the business case for workers age 50+ deborah russell, director, workforce issues aarp
TRANSCRIPT
The Business Case for Workers Age 50+
Deborah Russell, Director, Workforce Issues
AARP
America’s Aging Workforce
Significant Demographic Changes in the USA
In 2000, 13% of the workforce was 55 and older.
By 2015, 20% of the workforce will be 55 and older.
Highest growth rate in workforce will be among persons aged 55-64.
Concurrently, a decrease in the population of workers aged 25-44.
Labor shortages could have an adverse effect on productivity and economic growth.
Projected % Change in Labor Force by Age Group, 2002-2012
10%
-7%
14%
51%43%
13%
-10%
0%
10%
20%
30%
40%
50%
60%
20-24 25-34 35-44 45-54 55-64 65+
Employee Perspective
Key Factor: Age at “Retirement”
Boomers much less likely to associate retirement with the traditional retirement age of 65.
Nearly 70% of workers who have not retired report that they plan to work into their retirement years or never retire.
Almost half of workers 45-70 indicate that they envision working into their 70s or beyond.
Key Factor: Financial Need
Financial need is a primary reason that individuals are choosing to work longer.
An AARP Stock Market Survey (2002), 70% of 50-70 year old investors reported that they had postponed retirement as a result of stock market losses.
Boomers are not financially prepared to retire because of high levels of debt and low levels of savings.
2003 Retirement Confidence Survey (EBRI) reported that fewer than 4 in 10 workers (37%) said they have calculated how much money they will need to have by the time they retire.
Defined Benefit Plans Disappearing % of Wage & Salary Workers Covered by Plan Type, 1981-
2001
0%
10%
20%
30%
40%
50%
60%
70%
1981 1991 2001
Defined Benefit Only
Defined Contribution Only
Both
Why People Think They’ll Work in Retirement
Pre-retirees age 50-70
32%
50%
54%
58%
59%
66%
71%
77%
85%
87%
Pursue a dream
Learn new things
Need money
Be around people
Help other people
Need health benefits
Do something fun
Be productive or useful
Stay physically active
Stay mentally active
Source: AARP, Staying Ahead of the Curve, 2003: The AARP Working in Retirement Study, 2003
Key Factor: Work/Life Balance
Older workers, particularly the boomers, are striving for work/life balance:
31% of mature workers became responsible for a dependent parent
23% had an adult child move back home
16% were providing child care or day care for grandchild
Employer Perspective
Aging Not a Big Issue… Yet
80% of employers do not offer any special provisions (i.e. flexible work arrangements) to appeal to the concerns of mature workers.
60% of CEOs indicate their companies do not account for workforce aging in their long-term business plans.
Most employers are not yet facing labor shortages or other economic pressures requiring them to recruit and retain mature workers.
Environmental AnalysisWhat Employers are Facing
Workforce aging rapidly, especially in some sectors
Recruiting talent is an issue for many businesses
Many legal barriers to ideal phased retirement programs such as ERISA & ADEA
Employer Perspective Employers tell us their concerns
A majority (58 percent) of HR managers in an AARP survey say that it has become increasingly difficult to find qualified job applicants.
More than half of the managers also predict a shortage of qualified workers within the next five years.
American Business and Older Employees: A Focus on Midwest Employers - 2005
Employer Perspective Positive Perceptions of Older Workers
Loyalty and dedication to the company Come to work on time; low absenteeism Commitment to doing quality work Someone you can count on in a crisis Solid performance record Solid experience in job/ industry Basic skills in reading, writing,
arithmetic Getting along with co-workers
Employer Perspective Negative Perceptions of Older Employees
Averse to change
Lack experience with new technologies
Out-of-date job skills
Difficulty reporting to younger bosses
Too Expensive
The Business Case for 50+ Workers
The Business Case for 50+ Workers
Debunk the myths employers possess regarding the costs associated with 50+ workers and build a “business case” for utilizing 50+ workers as one strategy for addressing labor shortages.
The Business Case for 50+ Workers
Costs
Cash compensation Health Benefits Pension Benefits Paid Time Off
The Business Case for 50+ Workers
Industry Overlay
Energy Financial Services Health care Retail
The Business Case for 50+ Workers
Cash CompensationCash Compensation
Tied to market median Cost depends on ability, experience and
performance Cash compensation not necessarily tied to
age
The Business Case for 50+ Workers
Health Benefits
Health claims for 50 -64 years and dependents equal 1.4-2.2 times the cost of claims for 30 – 40 year olds.
HR managers are increasingly concerned with behavioral issues that lead to health risks
50-64 year olds are less likely to have dependent children
The Business Case for 50+ Workers
Pensions
Only 21% of private employers offer DB plans vs. 42% that participate in DC plans
DC plans are not age-based
The Business Case for 50+ Workers
“Value”part of the Equation
Engagement
Turnover
The Business Case for 50+ Workers
Engagement
Towers Perrin study shows that 50+ workers are more engaged as they age.
Highly engaged workers correlates with overall performance of the company.
The Business Case for 50+ Workers
Turnover
The average tenure among workers is 3.7 years.
Median job tenure of 55+ worker is 3.3 times that of 25-34 year old.
Employers often don’t see ROI until 3rd year.
The Business Case for 50+ Workers
Employer Action
Inventory your current talent and define future needs Model cost trends to understand the business case
for investments needed to attract and retain 50+ workers
Study available labor pool and define your talent strategies
Align reward programs Align workplace policies and practices
The boomers will reinvent "retirement," working longer either because they want to or they need to.
Mature workers offer businesses a unique
combination of experience, loyalty, enthusiasm and a strong work ethic.
As the workforce ages, businesses that know how to
recruit and retain mature workers will gain a competitive edge.
What’s In it For Business?
AARP Workforce Programs
AARP Best Employers for Workers Over 50 AARP Featured Employers Alliance for an Experienced Workforce
Resources
The Business Case for Workers Age 50+: Planning for Tommorrow’s Talent Needs in Today’s Competitive Environment
Staying Ahead of the Curve 2004: Employer Best Practices for Mature Workers
Staying Ahead of the Curve 2003: The AARP Working in Retirement Study, AARP, 2003
Staying Ahead of the Curve: The AARP Work and Career Study, AARP, 2002
AARP Employer web site:
www.aarp.org/employerresourcecenter