demographic trends and the older workforce · 2018. 8. 23. · demographic trends and the older...

Linda Barrington, Ph.D.The Conference Board

www.conference-board.org

Demographic Trends and the Older Workforce

November 10, 2004

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What business needs to know about society

and its societal impact

What policy makers need to know about business concerns

and operating framework

25 years of Maturing Workforce Research• Valuing Experience: How to Motivate and Retain Mature Workers (2003)

• Voices of Experience: Mature Worker in the Future Workforce (2002)

• Employing Older Workers: Opportunities and Constraints (1988)

• Managing Older Workers: Company Policies and Attitudes (1984)

• Older Workers and Retirement (1978)

Research inspired by “retirement shock,” again

12

15

8

21

52

30

-10

Total, All Groups

16 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65 & older

Aging workforce will thin current pipeline

Source: Occupational Outlook Quarterly, Winter 2001-2002, Bureau of Labor Statistics

35-44 year old cohort to shrink 10%

New “Retirement Shock”…

Ratio of Retirement-Age to Working-Age Male Population

43

44

57

41

63

54

45

37

23

24

34

21

30

30

26

20

Australia

Denmark

France

Japan

Netherlands

Spain

U.K.

U.S. 2030 forecast 2000

For every 100 men of working age, the number of retirement age men will nearly double in 30 years in many countries

of Global Proportions

Labor Force Growth is Huge in Low Income World

Past two decades--on average, global labor force grew by 473.8 million (1980-2000 avg)

This decade--forecast global labor force will grow by 393.3 million (2000-2010)

Low Income+214.1 million

Middle Income+213.1 million

High Income+46.6

million Low Income+229.1 million

Middle Income+148.1 million

High Income+16.1

million

Workforce Demographics of Emerging Markets--Education Levels Rising in Emerging World

Country % of Males % of Females % of Males % of Females

U.S. 53 58 63 83

Poland 16 21 46 66Ireland 21 15 42 53Philippines 23 26 30 33India 7 3 13 8China 3 1 7 4

1980 2000

% of Age Group Enrolled in Post-Secondary Education

Workforce in Emerging Markets Can Supply Much Labor to “Fill in Gap”

• immigration

• cross-border “sourcing”

Implication

Foreign Born Population Share Again Back in Double-Digits

14.8% 14.7%

11.6%

6.9%4.7%

7.9%

11.1%

14.4%

0%

5%

10%

15%

1870 1890 1910 1930 1950 1970 1990 2000

Pre WWII Levels

Source: The Conference Board. Data source: U.S. Census Bureau, Population Census data

Origins of Current Foreign-Born Workforce

Other8%

Europe14%

Latin America

52%

Asia26%

Source: The Conference Board. Data source: U.S. Census Bureau, March 2000 CPS

Remittances will likely continue rising as Latin American population ages

Implication

Population Projection--Latin America

2354

10212

34

4

020406080

100120140

2000 2025 2050

Population in millions80+65-79

Chart Source: CELADE, Boletin demografico 69 (2002): Table 11.

Asian/Pacific Islander

0.2%

Other0.0%

Black/African American

9.8%

White (non-Hispanic)

88.6%

Hispanic1.4%

Ever-Changing Face of America

U.S. Census Population 1940

Source: The Conference Board. Data source: U.S. Census Bureau

Hispanic4%


11%

Other0%


0.7%


84%





69.2%


3.6%

Other2.6%


12.1%

Hispanic12.5%





50.1%


8.0%Other2.9%


14.6%

Hispanic24.4%

U.S. Census Population 2050forecast



Immigration and Workforce Diversity• Only 5% of HR Executives surveyed expect

immigration to offset their needs from departing Baby Boomers

• Foreign Born already accounting for majority of U.S. labor force growth

Perception vs. Reality

Post-Baby Boom workers more diverse than HR Executives are “planning on”

Implication

2002

2015

0% 20% 40% 60% 80% 100%Percent Distribution

109 M

124 M

Millions of Households

Baby Boom Aging

Average Age of Head of Household Increasing

Source: The Conference Board Consumer Research Center

Under 35 35 to 49 50 to 64 Over 65

Under 35

35 to 49 50 to 64 Over 65

White Households Notably Older…

White

Hispanic

AfricanAmerican

Asian

0 20% 40% 60% 80% 100%


2015forecast

86 M

16 M

15 M

6 M

Millionsof

HouseholdsUnder 35 35 to 49 50 to 64 Over 65

But Less Likely to have Children Present

2015forecast Married Single Single

with & without Children Parent No Children Other


0 20% 40% 60% 80% 100%

White

Hispanic

AfricanAmerican

Asian

31%

57%

43%

41%

Percent with

Children

Educational Attainment U.S. Full-Time Year Round Workforce

Less Than High School

High School Degree

Some College

0%

20%

40%

60%

80%

100%

72 82 87 92 2001

Educ

atio

nal p

rofil

e of

U

.S. F

ull-T

ime

Wor

kers

(%

) . College

Graduate

Level of Educational Attainment Rising Among U.S. Full-Time Workforce

Data Source: The Conference Board.; U.S. Census Bureau, custom tabulations

Race/Ethnic differences in today’s 30 year olds

Educational Attainment of High School Class of ‘92 8 years after commencing Post-Secondary Institution

77%63%59%

37%37%

17%24%31%51%50%

0%

20%

40%

60%

80%

100%

White Asian Black Hispanic AmericanIndian

Bachelor's or higher

Associate or Certificate

No degree

Source: The Conference Board. Data Source: U.S. Dept of Education, National Center for Educational Statistics, 2002

Percent of Public School 4th-graders with Writing Achievement Below Basic or At/Above Proficient

23% 24%

7%10%

40%

32%

17%14%

0%

10%

20%

30%

40%

White Asian Black Hispanic

BelowBasic

At oraboveProficient

Source: The Conference Board. Data Source: U.S. Dept of Education, National Center for Educational Statistics, 2002

Race/Ethnic differences across today’s 4th graders

Income Distribution Differs

2015forecast


0 20% 40% 60% 80% 100%

White

Hispanic

AfricanAmerican

Asian

Under $25 K $25 to $49 K $50 K +

86 M

16 M

15 M

6 M

Millionsof

Households

Household characteristics correlate with raceOlder,wealthier white households without kidsYounger, poorer households of color with kids

Self-interested social agenda correlates with race Older,wealthier white households without kids

government spending on social security and medicare

Younger, poorer households of color with kidsgovernment spending on education and healthcare other than medicare

Implication

Self-interested workplace agenda correlates tooOlder,wealthier white employees without kids

healthcare and pension benefits, phasing retirement “deals”

Younger, poorer households of color with kidshealthcare benefits, higher low-end wages, job security

Implication

Annual, nationally representative sampleMost to least satisfied

Age categories:• under 25• 25-34• 45-55• 55-64• 65 & over

Job Satisfaction of U.S. Workers

• Retirement intentions and perspectives of employees 50 years of age or older

• 1600 employees at 8 Fortune 500 companies

Employee Survey--Voices of Experience

HR Executive Survey--Valuing Experience• Practices and perspectives of employers on

aging workforce issues

• 145 targeted HR executives(78% U.S. & 22% Europe and Canada)

Recent Conference Board Research

48% (783) retire next 5 years. Reasons why …57% Pursue dream28% Volunteer or contribute to society25% Don’t feel respected at my company23% No longer want to work21% Spouse/colleague retiring20% Retirement package available17% Met my financial goals

Voices of Experience

Other reasons for planning to retire…12% To make a career change10% Health reasons10% To relocate7% Want to start a business8% Expect to lose my job4% Physical tasks too demanding3% To care for a dependent


Incentive “keep me from retiring”

higher salary 46%

flexible hours 46%

promotion 33%

telecommuting, less pressure 25%

sabbatical, better benefits 13%

Those planning to retire


52% (861) not retiring in next 5 years. Reasons…69% Don’t have the financial resources64% Want to build up extra income62% Find my job interesting54% Work keeps me active52% Need the medical benefits33% My contribution to my company is appreciated29% Company provides me with flexibility I need29% Value the social network12% Strong likelihood of promotion


Can retain older workers wanting to retire, but at a cost

Implication

71% HR executives responded aging workforce very or fairly important. Reasons why...

95% Talent shortage (benefit)

38% Rising health care costs (cost)

21% Need to preserve customer relations (benefit)

12% Losing senior executives to competitors (benefit)

12% Legal concerns (cost)

7% Limited pension funds (cost)

HR Executives concerns include “benefits” provided by and “costs” arising from older workers

Employer Perspective Off the record meetings

“Don’t respond until you feel the pain” – cost of loss “We’re not replacing those pumps” – benefit of loss

Contrasting Views

“The company will be in for a real eye-opening as the older workforce is released. No one is teaching the intangibles of the job. You can teach an employee what a pump is and how it works--but not what it sounds like when it is going bad.”

Employee Perspective Survey respondent, Voices of Experience

Costs are the elephant in the room• Not PC to discuss cost concerns, so many companies don’t discuss at all

• “Tough Issues” have to be acknowledged to make progress on fuller integration of older workers into workforce• Difficult to separate myth from realitye.g., research getting increasingly harder to conduct because of fear of law suits

Implication

19,809 19,61817,416 15,719 15,785 15,191 14,141

16,00817,405

19,573

19,921 19,124

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%Age Discrimination Charges (Receipts) as % of All EEOC Charges (Receipts)

FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

Counts = Number of Age Discrimination Charges (Receipts)

Age Discrimination Charges Received by EEOC (Receipts) “On Par” with Decade Ago

Receipts include all charges filed under the ADEA as well as those filed concurrently under Title VII, ADA, and/or EPA.

Rehiring Retirees on Contract• lower fixed costs--something every CEO

covets, even at price of higher hourly

• flexibility for individual

• need clear understanding of legal constraints

• potential morale issues

Business “Best Practice” Solutions

Phased Retirement• What’s the definition of Phased Retirement?

- Leaving and returning as a consultant- Flex/Part Time- Mentorships/Coaching - Non-profit Leaves Phasing into Retirement

• Only want the “right” employees take it

• What are the legal issues & ERISA guidelines

Business “Best Practice” Solutions

Individual deals because of

Implication

• Concerns about legality of “policy”

• Desire to select “right” employees

Higher female labor force participation with each succeeding generation

Earlier retirement with rising living standards

Healthcare possible countering drag in U.S.

Net Labor Force of Older Workers

Generational changes still impacting women’s labor force participation

9.2

43.8

68.5

0

10

20

30

40

50

60

70

1940 1970 2003

55-64 years old 75+ years old

% of Men and Women in U.S. Labor Force, by age

65.5 68.7

8.6 8.3

48.956.6

3.5 4.1

67.9

0

10

20

30

40

50

60

70

1985 1994 2003 1994 2003

MenWomen

% of Women in U.S. Labor Force

45-64 years old

Global Trend

62.057.848.5France

64.260.354.9Japan

70.467.643.2Canada

71.768.548.9United States

200019901970Country

Labor Force Participation of Women aged 15-64 years old

Source: OECD, Historical Statistics, 2001

Long-run Trend Toward Earlier Retirement as Living Standards Rise

Average Age of Retirement Falling

60

62

64

66

68

1965 1975 1985 1995

Ave

rage

age

of e

xitin

g la

bor f

orce

JapanMale

JapanFemale

U.S. Male

U.S.Female

GermanyMale

GermanyFemale

Opportunity costs of early retirement rising in Europe as older population grows

11.2%13.2%

7.1%

15.9%

9.3% 8.9% 9.1%

2.9%

6.9% 6.7%

9.5%10.5%

6.7% 6.8%

12.6%

0%

5%

10%

15%

20%

Netherlands Germany Switzerland Ireland OECD avg.1990 2000 2010

Source: Herbersson & Orzag, IZA Discussion Paper No. 816

Percent of Potential GDP Foregone Rising in Europe as Workforce Ages and Retires “Early”

Retirement age falling, participation rising

Net effect increasing numbers of older workersgrowing macro opportunity cost

Implication



What business needs to know about society

and its societal impact

What policy makers need to know about business concerns

and operating framework


What business needs to know

Managing a three generation, ethnically diverse, global workforce will be more complicated than expected

Important trends will be missed due to risk-aversion to older-worker related research

Society will be split on age-related issues and will look to employers to resolve


What policy makers need to know

Business is worried about Lawsuits Being able to dismiss those not making the grade,with dignityHealthcare costs

Business will continue to expand non-native U.S. employment (immigration, offshoring) for cost savings(wages and benefits)

demographic trends and the older workforce · 2018. 8. 23. · demographic trends and the older...

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