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02/17/2011

aging workforce, baby boomers, employment, Job Search Tips, recruiting, Recruiting and Selection Tips, retirement, Staffing

The Aging of America’s Workforce: What Does It Mean For You?

Mark Twain once said; “Age is an issue of mind over matter. If you don't mind, it doesn't matter." Never in the history of our nation’s workforce have those words rung more true than they do today. American workers are increasingly facing pressures to prolong their careers beyond what have long been considered traditional tenures. The issues affect employees and employers alike, as there is a major ongoing shift in employment supply and demand factors at play.

Advances in modern medicine have extended today’s life expectancies well beyond that of prior generations. According to development indicators compiled by the World Bank, the expected lifespan of an American infant born in 2008 is 78.4 years, nearly nine years (or 12%) greater than what was expected of a child born in 1960 (69.8 years). While this certainly speaks well to our societal well being, it also presents a very daunting retirement quandary. We are spending more years, and a greater percentage of our lives, beyond the traditional retirement age of 65.

Think back to that child born in 1960. If the averages play true, that child would grow to live approximately 5 years, or about 7% of his or her total lifespan, beyond the traditional retirement benchmark of age 65. Now think of the child born in 2008. That child will grow to live over 13 years beyond age 65, representing approximately 17% of his or her total lifespan. Faced with greater post-retirement financial requirements, an issue that is compounded by inflation over a longer period than ever before, a rapidly increasing number of American workers are having to work into their 70’s, and sometimes beyond.

The gravity of the issue is particularly high during downturns in the economic cycle, like the one we are currently experiencing. Many workers who thought just a few years ago that their savings would be sufficient to carry them throughout retirement have had to face the harsh reality of depressed equity securities and real estate values, factors that have driven record numbers of septuagenarians back into the workplace. In fact, according to the U.S. Bureau of Labor Market Statistics, the number of workers aged 65 or older is expected to rise more than any other age category, on a percentage basis, over the next 5 years. We expect that percentage to grow even further in light of the increase in the Social Security retirement age that so many political pundits project.

But what does this mean for the employer side of the relationship? Quite simply put, companies are having to face the reality of an older workforce. The issue is closely intertwined with rising health care costs, another factor that must be carefully considered in developing age-based cost expectations during long-term budgeting. Generational differences in workforce composition are also of concern, as wider age gaps between younger and elder employment groups can present a disconnect in philosophical, procedural, and technological competencies.

There are no simple answers to the questions that both sides of the equation present. However, with a proper understanding of the inevitable shifts that are to come, and a well designed, proactive plan of action, aging workers and their employers alike will be better prepared to coexist during increasingly complex times.

Have you set your plan into action yet? Are you familiar with the anti-age discrimination laws that will inevitably affect American businesses in record numbers moving forward? Are you nearing traditional retirement age, faced with difficult decisions with respect to where your career goes from here? Why not call the employment specialists at Kavaliro for guidance? They have the expert knowledge that can help to set you or your firm on the path towards successful embrace of the coming shift.

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