It’s Time for Some Bold Strokes to Support Older Employees

Posted Wednesday, May 28th, 2014| Comments (3) rule

Philip Moeller
Contributing Writer, Money
Author, book on Social Security, under contract with Simon & Schuster
Speaker, on retirement and successful aging
Journalist and Editor, American History of Business Journalism
Research Fellow, Sloan Center on Aging & Work, Boston College

Research and anecdotal evidence find that workplaces often are not welcoming or friendly to older workers, and may be condescending if not actively hostile to them. Employers may be unwilling, unable or simply clueless about the well-established needs of older employees.

Meanwhile, mounds of research also have solidly established that older employees bring a wealth of experience to their jobs. They can be an organization’s most stable and loyal employees, are very trustworthy, great mentors, enjoy work more than younger cohorts and can be every bit as productive as workers in younger generations. If—and it’s a big one—if they are intelligently managed and supported by employers.

Now, hold this thought for a moment and consider a bit of irrefutable demographic information. The United States is running short of workers. Yes, lots of older Baby Boomers are extending their working lives, leading to alarmist stories that they are taking work from younger jobseekers and stalling efforts to begin and establish career paths. But the bigger picture here is that millions and millions of other Boomers are retiring, and their numbers will not be replaced over time by younger and smaller generations. Short of a large and totally unlikely flood of new immigrants into the U.S., many employers will have increasing trouble finding enough new employees, let alone qualified ones.

The happy solution, of course, would be for employers to close this manpower gap by embracing their older workers, retaining the ones who want to stay and putting out the welcome mat for new employees who are in their 60s and even 70s. They would get a great reception from older people who either want to keep working because they enjoy it, or need to keep working because their retirement portraits look like Dorian Gray.

There is a lot that education could do to produce better matches for older employees and workplaces. Often, reading about employer concerns regarding older workers seems like a story written in a foreign language compared with the narrative about how valuable a resource older employees can be.

Even so, the main spoiler to a happy ending to this story is—simply but profoundly—money. Older employees often represent higher expenses to employers. They may make higher salaries than comparably skilled younger persons. Their healthcare costs are higher. In many work settings, they are more likely to become injured and their rehabilitations are longer and costlier. Older employees may receive less training for skills maintenance and upgrading because they are viewed as sunset workers for whom such spending would be a bad investment.

What to do?

More studies and mindfulness strategies are nice thoughts but do we really need more research here? Experience suggests that employers with sizable older workforces will develop effective ways to handle them. The key is to encourage them to develop such workforces. And the best way to do that is to make it worth their while financially.

The biggest levers that exist to effect large-scale behavioral changes among employers are retirement and healthcare costs. These are big employer expenses.

If there’s any good news here it’s that they also are enormous public expenses. Social Security and Medicare have huge price tags that are only going to rise as Boomers get older. Less visible, perhaps, are the sizable hits to the U.S. Treasury from the breaks for tax-deferred retirement accounts and the tax deductibility of employer healthcare premiums.

Obamacare already has caused big attitudinal changes toward employer healthcare funding and, of equal importance, the notion that employers even are the best places to offer healthcare in the first place. It is not hard to see a future where employees go directly to a public or private healthcare exchange for their insurance.

As this likely evolution occurs, healthcare and retirement benefits are more and more likely to be viewed as coming from the same expense bucket. They will be managed as part of a single expense pool and employee costs will be looked at accordingly. Employers would pay “X” dollars for each employee’s benefits. And they shouldn’t care whether those dollars are spent in retirement security or healthcare. Nor where they are spent.

This is all by means of suggesting that changes could be made in Medicare and Social Security that would save employers enough money on the older members of their work forces to greatly reduce if not eliminate any added costs posed by them.

To name one example, why couldn’t Medicare be redesigned to accommodate older persons who are still working? Employers could shoulder some of these healthcare costs, although far less than they’d pay for a non-Medicare employer. Medicare would save money as well. Employees shouldn’t care whether their premiums go to a private insurer though a marketplace or to a private insurer participating in Medicare.

Further, older employers—and their employers—today continue to pay Social Security payroll taxes even if such taxes will add not a single penny to their eventual Social Security benefits. What about creating a payroll tax reduction or exemption for employees of a certain age? This might cost Uncle Sam some payroll tax dollars but wouldn’t the income tax benefit of keeping an older worker on the job more than make up for that hit?

Removing the reality and perception that older employees are a cost burden would lead to the retention and hiring of more aging Boomers. They would be better off and so, likely, would society.

3 responses to “It’s Time for Some Bold Strokes to Support Older Employees”

  1. Frank Hoffman says:

    I welcome articles like this raise public awareness of the employment environment-not great-for older workers. The threshold question to be answered is how can these competent, skilled members (or former members) of the workforce remain (or become) employed so that the focus can address managing this cohort. As one of those former members of the workforce, I’d much rather be in the workforce bringing value to an employer, and believe me, compensation really is not an issue…pay me a reasonable wage of the performance criteria established and I’d be thrilled…as I’m sure many other similarly situated unemployed workers would be.

  2. Mahdie says:

    ?????? I see you have no grasp of what employment is all about. You see, soemnoe is hired to WORK, for which they are PAID so that they have money to LIVE on. People aren’t going to work for no compensation, and just starve to death in the streets in return for their work. One necessity of life is access to medical treatment as needed, and preventive care on a regular basis. Thus, if people can’t get this from the compensation they get from their work, uh, well, there is no other way for them to get the money to pay for health care. Insurers offer discounted rates to groups. That’s why most people have gotten their health care through their employers it’s cheaper. If an employer won’t buy the cheaper insurance, they’d have to pay a vastly higher salary, so their employees can afford the more expensive rates. I really don’t get what wing-nuts don’t understand about all this. Do wing-nuts really think the reason people take jobs is for fun? Where do wing-nuts expect people to get the means to survive, if not from their employers? Uh, whoever told you the purpose of making sure people who have jobs can get access to health care was job creation is either a liar or deeply brain-damaged. The purpose of affordable health care is to prevent needless suffering and death, NOT to create jobs. Yes, it seems right to all SANE people that employees are compensated for their labor sufficiently to maintain their lives. Why doesn’t that seem right to YOU? Why do YOU think people work? If people aren’t supposed to be compensated for their labor, how do YOU expect them to live?

  3. Aliasgar says:

    It is not an employer’s reolinsibipsty to provide health care. That is why my employer’s health insurance plan is called a benefit ; it is a benefit I receive for working there, but it is not a right. On January 1, 2011, my company can decide not to renew the plan if it chooses to do so. I’d like to look at the new bill, because not all companies can afford to provide health insurance. The company I work for can do it, but many companies have a hard time making ends meet already. In my industry, I have heard of companies that lay-off workers, not pay workers for months at a time, and even go out of business. I work in a healthy, money-making industry, by-the-way. Things need to be done intelligently. Unless there is some unrelated amendment in the health care bill that is not common knowledge, then the bill will not create jobs. Of course, I am sure there is something in there to make a particular US Rep or Senator want to vote for it.