Baby Boomer Retirement: Boon or Bust?

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Mark Twain is alleged to have said , "Everyone complains about the weather, but no one does anything about it." I'm beginning to feel the same way about the baby boomers. You know them. Maybe you're one of them, yourself. They are the generation the U.S. Census Bureau defines as the 78.2 million Americans born between 1946 and 1964. The first of them becomes eligible for partial Social Security benefits on Jan. 1, 2008. Depending on whom you talk to, the pending retirement of the boomers will be little more than a blip on the screen or a full-scale demographic catastrophe the likes of which the American government has never seen.

So, how should savvy VARs prepare to take advantage of this trend? What will it mean for state and local governments? The first thing to do is recognize that there are three distinct groups of boomers to keep in mind:

1. GOVERNMENT IT WORKERS: These are the old dogs of government IT. Many of them are not interested in learning the new tricks of technology. When they retire in the next 10 years, they will hang around on a part-time, contract basis to help maintain all those legacy systems that were cutting edge when they came into government. The new dogs don't want to learn COBOL unless they have to.

2. ANALOG GOVERNMENT WORKERS: Many of these workers are the ones who perform all those costly manual processes. At the state level, they process benefits applications, drivers licenses, tax returns, college loans and so forth. At the local level, they collect garbage, read utility meters and write traffic tickets, among other not-so-glamorous pursuits. Elected officials at both levels would love to automate these processes--if only they weren't so scared of wasting money on failed IT projects.

3. THE CITIZEN-TAXPAYERS: These represent the vast majority of a state or locality's boomer-aged population. They will be moving into retirement and semi-retirement and living on fixed or limited incomes. Many will be retiring to new states and communities. They will be very averse to tax increases--especially those they can't avoid, such as property and income taxes. With children and grandchildren living elsewhere, they will not be as grounded in the local, non-boomers' concerns for schools, economic development and infrastructure. However, they will be keenly interested in services for veterans and aging populations.

VARs should not expect a wholesale collapse of the government IT workforce anytime soon. Agencies will retain just enough skills to keep legacy systems running indefinitely. There will always be a steady flow of IT workers seeking refuge from the hassles of the private sector to fill management slots and provide the primary skill sets. However, they will continue to struggle with hiring skill sets for cutting-edge technologies and practices that demand premium compensation outside government.

When it comes to automating all of those analog processes, vendors should be more optimistic. Many state and local budgets are already a mess due to the fact that elected officials simply refused to modernize tax codes for the service economy when times were good. State governments will have to shed hundreds of thousands of workers--primarily through retirement attrition--over the next decade or two. Humans will only be needed for strategic direction and citizen-facing services (e.g., state police). The rest can be digitized and automated.

Local governments will have a harder time replacing workers. Each new resident results in a new demand for labor-intensive services in terms of education, public safety, infrastructure and so on. However, recent advances in wireless technologies can greatly reduce the per-unit costs of providing them.

The good news is that the demands of an aging population can produce benefits for everyone. Technological advances in providing services to veteran and elder populations--whether they be in lifelong learning, case management or health IT--can be used for serving other demographic groups more effectively. With the Census Bureau predicting the nation's population to grow by 60 million people between now and 2030, VARs have no reason to be pessimistic. Demand for services (as well as the technologies that enable them) will be up across the board. However, they should be aware of the shifting terrain beneath their feet. Savvy VARs will find solid ground for growth. Others will be caught in demographic quicksand.

Chris Dixon is manager of state and local industry analysis at Input--and a proud Gen Xer!

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