AGING

1
AGING WORK

• Demographic Realities
• Employment Choice and/or Economic Necessity?
• Individual/Employer/Societal Perspectives
• Barbara McIntosh, Professor
• 318 Kalkin Hall
• School of Business Administration
• University of Vermont
• mcintosh_at_bsad.uvm.edu

2
Discussion Overview

• Demographics (Background)
• Individual Perspective
• Reasons for work
• Economic Uncertainty
• Employer Perspective
• Labor supply pressures
• Age discrimination in the workplace
• Business case
• Implications for human resources policies and
  practices

3
Demographics

• 2000 35 Million were 65 in the U.S.(1 in 8)
• 2030 One in Five will be 65
• Propelled by Baby Boom
• 76 million born between 1946 and 1964
• Increased longevity old-old (85)fastest
  growing cohort
• Decreasing fertility Baby Bust
• Gender Gap women outlive men at age 85
  41Men/100 Women
• Diversity White 84 in 2000 will drop to 64 in
  2050

4
FUTURE? Life Expectancy of 65 Year-Olds Over Time
Source Congressional Budget Office based on
Social Security Administration.
5
Projected Demographic Shift Work/Dependency
Implications

• Ratio of population 20 to 64 compared to 65
• Source Congressional Budget Office Based on
  Social Security Administration Data

6
WHY WORK? Individual Perspective

• Living longer, healthier lives
• Contribution/productive activity conscious
  work/leisure mix (AARP, 2002) n 1,500
• Work in some capacity (net) 69
• Work part-time for interest or enjoyment 34
• Work part-time mainly for the income 19
• Start own business 10
• Retire from current job but work full time doing
  something else 6
• Not work at all 28
• Dont know 2

7
Specific Reasons to Work (AARP, 2002)

• Need the money 76
• Enjoy the job/enjoy working 76
• Being productive is a way I can help others 68
• To save for retirement 67
• It makes me feel useful 66
• Need to maintain health insurance coverage 65
• People have an obligation to work if they can 59
• Need to pay for health costs for self and family
  56
• To fulfill pension requirements/qualify for
  pension 49
• To qualify for Social Security 48
• Need to support other family members 46

8
ECONOMIC UNCERTAINTY

• Shift from defined benefit to defined
  contribution pensions
• Shrinking wealth stock market other investments
  (savings)
• Social Security?
• Ratio of productive workers to retirees 16.5/1
  in 1950 3.4/1 today 2.1/1 in 2030
• SS Benefits/GDP 2.6 in 2000 5.5 in 2030
• Health insurance coverage
• Changing family economic demands (sandwich)

9
Pensions

• Shift in form- Defined Benefit to Defined
  Contribution
• Importance?
• 20 of total wealth of middle-income households
  aged 51-61 (2nd to SS)
• of private sector workforce covered 50 since
  1970s
• Coverage increased for women (increased earnings
  and labor force participation)
• Coverage declined for men (union membership and
  employment)
• More important for higher-income workers
  greater replacement needed
• All workers need more than SS
• At Risk! pension schemes faced 300 b shortfall
  in 2003 270 companies reported under funding
  schemes of 50 million in 2002 (PBGC,2003)

10
Retirement Savings

• As of 2001, a federal analysis of households with
  at least one worker from age 21 to 64 concluded
  that 28 million -- more than one-third of the
  total -- did not have a retirement savings
  account of any kind. (Census Bureau and Federal
  Reserve, 2003).
• Among the 47.5 million households with a working
  adult who owns either an IRA, Keogh, or 401(k)
  plan, the median balance of those accounts was
  27,000, a little more than 1,000 a year if
  spread over a 20-year retirement

11
Retirement Savings (2)

• Increased credit card debt among those 65-69
  (5,884) up from 1800 in 1992.
• How much is enough?
• Consider profile
• 1 MILLION doesnt go as far
• 1 million in 1957 7.3 million today (Federal
  Reserve)
• 99 of Americans dont have 1 million

12
Social Security

• As Income Source
• 100 of income for 20 of older Americans
• 90 of income for 33 of older Americans
• 50 of income for 65 of older Americans
• Income redistribution
• Old-age poverty 50 in 1930s
• today 10
• Benefit scale now replaces 60 of pre-retirement
  earnings for low-income workers 30 for workers
  in the highest earning band
• Higher replacement rate for women longevity
  also disability insurance favors workers in
  tougher jobs at lower end of the income spectrum

13
Social Security continued

• Pressures for Change
• Ratio of workers per beneficiary
• 1960 5.1 workers per beneficiary
• 2004 3.3 workers per beneficiary
• 2031 2.1 workers per beneficiary
• Financial
• In 2018 SS benefit payments will begin to exceed
  SS tax income.
• In 2042 only about 73 of benefits could be paid
  unless changes are made (the system is broken)
• Support 55 of Americans want the system fixed
  now (35 no) results of poll in early March 2005.

14
Health Care Benefits

• Private plans cost increases double digits yr.
  increased premiums, reduced coverage or employers
  dropping coverage
• Medicare hospital insurance trust fund which
  pays for inpatient hospital care for those over
  65 will be exhausted by 2019 (7 years earlier
  than forecasted in 2003)
• Costs will exceed SS in 2024
• Will grow faster than the economy as a whole 2.6
  GDP in 2003 to 3.7GDP in 2010 and 7.7 of GDP in
  2035
• Tax revenues will fall short of outlays this year
  not in 2013 as earlier predicted
• Drug benefit costs 85 billion/yr in 2006
  161.8 billion in 2013

15
Employer PerspectiveDemographics as Driver

• More workers 55 receptivity
• 2000, 55 13 55-64 fastest growing
• 2015, 55 20 segment of workforce
• Smaller Cohorts Entering Labor force
• Critical Labor Shortages in dominant, growing
  service sectors skill specific
• Oil and Gas
• Nursing Allied Health Professions

16
Employer ViewShortage - Market? Existing?

• Alternatives?
• Immigration? (H-1B visas set at 195,000 during
  tech boom reduced to 65,000 and for FY 2005 they
  were gone the first day of availability. Reduce
  flow in education)
• Technology?
• Untapped labor pool
• Current aging workers retirees?

17
Why Retain/Recruit Older Workers?

• Logical labor market strategy response to
  conditions
• Proactive response to potential age
  discrimination suits
• Strong business case for adding age diversity
• HR policies and practices need to be re-examined
• Manage the multi-generational workplace

18
Proactive re Age Discrimination

• Still prevalent 19k cases filed with EEOC in
  2002 (14)
• In 2004, cost of negotiated settlements in
  federal age discrimination complaints totaled 69
  million (AARP 2006)
• In surveys, 67 report age discrimination (AARP,
  2002)

19
Age Discrimination in Employment Act (ADEA)

• Right to gainful employment has long been
  recognized Passed 1967 (mandatory retirement age
  70) amended 1987 (mandatory retirement
  eliminated)
• Use of an individuals age as a criterion for
  employment is generally forbidden Only where
  age is a bona fide occupation qualification
  (BFOQ) may it be used as a factor in employment
  decisions

20
ADEA Protection

• Covers workers 40 years or age and older
• Applies to firms that have 20 or more employees
• Applies to firms that affect interstate commerce
• Does not cover bona fide executive or high policy
  maker (attained 65 and held the position for two
  years) if entitled to a retirement benefit of at
  least 44,000.

21
Unlawful Employer Practices

• To fail or refuse to hire or to discharge any
  individual or otherwise discriminate against any
  individual with respect to his compensation,
  terms, conditions or privileges of employment
  because of such individuals age
• To limit segregate, or classify his employees in
  any way which would deprive or tend to deprive
  any individual of employment opportunities or
  otherwise adversely affect his status as an
  employee, because of such an individuals age or
• To reduce the age rate of any employee in order
  to comply with this chapter.

22
Exceptions

• Age as an occupation qualification
• Other Reasonable Factors
• Laws of a foreign workplace
• Seniority system
• Employee benefit system
• Discipline or discharge for good cause

23
Type Discrimination Experienced (AARP, 2003)

• Not getting hired for a job you applied for
  because of your age 15
• Passed up for promotion or a chance to get ahead
  because of your age 9
• Laid off, fired, or forced out of a job because
  of your age 6
• Passed up for a raise because of your age 5

24
Business Case for Older Workers

• Reduce Costs (turnover/recruiting)
• New Product/Service Markets
• Customer Sensitivity
• Employer of Choice (Competitive in Labor Market)
• More Attractive to Investors if Stable
• Greater Efficiency

25
FIRST STEPHR Policies Practices Review

• HR Audit Profile Organization
• Mission/Vision Diversity with Clout
• Age audit policies practices
• Recruiting
• Compensation
• Benefits
• Training opportunities
• Performance Assessment
• Promotion (legal)/Career Development

26
HR Policies Practices Review (2)

• Organization Learning
• Continuous training for ALL
• Mentoring (non-age specific)
• Stimulating Creativity
• Career development
• Reinventing careers
• Transition assistance
• Recruitment practices

27
Retention First then Recruiting Labor Market
Realities Expectations

• You are over qualified.
• This job would not be a good fit for you.
• The job has been filled.
• We will keep you posted.
• Real or easy response????

28
Educate All Recruiters!

• Recruiters should be sensitized to stereotypes
  (both conscious and unconscious).
• Focus should be on job description and required
  job performance.
• Interviewing team should include at least one
  mature worker.
• Screening materials/tests should allow for
  variation in completion time.

29
Challenge Legal Issues with Flexibility

• Flexibility in hours non-discriminatory given
  Fair Labor Standards Act
• See Conference Board Report, October 2007
• See Georgetown University Law Center

30
Societal Perspective Political Environment 2007

• Older Americans Act (OAA) reauthorization
• Senior Community Service Employment Program Title
  V
• Workforce Investment Act (WIA)- reauthorization
• New Legislation
• 1) Older Worker Opportunity Act of 2007 (Sen.
  Kohl)
• Tax Credit for Employing Older Workers in
  Flexible Programs
• Caregiving Credit for Older Workers

31
Political Environment March 2007Continued

• 2) Health Care and Training for Older Workers
  Act (Sen. Kohl)
• Extended COBRA coverage for Older Workers
• Improved access to Job Training Programs
• Clearinghouse of Best Practices for Hiring and
  Retaining Older Workers

32
Essential Resources Professional Associations

• Society for Human Resource Management (SHRM),
• www.shrm.org
• AARP, www.aarp.org
• Gerontological Society of America, www.geron.org
• National Council on the Aging (MaturityWorks
  Alliance),
• www.ncoa.org
• American Society on Aging (Business Forum on
  Aging),
• www.asaging.org
• Association for Gerontology in Higher Education
  (AGHE),
• www.aghe.org
• Chamber of Commerce, Institute for a Competitive
  Workforce, www.uschamber.com
• Urban Institute, www.urban.org