Accommodating The Older Worker

Risk & Insurance,  August, 2000  by Steven Van Yoder

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Coming Labor Shortage

According to a study by the Urban Institute (sponsored by the U.S. Department of Labor), the absolute number of labor force participants between the ages of 45 and 54 will increase by about 31 percent (from 26 million to 34 million) by 2005. This compares with more modest increases of 8.5 percent for people age 16 to 24, and a decline of 10 percent for 25 to 34 year olds. The projected labor shortage has caused some to predict dire consequences if employers do not embrace the realities of an increasing reliance on an older work force.

"I recently spoke with the management of a major American company who said that within five years, half their work force would be eligible for retirement," says Bruce Douglas, senior medical consultant for Marsh Risk Consulting in Deerfield, Ill. "This is a company with worldwide operations, and the managers had long faces because they faced a labor shortage.

"It was not so long ago that encouraging older people to retire was very normal, and very American, particularly with union shops," Douglas says. "Unions struggled to get contracts with employers who had good retirement benefits. Now even the unions are starting to realize they might have done themselves a disservice."

Douglas predicts an economic disaster--a labor shortage brought about by baby boomers leaving the work force. Because fewer younger employees are available to take their place, Douglas says that employers must embrace and prepare for an older work force out of sheer necessity. "The average older, healthy woman age 50 has almost half her life left. The average, healthy male will live until age 83. From a societal and corporate point of view, it doesn't make sense for many of these people to go out to pasture."

The American Association of Retired Persons recently published its third study identifying, documenting, and tracking the policies and practices of American business toward older workers. The study predicts there will be less new entrants into the work force.

It also predicts that because retirement becomes a more elusive goal due to Social Security being restructuring, corporate pensions being trimmed or eliminated, and personal savings being depleted or nonexistent, many older workers will need jobs because of their circumstances.

A robust economy, combined with a shrinking pool of younger workers, is expected to increase the employment of older workers beyond the current retirement age.

"The culture of the company still tends to reach in the direction of retirement. Corporate America has to recognize that this premise is outdated and work to develop ways to keep older people at work," Douglas says.

Realities of Older Workers

There are three realities we can count on: the workplace is aging and will be working longer out of economic necessity; older workers are less likely to have accidents but experience more severe and costly claims when they do; employers must prepare now for an older work force.