What the Toys R Us meltdown reminds us about workforce trends

By now you probably have seen the sad news that Toys R Us is in bankruptcy, and is facing the likely closure of its 700+ stores in the US in the coming months.

Definitely a sad day for many, especially for the thousands of Toys R Us employees soon to be out of work, and for the let's say 'traditionalists' among us who still enjoyed shopping for toys and games and the like in the 'real world', and not just from an Amazon app.

Of the many reasons that have been blamed for Toys R Us demise, competition from Amazon (and others) is frequently cited, along with the pretty staggering amounts of corporate debt and debt service payments that Toys R Us has been burdened with since its acquisition by Private Equity companies in 2005. Other post-bankruptcy analyses have pointed to Toys R Us failure to modernize its shopping experiences, inability to grasp digital commerce trends, and the fact that they lost touch with their most important customer - mothers shopping for their kids.

But there is one other factor that has contributed to the toy retailer's plight, one that has not been mentioned as much in the coverage, and one that has much wider implications in work and workplaces as well. And it is this: people in the US are having fewer children, thus creating fewer of Toys R Us' prime 'end customers', and, eventually, fewer entry-level workers for all US firms to recruit.

Here it the thing, the folks running Toys R Us maybe couldn't figure out what to do about this trend, but they did see it coming. Here is an excerpt from their most recent 10-K financial filing from April 2017:

"Most of our end-customers are newborns and children and, as a result, our revenues are dependent on the birth rates in countries where we operate," the filing reads. "In recent years, many countries' birth rates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results."

Data from the CDC in the US backs that up - the most recent data available from 2016shows the US birth rate hitting a record low, and with no obvious sign of this trend changing, retailers like Toys R Us are going to face continuing pressure. Longer term, if this trend does continue, all kinds of employers will face pressure too - a different kind of pressure perhaps, this one stemming from relatively fewer entry-level or younger candidates, as well as the need to create workplaces that are more open, accommodating, and available to older workers too.

Since I love charts, I will close with this one, from our pals at FRED - a look at the increase in the 65+ labor force in the US over the last 20 years or so.

I will spare you trying to squint at the small print, but the total number of workers aged 65+ has more than doubled since 2000 - with almost 10M people in that group as of the latest data. And even if you can't read the small print, it is easy to see the 'up and to the right' trend in the data.

Fewer babies and young kids means trouble for Toys R Us in 2018. It could mean recruiting problems for your organization too, in a few years. Don't wait until it is too late, like our pals at Toys R Us, to know how to react.

Have a great week!

CHART OF THE DAY: If you're feeling old, you're not the only one

Super simple, yet cool Chart of the Day on the graying of America courtesy of the Chmura Economics Blog - let's take a look at the chart then as you continue to demand, some FREE commentary from me...

Wow, check the growth of the 60+ age cohort from 2000 - 2030, amazing how the other segments remain (relatively) flat, while just about everyone else, (you and me too), get a heck of a lot older.

Why should we care about this? A few reasons I think.

1. These general demographic trends combine with observed and predicted workforce composition trends to point to a future where the average worker will be older, will plan on working longer, and where qualified 'new' workers will be even more in demand. If your company is not one where these in-demand younger workers will want to be, then you are going to have to get used to an older workforce than you have had before.

2. How does a relatively older workforce actually translate to HR/Talent programs? Increased need for re-training, as careers lengthen but needed skills continually change, higher reliance on benefits more likely to be used by older workers and less on those that tend to be leveraged by 20 or 30-somethings, and finally a need to be more aware and deliberate about how more widely spread age ranges can effectively work together. 

3. Deeper in the Chmura data, they break down this 'aging effect' by US state/county, (I was not able to embed the map here, but you should click through to check it out). As you might expect, the effects of the aging population/workforce composition will differ by locality. You might want to pinpoint the county(ies) that your organization has set up shop in order to get a feel for how quickly and how pronounced the aging effect is expected to be where you need to recruit and retain.

Bottom line, it is probably a good idea to be aware of the big shifts in demographics, at least until you have figured out a way to replace all of your workers with robots.

And looking at how much older we all seem to be getting, you might want to accelerate the robot recruiting sooner than later.

HR map of the day - time to widen your circle

The map below, initially posted by Reddit user valeriepieris, made the internet rounds last week, so perhaps you've seen it. Or perhaps not, as we seem often in the HR online space (me included), debating about cultural fit and performance reviews and the difference between SaaS and hosted applications, and other such nonsense, when chances are at least more likely information like in the map below will have a more profound and significant impact on our businesses in the next decade.

So here is the map, and then we can discuss what, if anything this should mean to those of us in the Talent game.

So for the US-based Talent pro, this might be kind of surprising, I know it was surprising to me. We know that the world is supposed to be shrinking, but in a way this map doesn't really bear that out. Rather it shows pretty simply that the center of population is on the other side of the world, and packed into a relatively small area. 

So what might this mean, or what might you need to be thinking about with this map in mind?

If you are an older, established company that is having a hard time finding opportunities for growth in your domestic market, then if you are not looking to play inside the circle in some way - then you are effectively cutting out half of the world's population and potential customers.

If you are a newer Talent pro, then chances are sometime in your career you will either need to understand the talent pools inside the circle, or perhaps even have to spend some time working inside the circle yourself. Maybe not today or tomorrow, especially if your shop is in some kind of truly local business. But do you really think you will be working there forever? No time like the present to start preparing for both of those possibilities. 

Last, if you are a parent, or perhaps plan to be a parent one day, this map is just another representation of the fact that the world our children will inherit and have to make their way in will be substantially different than it was even one generation ago. That has probably been true of all generations, but that doesn't give you a pass to ignore what is happening in the world today and to think about how best all of us should be preparing those rock and roll loving young whippersnappers.

So take a look at the map, think about (at least for a few minutes), what it might mean for you. Then, if you must, resume tweeting about how companies need to be more social and how employee engagement is good. 

Somehow, I think all that stuff will mean very little when compared to some of the really big changes happening in the world.

Note: If you need or care about the rough population estimates that back up this conclusion here they are:

World pop: 7+B, so the circle must have more than 3.5B people in.

China pop: 1.33B

India pop: 1.25B

Indonesia pop: 0.25B

Japan pop: 0.13B

Thailand pop: 0.07B

Bangladesh pop: 0.14B

Pakistan pop: 0.19B

Malaysia pop: 0.03B

Philippines pop: 0.095B

South Korea pop: 0.04B

Total from above: 3.524B