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Accommodating The Older Worker

Risk & Insurance, August, 2000 by Steven Van Yoder

Baby boomers are swelling the ranks of the employed, potentially impacting workplace injuries. Employers have to address these issues now to keep workers' comp costs under control.

The post-World War II baby boom generation has had a profound effect on America. The sheer number of people in this generation makes it a major demographic contributor to important events and developments in society, the economy, and the workplace.

But despite the many profound implications, studies show that most employers are not planning for the aging baby boom generation. The aging of the work force, and the trend toward longer working lives and greater employer reliance on older employees, has significant cost implications that must be addressed. These issues include increased workplace injuries and workers' compensation costs, as well as potential labor shortages as baby boomers retire.

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Between 1946 and 1964, about 75 million children were born in the United States, an average of about 4 million births each year, peaking at more than 4.2 million a year in the early 1960s. Between 2011 and 2029, the baby boomers will reach the traditional retirement age of 65, swelling the ranks of America's elderly to record highs. Experts predict there will be a severe labor shortage as baby boomer retirements dramatically reduce the size of the work force. In addition, many boomers will work well beyond the traditional retirement age, a fact that promises to impact workplace injuries and claims costs.

Injuries, Claims Implications

A recent study by the National Council on Compensation Insurance (NCCI) concluded that the median age of America's work force will rise to 41 in 2005, up from 34 in 1980. And the ranks of workers 45 or older will increase to about 55 million, or nearly 40 percent of the labor force. Furthermore, the study concluded the average age of U.S. workers, including those injured on the job, has increased since the early 1980s.

Between 1980 and 1990, the average cost per covered worker for workers' compensation insurance increased from $127 in 1980 to $324 in 1996. The study acknowledges other factors that affected claims costs in this period, such as statutory reforms. Still, the researchers found that the demographics of aging have statistically significant effects on the workers' compensation system's cost components.

Older workers experience fewer injuries with less frequency overall than younger counterparts, but the severity of injuries is greater among older workers and causes a resultant increase in indemnity and medical claims costs. The NCCI predicts a 2 percent decline in claims frequency between 1997 and 2001 that will be offset by acceleration of claims costs. The average cost per lost-time claim is predicted to increase by 3.8 percent in indemnity costs, up from a 1.4 percent annual increase during a prior period between 1993-1997 and a 3.1 percent annual increase in medical costs, up from 2.8 percent.

An aging work force also brings preexisting health problems and conditions that affect workers' compensation costs. Called co-morbidities, these conditions, if left unchecked, can significantly impact workplace injuries and claims costs. "Generally older workers are more experienced and careful and have lower injury rates. On the other hand, they are more likely to have developed nonoccupational injuries that increase in severity over time and contribute to future workplace injury claims," says Eric Oxfeld, president of Strategic Services on Unemployment and Workers' Compensation in Washington.

According to Oxfeld, state workers' comp laws do not do a good job of distinguishing work-related from nonwork-related health conditions. "In many states, if work aggravates nonoccupational health conditions, it may become compensable. Responsible employers may want to establish a baseline to determine whether hearing loss, or any other degenerative condition, is caused by the aging process rather than job conditions. Therefore, employers who have workers in the baby boom generation may want workers tested for things like hearing to see whether it is or isn't the product of a work-related degenerative process."

Employers must address and recognize conditions such as cardiovascular, cerebrovascular and pulmonary diseases, diabetes, arthritis, allergies, asthma, and hearing loss, all of which can make workplace injuries more complex, costly, and difficult to treat while presenting treatment delays and confusion in the diagnosis and evaluation of potential work-related health conditions.

Periodic hearing tests and ergonomic evaluations, for example, go a long way toward addressing and minimizing the risks associated with preexisting or potentially degenerative health conditions. Becoming aware of employee health conditions (discreetly through hearsay or direct observation) can help management identify and deal with degenerative conditions such as arthritis by giving employers the opportunity to accommodate an employee's workplace needs in a manner that reduces the risk of injury.

Financial Services Industry

Accommodating The Older Worker

Risk & Insurance, August, 2000 by Steven Van Yoder

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