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Older Workers On the Rise: Benefits and Potential Drawbacks

The baby boomer generation has had a significant impact on society—and the workforce. That impact is predicted to continue. The Bureau of Labor Statistics (BLS) reports that, while only 11.9 percent of the labor force was 55 years or older in 1990, that percentage will increase to 25.2 percent in 2020. Many Americans are choosing to work longer these days, either based on the need for additional income or the desire to stay involved and active. Seniors in the United States are employed at the highest rates in 55 years according to a Bloomberg article.

An Aging Workforce

With the tsunami of aging baby boomers poised to finally exit the workplace, many companies have found themselves faced with concerns about whether they have the bench strength to fill these soon-to-be-empty positions. Engaging these older employees and keeping them in the workforce is one option to help minimize the impact of this exodus. Engaging with retirees to draw them back for special assignments or limited term engagement is another.

According to research from the Employee Benefit Research Institute, 79 percent of workers plan to supplement their retirement incomes by working.  In addition to their contributions as employees, older workers and retirees hold potential to give back to the organizations they’ve served, and future leaders, by serving in coach/mentor roles. Retirees can also serve as brand ambassadors, spreading the good word about the organizations they’ve worked for in the community.

There are obvious benefits for organizations in terms of retaining the institutional knowledge that older workers retain; there are some drawbacks though as well. Here we take a look at both.

Benefits of Retaining Older Workers

As the economy has begun to show signs of improvement, employers are starting to feel the pinch and finding it more challenging to recruit workers—especially for certain positions. The ability to retain older workers is one way to lessen that pinch.

In addition, as we’ve already alluded to, older workers have a significant amount of knowledge and past experience to bring to bear. The loss of that knowledge and experience can be a definite blow both in terms of finding someone to fill the gap and in terms of lost productivity. These experienced workers have also established relationships in- and outside the organization that also have value.

As Nathaniel Reade points out in AARP The Magazine, older workers “score high in leadership, detail-oriented tasks, organization, listening, writing skills and problem solving—even in cutting-edge fields like computer science.”

Because of the knowledge they have accumulated and the experience they have to share, some older workers are being called back to the workplace after retirement for short gigs or to mentor their younger replacements. These types of arrangements can be a win-win for all involved.

There are, though, some potential drawbacks that organizations should be aware of. In fact, Fidelity Investments recently made the news for its offer of a voluntary buyout package to 3000 employees, age 55 or older who had been with the company for at least 10 years. They’re not the only company to do so.

Drawbacks That Older Workers May Present

Why would organizations like Fidelity choose to offer older workers an incentive to leave? The bottom line.

One of the key drawbacks of older workers is that they cost too much. Having been in the workforce longer, and often receiving pay increases year over year, these older workers are more expensive than new hires might be. Their benefit packages may also be more costly—e.g. more accrued vacation or sick leave, higher costs of insurance coverage, etc.

Still, there are ways to get around some of these expenses. In recent years an increasing number of organizations have shifted to a market-based compensation strategy, rather than paying employees more as they gain increasing years of service. This can help to maintain a level playing field that benefits both employers and employees.

Another potential downfall? In some cases, regardless of their chronological age, employees who have been on the job for a longer period of time may become burned out or disengaged and disenchanted with the work they do. It may be time for them to leave and to insert new energy and enthusiasm into the position.

 

Each organization will have to weigh the pros and cons based on their own unique situations and workforce makeup. Despite organizations like Fidelity that are finding value in paying older workers to leave, other employers are taking advantage of the skills, knowledge and unique abilities that their older workers—and retirees—can bring to the workplace.

 

 

 

 

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