Retirement-It's the New Competition for U.S. Employers

By Dennis, Helen | Aging Today, March/April 2006 | Go to article overview

Retirement-It's the New Competition for U.S. Employers


Dennis, Helen, Aging Today


Remember the downsizing of America? In the 1980$ and early 19908, hundreds of thousands of employees were laid off or given opportunities that they could not resist. Many were middle-aged or older. The New York Times described this phenomenon as an "economic storm that left a trail of anguish and upheaval."

During that time, employers made dramatic cuts to their workforces: AT&T cut 40,000 jobs; Delta-15,000; IBM-35,000; and Sears-50,000 jobs. The numbers added up, and older workers took a big hit. The business mantra was to establish a lean-and-mean management structure, do more with less, and produce faster, better and cheaper. Since companies could no longer ensure lifelong employment, they offered retraining that would ensure employability, increasing employees' chances of getting a job after a layoff or early retirement-elsewhere. The subject of brain drain and lost knowledge was not even on the radar screen.

EPIPHANY FOR EMPLOYERS

Jump forward to 2006: Some things haven't changed. For example, General Motors recently announced that the company will eliminate 30,000 jobs, and in the last year the newspaper industry shrank by 2,100 people, including many newsroom veterans. But many other emptoyers are'having an epiphany. Theyare becoming aware of a new kind of competitor, one that is neither a threat from global enterprises nor from companies that are outperforming them. This new competitor is retirement.

As boomers retire and fewer workers are available to fill the gap, the United States expects to face a worker shortage of 10 million in the next six years. Retiring boomers' knowledge, contacts and experience cannot be transferred in a few conversations, seminars or PowerPoint presentations.

Boomers have made their presence felt in U.S. society at every stage of their lives. Cheryl Russell, author of The Master Trend, (New York City: Plenum Press, 1993), reminds Americans that their culture has always bent to the whims of boomers. In the 19505 and 19605, boomers needed schools so their communities built them. A decade later, they needed colleges-and more colleges opened than in any other decade before or after. When they needed houses in the 19705, housing starts rose to a record level. In their grown-up years, boomers supplied business with the largest and most educated group of employees in U.S. history. And now once again, boomers may rock society-not by their presence, but by their absence.

This new business competitor is very seductive. Currently, 85% of those 65 and older choose not to work. Many either cannot find employment or have health problems that prevent them from working. Many more are retiring because they can. Social security benefits, company pensions, health insurance, Medicare and 4oi(k) funds (a staggering $1.8 trillion) make it alluring and easier for people to retire-at least for some. Although a 2002 AARP survey found that 70% of employees plan to work in their retirement years, it is uncertain in which industries and in what positions.

LOSS OFTALENT

Employers from both the private and public sectors are beginning to realize the impending profound loss of talent and knowledge that will occur as boomers retire. The Federal Aviation Administration (FAA) is among them. Three-quarters of the nation's 15,000 air traffic controllers will be eligible for retirement in 10 years. Since it typically takes three to five years to train an air traffic controller, the FAA is in the process of publishing rules that wouldallow controllers, mandated to retire at age 56, to get yearly exemptions until they reach 61. The FAA also is planning to use simulators to shorten training time by about two or three years.

One-third of all secondary school teachers in the nation will be able to retire in 2008. In California alone, 100,000 teachers are expected to retire in ten years. In the oil and gas-production industries, 60% of their employees may retire in 2010. …

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