My mother worked as a nurse for two decades and retired in Phoenix about two years ago, with no intention of ever working again. Her brother, my uncle, worked for a phone company in New Jersey for 30 years, left his job, and became a realtor, then a DJ, and then a driver. Guess which track is more common among older Americans today?
To borrow a phrase, this ain’t your parents’ retirement. The baby boomers have redefined every stage of life – from education to child rearing to workforce participation – and now workforce exit. In this column I would like to describe how this new era of retirement presents a business opportunity.
Most people reading this column are aware that society is aging. What may be news is that, for all the talk, societal aging really hasn’t happened yet, thanks to the low fertility rates of the Great Depression. In fact, between 1990 and 2010 Idaho barely aged. The fraction of Idahoans aged 65 and older was 12 percent in 1990 and 12.4 percent in 2010, and even dipped to 11.3 percent in 2000. Since 2010, however, the fraction of Idahoans aged 65 and older increased to 13.3 percent and is scheduled to increase rapidly over the next 15 years to 18.2 percent – that’s nearly 1 in 5 Idahoans.
The aging of Idaho will have serious implications for individuals–continued work later in life–and for government– strained state and local budgets. Employers, somewhat in contrast, may have a lot to gain from an aging workforce. More individuals needing to stay working later in life means: 1) there is a larger pool of workers from which to choose; 2) your most experienced workers may be willing to stay with you longer, preventing – or at least staving off – brain drain in the near term; and 3) new opportunities for mentoring may be available within your workforce.
These benefits do not come without costs, of course. All cohorts of workers have different needs. Just as those in their 20s and 30s might be interested in maternity or paternity leave and flexible schedules to address child care needs, older workers, too, might desire flexible scheduling to reflect potential shifts in work-life balance. Each employment situation is unique, but there are lots of reasons to think that the benefits of hiring or retaining older workers can outweigh the costs, providing a win-win opportunity for both employees and employers.
The other thing to keep in mind is that, as we all know, the free market is a powerful force. Sit idle and you can easily be blown over. Societal aging is more or less inevitable, due to two very long-term demographic trends: increases in life expectancy and reductions in fertility rates. These two trends imply that societal aging is here to stay. This is not a baby boomer phenomenon that will pass in a decade or two. A wise employer will take this shift as a given and, in a Darwinian way, adapt in order to survive this new market reality.
One of the Darwinian forces at play here is that, like my uncle, many of today’s older workers are very open to job changes later in life. My own academic studies of Americans nationwide, as well as other researchers’ work, has found that, among career workers, it is actually more common to change jobs later in life than it is to experience a one-time, permanent exit from the labor force following career employment. Retirement can be considered a process for other reasons as well. A sizable minority of older Americans switches from wage-and-salary career employment to self-employment and many return to paid work following an initial retirement. (Note: I’ve told my mother this many times and she still has no intention of returning to paid work!)
What does the new era of retirement mean for you, the employer? For one, it means look out. If your older employees are similar to other older workers across the country, they are well aware of the opportunities that the dynamic American labor market provides, and may take advantage of it. Moreover, the most talented and skilled workers are those with the most to gain in the free market. The takeaway – be cognizant of the opportunities your older workers have, and respond accordingly. Keep communication open and don’t wait until it is too late to focus on retaining the one element of your workforce that only older workers can provide – a lifetime of experience.
Some have argued that retaining older workers hurts younger ones. For every job taken by an older worker, a younger one loses out. Don’t buy it. This argument is severely flawed economically and has been proven misguided repeatedly in empirical studies. Just think of where we would all be if the baby boomers en masse decided to stop working. Now that would be a real problem, as a large number of productive individuals would vanish and need to be supported by, you guessed it, younger workers.
When it comes to older workers, you, the employer, have a lot to gain. The trick is being open to the opportunity right in front of you and figuring out how best to benefit. Remember, too, if you’re not open to the opportunity, the guy down the street will be.
Kevin E. Cahill, PhD is a research economist with The Sloan Center on Aging & Work at Boston College and a senior economist with ECONorthwest, an economic, public policy, and litigation consulting firm based in Portland, Ore. Kevin lives in Boise with his wife, Danae, and two sons, Aidan7, and Daniel, 6. The views expressed in this article are those of the authors and do not necessarily reflect the views of ECONorthwest.