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Navigating Aging Labor Market Takes Finesse

The benefits of an aging U.S. workforce may outweigh the costs, although much depends on how willing companies are to adapt to changes in the labor market.

The AARP recently released a study indicating that older workers bring along a number of benefits and that there is only a nominal increase in cost for retaining older employees, contrary to popular opinion. Older workers have shown to be more engaged than younger employees, as well. And, they are becoming cheaper thanks to changes in compensation practices.

But, questions remain about the role of government in ensuring the labor market is equipped to handle an aging workforce and if companies are doing enough to ensure they are positioned to balance the costs and benefits of both older and younger workers.

The Aging Workforce Has Plenty to Offer

Some say that with age comes wisdom; and according to reports that age old adage may help improve workplace culture and productivity. An NBCstory states that nearly a third of the U.S. workforce is over 50 years old and employees older than 65 outnumber teens in the workforce for the first time in more than 60 years.

A 2015 AARP study found that along with experience and perspective, older workers have a higher level of engagement than younger colleagues. The study found that 65% of workers over age 55 were engaged in their work, compared with 60%, or less, of younger workers.

A Gallup survey found that, overall, a more engaged workforce leads to increased productivity, better attendance, fewer safety accidents and lower turnover. Replacing employees, the article states, is expensive for employers. Further, older employees who did seek new work had lengthy stints without a job, possibly incentivizing them to stay put.

"Just as today's 50+ population is redefining aging and eroding negative stereotypes, today's 50+ workforce is adding value by exhibiting traits that are highly sought after in today's economy," AARP CEO Jo Ann Jenkins said in a foreword to the study.

Retirement May Be On Hold for Some... Or Not

A study enumerated in a Forbes article found that many employees are expecting to work past the age of 65 and the number of employees expecting to stay in the workforce past the traditional retirement age is growing. It remains to be seen if those nearing retirement age will actually keep working once retirement becomes available.

According to the study, 36% of employees say they expect to work beyond 65, and 10% of employees say they may never retire. More than two-thirds of employees plan to work for pay beyond retirement.

In 1991, only 11% of workers expected to stay on the job past 65, the story states. The reality, though, is that the percentage of those actually working beyond 65 has not moved much and remains at about 25%. This begs the question; what is the cause for the statistical disconnect?

Some speculate that businesses are not embracing older employees, even though they have tangible benefits. A myriad of concerns have scared off employers, but information from the AARP shows that the cost gap between older employees and younger employees is shrinking, even considering factors such as healthcare.

Changes to pension and compensation packages have helped narrow the difference.

Are Other Countries More Equipped for the Aging Workforce?

Joseph M. Coleman, author of the book “Unfinished Work: The Struggle to Build an Aging American Workforce” discusses some of the differences between how the U.S. and other countries' businesses and governments are handling the aging workforce. An article from Government Executive discusses some of Coleman’s observations.

When discussing how prepared the U.S. is for an aging labor force: “There are good things and bad things. We have a very dynamic economy, we're able to react to changing circumstances in a relatively rapid way. That's a great strength as far as responding to the changing circumstances of the demographic composition of the labor force. The bad thing is that we're very short-term focused and I think that the recession only exacerbated that.”

He said businesses should focus on making the workplace more comfortable for all employees and age diversity will naturally follow.

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