The aging workforce: the reality of the impact of older workers and eldercare in the workplace

HR Magazine, Dec, 2003 by Nancy R. Lockwood

Abstract

The impact of the aging workforce--particularly in developed countries--is beginning to be felt globally in the economy, in businesses, in communities, and even in people's family life. It is critical that governments, employers, and communities become more aware of the affect of the aging population on society in general and in particular the anticipated labor shortages, greater health care needs for the elderly, and decreased private and public investments with fewer people contributing as the baby boom generation retires. And as worldwide demographic trends continue to show declining fertility rates and a steady increase in life expectancy, the issues of older workers and eldercare come to the forefront.

**********

Part One: Older Workers

The makeup of the labor force has slowly changed over the past 50 years, and significant changes are coming. This demographic shift has been exacerbated by the trend of early retirement of the baby boom generation. In 1950, there were seven working age people for every elderly person in the United States. By 2030, there will be only three. (1) The aging workforce represents a major economic challenge at home and abroad. The question is--how will society and world leaders address this challenge?

There are several components to be considered. First, many older workers are remaining in the workforce or seeking full- or part-time positions after retiring. Second, to retain older workers with their experience and knowledge base--and offset the skilled labor shortage--legislative changes must be made to allow older workers to continue to work, or return to work, without financial penalty (e.g., changes in social security, pension plans, IRS regulations). And third, to encourage older workers to remain in the workforce, organizations must be willing to make investments in training and offer appropriate benefit options.

Exactly Who is an "Older Worker"?

Who are older workers? They are full time and part time, temporary and permanent, white-collar and blue-collar. Older workers may be 45, 55, or 65 years old, in their 70s, or even older.

With varying perspectives on what constitutes an older worker, there is no set definition. The Age Discrimination in Employment Act of 1967 (ADEA) applies to individuals aged 40 and over. Using the ADEA definition, the number of older workers will significantly increase as all baby boomers reach age 40 by 2004.

In the profiles on older workers presented by Georgetown University's Center on an Aging Society, the data suggest that being an older worker starts at age 51. (2) However, the Committee for Economic Development's New Opportunities for Older Workers identifies older Americans as age 45 and older. (3) As portrayed in Chart 1, the 2003 SHRM[R]/NOWCC/CED Older Workers Survey shows that human resource professionals widely differ on defining the age of older workers, from ages 40 to 45 to age 70 and older. (4)

Projected Statistics Forecast a Serious Scenario

A significant labor shortage is forecast, with some of the factors being an unprecedented aging workforce, retirement of the baby boom generation, lower birth rates, and fewer skilled younger workers:

* Since 1950, the number of people aged 65 and older in the United States has increased from 8% to 12%. (5)

* In 2002, the total labor force in the United States--including people with jobs and active job seekers--increased by approximately 720,000 people, as compared to 950,000 in 2001. The increase is primarily due to people aged 55 and over. (6)

* By the end of 2002, the number of older workers in the labor force aged 55 to 64--employed or seeking work--increased to 62.9%, the highest level during the postwar era. (7)

* According to the U.S. Bureau of Labor Statistics, more than 25% of the working population will reach retirement age by 2010, resulting in a potential worker shortage of nearly 10 million. (8)

* According to the U.S. Census Bureau, the number of people aged 55 and older will increase to 73% by 2020, while the number of younger workers will grow only 5%. (9)

* By 2030, with the last of the baby boom generation turning age 66, an unprecedented 20% of the population will be over age 65. (10)

Law and Older Workers

In the United States, older workers are protected from discrimination in the workplace under the ADEA. This law prohibits age discrimination in employment for persons aged 40 and over. The ADEA applies to private and public employers with 20 or more employees, employment agencies, labor organizations with 25 or more members, and apprenticeship and training programs. With some exceptions in academic institutions, the ADEA forbids mandatory retirement based on age and limiting or classifying employees in any way that adversely affects their status due to age (e.g., discontinuing pension accruals after age 65). Other exceptions to the ADEA may occur with bona fide occupational qualifications reasonably necessary to an organization's operation or special rules under the 1988 Employee Retirement Income Security Act (ERISA).