The Lost Generation
Has anyone else noticed the lack of young people in our business?
By young people, I don’t really mean the under-40 crowd. I’m talking more about the under-30 crowd.
Since 2007, I can think of fewer than 10 young people I know that have been hired into the commercial real estate business either straight out of college or out of their first job out of college. And when I say “hired,” I don’t mean huge brokerage shops giving the proverbial desk and phone book to enterprising young youth who then go “Dial for dollars!” I am talking more about salaried, full-time CRE positions.
I have also noticed that, almost without fail, open job positions are going to the candidate with the most experience. If a company is looking for a relationship manager, they always seem to go with the fella with 30 years of experience versus the up-and-comer with 10 years of experience. As I have mentioned before, experience seems to be the cure-all for what ails the struggling CRE firm. (As if going through the S&L crisis or the little dot com blip in 2001 somehow makes you able to outsmart the market in the greatest and most unique recession our country has seen in 80 years.)
Anyway, I am not here to complain about hiring practices or strategy. I just want to point out the long-term implications of what seems to be a lack of young people in our business.
Let’s have some fun with numbers for a minute . . .
Let’s assume that this Great Recession is going to last at least another year and will adversely affect the graduating class of 2012. That will make 6 graduating classes of college students who have been unable to find unemployment in the CRE industry. They are the classes of 2007, 2008, 2009, 2010, 2011, and 2012. How many thousands of potential employees is that?
I don’t really know, but let’s assume that workers pour into our industry at an even pace. So, in the long run, the class of ’76 has the same number of CRE employees as the class of 2012.
Let’s also assume that the basic work force consists of 22 to 65 year-olds. Divided by age, that makes 43 groups of workers in our field.
I am going to assert that 1/5 of the CRE world is being underutilized and it will create problems for us in the future.
My assertion is based on the observations I mentioned above; that basically everyone in CRE under 35 is being passed over or ignored for crucial positions. That is, if you are 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, or 35 years old, chances are that you will be given little to no real responsibility in CRE transactions. That isn’t to say that you will not see transactions or be involved in deals, but championing a deal and leading a deal across the finish line are very different than just simply being involved.
Most people would say, “So what?” or “Pay your dues!” or something to that effect. I say otherwise. Statistically, that means that 21.5% of the CRE workforce (14 age groups out of 43) is being underutilized and is not fully experiencing the down-slide and corresponding upswing in the market.
I say that is going to lead to under-developed industry leaders down the road. Let me illustrate why:
There are two young children in a house. Child A is told “don’t touch that hot stove or you will burn yourself.” Child B goes up and slams his palm down on the hot stove, burns the hell out of his hand, and cries all night. Which of those two boys would you say is more likely to make the mistake of touching that hot stove in the future? The exact same principal applies to business. He that watches learns for now, but he with scars learns for good.
The young CRE professionals in our city can go around town, listening to the horror stories, watching their bosses try to keep struggling companies afloat, seeing family friends losing their homes, and generally seeing the despair and destruction in the market. But it is an entirely different experience when YOU personally have to keep the company afloat or figure out how to pay the mortgage and the kid’s private school tuition. Feeling the pain for yourself always leaves a deeper and more lasting impression than just listening and watching from the sidelines.
So, I have a small prediction.
Since we are not fully developing the next generation of CRE professionals, there will be below-average leadership in our industry at some point in the future. Assuming that the peak leadership ages are 45 years-old to 55 years-old and that my numbers are roughly correct, that means that from the year 2021 (when today’s 35 year-old turns 45) to the year 2044, we will see some serious leadership challenges, mistakes, and growing-pains that would make the current generation of leaders cringe in disgust. All of those 22-35 year-olds are either under-employed or unemployed right now and are therefore effectively out of the game. All of the experienced guys are making the deals happen and plotting the course and the young guys are collecting data and running ARGUS.
Maybe the simplest way to put it is: If the next generation of leaders are only in the game or allowed to make decisions once things are easy and we are in the economic clear, how can we expect them to know how to lead companies when the inevitable downturn comes again in the future?
I say that now is the most important time to utilize, train, mentor, and involve the next generation of leaders in our business. If we can teach them how to lead and make tough decisions in tough times, then the future boom-bust cycles that accompany CRE may be much less severe than the current downtown. At the very least, we will then have better equipped leaders to handle the adversity.
I should mention that I don’t think this phenomenon is unique to commercial real estate. It seems like most industries have had multi-year hiring freezes and also have voids to fill in terms of the younger work force. I work in CRE, so I see this pattern most directly in my end of the business spectrum.
So, this isn’t a call to arms or a record of wrongs against HR departments or hiring managers. I just noticed a trend that may lead to some trouble for us down the road. I will not presume to tell you about what you should do or how you should react to this if you are (like me) between the ages of 22 and 35, but I will write an article tomorrow about what I am doing.
If you disagree with my observations or think I am making too big a deal out of it, feel free to comment or enlighten me in the comments below.