The Business Case for Workers Age 50

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• The Business Case for Workers Age 50
• Deborah Russell, Director, Workforce Issues
• AARP

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Americas 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.

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Projected Change in Labor Force
by Age Group, 2002-2012
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Employee Perspective
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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.

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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.

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Defined Benefit Plans Disappearing of
Wage Salary Workers Covered by Plan Type,
1981-2001
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Why People Think Theyll Work in
RetirementPre-retirees age 50-70
Source AARP, Staying Ahead of the Curve, 2003
The AARP Working in Retirement Study, 2003
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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

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• Employer Perspective

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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.

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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

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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

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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

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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

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• The Business Case for 50 Workers

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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.

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The Business Case for 50 Workers

• Costs
• Cash compensation
• Health Benefits
• Pension Benefits
• Paid Time Off

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The Business Case for 50 Workers

• Industry Overlay
• Energy
• Financial Services
• Health care
• Retail

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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

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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

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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

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The Business Case for 50 Workers

• Valuepart of the Equation
• Engagement
• Turnover

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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.

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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 dont see ROI until 3rd year.

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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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Whats 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.
•  

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AARP Workforce Programs

• AARP Best Employers for Workers Over 50
• AARP Featured Employers
• Alliance for an Experienced Workforce

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Resources

• The Business Case for Workers Age 50 Planning
  for Tommorrows Talent Needs in Todays
  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/employerres
  ourcecenter