Study looks at state's aging workers

Wayne Ruple
02-19-2007

A recent study by AARP Alabama has revealed that only one in ten businesses report they have taken actions to prepare for the retirement of the baby boom labor force. The study says that between 1990 and 2000, Alabama’s population grew by over 10 percent. These gains are expected to continue through 2025. Alabama’s population has been aging and will continue to age through 2010 with the number of residents age 44 to 64 increasing most rapidly. After 2010, the fastest growing segment of Alabama’s population will be age 65 and older. In 2004, 13 percent of the total population was age 65 and older, and it is projected that this segment of the state’s population will increase to 20 percent by 2025. This trend is exacerbated by a weak net in-migration rate. Alabama’s aging population will have an influence on the state’s labor force. In June 2006, Alabama’s civilian labor force totaled 2.1 million. The state currently experiences nearly full employment, with an unemployment rate of 3.6 percent. The state’s unemployment rate is a full point lower than the U.S. unemployment rate overall (4.7%). At the same time, Alabama’s economy is out pacing that of the nation, and Alabama business leaders remain optimistic about the prospects for continuing growth in the state’s economy. In 2004, older persons accounted for 14.9 percent of Alabama’s labor force. Like the nation, the state’s labor force is aging. As the baby boomer generation ages, the median age of Alabama’s labor force will grow to about 40.6 by the year 2010. By then, more than half of the labor force will be age 40 and over. At the same time, the growth in the state’s labor force is expected to decelerate as fewer women enter the labor force. All areas of Alabama’s labor market employ workers age 45 and older. In fact, employers in every occupation face the impending retirement of significant segments of their labor force. These retirements will result in a major loss in skilled and experienced workers in a relatively short period of time. This decline coupled with falling fertility rates, could have adverse effects on the state’s productivity and economic growth. Yet, according the Center for Business and Economic Research at the University of Alabama, the majority of Alabama’s employers have not developed policies designed to keep mature workers in the labor force longer. Highlights of the report include: •More than nine in ten (95%) employers in Alabama report that it is no less than “very important” for their organization to retain skilled employees. •About eight in ten respondents also indicate that recruiting skilled employees (87%), developing programs to improve employee performance (82%), transferring knowledge from skilled to unskilled workers (80%), and introducing new technology (79%) are at least very important to their organization. •Employers rate workers age 55 and over at least very good on commitment to doing quality work (98%); solid experience in the job or industry (94%); ability to get along with co-workers (93%); and a reliable performance record (92%). Of all characteristics rated, willingness to learn new technology, received the lowest rating with only about six in ten (59%) employers rating workers age 55 and older at least very good. •About one in ten (11%) respondents report they have taken actions to prepare for the retirement of the baby boom labor force. •More than four in ten employers report they are planning to use or would consider using four strategies to accommodate workers interested in working beyond normal retirement age: enabling employees to ease into retirement by reducing their work schedules (49%); hiring retired employees (47%); providing part-time work arrangements without continuation of benefits (45%); and upgrade training (43%). Detailed findings include: Employers were presented with a list of nine issues and asked to assess how important each was to their organization. More than nine in ten respondents indicate that retaining skilled workers is at least very important to their organization. Approximately eight in ten also report the following are at least very important to their organization: recruiting skilled employees; developing programs to improve employee performance; transferring knowledge from skilled to unskilled workers; and introducing new technology into their workforce. Between one half and seven in ten employers also rate issues related to managing an aging workforce as at least very important: retaining mature employees (71%); training/retraining your current (older workers specifically) workforce (62%); and addressing the needs of your aging workforce (56%). Employers were presented with a list of nine employee characteristics and asked, based on their knowledge and experience, how they would evaluate employees age 55 and older on each of the characteristics. More than nine in ten employers report that workers age 55 and older are at least good on: commitment to doing quality work; solid experience in the job or industry; ability to get along with co-workers; and reliable performance record. Eight in ten also report they are at least good in their ability to handle multiple projects. Few employers rate workers 55+ as poor or very poor on any of the nine characteristics. Employers were informed that baby boomers born between 1946 and 1964 are approaching retirement and that their retirement may create a shortage of employees since the generation of workers following them is much smaller. They were asked whether their organization has taken any steps to prepare for the potential shortage of workers resulting when workers born during the baby boom retire. Only slightly more than one in ten employers report they have taken steps. in ten employers report they have taken steps. Employers were told that organizations could use different approaches to accommodate employees who want to work past traditional retirement age. They were then presented with five different strategies and asked if they were currently using each strategy and were planning to continue using it; if they were not currently using it, but are planning to use it; if they were not currently using it, but would consider using it; or if they were not currently using it and would not consider using it in the future. Only about a third or fewer of the employers indicate they are currently using any of the strategies and plan to use them in the future. The two most frequent strategies employed are providing training to upgrade skills for employees and hiring retired employees as consultants or temporary employees. More than four in 10 employers report they are planning to use or would consider using four of the strategies: upgrade training; hiring retired employees; providing part-time work arrangements without continuation of benefits; and enabling employees to ease into retirement by reducing their work schedules. Employers were presented with a list of four training options and asked if their organizations would be interested in training on any of the issues. About one in four says they would be interested in training on cross-generational management issues (23%); age discrimination in employment (19%); or strategies for recruiting workers age 55+ (19%). Only one in eight (12%) express interest in training on strategies for managing an aging workforce. Employers were asked if their organization has sought information from a list of 13 different types of organizations or individuals on older worker issues such as age discrimination, phased retirement, alternative career tracks, retraining, retirement planning, or part-time work with benefits. One in five says they have consulted a lawyer or attorney. Fifteen percent or more also report they have contacted the Alabama Department of Labor, SHRM, and the EEOC. More than nine in 10 (92%) of the organizations participating in the survey have their headquarters in Alabama. The 28 organizations not headquartered in Alabama do business in a myriad of counties in Alabama, and one in five (20%) report they do business statewide. Participating businesses also represent all Alabama NCIS business categories. There is considerable diversity among employers responding to the survey relative to the size of their full-time labor force. About half have 50 employees or fewer. The majority of employers report that none of their employees retired in the past year. Slightly more than one in three say they had between one and 10 employees retire. Only one percent of employers report they had more than 100 employees retire during the past year. Notably, more than three in four (76%) participating employers indicate that none of their workers are age 55 and over. Fifteen percent report that between 26 and 50 percent of their workforce is age 55 and older. Only six percent indicate that more than half of their workers are age 55 and over. More than four in 10 respondents report they are a human resources professional, a human resources manager, or human resources director (42%). More than three in ten say they are a manager, director, or officer (31%). One in five respondents indicate they are a key executive, president, CEO, Chairman, or Owner of the company (20%). Eight percent say they hold some other position in the company The report concludes that Alabama’s workforce is growing older and over the next decade the number of workers age 55 and older will grow significantly. Few employers, however, have taken steps to prepare for the aging of their workforce. Only slightly more than one in three say they have taken actions to prepare for the retirement of the baby boomer labor force. Further, only about one in three or fewer respondents report they are currently using or planning to continue to use management approaches to accommodate workers who want to work past the traditional retirement age. More than four in 10 employers report they are planning to use or would consider using four management strategies to encourage workers to remain in the labor force longer. Those strategies most attractive to those employers include enabling employees to ease into retirement by reducing their work schedules, rehiring retirees as consultants or temporary employees, providing part-time work arrangements without continuation of benefits, and upgrade training. More could be done in the state to encourage a dialogue among employers about the graying of the labor force and its impact on their bottom line. Incentives could be designed to encourage employers to adopt practices and policies to adjust to the changing labor market. Those employers participating in this study report that older workers have numerous valuable attributes such as commitment to quality, solid work experience, and a reliable performance record. Workers age 55 and older also share the responsibility to prepare for the future job opportunities. They need to embrace new technology, be willing to try new approaches to problem solving, and to participate in upgrade training. Business, their trade associations, and state agencies need to begin to plan for the demographic shift in the labor force. They can join together to explore a range of educational options and workforce development strategies that can better prepare them for imminent opportunities and challenges.

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