The Aging Workforce and Retiring Baby Boomer Population
How HR managers can enhance their companies by hiring older and more experienced individuals and avoid lawsuits.
November 19, 2009
Today’s accounting and financial firms may be facing a high unemployment rate, but things soon may improve in a big way. An aging workforce is likely to see an increased retirement with employment opportunities opening up more quickly for today’s grads than they have since the baby boomers entered the labor market in the late ’60s and ’70s, even if the economy does not return to ’90s levels. More than 20 million baby boomers will hit retirement age by 2012, and the number will increase through the following decade. As boomers retire, there might be a chain reaction whereby promotional opportunities open for younger workers. Unless … boomers refuse to retire.
Baby boomers may not retire for two reasons.
Plus, we may see inflation. According to the American Association of Retired People, nearly three out of four (70%) workers say that they plan to work in retirement and one-half (50%) aged 45 to 70 expect to work through their 70s. No rest for the weary Boomers.
HR Concerns About Aging Workforce
There are many human resource (HR) management issues concerning an aging workforce such as recruitment, law suits, health and safety, medical plan costs and training. In the ’50s, University of Chicago labor economist Gary Becker argued that any form of discrimination raises labor costs and, therefore, firms that discriminate will be punished in the marketplace. That is true of age as well as gender and race discrimination. To the extent, not hiring older workers who can do a job well, can raise labor costs and make firms less competitive.
Older workers incur 1.4 times to 2.2 times more health costs in comparison with workers in their 40s. But older workers have experience and often have a stronger work ethic than today’s graduates. They can be more reliable and in certain fields their networks of contacts may be invaluable. On the other hand, some older workers are less technologically adept and may be less creative and flexible. On balance, there are probably some professions in which older workers will outperform younger workers and others where the reverse is true. If you are a smart employer or recruiter, you will be able to identify what segment these older workers are in, even if it is through trial and error. But how many employers have systematically examined this issue? My guess is close to none.
How to Cater to Older Workers
Employers who decide to hire older workers should consider a number of health and safety issues. An important health issue for older workers is falling. Thus, establishing health and safety audits of walkways; keeping outdoor spaces dry and clear of ice and snow; maintaining lighting; establishing health and safety standards with respect to handrails; and using job rotation to reduce stress can be beneficial.
In a study, the Conference Board found that there are a number of useful tactics for motivating mature workers. Flexible work arrangements that permit part-time work are useful for recruiting and scheduling. Training older workers for job transitions into work that best utilizes their strengths may pay high dividends. Phased retirement, in which workers work part-time for several years before retiring, can be a useful tool, not only to manage older workers but also to facilitate knowledge transfer.
One concern is the increasing risk of age discrimination law suits. But in firms where there is a significant number of workers over 60, lawsuits become less winnable because the plaintiff cannot argue that termination was discriminatory.
The Society for Human Resource Management reports that the American Association of Retired Persons (AARP) has found “60 percent of employees over 50 see age discrimination as the primary barrier to finding new jobs, while only 38 percent view their employers as welcoming toward older workers.”
There are powerful economic forces that will militate against a large percentage of retiring boomers. Retiree healthcare, Medicare and Medicaid as well as Social Security remain serious, looming problems that Congress has left unaddressed. The Federal Reserve Bank of St. Louis (PDF) reports that M2 — a measure of the money supply — has grown by better than eight percent per year since 2006, despite widespread concerns about deflation, and the adjusted monetary base (PDF) has grown from $800 billion in early 2008 to over $2 trillion now. These rapid increases in monetary measures suggest a palpable risk of inflation. Fixed income securities, including pensions, may fare badly in the near future. Thus, the combination of the neglect of retiree benefits, including Medicare and Social Security and inflation can mean that the workforce will be increasingly gray.
Bridging Older Workers With Gen X and Beyond
Some younger workers may feel uncomfortable working with older workers, and the dynamic of a younger boss and older subordinate is likely uncomfortable for many. Social compatibility plays a role in generating esprit de corps. As an HR manager, it is in your and your firm’s best interest if such prejudices are overcome. Accounting and finance firms can be made much more efficient by hiring without concern for age and, instead, with an eye on optimal productivity.
A report by Dana Knight of the Indianapolis Star found that three out of four (71%) of workers aged 60 and over report to younger bosses. While managing older workers ought to become part of all MBAs’ and CPAs’ managerial tool kits, relatively few firms have been planning for an older workforce and even fewer MBA programs have been addressing the issue. Interestingly, smaller firms have been better at integrating older workers than larger firms have. Maybe there’s a lesson to be learned.
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Mitchell Langbert, PhD, is an Associate Professor, Brooklyn College. Widely published on the subject of human resource management, Langbert has consulted and served as an expert witness.