Last week I listened in on a very intriguing teleconference featuring Ann Clurman, Senior Partner of Yankelovich Monitor. She was reporting on a survey that Yankelovich just completed, ‘10 Things About Boomer Women.’ There are many indicators in the survey that substantiate the expectations of many that this group is not going to just fade quietly into the sunset any time soon. Of course, I was particularly interested in aspects of the study that gave clues to the Boomer womens’ plans regarding employment in the future. The study did not disappoint.

Several studies have indicated that 65 - 70% of Boomers plan to work into their late 60’s or 70’s. This study put a different, and very interesting spin on that group. Yankelovich asked whether they would agree to the statement that “If I choose to, I will be physically and mentally capable of working into my 70s and 80s.” 68% of the Boomer women agreed with that statement. This positive attitude was reflected in another response, with 86% agreeing that “I believe life is a set of endless opportunities no matter what your age.”

Yankelovich calls this goal “Middle Age-lessness.” Ann Clurman pointed out that “Boomers see no reason why they should matter less in the future.” And they are going to work to keep physically and mentally sharp to stay on top of their game.

Information on the Yankelovich study can be obtained from Sara Delligatti at Yankelovich (sdelligatti@yankelovich.com).

Another survey, this one by Jobfox, uncovered some trends that could fit very well with the above. They note in Workforce Management (link) that “Companies are showing increased interest in retirees and stay-at-home moms to possibly fill glaring labor shortages.” With the Yankelovich survey already noting that 27% of Boomer women parents without children under 25 living at home “Have returned to work or work more hours since (their) last child left home,” up from 20% in 2006, employer need and worker desire could come together in a very positive way for Boomer women. 

Another Workforce Management article (link) was published in April, but is very relevant to the above. The article chronicles how Lehman Bros. recognized the need to ‘recruit and retain women for senior positions at the firm,’ and that bringing back women who had left the workforce required flexibility in hours and days worked. Lehman has made this a top priority, with direction and comment straight from the president.

Of course, these are highly skilled women, and they are in great demand. Those with less skills will probably discover reentry to be a more challenging objective. However, as more firms like Lehman lead the way, these ‘best practices’ will hopefully lead to more opportunities throughout the workforce. 

The U.S. has a major funding problem with its entitlement spending (Social Security and Medicare) programs. However,  the U.S. population is younger than that of Europe because the Fertility Rate is higher and Life Expectancy is (sadly) lower. Add to that the fact that European social programs are more generous than those of the U.S., and Europe has bigger problems than those of the U.S.

This has generally been ignored during the ascension of the Euro. However, Johathan R. Laing reports in Barron’s this week (link) that a new report by GaveKal, “an international investment-research boutique” notes that “rapidly aging populations in euroland figure to decimate working populations there and increase the governmental financial burden at a pace far faster than in the U.S.”

In addition to the U.S. having a younger population, the U.S. population works longer hours and later in life. The AARP ‘Profit From Experience’ report (link) included data showing that the U.S. workers stay on the job longer than all other G7 countries other than Japan.

Combine these facts with reports that indicate that Boomers want to stay on the job even longer, and the U.S. competitive advantage could grow even greater. What is needed is a continuing thrust to make sure that outdated policies and practices do not stand in the way of Boomers staying on the job when they would like to do so. For instance, EBRI reports (link) that 37% of workers retired earlier than they had planned. Health, disability, and caring for family members were part of the reason. However, downsizing and obsolete skills were a significant factor. Work incentives and retraining could probably bring a lot of these workers back to being productive for society.
 

It is not often that there is an opportunity to report good news on the subject of retirement preparation. However, three studies released recently have included very positive developments in 401(k) auto participation.

Wells Fargo’s Institutional Trust Services, and BPS&M (a benefits planning division of Wells Fargo) issued their twelfth annual report on ‘Strategic Initiatives in Retirement Plans.’ (Link) Included was the information that plans using automatic enrollment for their 401(k) programs had increased from 26% of respondents  (employers) to 44% from 2006 to 2007. Human resource professionals have called this increase in one year amazing.

“The Pension Protection Act of 2006 has opened the door for employers to design plans that encourage plan participation…,” according to the study. The change from having employees ‘opt-in’ (actively sign up for a 401(k)) vs. ‘opt-out’ (they are automatically enrolled and have to take action to drop out) led to these amazing statistics above.

The Employee Benefit Research Institute estimates that auto enrollment, and auto escalation (another provision of the PPA) “will result in a significant increase of 401(k) accumulations - especially for low-income workers - compared with estimates previously determined for automatic enrollment.” (Link)

And a Harris Interactive poll, sponsored by AARP, FINRA, and Retirement Security Project (Link) measured the employee attitudes toward automatic 401(k) enrollment. Of those enrolled in a 401(k) plan, 98% either strongly or somewhat agreed that they were “..glad (their) company offers automatic enrollment.” Even for those who opted out, 79% strongly or somewhat agreed they were glad their company offered automatic enrollment.

The PPA has been described as the biggest improvement in pension legislation in many years. So, since congress takes so much criticism, it is only fitting that for a positive move, we should thank the PPA’s sponsors. They are Representatives Boehm (OH), Camp (MI), McKeon (CA), Kline (MN), and Thomas (CA).

From the 1950’s to the early 80’s there was a constant trend toward earlier retirement. However, in the mid 80’s that trend gradually started changing. At a recent AARP International Profit From Experience Conference, Jan Denys, the Manager Corporate Communication and Public Affairs and Labor Market Expert, Randstaad, Belgium, noted this change in many countries and he suggested that governments and employers should “surf the trend.”

In many countries the trend to later retirement is a function of governments having to make the official date of retirement an older age. This is badly needed, as retiree social programs are severely testing government financial capabilities. However, changing the retirement age is meeting with mixed results. It is amazing that Sarkozy was elected in France with a key plank in his platform being that the French needed to work more. Across the border in Germany, the recent increase of the retirement age to 67 is being challenged (The Economist on 10/11/07, reported that 80% of the German voters want to roll back the government effort to get the retirement age up to 67).

In the United States, The Congressional Research Service , on September 7, reported trends in labor force participation to Congress ( link). the low point for the percent of men and women 65 and over working hit their low points in 1985 (15.8% and 7.3%, respectively). For men 55 to 64 the low point of 66.0% was reached in 1995.

As the CRS report points out, there is no solid statistical analysis that provides solid reasons for this trend development. However, the author (Patrick Purcell) puts forth a hypothesis that one of the reasons is likely to be the significant switch in employer pensions from Defined Benefit to Defined Contribution (largely 401ks). The former is likely to penalize a worker for staying beyond a defined retirement age (differs by plan), while the latter provides more savings for retirement for those who stay on the job.

The author also notes that increasing use of ‘phased retirement’ could be a factor. This is tricky because, as the author points out, “No statutory definition of phased retirement exists.” Yet, several surveys report that what workers would like the most in order to stay on the job is flexibility in work schedules. Employers, on the other hand, are afraid of the statutory uncertainty of phased retirement programs. Therefore, the safest route is often to have employees retire, then apply for work as a consultant or contract worker.

The net is, it is very encouraging that more workers are staying on the job. The AARP surveys indicate that 70-80% of them want to. And that extra work is good for the employers and the economy as well. Employers and government should take advantage of this by ’surfing the trend!’

In my last post I noted that the AARP ‘Best Employers for Workers Over 50′ program was more than an awards show (see above). AARP has taken the inputs of the applicants and turned them into a ‘best practices’ model for employers that wake up and realize that keeping Boomers in the work force is going to be a key strategic initiative over the next few decades.

The following morning, Molly Selvin reported in the LATimes (link) that Ernst & Young has updated their work on the Aging U.S. Workforce with the 2007 version of that study (link). This is another important study that should provide an additional alert to wake up those managers who are aware but not taking action.

 In fact, E&Y reports an incredible increase in the percent of HR executives that said “retaining key employees to maintain intellectual capital was the human capital issue of most concern” (from 38% in 2006 to 68% in 2007)! Efforts to increase awareness are obviously beginning to get some results.

A new finding (to me, at least) was that the focus in the strategic planning to address the aging workforce issue should be in middle management. This is problematic when “41% of the companies responding say that middle management will be the level most affected by the talent gap, yet 75 percent are focused on monitoring succession at the senior management level.” HR professionals clearly need to refocus their efforts.

Ernst & Young has several key recommendations for those HR managers who decide to tackle this issue. Combine their analysis with the ‘best practices’ noted from the AARP  Best Employers for Workers Over 50 program, and earlier work from The Conference Board and the General Accountability Office, and there is a substantial body of material that can provide significant guidance to those HR professionals who decide to take action in this important area.

Hopefully, we will start to see  a progression from increased awareness to increased action.

I recently attended the AARP ‘Best Employers for Workers over 50′ awards dinner. This was the seventh annual event, meaning that AARP started this commendable effort well before most people were aware that retention of Boomer workers was going to be a critical need for the U.S. economy.

The fifty employers receiving awards (link) certainly deserve the commendations. They are definitely in the vanguard, often because of problems with retaining certain classes of employees.

Award shows are often superficial and fleeting. This one is neither. Companies put a lot of work into their submissions, and the accumulation of these submissions is providing a very valuable list of ‘best practices’ in the area of making the workplace a positive environment for older workers, and therefore helping to retain them. In 2004 AARP had Mercer Human Resource Consulting analyze the best practices in a report (link).

AARP continues to analyze the submissions and has lists of best practices on subjects like ‘Retention’ (link) and ‘Workforce Trends’ (link).

Surveys are showing that most employers are not preparing for the forthcoming shortages of employees. Fortunately for them, when they do wake up and realize they are in trouble, the best practices developed by AARP will give them a badly needed head start in getting up to speed.