going to wait it out. So it’s a bit of a holding pattern. And then the furlough issue is, well, I’m just going to go back to what I was doing before. So, I can get the money now, I can wait it out, I’ll go back. I think the great recession was sort of like, yeah, I’m not going back to that job. So I’ve got to get back to school and figure out what’s next.

Scott Jeffe: That’s interesting. I hadn’t thought of it that way. I track the data that comes out of National Student Clearinghouse, and for the second semester in a row, enrollment growth has been strongest at the graduate level, master’s level, postbac or graduate certificates. They’re growing. For the report that we just got is 4.4 percent whereas undergrad is down 4.5 and of course associate has really just falling off a cliff.

Rob Sentz: And there’s a lot of uncertainy in those settings. Are we going to be online only? Are we going to be on campus? So uncertainty just creates poor decision making.

Scott Jeffe: I have a friend whose spent her whole career in that undergraduate adult space. And one of the things that she’s worried about is that for the bachelor’s level, many of our institutions may have priced themselves out of what…when you think about the demographic of individuals that could advance their careers by finishing a bachelor’s degree, the socioeconomic dichotomy is pretty wide. And so that’s something that I plan to do some research on them at some point.

Rob Sentz: You throw virtually every student in the country into online education very quickly. And then to say, okay, now you can go back. Well, they’re like, there’s this other online program that’s half the price and you’re still trying to charge me full price for what it was like being on campus. I’m not going to do that. I’ve gotten used to it. Any kind of draconian response that’s not really thought out has consequences that we don’t understand. And I think one of the consequences is we just adapted millions of students to online learning. Then they found other online options that are far more cost-effective and they can achieve essentially the same result. The employer isn’t like, well, did you stay on campus four years? The employer kind of doesn’t care.

Scott Jeffe: I have one last question that is a big one. And I’m trying to get us to how you ended the report with the outlook, the solutions and so on. And what I thought was interesting is amongst those conclusions about what could be done to address the sansdemic, you wrote that some things that may seem like the obvious solutions just will not quite cut it. And those included things like increased immigration will only be a temporary fix. Having more babies would have had to start 20 or 40 years ago. I love that one. That technology… What I loved about these are these are the ones that come to mind when you’re having a casual conversation about this, if anybody does, but whatever. Technology will help but as you wrote in so many cases, technology actually requires more people, different people, but more people. But then there were the three that you ended with is what I’d really like to have us close this thing out with today. So can you tell me about the last three and the report’s final recommendations, but what we all need to do to help mitigate sansdemic and the demographic drought?

Rob Sentz: It comes down to a central point. If you look at things like supply and demand. As you look at the data, there’s less people for all the infrastructure that we’re thinking about, all the schools that are trying to enroll them, all the businesses that need to hire them, all those roles that need to be filled. We’re just seeing less people, less interest in a lot of ways in those jobs. So it does mean that you need to value people a lot more at every level. So a school needs to think about that student who is currently enrolled, what are you doing to retain them? That person who’s in high school right now, how are you talking to them right now to make sure that they understand the value that he’d get if they enroll.

To a business, how are you thinking about… I think the new term that we’re going to see here is recruit your own people. A lot of businesses spend time recruiting people from other companies. How do you actually recruit your own head count to keep them engaged and knowing that they should be at your company, especially if you’ve made everybody go remote? We see that resignation rates are going to go through the roof this summer. And it’s because all of a sudden with all these people online, they can take a new job. And there’s very little friction. Oh, I don’t have to move? I don’t have to take my kids out of school? I basically changed my coffee cup. That’s about it. I think it’s retain, retain, retain, and get to a place where you’re truly valuing people a lot more than you did for the past 20 years or so, because it’s a supply side issue.

Scott Jeffe: I loved what you wrote about how companies may need to emulate something that higher education has been doing with varying success, some are very successful. Like for example, recruiting older students at companies that could be recruiting people that are older, that still have… And then making a corporate policy or employment policy, whatever HR, whatever you want to call that more amenable to people that would have been considered retirement age a decade ago. And just keep that all on. I thought that was really very interesting. And I think that our higher education institutions need to, I sometimes say sharpen their pencil on that when somebody comes to me and asks, well, what research can you provide to us to help us figure out how to get into this re-skilling, up-skilling and so on.

One of the questions that I typically ask them is what is your appetite for lowering the cost of what you deliver to them? Because there are too many options out there that are less expensive. And I go back to that employer study, granted it was four years ago, but what I heard was because we don’t have the money to pay for it, we are more accepting than we ever were in the past of our employees who need to go get training doing it on the cheap, because that’s just a rationality that I like to hear from the standpoint of just human relations. But it’s not great to hear when you’re in a higher education institution that may have those offerings, but they’re more expensive. They take longer, they’re less convenient, they’re less flexible.

One last question. Is there any end to this? It sounds to me like it’s kind of permanent. Is this going to be a permanent state of affairs?

Rob Sentz: The end might be when we’re all gone. A new generation thinking differently about these things. We’ve just been a generation of people really since the 1970s whose thought really specifically about getting in the market is the most important thing, getting that high paying job is the most important thing. And we built a massive amount of wealth, $68 trillion of wealth. That’s what we had a generation orient to.

I think what’s so important about a lot of the arguments we’re making here is, are there still people? Yes, obviously, but what’s happened is we’ve got a massive generation move through, amass huge amounts of wealth, have far fewer children. The average baby boomer grew up in a home of four kids. The average millennial and the average gen X-er is growing up in a home of less than two. So if you take four and go to two, and that four amassed massive wealth, generally, when we start to have that generation go away and that wealth gets passed on, what’s going to start to happen? We have a whole generation of people who will receive that wealth and not really have to work. They don’t need the degree. They don’t need the job. Their parents didn’t kick them out of the house and say you’re 18, you need to go get a job, that’s not happening. And so that is very important to understand, and then they’re going to burn through that capital at some point. Then we might get another generation that says I got to go to work. But that’s going to take time to happen.

Scott Jeffe: Oh, that’s really interesting. And look, I don’t think not having a particular end in sight is necessarily a bad thing. That makes it a necessity that we’re in, I hate to use the term, but we’re in a new normal, we’re in a new era. That’s really interesting.

Rob Sentz: And right now it’s changing I think the way we think about the supply of labor and the supply of people who are interested in interacting with the market. It’s just different.

Scott Jeffe: What a great place to end. It is just different.

About the Author

Scott Jeffe, RNL

Scott Jeffe has worked with more than 200 institutions in 40+ states to apply market data to strategic decisions. With a focus on profiling the demands and preferences of nontraditional (adult, online, etc.) students, Scott...

Read more about Scott's experience and expertise

Reach Scott by e-mail at Scott.Jeffe@RuffaloNL.com.

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