Aging and the U.S. Workforce

Abstract

This article explores issues of the aging population of the United States—also known as the baby boom generation—and the aging of a significant proportion of working Americans. According to US Census Bureau projections, the number of older adults will have reached about 85 million in the United States by 2030. Firms are facing the challenge of losing a large part of their knowledgeable and experienced workforce as a majority of the population ages. Older workers often face challenges of their own, such as the need to remain in the workforce later than retirement age, diminished physical and cognitive capacities, and workforce discrimination due to some employers' perceptions.

Overview

Baby boomers made up 25 percent of the US labor force in the 2020s, down from 49 percent in 1995 (Sjoerdsma, 2020). According to experts, there are not enough younger workers in many fields to replace them. This might create labor shortages in key industries, which brings to the fore issues of productivity, employee retention, and retirement. Paradoxically, however, aging is one of the leading causes of unemployment, affecting the health care, economic, psychological, and social aspects of life for many mature Americans.

Experts define an aging worker based on the time when major life changes take place, including work-related functions. Physical capacities begin to decline at age thirty, according to experts, and the diminution increases during the following decades, particularly if the workload does not decrease. A general perception exists that workers reach their peak before the age of fifty, which is, among many institutions, the base age criterion that defines an older worker. In 2020, the percentage of Americans older than fifty in the workforce was 37.3 percent or 16.1 million workers. Fifteen percent of the workforce, or 6.4 million people in the workforce were over the age of sixty in 2020 (Schramm, 2020). Not only did older people still make up a large part of the workforce, the fact remains that a significant proportion of the US population in general is going to be older as the twenty-first century progresses.

The US workplace continues to undergo significant changes, based not only on the aging of large segments of the population but also on global changes at the international level. In other words, the US workforce has been challenged by intensifying competition from the international labor market. Moreover, the number of entry-level workers is declining.

Another issue directly impacting the numbers of aging US workers is the increase in life expectancy. Changes in health sciences and lifestyle since the late nineteenth century mean that people typically live longer than ever before. At the same time, industrialized societies are witnessing a steady decline in birth rates. In some areas of Western society, such as in smaller communities that do not attract young people or much immigration, older residents represent the majority. This may convey the eventual disappearance of many small communities across the country.

In the United States, millions of baby boomers are in the process of retiring or will retire in the 2020s. Experts find cause for concern but also posit that appropriate programs and policies can support the older population and help people live prosperously and independently. On the other hand, problems may arise, for example, in public and private pension plans, as the number of people who retire and collect a pension rises, and there is a decline in those becoming employed. These trends, which parallel the economic crises in the United States and worldwide, correlate with large numbers of aging individuals who find they cannot afford to retire. Under such circumstances, the complex issues of employment and employability of aging workers have become more important.

Further Insight

Barriers for Older Employees. Older workers face myriad employment problems. Aging in itself is not a problem. Problems arise mostly from the negative perception many employers have about aging and from a lack of planning for the management of older employees. According to the US Centers for Disease Control and Prevention (CDC), older workers frequently encounter obstacles that hinder or impede their employment.

The CDC lists the following as reasons for reduced employment opportunities for older workers:

• Making a career change later in life or returning to the workforce after a period away. Older workers find fewer opportunities and face reduced wages and benefits compared to what they used to earn.
• Older workers are less likely to participate in training activities in the workplace than younger workers. Experts believe the decreased participation of older workers in training activities is mostly related to a lack of managerial support.
• Older workers face workplace discrimination. Employers are often concerned that hiring older workers will incur higher costs and benefits, despite evidence pointing out that hiring older workers does not have a negative impact on productivity and earnings and that older workers tend to be more reliable than younger workers.
• Aging has been associated with an increase in age-related health problems such as cardiovascular disease, diabetes, and others. This can result in work constraints which may be a cause of concern for an employer and for the older worker too.
• Older workers often worry about challenging workplace conditions, such as inflexible or unconventional schedules. Many older workers must care for other aging relatives or may have driving limitations, among other issues.

According to the National Institute of Occupational Safety and Health, scientific data and gerontological research support that aging is accompanied by physical and mental challenges. Physical and health changes can slow down aging workers, especially in blue-collar positions and, to a lesser extent, in the clerical, managerial, and professional areas. On the other hand, changes in physical capacities can be slowed down between the ages of 45 and 65 with healthy lifestyle behavior, such as regular exercise and a healthy diet. Normal aging changes in mental functions, such as memory and information processing, are reported to change minimally during a person's career. In fact, some cognitive functions improve with age. Among the latter is the ability to process complex problems in insecure situations. As workers slow down, experience and wisdom can substitute for speed. Although many hold the perception that older workers have difficulty learning, the learning process itself does not decrease with age, and willingness to learn can make up for much.

Older people face particular economic problems as well. In general, research performed in various countries as well as in the United States shows that older people are at higher risk for impoverishment and that they live on lower incomes. Individuals aged 65 years or older show the highest risk for poverty. In Western countries, however, the older generations have a longer life expectancy and greater possibilities of having benefits, savings, and assets.

Employers and Older Workers. The skills and abilities of individuals evolve over the length of their careers. Firms and organizations benefit from diversity among the workplace staff, including a wide variety of ages. Different workers make different contributions. Although firms are not yet facing critical labor shortages, there will be fewer new workers available to replace the aging workforce as it retires. Moreover, many aging Americans find they are not ready to retire, according to field experts; many American workers will remain longer in the workplace. Firms, then, must plan accordingly.

Data gathered by the American Management Association (AMA) reflect that employers are concerned that the aging of the American workforce could affect the fields of recruitment, talent quality, organizational culture, and competitiveness. For example, older employees take with them their talent, work-related relationships forged through time, knowledge, and long-term field and company expertise. The AMA proposes that employers come up with an action plan that may be a catalyst for positive dialogue and change within the company. These may include the following steps, among others: retention planning in order to keep key employees; succession planning, formal plans that address the loss of key employees and the transfer of knowledge and responsibilities; culture change. The loss of long-term and key employees, and an influx of new ones, can change the organizational culture. It is crucial, then, to consider ways to retain important company values and ways to incorporate new values or viewpoints that benefit the firm. At all points, it is recommendable to encourage dialogue between decision-makers and employees.

Other experts recommend an ongoing assessment of the optimal number of workers needed to produce a desired level of output. Managers can analyze and implement, according to age, skills, and productivity, the best mix to achieve their goals. This is especially important among companies that have hired a large number of workers from the baby boom generation, as these will face larger numbers of aging workers. Some firms are concerned about a large number of older workers remaining in the company until they are much older. On the other hand, firms also worry about losing too many senior employees simultaneously. By using economic incentives and flexible compensation policies, such as combinations of early retirement and deferred retirement, firms can develop strategies to maintain the ideal number and mix of employees needed for optimum performance.

Some useful strategies focus on the concept of work ability. An individual's abilities change, for many reasons, throughout his or her lifespan. One of the main factors contributing to change is aging, as well as job requirements, such as new tools and systems, workload, and methods. New technology, for example, can cause stressful challenges for some aging workers. In fact, it is one of the causes of unemployment for older workers. Organizations often neglect to implement the policies and practices necessary in order to integrate all members of the working staff with new work demands. Displacement or unemployment of older workers is not caused by their lack of competency, abilities, or experience. It is largely due to sudden changes in the workplace and the lack of planning for the integration of human resources to the new work requirements. It is useful, then, to plan strategically so that all workers, including older workers, can be successfully integrated into new work systems and cultures.

Viewpoints

The oldest baby boomer turned 65, the typical retirement age, in 2011. The youngest baby boomer will turn 65 in 2029. In the years between that 18-year span, 3.8 million baby boomers will turn 65 each year, or 10,000 daily. However, there are not 10,000 baby boomers retiring each day. In fact, baby boomers are leaving the workforce at about half that rate (Fry, 2019).

Despite some prevalent stereotypes about older workers, the views of employers in reference to aging workers are generally positive. Studies consistently report that employers believe older workers possess greater knowledge and experience of work-related tasks than younger workers. Employers with a sizeable proportion of older workers report that, in general, they are willing to learn new tasks, are resilient in the workplace, and are able to keep up with the physical demands required by the job. Nevertheless, employers are often concerned about older employees representing greater health costs, being more prone to absenteeism, and expecting higher wages and better benefits. Many also believe that many older employees are set in their ways and resist new knowledge.

Policymakers, social workers, and many employers are also concerned with the employability of the aging population. Employability refers to the skills, capacities, and talents of people in order to function successfully in a job. People who have been long absent from an industry field, for example, may find that their skills have become outdated. Planning for employability involves a series of actions aimed at improving these conditions for workers, as well as providing employment opportunities, education, social and health services, and legislation such as measures to protect against age discrimination. Some experts believe that increasing the employability of aging workers is an important measure to integrate them successfully into the labor market. Others, however, posit that employability by itself cannot really solve the work-related problems of aging workers. Myriad processes affect the successful employment of older Americans; one is employability, and another is the availability of work opportunities for older workers. These include, for example, training organization decision-makers and supervisors to manage aging human resources, training older workers on new systems and technology, and the implementation of health and lifestyle improvement programs in the workplace, among others.

The efforts of government and private firms to deal with aging worker issues have been the catalyst for much debate. The Government Accountability Office (GAO), for example, stresses the importance of the following issues: firms facing difficulties in meeting their employment needs when large numbers of baby boomers retire; the federal government must design a strategy that can deal sufficiently with aging workforce issues; many firms hold reservations about employing older workers and relatively few have implemented aging-worker programs; the federal government must balance the desire of older workers to work beyond retirement age and the needs of younger workers to advance at the workplace.

The government promotes policies and legislation that help further employment for older workers. These include programs that provide job training and placement services and protection from age discrimination. Nevertheless, these government policies often diverge from company policies. Firms frequently encourage early retirement and dismiss or fail to hire older individuals, fearing they might not be cost-efficient. Experts find other reasons for concern at the macroeconomic level. For example, emerging markets increasingly offer attractive substitutes for employment of American workers by way of significantly lower labor costs and increasing technology and infrastructure in developing countries. Moreover, technology in industrialized countries is rapidly replacing workers with automation.

Others argue that aging and work is not an issue to be addressed solely by the state. Individuals, civil society, and nongovernment organizations (NGOs) can also commit to sharing ideas and responsibilities related to aging and work. Aging individuals may be integrated into the workforce with dignity if different groups organize to identify problems, offer solutions, and plan for viable objectives. The changes in age among a significant sector of the population, as well as structural, cultural, and economic changes in society, can be a positive challenge if shared by organizations and communities.

Data show that organizations are already striving to optimize age differences among their members. In the case of employers, there are greater efforts expended in trying to attract, maintain, and invest in quality employees. Research continues to show that firms that promote diversity perform better all around. In a highly competitive global environment, companies are facing the challenge of building the kind of organizational environment that will provide fertile ground for a diverse workforce.

Despite all these measures, when the great majority of the baby boom generation reaches 65 years of age, a significant segment of the educated and experienced workforce of the entire country will be retired. Experts debate existing and future policies for the continuing utilization of the knowledge and experience of such a large proportion of the former workforce. The US retirement system is, relatively speaking, a modern institution. Historically, in most cultures around the world, older adults continued to be valued and productive members of families and societies. Many experts argue that institutions and organizations must coalesce to design ways to continue to utilize, in a productive manner, the knowledge and expertise of the older population, which desires to continue to work.

The COVID-19 pandemic of 2020 had strong, lasting effects on the older generation of workers in the United States. The pandemic affected all areas of employment, from labor shortages to layoffs, to labor disputes and issues with retirement and pensions. While the younger generation of workers was expected to reenter the workforce at full force, once lockdowns were lifted, and the pandemic subsided, older workers did not return with them. While the number of employed Americans over the age of 65 was increasing prior to the pandemic, afterward, that number plateaued. Older Americans realized that retirement could be fulfilling, their financial goals had been reached, and their health fared better outside of the job market (Lee, 2021).

Terms & Concepts

Baby boomers: Baby boomers, or the baby boom generation, are those born during the postwar era, which encompassed the years 1946 to 1964. They number approximately 78 million Americans and make up about one-third of the workforce in the United States.

Older workers: The term older employee is difficult to define, as there is no consensus about who is an older worker. The definition depends upon societal and cultural contexts, as well as upon different policy categorizations. For example, a variety of organizations and agencies use a wide variety of ages to determine who is an "older worker." As a reference, the United States Department of Labor considers an older worker to be 55 years of age or older.

The Age Discrimination in Employment Act of 1967: Federal legislation that covers workers aged 40 years or older. Other government organizations have created a subcategory with the term "elderly," which are those 65 and older.

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Suggested Reading

Applewhite, A. (2016, September 3). You're how old? We'll be in touch. Retrieved December 27, 2016 from the New York Times online. http://www.nytimes.com/2016/09/04/opinion/sunday/youre-how-old-well-be-in-touch.html

Barrett, J., & Bourke, J. (2013). Managing for inclusion: Engagement with an ageing workforce. Employment Relations Record. 13(1). 13-24. Retrieved January 1, 2015 from EBSCO Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=89985423&site=ehost-live

Colley, L. (2014). Understanding aging public sector workforces: Demographic challenge or a consequence of public employment policy design. Public Management Review, 16(7). 1030-1052. Retrieved January 1, 2015. EBSCO Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=97454180&site=ehost-live

Drabe, D., Hauff, S., & Richter, N. F. (2015). Job satisfaction in aging workforces: An analysis of the USA, Japan and Germany. International Journal of Human Resource Management, 26(6), 783-805. Retrieved March 22, 2015 from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=100521319&site=ehost-live

Paton, N. (2012). Employers concerned about the health of their aging workforce. Occupational Health, 64(11). 9-46. Retrieved January 1, 2015. From EBSCO Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=83518744&site=ehost-live

Schimke, A. (2014). Ageing workforce and firm growth in the context of "extreme" employment growth events. Structural Change & Economic Dynamics, 30, 86-100. Retrieved March 22, 2015 from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=97449483&site=ehost-live