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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.

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The Business Case for Workers Age 50+

Deborah Russell, Director, Workforce Issues

AARP

america s aging workforce
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.
key factor age at retirement
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
Key Factor: Financial Need
  • Financial need is a primary reason that individuals are choosing to work longer.
  • An AARP Stock Market Survey (2002), 70% of50-70 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
Defined Benefit Plans Disappearing % of Wage & Salary Workers Covered by Plan Type, 1981-2001
why people think they ll work in retirement pre retirees age 50 70
Why People Think They’ll Work in RetirementPre-retirees age 50-70

Source: AARP, Staying Ahead of the Curve, 2003: The AARP Working in Retirement Study, 2003

key factor work life balance
Key Factor: Work/Life Balance
  • Older workers, particularly the boomers, are striving for work/life balance:
  • 31% of mature workers became responsible for a dependentparent
  • 23% had an adult child move back home
  • 16% were providing child care or day care for grandchild
aging not a big issue yet
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 analysis what employers are facing
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
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
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
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 workers18
The Business Case for 50+ Workers

Costs

  • Cash compensation
  • Health Benefits
  • Pension Benefits
  • Paid Time Off
the business case for 50 workers19
The Business Case for 50+ Workers

Industry Overlay

  • Energy
  • Financial Services
  • Health care
  • Retail
the business case for 50 workers20
The Business Case for 50+ Workers

Cash Compensation

  • Tied to market median
  • Cost depends on ability, experience and performance
  • Cash compensation not necessarily tied to age
the business case for 50 workers21
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 workers22
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 workers23
The Business Case for 50+ Workers

“Value”part of the Equation

  • Engagement
  • Turnover
the business case for 50 workers24
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 workers25
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 workers26
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
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What’s In it For Business?

  • 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.
aarp workforce programs
AARP Workforce Programs
  • AARP Best Employers for Workers Over 50
  • AARP Featured Employers
  • Alliance for an Experienced Workforce
resources
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