Looming Boomer Retirements

Julie Shenkman
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They were born - in droves - after World War II, becoming the largest sustained population surge in U.S. history. They were Dr. Spocked in their infancy and Mr. Spocked in their adolescence. They've trail-blazed, followed, and reinterpreted many stages of life and culture, from free-and-easy lifestyles to two-income families.

And now they're getting old. The baby boom generation - "the pig in the python," as demographers have labeled it - is rapidly entering its mature years. As the first of these 75 million people hit age 65 in 2011, businesses throughout the United States will soon be awash in a tsunami, a towering gray wave of boomer retirements.

And not all businesses will be braced for the onslaught. "A lot of folks are waking up to this," says Roger Herman, a human resources consultant and futurist in Greensboro, N.C. "But other companies don't have a clue. They're too focused on the short term to see what's going on around them."

Is demography destiny?

The Hudson Institute, a public policy think tank, has issued research analyzing the changing workforce in the United States. Senior Research Fellow Richard Judy notes that U.S. population growth is in decline and will continue to drop well into this century. The growth of the workforce, too, is slowing and is now at the slowest pace in U.S. history. Further, the number of young adults (those ages 25-34) will fall sharply for the next several years, while the number of those ages 55-64 will double between now and 2020.

This is what the experts mean by the graying of the population. And in the vanguard are baby boomers. In 1995, boomers constituted 41 percent of the population ages 16 or older. Their vast numbers continue to dwarf other demographic groups as the generation ages.

The significance of this demographic bulge is that the number of working-age Americans who are available to support each person of retirement age is plummeting. Now, some 4.5 persons support each senior, defined as someone aged 65 or more. By 2010, according to Hudson Institute statistics, there'll be only 2.5 persons supporting every senior.

As the boomers near retirement age they will put increasing pressure on businesses' hiring and employee retention efforts, as well as deliver a huge wallop to the two major entitlement programs, Social Security and Medicare.

A diversity issue

The coming retirement wave will affect unionized companies first, particularly those in durable goods manufacturing, according to Hudson Institute research. That's because such companies, at the height of downsizing a decade or so ago, trimmed their workforces of younger, less-senior workers. The workers who stayed on are now beginning to approach retirement age.

Other factors will accelerate this trend. Participation in the labor force - especially among males - typically drops at age 55, largely because that's when many early-retirement programs kick in. Participation in the labor force falls again when males reach age 62, when eligibility for Social Security early retirement takes effect.

The biggest impact on business will be attracting and retaining critical workers. As the workforce shrinks, attraction and retention will only become more critical to a business's success and continued growth.

"Older workers will be a resource, more than they'll be a burden," argues Herman. With a continuing labor shortage, business "should be looking for all the people they can find to get on board."

A 1999 survey sponsored by the American Association of Retired Persons (AARP)indicates that most baby boomers intend to remain in the workplace once they reach - and pass - traditional retirement age. Boomers envisioned "a very novel type of retirement," the survey said. Eight out of 10 boomers believe they will work in some manner, for enjoyment or financial need, long past age 65 or 67.

Yet blending a workplace of older workers with younger supervisors can create some thorny cultural and managerial problems. Herman argues that smart companies already are enlarging their diversity initiatives to encompass more than just racial issues. The goal is to "build tolerance and honoring of people who are different from you," he explains.

That impetus for compromise, understanding, and appreciation of the differences among workers will lead, Herman hopes, to a different kind of management that he calls "facilitative leadership." This style of management appeals, ironically, to those who most recently entered the full-time workforce.

Facilitative leadership comes from managers doing three simple things well. The first, Herman says, is defining what's desired from a job or project. Second is providing the employee with all the tools and resources needed to achieve the results. And third, "Get out of the way!" says Herman. That means: Let people use their skills and processes to accomplish the task their way.

Ask the older worker to stick around

Judy, the Hudson Institute analyst, offers businesses some ideas on how to mitigate the looming retirement wave. First, he suggests, businesses should identify what he calls the "older-keepers" among your workforce.

These are the graying workers whose knowledge, skills, experience, and business contacts are so valuable that you cannot bear to lose them early. Judy urges businesses to come up with ways to keep these war-horses on staff a little longer. At the same time, of course, businesses must prepare replacements for these keepers of institutional memory, and assign the younger employees as understudies to the senior ones.

Another strategy is to change workplace and compensation practices to make it more congenial to older workers. That might include offering older workers more flexible schedules, and job-sharing and part-time job opportunities. Offering more flexibility in benefit programs and health coverage, too, may lure older workers to stay on the payroll longer.

Businesses may want to accommodate their physical limitations by placing benches near elevators, providing easier-to-read computer screens, and providing workers with more ergonomically acceptable office furniture.

Businesses also should plan for a future of fewer workers. Analyst Judy says companies must look at how to re-engineer their production processes, capital equipment, and product mixes to enable them to operate productively with fewer employees.

If that doesn't work, Judy supposes you can always move your operations to areas that have the workers, such as Florida, Arizona, and other sunny bastions of the active elderly.

More age discrimination in the forecast?

As the working population ages, observers worry that there will be an increase in the number of discrimination lawsuits brought by older workers who've lost their jobs.

Brenda Eckert, a partner in the New England labor and employment-practice firm of Shipman & Goodwin, says it's important for employers to get their reductions in force (RIF) right.

"The area of exit incentive packages, reorganizations, RIFS and getting releases - this is a very complex area," she says.

"If a company is thinking about a RIF," she adds, "the first thing you need to do is talk to a lawyer," to ensure that your operations stay in line with requirements of the Older Worker's Benefit Protection Act and the Age Discrimination in Employment Act.

The liability issue aside, Eckert also advises HR managers to treat layoffs and RIFs individually. "Look at people as individuals," she says. "Make no assumptions. If you make a decision about jobs that is adverse, give them a reason that indicates age is no focus."

The single biggest reason cited by the Equal Employment Opportunity Commission when determining whether age discrimination in the workplace has occurred is lack of communication, Eckert says. "It sounds so trite, but if you give people legitimate reasons [for a layoff or RIF], they'll think twice before suing you."

--From BLR's Best Practices in HR


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