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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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The Washington Post

Economic Policy

Baby Boomers upend the workforce one last time

As older workers look to retire, companies reckon with how to replace outgoing skillsets.

By Andrew Van Dam

March 1

The youngest baby boomers are around 55 years old. The oldest are in their 70s. Most

Americans don’t remember a workforce without the largest generation.

And yet, as boomers enter their final years in the workforce, their retirements are taking

companies by surprise.

In the next five years, almost three-quarters of the companies surveyed in 2018 by Willis

Towers Watson, a risk-management and insurance brokerage company, expect to face

significant or moderate challenges from late retirements. But because nothing is predictable, a

significant share are also worried about early ones.

Companies typically said they were more concerned than they used to be about the cost of older

workers, and the challenge of replacing the knowledge and skills those older workers will take

with them on the way out the door. The reported rise in concern over older workers “blocking

promotions of younger employees” was not as sharp, though about two-thirds of respondents

said it was at least a moderate concern.

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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The survey included 143 human resources managers at companies that, together, employ about

2.9 million people. It was analyzed in a working paper circulated in February by the National

Bureau of Economic Research.

Managers were asked to compare the business challenges of employee retirements over the past

five years to the next five years. In each category, companies saw a greater challenge in the

years to come.

The respondents were not part of a random sample, and their experiences cannot be considered

representative. But they suggest broad concern in the business world about dealing (or not

dealing) with an aging workforce. This data was not available otherwise.

Reason 1: Boomer retirement dates are a moving target. Record-breaking shares of Americans plan to work longer. An April 2018 Gallup poll showed 41

percent expect to be working beyond age 65 — a huge jump since Gallup started tracking in

1995, when it averaged 13.5 percent.

The age required for full Social Security benefits has also risen. Americans born before 1937

became eligible for full Social Security benefits at age 65. By the time the oldest boomers were

born in 1946, the standard retirement age had risen to 66. Boomers and others born after 1960

won’t get full benefits until 67.

Workers aren’t always transparent with their employers about their plans, said Alan Glickstein,

a managing director at Willis Towers Watson who helped oversee the survey.

“There’s some pretty significant disconnects, gaps in knowledge between what the employers

think and what the employees think,” Glickstein said.

They may not know themselves. Even if they do, they may be reticent to discuss their financial

situation or make themselves vulnerable to replacement by committing to a retirement date

with their employer.

While some people will only retire when forced, Glickstein said, “a lot of the older workers are

working primarily because of financial need, not because they’re fulfilled with their job and

they want to be in the workforce until they’re 70.”

In 2017, The Washington Post’s Mary Jordan and Kevin Sullivan reported on the lives of people

who had been forced to keep working well beyond typical retirement age, often into their 70s.

“Fundamental changes in the U.S. retirement system have shifted responsibility for saving from

3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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the employer to the worker, exacerbating the nation’s rich-poor divide,” Jordan and Sullivan

wrote. “Two recent recessions devastated personal savings. And at a time when 10,000 baby

boomers are turning 65 every day, Social Security benefits have lost about a third of their

purchasing power since 2000.”

Reason 2: Nobody knows what ‘retirement’ means anymore. As more workers become consultants or accept temporary contracts or gigs, their relationship

with employers is changing. Boomers’ ties with their employers may be more tenuous from the

start. In the end, their bonds are more likely to unravel piecemeal than to sever all at once in a

nice ceremony involving a gold watch.

“You kind of wonder what retirement is anymore,” Glickstein said. There’s no longer “a magic

moment when you stop working entirely,” he added.

The share of companies offering older workers partial-year employment and shorter hours is

expected to rise sharply. About 2 in 5 companies surveyed are considering offering part-time

work or flexible hours by 2020, nearly double the current rate.

Others hope to keep older workers around with reduced responsibilities, and a small but

growing minority are offering options that blend volunteer work with traditional employment.

Reason 3: It’s hard to generalize across industries. Four out of 5 manufacturers, and 2 out of 3 employers in the mining and nonprofit sectors

included in the survey were concerned about loss of talent. Retail and service-sector employers

were not as concerned.

That tends to track somewhat with each sectors’ reliance on older workers, but individual

industries within each sector vary considerably. Funeral homes, religious organizations, bus

drivers, florists and real estate agents all have more than a third of their workers over age 55,

according to our analysis of the Census Bureau’s American Community Survey.

At the other end are industries that tend to rely on a younger workforce, such as retail,

restaurants, electronics stores, theaters and warehouses. In those fields, fewer than 1 in 7

workers are nearing retirement.

In many industries, employers also face significant uncertainty as to whom or what will replace

a retiring boomer, Glickstein said.

Respondents reported that “loss of specific company knowledge” would be an increasingly

difficult challenge, as would “finding workers with similar knowledge and skills.”

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As technology progresses, it’s feasible that a robot or computer program could take on some of

a worker’s responsibilities when he or she is ready to retire. That means employers’ succession

strategies will evolve alongside technology.

And because boomers are the first generation to face the task of passing on their knowledge to

machines and computer programs — as well as to apprentices and junior employees — setbacks

and tensions are bound to arise.

“How do you translate that business knowledge into an algorithm?” Glickstein asked.

Scott Clement contributed to this report. The story’s headline has been updated.

Andrew Van Dam Andrew Van Dam covers data and economics. He previously worked for the Wall Street Journal, the Boston

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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3/2/19, 4)16 PMBaby boomer retirements: Companies fear both the cost of older workers, and the cost of replacing their knowledge - The Washington Post

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