1) Disruptive Demographics: Implications for the Accounting Profession James H. Johnson, Jr. Distinguished Professor of Entrepreneurship & Strategy, University of North Carolina─Kenan-Flagler Business School 

2) Disruptive Demographics: Implications for the Accounting Profession James H. Johnson, Jr. , Ph.D. Frank Hawkins Kenan Institute of Private Enterprise Kenan-Flagler Business School University of North Carolina at Chapel Hill October 2015 

3) OVERVIEW • Demographic Trends • Challenges & Opportunities • Discussion 3 

4) what CENSUS 2010 will REVEAL October 2015 4 

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6) 6 DISRUPTIVE TRENDS • • • • • • The South Rises – Again The Browning of America Marrying Out is “In” The Silver Tsunami is About Hit The End of Men? Cooling Water from Grandma’s Well… and Grandpa’s Too! 6 

7) The South Continues To Rise ...Again! 7 

8) South’s Share of U.S. Net Population Growth, Selected Years, 1910-2010 Years 1910-1930 1930-1950 1950-1970 1970-1990 1990-2010 U.S. Absolute Population Change 30,974,129 28,123,138 51,886,128 45,497,947 60,035,665 South’s Absolute Population Change 8,468,303 9,339,455 15,598,279 22,650,563 29,104,814 South’s Share of Change 27% 33% 30% 50% 49% 

9) U.S. POPULATION CHANGE BY REGION, 2000-2010 2010 Population Absolute Population Change, 2000-2010 Percent Population Change, 2000-2010 309,050,816 26,884,972 9.5% Northeast 55,417,311 1,753,978 3.3% Midwest 66,972,887 2,480,998 3.0% South 114,555,744 14,318,924 14.3% West 72,256,183 8,774,852 13.8% Region U.S. 

10) SHARES OF NET POPULATION GROWTH BY REGION, 2000-2010 Absolute Population Change Percent of Total UNITED STATES 26,884,972 100.0 NORTHEAST 1,753,978 6.0 MIDWEST 2,480,998 9.0 SOUTH 14,318,924 53.0 WEST 8,774,852 32.0 Region 

11) NET MIGRATION TRENDS, 2000-2008 Northeast Midwest South West Total -1,032 -2,008 +2,287 +46 Black -346 -71 +376 +41 Hispanic -292 -109 +520 -117 Elderly -115 +42 +97 -27 Foreign born -147 -3 +145 +3 = Net Import = Net Export 11 

12) GROSS AND NET MIGRATION FOR THE SOUTH, 2004-2010 The Region Domestic Years In Out Foreign Net In Out Net 2004-2007 4,125,096 3,470,431 654,665 268,619 132,382 136,237 2007-2010 3,874,414 3,477,899 396,525 232,501 132,201 100,300 Florida Domestic Years In Out Foreign Net In Out Net 2004-2007 812,053 630,051 182,002 41,745 24,108 17,637 2007-2010 654,931 668,087 33,095 32,094 1,001 -13,156 

13) State Share of South’s Net Growth, 2000-2010 Region/State The South Texas Florida Georgia North Carolina Other Southern States Absolute Change State’s Share 14,318,924 100.0% 4,293,741 30.0% 2,818,932 19.7% 1,501,200 10.5% 1,486,170 10.4% 4,218,881 29.4% 13 

14) U.S. POPULATION CHANGE BY REGION, 2010-2014 2014 Population Absolute Population Change, 2010-2014 Percent Population Change, 2010-2014 318,857,056 10,098,951 3.3% Northeast 56,152,333 833,985 1.5% Midwest 67,745,108 815,210 1.2% South 119,771,934 5,208,983 4.5% West 75,187,681 3,240,773 4.5% Region U.S. 

15) SHARES OF NET POPULATION GROWTH BY REGION, 2010-2014 Absolute Population Change Percent of Total 10,098,951 100.0 NORTHEAST 833,985 8.3 MIDWEST 815,210 8.1 SOUTH 5,208,983 51.6 WEST 3,240,773 32.1 Region UNITED STATES 

16) STATE SHARES OF SOUTH’S NET GROWTH, 2010-2014 Region/State Absolute Change State’s Share The South 5,208,983 100.0% Texas 1,810,854 34.8% Florida 1,088,674 20.9% Georgia 408,662 7.8% North Carolina 408,273 7.8% Virginia 325,265 6.2% 1,167,255 22.4% Other Southern States 

17) THE “BROWNING” OF AMERICA 17 

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19) The Numbers Legal Immigrants Year 1920-1961 1961-1992 1993-1998 1999-2004 2005-2008 2009-2012 Refugees, Parolees, Asylees Annual Flow 206,000 561,000 800,654 879,400 1,137,000 1,067,000 Year 1961-1993 Annual Flow 65,000 1994-1998 107,000 1999-2004 85,500 2005-2008 75,000 2009-2012 92,500 

20) The Numbers Cont’d • Illegal Immigrants 300,000 to 400,000 annually over the past two decades Three million granted amnesty in 1986 2.7 million illegal immigrants remained after 1986 reforms October 1996: INS estimated there were 5 million illegal immigrants in U.S. • Since August 2005: Estimates of illegal population have ranged between 7 million and 15 million • Today: An estimated 11.5 million unauthorized immigrants reside in U.S. • • • • 

21) NON-IMMIGRANTS ADMITTED TO UNITED STATES, SELECTED YEARS, 1981-2011 Year All Classes Exchange Visitors Academic & Vocational Students 1981 11,756,903 108,023 (1%) 271,861 (2%) 1985 9,539,880 141,213 (1%) 285,496 (3%) 1990 17,574,055 214,644 (1%) 355,207 (2%) 1995 22,640,540 241,364 (1%) 395,480 (2%) 2000 33,690,082 351,743 (1%) 699,953 (2%) 2001 32,824,088 389,435 (1%) 741,921 (2%) 2002 27,907,139 370,176 (1%) 687,506 (2%) 2008 39,381,928 506,138 (1%) 917,373 (2%) 2011 53,082,286 526, 931 (1%) 1,702,730 (3%) 

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23) Number of Immigrants (in millions) U.S. Immigrant Population, 1900-2011 45 40.4 40 35.2 35 31.1 30 25 19.8 20 15 10 10.3 13.5 13.9 14.2 11.6 14.1 10.3 9.7 9.6 5 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2005 2011 Year 

24) U.S. Foreign Born Population by Race/Ethnicity, 2011 Race/Ethnicity Foreign Population Share of Total (%) Total 40,381,574 100.0 Hispanic 18,788,300 46.5 White Alone, not Hispanic 7,608,236 18.8 Black Alone, not Hispanic 3,130,348 7.8 Asian Alone, not Hispanic 9,988,159 24.7 Other Alone, not Hispanic 866,531 2.1 24 

25) U.S. POPULATION CHANGE BY RACE & ETHNICITY, 2000-2010 Absolute Change 2000 – 2010 Percentage Change 2000 - 2010 Race 2010 Population Total 308,745,538 27,323,632 9.7% 258,267,944 12,151,856 4.9% 196,817,552 2,264,778 1.2% 37,685,848 3,738,011 11.0% 2,247,098 178,215 8.6% 14,465,124 4,341,955 42.9% 128,067 36.2% 5,966,481 1,364,335 29.6% 50,477,594 15,171,776 43.0% Non-Hispanic White Black AI/AN Asian NH/PI 2 or More Races Hispanic 481,576 

26) NON-WHITE AND HISPANIC SHARES OF POPULATION GROWTH, 2000-2010 Area Absolute Population Change Non-White Share Hispanic Share US 27,323,632 91.7 55.5 South 14,318,924 79.6 46.4 Texas 4,293,741 89.2 65.0 Florida 2,818,932 84.9 54.7 Georgia 1,501,206 81.0 27.9 NC 1,486,170 61.2 28.3 

27) MEDIAN AGE OF U.S. POPULATION BY RACE, HISPANIC ORIGIN & GENDER, 2009 Race Total Male Female United States 36.8 35.4 38.2 White Alone 38.3 37.0 39.6 White, Non-Hispanic 41.2 39.9 42.6 Black Alone 31.3 29.4 33.3 AI/AN Alone 29.5 29.0 30.2 Asian Alone 33.6 32.6 34.6 NH/PI Alone 29.9 29.5 30.3 Two or More Races 19.7 18.9 20.5 Hispanic 27.4 27.4 27.5 27 

28) TOTAL FERTILITY RATES FOR U.S. WOMEN BY RACE/ETHNICITY, 2012 Race/Ethnicity Total Fertility Rate All Races 1.88 Hispanic 2.18 Non-Hispanic White 1.76 Blacks 1.90 Asian 1.77 Native American 1.35 

29) RELATIVE DISTRIBUTION OF U.S. BIRTHS BY RACE / ETHNICITY Race/Ethnicity 1990 2008 2011 White 66% 50% 49.6% Blacks 17% 16% 15.0% Hispanics 15% 26% 26.0% 2% 8% 9.4% Other Source: Johnson and Lichter (2010); Tavernise (2011). 

30) RELATIVE DISTRIBUTION OF U.S. POPULATION BY RACE / ETHNICITY Race/Ethnicity White Blacks Hispanics Asian 2005 2050 67% 47% 12.8% 13% 14% 29% 5% 9% Source: Pew Research Center, 2008 *projected. 30 

31) Marrying Out September 2014 is “In” 31 

32) INTERMARRIAGE TREND, 1980-2008 % Married Someone of a Different Race/Ethnicity 32 

33) EDUCATION & INTERMARRIAGE % of Newlyweds Who Married Someone of a Different Race/Ethnicity, 2008 33 

34) INTERMARRIAGE TYPES Newly Married Couples in 2008 34 

35) INTERMARRIAGE RATES BY RACE & ETHNICITY % of Newlyweds Who Married Someone of a Different Race/Ethnicity, 2008 35 

36) THE SILVER TSUNAMI 36 

37) U.S. POPULATION CHANGE BY AGE, 2000-2009 Age <25 2009 Absolute Change 2000 - 2009 Percentage Change 2000 - 2009 104,960,250 5,258,492 5.3 25-44 84,096,278 -1,898,345 -2.2 45-64 79,379,439 16,977,567 27.2 65+ 39,570,590 4,496,886 12.8 307,006,550 24,834,593 8.8 TOTAL 37 

38) U.S. POPULATION TURNING 50, 55, 62, AND 65 YEARS OF AGE, (2007-2015) Age 50 Average Number/Day Average Number/Minute Age 55 Age 62 Age 65 12,344 11,541 9,221 8,032 8.6 8.0 6.4 5.6 38 

39) THE GREYING OF AMERICA U.S. Census Projections 39 

40) ABSOLUTE AND PERCENT CHANGE IN U.S. POPULATION BY AGE Age 2005 2050 % Change Total 296 438 50.0 0-17 73 102 39.7 18-64 186 255 37.1 37 81 118.9 65+ 40 

41) OLDER WORKERS IN U.S. WORKFORCE YEAR Age 65 or Older Age 75 or Older 1998 11.9% 4.7% 2008 16.8% 7.3% September 2014 41 

42) DEPENDENCY RATIOS IN THE AMERICAN SOUTH Source: Census 2010 

43) The End of Men? 43 

44) FEMALE WORKFORCE REPRESENTATION 50 45 40 35 30 25 20 15 10 5 0 1970 1980 1990 % Female 2000 2010 44 

45) The Plight of Men • Today, three times as many men of working age do not work at all compared to 1969. • Selective male withdrawal from labor market—rising non-employment due largely to skills mismatches, disabilities & incarceration. • The percentage of prime-aged men receiving disability insurance doubled between 1970 (2.4%) and 2009 (4.8%). • Since 1969 median wage of the American male has declined by almost $13,000 after accounting for inflation. • After peaking in 1977, male college completion rates have barely changed over the past 35 years. 

46) COLLEGE CLASS OF 2010 DEGREE MALE FEMALE DIFFERENCE Associate’s 293,000 486,000 193,000 Bachelor’s 702,000 946,000 244,000 Master’s 257,000 391,000 134,000 Professional 46,800 46,400 -400 Doctor’s 31,500 32,900 1,400 1,330,300 1,902,300 572,000 TOTAL 46 

47) September 2014 47 

48) Jobs Lost/Gained by Gender During 2007 (Q4) – 2009 (Q3) Recession Industry Women Construction -106,000 Manufacturing -106,000 Healthcare +451,800 Government +176,000 Total -1,700,000 Men -1,300,000 -1,900,000 +118,100 +12,000 -4,700,000 48 

49) Cooling Waters From Grandma’s Well And Grandpa’s Too! September 2014 49 

50) Children Living in Non-Grandparent and Grandparent Households, 2001-2010 Household Type Absolute Number Absolute Change 2010 2001-2010 All 74,718 2,712 3.8 No Grandparents 67,209 917 1.4 Both Grandparents 2,610 771 41.9 Grandmother Only 1,922 164 9.3 318 71 28.7 Grandfather Only Percent Change 2001-2010 50 

51) Children Living in Non-Grandparent and Grandparent-Headed Households by Presence of Parents, 2010 Household Type All Children Living with (in thousands) Both Parents Living with Mother Only Living with Father Only Living with Neither parent All 74,718 69.3% 23.1% 3.4% 4.0% No Grandparents 67,209 73.4% 21.2% 3.3% 2.1% Both Grandparents 2,610 18.1% 40.6% 5.2% 36.1% Grandmother Only 1,922 13.8% 48.4% 4.5% 33.2% Grandfather Only 318 26.4% 45.9% 4.4% 23.6% 51 

52) DIVERSITY RULES ...but Challenges Abound 52 

53) The Triple Whammy of Geographical Disadvantage The Human Capital Challenge 

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58) Education is Necessary ...but insufficient 58 

59) AVERAGE SHARE OF LONG-TERM UNEMPLOYMENT BY EDUCATION Education 1990-1993 2001-2004 % Change Less Than High School 23.7% -1.0 High School Graduate 40.6% 34.3% -6.3 Some College 20.7% 24.4% 3.7 Bachelor’s Degree or More September 2014 24.7% 14.0% 17.6% 3.6 59 

60) AVERAGE SHARE OF LONG-TERM UNEMPLOYMENT BY OCCUPATION Occupation 1990-1993 2001-2004 % Change Blue Collar 40.5% 31.6% -8.9 Service Occupation 14.3% 16.7% 2.4 White Collar 38.5% 44.4% 5.9 60 

61) THE LONG-TERM UNEMPLOYED, 2009 PROFESSION % OF ALL JOBLESS WORKERS Architecture & Engineering 41.2 Management 39.0 Community & Social Services Occupations 36.1 Installation, Maintenance & Repair Work 34.9 Production Occupations 33.4 61 

62) THE COMPETITIVE TOOL KIT • Analytical Reasoning • Entrepreneurial Acumen • Contextual Intelligence • Soft Skills/Cultural Elasticity • Agility and Flexibility 

63) Implications for Workforce Planning and Development • Managing transition from the “graying” to the “browning” of America. • Competition for talent will be fierce – and global. • Successful recruitment and retention will hinge on your ability to effectively manage the full nexus of “diversity” issues. 63 

64) Diversity Challenges and Opportunities in the Accounting Profession • • • • • • • Workforce Changing Rapidly Lucrative Ethnic Markets for Services Glass/Bamboo Ceiling Promotion and Retention of Women & Minorities High Turnover Sexual Harassment Succession Planning 64 

65) Iceberg Model of Diversity Visible Diversity Traits If all I know about you is what I can see… Race/Skin Color Gender Visible Disability Age Group Physical Attributes Ethnicity Invisible Diversity Traits Level in Organization Culture Marital Status Values Education MBTI Religion/Religious Experiences International Cultural Immersion Communication Style Conflict Style Beliefs Teaching Style Recreational Habits IQ Learning Styles Academic Discipline Literacy Sexual Orientation Personality Style Orientation to Time Family Relationships Orientation to Tasks Physical Abilities/Qualities EQ Military Experience Socioeconomic Status Geographic Background Work Background Smoker/Non-Smoker Parental Status Native Born/Non-Native Born Political Ideology Thinking Style 

66) THE END