Senate (Special Committee on) Aging Committee Hearing
Chairman Collins, Ranking Member McCaskill, Members of the Committee...
Thank you for inviting me to testify today before the
I'm Kerry Hannon AARP's job expert, a New York Times columnist and author of 10 books, including Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy . . . And Pays the Bills and Getting a Job After 50 For Dummies which will be published this fall.
I've spent three decades covering all aspects of business, careers, and personal finance and am increasingly alarmed by the disconnect between employers and older workers.
We're too old to hire, but not ready to retire
Work at an older age is becoming increasingly common.
Yes, some retirees have always taken part-time jobs out of financial need to shore up retirement accounts, or stave off boredom. What's different now is that baby boomers are either continuing to work much longer or approaching work not as an afterthought but as a pillar of their "retirement" plans, as oxymoronic as that sounds.
I'm delighted that Senator
Moreover, with
And that segment of the population -- 65 and older -- is the only one anticipated to grow. The number of people of prime working age -- ages 25 to 54 -- is expected to decrease through 2030. There are not enough younger workers to fill the gap left by retiring older workers.
And
Meantime, you have supported tax and other incentives to spur investment in renewable energy technology and create "green jobs" that will expand and strengthen our economy. Green jobs, I believe, are a growing field for workers over 50, and one that appeals to those who are looking for jobs with a social purpose and meaning.
I'm looking forward to hearing the testimony of my fellow presenters will also add substance to my argument:
Each of us here today because we deeply believe and are dedicated to the social and economic well-being of Americans over 50 which, of course, converts into national economic well-being.
Keeping older workers on the job is a win all around. Older workers contribute to the economy in a plethora of ways from paying taxes to spending and investing.
The Numbers Tell the Tale
. As the population ages, the workforce is aging right along with it. The trend is rooted not just in longevity, but in the realization that continuing income will help sustain these later years--especially as employer pensions recede into the past.
. U.S. employees 65 and older now outnumber teenagers in the workforce for the first time since 1948. In 2002, workers 50 and older comprised 24.6 percent of the workforce. By 2012, they represented 32.3 percent. And by 2022, they're projected to be 35.4 percent of the total workforce.
. By 2029, when all of the baby boomers will be 65 years and over, more than 20 percent of the total U.S. population will be over the age of 65, according to the
. In 1991, just 11 percent of workers expected to retire after age 65, according to the
. In 2015, Two-thirds of workers said they plan to work for pay in retirement, up from 61 percent in 2001, according to the
. The nonprofit
Working longer can help provide for a secure retirement
Planning to stay on the job a few years longer can make a huge difference for financial security as we age.
As I travel around the country speaking to audiences of 50-plus who are actively looking for jobs, I see a palpable fear in their eyes that they will outlive their money.
For many people, the mixture of longer lives, meager savings and no idea what their ongoing healthcare and other expenses will be down the road is daunting. Simply put, they need to work.
When it comes to re-entering the workforce after a bout of unemployment, the reality for many older workers is that they may make less money in their next job, at least initially.
In the recent survey "The Long Road Back: Struggling to Find Work After Unemployment,"
And for those workers who do currently have a job, it's a struggle to hang on, as they inch towards the age 65 line in the proverbial retirement sandbox.
Ageism is alive and well in the workplace.
I'm not going to sugarcoat it.
More than half the people aged 50 and older who participated in a recent
Many older job seekers know age discrimination, although tough to prove, is a fact of life. But increasingly they are finding jobs at smaller organizations, including nonprofits, start-ups, small trade associations and niche educational programs. Typically, these are employers that operate with a spare staff and depend on the experience and expertise that comes with age.
"When I initially sent out resumes to commercial language schools, the only school that responded was one run by a person as old as I was," said
For
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"They may be over 60 and very close to traditional retirement age, but they feel they don't have the resources to retire. And many are feeling healthy. They're at the top of their game and wanting to make a contribution,"
But the older a person is, the harder it is to get a job.
"With each decade the length it takes to get re-employed is longer," he said. The average duration of unemployment for those over 55 is nearly a year, compared with seven months for someone younger.
Employers hesitate for myriad reasons, and some of their assumptions may not be valid.
"Most of these turn out not to be accurate when you do the research. But nonetheless they are tenaciously held,"
Some employers believe older people only want to work for a short time, compared with younger people. "When researchers look at that question, it is actually the opposite,"
Another obstacle is the perception that older worker are less productive and energetic. "Older workers are as productive as any other age group,"
Some employers also believe older job applicants expect high salaries or are overqualified. "Most people are happy and willing to go back to a position they had a few years ago, if it gets them back doing work they're qualified to do and want to do,"
Moving into a new arena as
A lack of technology aptitude is a common worry. "People over 60 are often perceived as technophobes," said
Career coaching can pay off.
"You want someone who understands the obstacles and can help guide and motivate you,"
"Academic research also convincingly shows that more than half of all jobs come through a network," said
For some older workers, it makes sense to explore consulting and contract work.
"There does not seem to be much discrimination in the part-time, temporary, project-based and seasonal job hiring areas," said
Tallying the Benefits of Staying in the Workforce
Here are three money-wise reasons for workers to stay in the workforce as long as they can:
1. The more earning years when you can build savings in a defined contribution plan like a 401(k) or an Individual Retirement Account (IRA), the better off you'll be down the road. Your monthly
2. The longer you work, the longer you delay tapping retirement funds, which can continue to grow.
3. It can provide income to pay for health insurance until you're eligible for
Non-monetary benefits of working longer
Money aside, there's another big reason you may want to keep working in some adaptation: a sense of "well-being," according to
Work gives us a sense of purpose, feeling connected and needed. It makes us feel relevant. It's hard to pin a precise paycheck to that, but it's real.
Moreover, it keeps our minds sharper. Researchers from the
Older people who do paid or volunteer work are found to have significantly lower levels of depression. A French study revealed strong evidence of a link between retirement postponement and decreased risk of developing dementia.
Today's 60-year-old might reasonably plan to work at least part-time for another 15 years, figures
"The entire concept of you work and then retire is over for most people,"
"Retirement is a process. People gradually fade out of the workforce. About 60 percent of the career workers take on a job after exiting their main career. We call these bridge jobs."
Noting a change in the current workforce
Many CEOs are increasingly aware that they need to have 50-plus workers on board.
Employers are getting worried about their future workforce. In a recent survey by the
Employers say they plan to hire retired employees as consultants or temporary workers, offer flexible work arrangements and design part-time positions to attract older workers, according to the report. But most aren't doing anything-yet.
Corporate executives and policy makers would be wise to focus on how they can keep older workers productively on the job longer.
Here's why. As the economy gains momentum, plenty of jobs will be created between now and 2030, and there will not be enough younger workers to fill the need as millions of boomers leave the workforce.
Workplace experts predict that there will be a future shortage of trained workers for key jobs in a broad swath of professions from education to engineering to healthcare and beyond. Older workers will need not only to stay on the job, but have core training to stay relevant.
Here are some challenges:
Who is going to pay for that training? Most labor market experts I have interviewed say the government and private employers need to ramp up more training programs for older workers and create workplaces that make it easier for them to do their jobs.
Employers don't want to spend for it, especially small businesses. They've already cut to the bone to stay competitive globally in recent years and this kind of spending is a tough sell.
Conceivably, as I discussed in a speech at a Future of
What skills will we need? There's a palpable need for employers to provide a roadmap, so we're all pulling in the same direction. The key will be for employers to cast an eye to the future and identify what skills need to be ramped up so older workers can stay on the job productively.
The training disconnect already exists. I speak frequently to 50+ workers around the country about the need to keep their skills up-to-date and to constantly being adding to their toolkit to keep a toehold in the workplace.
Many are willing to add the training at their own cost, but have no idea what they should be concentrating on, where the demand will be, and how much they should invest in their future.
Who will pay for the cost of retaining older workers? Contrary to common perception, workers age 50-plus don't cost significantly more than younger workers, according to the report "A Business Case for Workers Age 50+: A Look at the Value of Experience 2015," commissioned by
One savings that immediately comes to mind: firms often don't have the time to squander while a younger worker ramps up skills and knowledge. Companies are slowly realizing that to stay competitive, it's smarter to seek out and hire experienced workers, who can step in and do the job right now and solve an existing problem. And it can save money. Depending on a worker's position and industry, the total cost of replacing someone can range from thousands of dollars to as much as one-and-a-half times your annual salary.
Retaining older workers reduces the one-time costs of turnover, which range from
The Aging Workforce survey, part of a three-year national Aging Workforce Initiative by SHRM and the
In addition, an international report came out last week that caught my attention and may be instructive to our thinking about the older worker issue in the U.S. Golden Aging Prospects for Healthy, Active, and Prosperous Aging in
"More often than not, the aging of a population is a source of concern, given the potential for higher health care and pension costs, increasing dependency, lower growth, unsustainable fiscal deficits, and intergenerational tensions," the authors write. "Demographic trends are frequently viewed as unstoppable and as an inevitable cause of increasing economic costs. However, individuals and firms change their behavior in response to changing conditions, and policy can help or hinder adaptation to demographic shifts."
"There is already some evidence that active older individuals today have better health and maintain their cognitive skills longer than their inactive counterparts and older individuals of previous generations. Productivity does not inevitably decline with age, and skills shift with aging." Some highlights from the report:
. Adjustments in labor and pension laws and improved incentives to keep investing in human capital throughout an individual's working life would facilitate increased participation and productivity of the elderly in the labor market.
. To offset these steps, the biggest savings can be achieved by reducing the incentives for early retirement and making it attractive to work beyond 65, or to a level where there are about 15 years of remaining life expectancy at the age of effective retirement.
. For clues about what policies keep older people employed, it is useful to look at
. Firms can also help improve the productivity of older workers. Some effective mechanisms include workplace adjustments, reassignment to age-specific tasks, mixed-age working teams, reduced work time, and well-designed lifelong learning.
We need more flexible work options
Telecommuting employees are happier and more loyal, and they have fewer unscheduled absences, according to a survey by outplacement firm
Workers over 50, like me, need and want to work, but we face caregiving demands, from elderly parents or ailing spouses. Family-friendly practices such as flextime and shared or part-time jobs are possible solutions.
* More than three quarters of employers in
* A company that encourages work-life balance practices for its employees can boost productivity, according to a study of more than 700 firms in
* Twenty-nine percent of employers reported allowing some workers to share jobs, and 36 percent reported allowing at least some to move from full-time to part-time work and back again while remaining at the same position or level, according to the 2014 National Study of Employers..
* More than half of employers allowed at least some workers to phase into retirement by working reduced hours, and 18 percent allowed most or all of their employees to do so, according to the National Study of Employers.
* A Sloan Center on Aging and Work at
* In
We need more employers to offer phased retirement programs. "This vision of a flexible, phased transition to retirement cannot be accomplished without employers having programs and employment practices in place to facilitate it," according to
The
We need employers to examine their policies in regard to demographic change.
Many CEOs these days give lip service to the notion of keeping workers on board as they slide over into what was once considered retirement age.
The
The survey of HR professionals, part of a three-year national Aging Workforce Initiative by SHRM and the
About one-half of HR professionals did not think the potential loss of talent during the next one to two years would have an impact on their industry or organization. But one-third thought it would be a problem or a crisis for their industry and organization in the next six to 10 years.
For years,
The reason for not offering this kind of program I suspect is because it's a pretty expensive perk to offer an employee-fewer hours and full benefits. Even fewer hours and some access to health and retirement plans for a period of time isn't economically feasible for many small firms and nonprofits who aren't likely to forget the tailspin that 2008 recession unleashed.
The federal government is modeling how it can be done. A new federal-employee phased retirement program began accepting applications last fall. Federal employees who take phased retirement will work 20 hours a week and receive half their pay and half their retirement annuity payout. A requirement: to devote 20 percent of their time mentoring other federal employees, who will probably take over the reins from them when they finally move on.
This will be a slow moving show though. As
Still, forecasts are that the phased retirement will become available for many federal near-retirees in 2015 and 2016 and "the impact could eventually be huge."
The hope is that this program will be a model for private companies to add formal phased retirement initiatives to their benefits offerings.
Private sector examples to applaud:
At Herman Miller in
The firm also has a "flex retirement" plan, allowing an employee who's 60 or over and has at least five years of service at the company to plan an exit over six months to two years. The flex-retirement employee puts together a plan to teach the ropes of his or her job to a replacement.
Another example is
We need to create more corporate programs to help employees shift to second careers in both nonprofit and for-profit enterprises.
There are plenty of innovative ways to offer phased in retirement that I know can percolate up with some elbow grease, if employers are willing to put their muscle behind their mouth.
Two years ago, the company introduced the Intel Encore Career Fellowship -- a program that pays a one-year,
Last year,
Some other innovative programs:
When he was 5 years old,
At 60, his passion hasn't subsided. Today, after being laid off from a top commercial real estate job in
For the reconstruction of his career,
WHEN she was just 10 years old,
It was there that she set up her chalkboard and led her imaginary classroom. "I would use my yardstick to tap my make-believe students who misbehaved, or didn't get the right answer,"
After three decades with Big Blue, she retired, and now
And
We need employers to offer opportunities for a range of career moves within an organization.
In her book, "The Career Lattice: Combat Brain Drain, Improve Company Culture, and Attract Top Talent," author
Late-career lateral moves are developing as a way to free up sought-after promotions for younger workers while using the experience of older workers.
Changing focus for Johnson didn't mean downshifting to easier work. At
We need employers to offer more educational and career development opportunities.
Some of those reluctant retirees want, or need, to keep working in some fashion, but to get hired, they must first expand their skill set. The need to offer more educational options that can lead to jobs for older adults is gaining traction.
. Around half of employers offer education assistance, and you might not even need to be studying something directly linked to your work. Generally, you don't have to pay federal income tax on the first
We need more programs like the
It's designed to help students 50-plus train for new jobs. Instead of ending education in our teens or 20s, let's help people gain new skills in their 40s... 60s... and 80s as well. Education providers need to get creative about offering practical content in user-friendly, flexible arrangements.
In March, deans, provosts and vice presidents from 22 institutions, including
Among the challenges are how to provide courses for those in an aging population who lack the time or financial resources for full-blown degree-based programs.
"It makes no sense, however, to have an educational system that ends in the 20s when people are likely to be working into their 80s," said
. The government can help people finance later-life education by changing federal loan rules to support part-time, non-degree programs.
. Sometimes older students can negotiate for a fast-track degree by getting the college to waive some required courses because of work and life experience. In recent years, community colleges have reached out to adults interested in practical continuing education.
. If
. We need more older-student grants scholarships or fellowships.
. We need more free or discounted college tuition. Nearly 60 percent of U.S. colleges and universities let older students take classes either tuition-free or at rock-bottom prices.
The Emerging Gray Jobs Market.
As the population ages, jobs like senior fitness trainer and other jobs in health care, housing and other areas are on the rise. By 2050, according to
"As tens of millions of people live into their 80s and 90s, we'll need millions of others in their 50s and 60s and 70s to help care for them -- not just within families, but through second careers," said Encore.org's Freedman. "They'll be able to fill millions of positions we will need to fill -- as nurses, home health aides, health navigators and roles we've yet to even define," he said.
Certain workers are already clearly in demand, including fitness coaches people who modify homes to make them safer, certified financial planners and people who can offer monthly help with finances and bill-paying.
Foster Senior Entrepreneurship
In 2009, the
With life expectancy rising, Boomers continue to be an important economic force for years to come.
A
"It makes sense to consider reforms to the unemployment insurance program that would help people get back to work," said Senator
And a variant of traditional family businesses: so-called legacy partnerships. The partnerships are started at or near the older partner's retirement from a lifelong career, so two generations bring complementary assets to a new business. The assets are typically capital and experience from the older partner and energy, technical expertise or online marketing skills from the younger.
"Many seniors are creating legacy businesses alongside a younger member of their family," said
In some demographic groups, too, multigenerational start-ups are leading the way,
We need to improve access to finance, support matching and networking of investors and entrepreneurs, provide grants for business startups where loans are not feasible, and to develop tax incentives for seniors starting businesses.
Summary
Finally, I've recently returned from my fellowship at
One of of my takeaways:
"There's a lot of doom and gloom and crepe hanging about the aging population," said
Fried added: "We must invest in education to keep older workers engaged. They will stay healthier and there will be less demand on health system."
Her final message that clings to me: "Let's build a society where we want to get old."
I could go on, but my time is up. Again, I want to thank the committee for inviting me to be here today to weigh in on this vital issue.
Read this original document at: http://www.aging.senate.gov/download/?id=81baa701-4b2e-4681-b810-9855c64f9bc8&download=1
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