The current financial crisis in the U.S. is hitting everyone hard, perhaps not least the older population. Many in this age group will have taken early retirement in recent years and may now be starting to feel the pinch due to unexpected price rises. Some of these seniors, along with others who just miss the activity and companionship of the workplace, may be considering a return to work on a full or part-time basis.
In fact, the trend towards earlier retirement in recent decades means that the U.S. has a large non-economically active older population in their 60s and early 70s, many of whom hold valuable skills and experience and who enjoy much higher levels of health and fitness at this stage of life than any earlier generation.
Increasingly, employers will need to tap into this older labor pool in order to ease recruitment difficulties. Demographic changes, including a falling birthrate and the aging of the U.S. population, mean that fewer young people are now entering the labor force. As the first cohort of the baby boomer generation reaches retirement age this year, the labor force can be expected to shrink considerably within a short period of time, even taking into account a continuing influx of immigrants.
Moreover, the workforce itself is aging, as reflected in the U.S. Bureau of Labor Market Statistics’ data on the employment participation of different age groups. Between 1977 and 2007, it is reported, there was a 101% increase in the employment of workers aged 65 and above, compared with a 59% increase in total employment. By 2016, it is estimated, the number of workers aged 55 to 65 will increase by 36.5%, while the number of workers aged 65 and over will increase by more than 80%, with the latter group accounting for more than 6% of the total labor force by that time.
Simple supply and demand considerations, therefore, suggest that future employment opportunities for older people will be good. Moreover, a raft of legislative and policy changes over recent decades, including the Age Discrimination in Employment Act (ADEA) of 1967 and the elimination of mandatory retirement in 1986, have also theoretically improved recruitment and retention prospects for the country’s seniors.
Yet there is evidence that age discrimination on the part of employers is rampant in the U.S., hindering not only the opportunity for older people to improve their finances but also potentially hampering the ability of the labor market to adjust to the demographic changes. Equal Employment Opportunity Commission statistics show a vast increase in age discrimination lawsuits in recent years, while research studies also provide evidence that age discrimination is widespread, at least in terms of recruitment and displacement, if not in terms of earnings. However, this is often very subtle and more difficult to prove than other forms of discrimination; for this reason it is likely that the statistics vastly under-estimate its true extent.
Benefits of Retirement-Age Workers
Studies have suggested that many employers are reluctant to hire older workers as they fear higher healthcare and insurance costs and hold concerns about their abilities and likely productivity. In fact, while there is some evidence that physical strength steadily declines after the age of 40, research has also indicated that there is little deterioration in mental faculties until over the age of 70. Moreover, published case studies of organizations in the U.S. and Europe that actively recruit and retain older workers, including McDonalds and the book retailer Borders, provide evidence of many benefits of such policies, such as lower rates of absenteeism, lower turnover, higher profits and improved customer satisfaction.
The increased employment of older workers is also likely to bring wider economic benefits to the U.S. by helping to ease the burden on the Social Security and pensions schemes resulting from early retirement patterns and the increased lifespan of Americans. A remaining barrier, however, is the restrictive pension scheme regulations which often deter older people from continuing to work beyond retirement age or re-entering the workforce. The U.S. may be well-advised to consider adopting the type of gradual retirement programs already in place in many Scandinavian and European countries.
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