The U.S. workforce is undergoing significant demographic changes that will inevitably have the greatest impact on small-to-midsized businesses across the country. According to the Bureau of Labor Statistics, the labor force participation rate for individuals aged 75 and older is projected to grow by an astounding 96.5% from 2020 to 2030. We are already seeing, and are likely going to continue seeing, more older adults choose to remain in or re-enter the workforce.

At the same time, the population under 18 is expected to grow by just 4% from 2020 to 2060. Combined, these changes bring far-reaching implications, from shifts in the generations represented in the workforce to increased demand for health care services.

Benefits professionals can play a critical role in encouraging employer clients to think proactively about how these demographic trends will affect their business. Questions such as: How do they see their workforce evolving over the next three years? Based on this, how might this evolution influence their decision-making in the coming year?

Aging workforces may lead to higher health care-related costs, which can significantly affect business financials in the years ahead. Guide your clients in thinking strategically about how to manage these changes. For example, consider what growth looks like for their business. How will it affect talent acquisition and retention, and how might workforce demographic shifts influence the benefits program — both in its current form and as it evolves in the future? Employers should think about ways they can personalize their benefits programs to each employee for maximum value. Offering and promoting voluntary products, like hospital indemnity, accident, and critical illness coverage, can provide the personalized solutions needed to help bridge financial gaps that arise from unexpected health events and rising health care costs.

Ask key questions 

Uncertainty can stem from a variety of sources, including market volatility, cash flow concerns, rising operational costs, or labor challenges. Helping your clients identify these risks is the first step toward creating a confident path forward. Once the risks are identified, work with them to map out different potential scenarios and approaches to mitigate impacts.

A helpful approach is to identify the best, most likely, and worst-case scenarios. Walking through these options allows clients to explore what adjustments they might need to make to stay on track with their long-term goals.

For example, if a client is concerned about rising costs for materials or supplies, you may ask, “What if costs rise by 10%? What if they remain steady but demand drops? What if a new supplier offers better terms?” By exploring these scenarios, you can help your client anticipate challenges, adapt to shifting conditions, and make informed decisions to safeguard their business and foster growth.

Another example may be, “What if I need to begin hiring talent with skills in deploying artificial intelligence to drive operational efficiencies? What if I can’t attract this type of talent? What if I find so much of this talent that I am unable to differentiate what’s right for the business?” Again, this approach to thinking through possible futures will help clients approach the future with a well thought out plan.

(A “thanks” to Brian Moran at Small Business Edge for introducing me to the “what if?” framework.)

2025 Outlook

The landscape for small-to-mid-sized businesses is softening from record hiring and growth in the first half of 2024 to cautious optimism and stable staffing. Employer concerns about employee retention fell from 46% in July 2024 to 32% in November 2024, while concerns about attracting talent dropped from 39% to 33%.

Many business owners expect their business decisions to be impacted by the results of the presidential election but are not yet sure how. While there is uncertainty around changing policies, we do know that SMBs are resilient. SMBs represent roughly 50% of all jobs and drove 65% of new jobs between 2000- 2019 – and this trend is expected to continue. Small-to-midsized businesses are nimble and able to adjust quickly, consistently weathering economic cycles.

By helping business owners understand the changing demographics and talent needs of their business, identify their risks, and plan accordingly, you can guide them to navigate uncertainty with confidence. This positions them and their business to not only adapt but also find new opportunities for continued growth and success.

Kara Hoogensen is SVP for Benefits & Protection at Principal Financial Group.