Elizabeth Pope

AARP Bulletin April 2007
By Elizabeth Pope

In May, Alan Ross attended a boomer job fair in Scottsdale, Ariz., that drew more than 1,200 people and 70 companies. "There was a real disconnect," says Ross, 57, a marketing executive who left his previous job because he didn't feel it was a good fit. "The garage was packed with luxury cars, and we were all dressed to the nines, but the companies were offering $8- to $12-an-hour jobs. It was as though they were saying, 'Here, you've got nothing better to do with your time—and we've got all these entry-level jobs to fill.' If this is what it's going to be like for my generation, something's wrong."

Workers like Ross—boomers who have lost jobs or want to change jobs or move to part-time—have stumbled into a business world in transition. Economists predict a massive labor shortage—10 million jobs unfilled by 2010—as millions of boomers approach retirement with fewer younger workers to take their place.

"We're at the tipping point where the lines between supply and demand are crossing," says Tamara Erickson, co-author of Workforce Crisis, How to Beat the Coming Shortage of Skills and Talent. "We've had a labor surplus, but now we're inching into a deficit. In 10 years, that gap will be alarmingly wide ... and the jobs will come."

Until then, though, the situation is a starkly different one, with many older workers unable to find jobs that meet their expectations.

Government officials believe it's in the country's best interest to keep older people employed: A recent study by Federal Reserve Bank economists projected that economic growth would slip toward the 2 percent range after 2010, about a point lower than the rate of the last decade, largely due to a smaller labor force.

To encourage employers to attract and retain older workers, Sen. Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging, has promoted legislation that would provide a tax credit to businesses offering flexible work schedules without a loss of health or pension benefits for those 62 and older. Congressional leaders are discussing expansion of "wage insurance," which supplements the salaries of workers who lose a job and take a new one for lower pay. And New York State is considering legislation on retraining, tuition-free college courses and the promotion of "senior-friendly" businesses.

Dire predictions of labor shortages may have attracted lawmakers, but the business world is only reluctantly receptive to hiring older workers. Studies clearly show a reality gap between the kinds of jobs older workers want or need and the demand for their talents. AARP's message boards on money and work are filled with sobering tales of failure to find a new job after buyouts, layoffs and plant closings. Employers say older workers are motivated, disciplined and reliable, but they may also see them as more costly, technologically unskilled and resistant to change.

A recent Ernst & Young survey found that more than six in 10 large employers said boomer retirements would cause shortfalls. But 85 percent had no formal retention programs. "A lot of CEOs still see the brain drain as an HR issue and not as a business imperative," says Deborah Russell, director of AARP's work force issues. "If it's not on their radar screen, it's not going to happen."

Still, while some companies have innovative programs to pull older workers in, federal laws and regulatory restrictions may inadvertently push them out. The tax code, pension regulations and age discrimination laws can make phased retirement or rehiring confusing. Some businesses are so risk-averse, they either won't rehire retirees or they do it informally, says David W. DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce. Managers often ignore human resources and rehire those whose skills they need. "At one company," he says, "the engineers joke: 'Eat cake on Friday and punch in on Monday.' "

It's a "patchwork problem," DeLong says. Some industries may be unaffected by the labor shortage, while others requiring unique skills and years of training already face shortfalls (for example, science, aerospace engineering, the tool-and-die industry). Other areas that have failed to attract younger workers and now lack replacements include the federal government, public utilities, and skilled trades like carpentry, plumbing and auto repair.

"Companies need to fill jobs with specific skill sets," says Lynn Dudley, of the Washington-based American Benefits Council. "Workers with that knowledge are the ones who are sought."

Some economists say a "skills shortage" will be followed by a "body shortage"—a lack of unskilled labor. Others maintain that immigration, technology and women remaining on the job will alleviate the shortage and prevent a crisis in the workplace.

Some companies are shifting to meet the demands and needs of a changing work force, of which nearly 28 percent was age 50-plus in 2006—up from less than 20 percent 20 years earlier.

Flexible scheduling is what older workers want above all else. Forward-thinking companies have come up with innovative options: short-term projects, sabbaticals, telecommuting, job-sharing, seasonal work, even labor pools made up only of retirees. CVS, Borders Books and Home Depot allow employees to work in two locations, to satisfy migrating "snowbirds." Eli Lilly and Procter & Gamble created YourEncore, a separate firm that hires retired scientists, engineers and technology workers for part-time assignments. At Bon Secours Richmond Health System in Virginia, a repeat winner on AARP's annual list of Best Employers, 30 percent of employees are 50-plus. Its senior-friendly environment, with such perks as art classes, helps keep employees like Hattie M. Davis, 85, working as a licensed practical nurse at the wellness clinic at St. Mary's Hospital.

Phased retirement is also becoming more institutionalized. Nearly three-quarters of employers polled would consider allowing pre-retirement workers to scale back their hours on a case-by-case basis, according to a 2003 Cornell University study. "The biggest obstacle to phased retirement is that a lot of companies are concerned about whether jobs are compatible with part-time work," says Robert Hutchens, the professor who ran the study.

Barbara Peacock-Coady, 62, a manager at the Massachusetts Institute of Technology, another winner on AARP's best employers list, was rehired through MITemps, which is managed by an outside company, one of the ways many businesses rehire retirees.

The current ad hoc conditions may be similar to the era when women entered the work force, says AARP's Russell. "In the beginning there weren't any child-care or maternity leave policies to meet the needs of working women, but all that changed."

For boomers caught in the crunch, the best short-term strategy may be to go back to school or move to where the jobs are, says work force expert Erickson. Or consider self-employment or contract work, such as part-time consulting. That's Alan Ross's solution, at least for now.

Elizabeth Pope, based in Portland, Maine, covers aging and retirement for national publications.