Demographic Trends and the Older Workforce

Transcription

1 Demographic Trends and the Older Workforce November 10, 2004 Linda Barrington, Ph.D. The Conference Board

2 THE CONFERENCE BOARD Finding solutions together Councils Conferences Symposium Economic & Business Data Help businesses strengthen performance and better serve society Research Reports & Presentations Research Centers & Working Groups

3 THE CONFERENCE BOARD Finding solutions together Help businesses strengthen performance and better serve society What business needs to know about society and its societal impact What policy makers need to know about business concerns and operating framework

4 Research inspired by retirement shock, again 25 years of Maturing Workforce Research Valuing Experience: How to Motivate and Retain Mature Workers (2003) Voices of Experience: Mature Worker in the Future Workforce (2002) Employing Older Workers: Opportunities and Constraints (1988) Managing Older Workers: Company Policies and Attitudes (1984) Older Workers and Retirement (1978)

5 New Retirement Shock Aging workforce will thin current pipeline 65 & older to to to to year old cohort to shrink 10% 16 to Total, All Groups 12 Source: Occupational Outlook Quarterly, Winter , Bureau of Labor Statistics

6 of Global Proportions Ratio of Retirement-Age to Working-Age Male Population Netherlands Denmark 20 U.S forecast 2000 U.K. Spain Japan France Australia For every 100 men of working age, the number of retirement age men will nearly double in 30 years in many countries

7 Labor Force Growth is Huge in Low Income World Past two decades-- on average, global labor force grew by million ( avg) Low Income million Middle Income million High Income million This decade-- forecast global labor force will grow by million ( ) Low Income million Middle Income million High Income million

8 Workforce Demographics of Emerging Markets-- Education Levels Rising in Emerging World % of Age Group Enrolled in Post-Secondary Education Country % of Males % of Females % of Males % of Females U.S Poland Ireland Philippines India China

9 Implication Workforce in Emerging Markets Can Supply Much Labor to Fill in Gap immigration cross-border sourcing

10 Foreign Born Population Share Again Back in Double-Digits 15 % 14.4% 14.8% 14.7% Pre WWII Levels 11.6% 11.1% 10 % 6.9% 7.9% 5% 4.7% 0% Source: The Conference Board. Data source: U.S. Census Bureau, Population Census data

11 Origins of Current Foreign-Born Workforce Other 8% Europe 14% Latin America 52% Asia 26% Source: The Conference Board. Data source: U.S. Census Bureau, March 2000 CPS

12 Implication Remittances will likely continue rising as Latin American population ages Population Projection-- Latin America Population in millions Chart Source: CELADE, Boletin demografico 69 (2002): Table 11.

13 Ever-Changing Face of America U.S. Census Population 1940 Hispanic 1.4% Black/African American Asian/Pacific 9.8% Islander 0.2% Other 0.0% White (non- Hispanic) 88.6% Source: The Conference Board. Data source: U.S. Census Bureau

14 Ever-Changing Face of America U.S. Census Population 1970 Hispanic 4% Black/African American 11% Asian/Pacific Islander 0.7% White (non- Hispanic) 84% Other 0% Source: The Conference Board. Data source: U.S. Census Bureau

15 Ever-Changing Face of America U.S. Census Population 2000 White (non- Hispanic) 69.2% Hispanic 12.5% Black/African American 12.1% Asian/Pacific Islander 3.6% Other 2.6% Source: The Conference Board. Data source: U.S. Census Bureau

16 Ever-Changing Face of America U.S. Census Population 2050 forecast White (non- Hispanic) 50.1% Hispanic 24.4% Black/African American 14.6% Asian/Pacific Islander 8.0% Other 2.9% Source: The Conference Board. Data source: U.S. Census Bureau

17 Perception vs. Reality Immigration and Workforce Diversity Only 5% of HR Executives surveyed expect immigration to offset their needs from departing Baby Boomers Foreign Born already accounting for majority of U.S. labor force growth

18 Implication Post-Baby Boom workers more diverse than HR Executives are planning on

19 Average Age of Head of Household Increasing 2002 Under to to 64 Over 65 Baby Boom Aging Millions of Households 109 M M 0% 20% 40% 60% 80% 100% Percent Distribution Source: The Conference Board Consumer Research Center

20 White Households Notably Older 2015 forecast White Under to to 64 Over 65 Under to to 64 Over 65 Millions of Households 86 M Hispanic 16 M African American Asian 15 M 6 M 0 20% 40% 60% 80% 100% Source: The Conference Board Consumer Research Center

21 But Less Likely to have Children Present 2015 forecast Married Single Single with & without Children Parent No Children Other White Percent with Children 31% Hispanic 57% African American Asian 43% 41% 0 20% 40% 60% 80% 100% Source: The Conference Board Consumer Research Center

22 Educational Attainment U.S. Full-Time Year Round Workforce Educational profile of U.S. Full-Time Workers (%). 100% 80% 60% 40% 20% Level of Educational Attainment Rising Among U.S. Full-Time Workforce College Graduate Some College High School Degree 0% Less Than High School Data Source: The Conference Board.; U.S. Census Bureau, custom tabulations

23 Educational Attainment of High School Class of 92 8 years after commencing Post-Secondary Institution Race/Ethnic differences in today s 30 year olds 100% 80% 60% 50% 51% 31% 24% 17% Bachelor's or higher Associate or Certificate No degree 40% 59% 63% 77% 20% 37% 37% 0% White Asian Black Hispanic American Indian Source: The Conference Board. Data Source: U.S. Dept of Education, National Center for Educational Statistics, 2002

24 Percent of Public School 4th-graders with Writing Achievement Below Basic or At/Above Proficient Race/Ethnic differences across today s 4th graders 40% 30% 20% 10% 10% 32% 7% 40% 23% 24% 14% 17% Below Basic At or above Proficient 0% White Asian Black Hispanic Source: The Conference Board. Data Source: U.S. Dept of Education, National Center for Educational Statistics, 2002

25 Income Distribution Differs 2015 forecast White Under $25 K $25 to $49 K $50 K + Millions of Households 86 M Hispanic 16 M African American 15 M Asian 6 M 0 20% 40% 60% 80% 100% Source: The Conference Board Consumer Research Center

26 Implication Household characteristics correlate with race Older,wealthier white households without kids Younger, poorer households of color with kids Self-interested social agenda correlates with race Older,wealthier white households without kids government spending on social security and medicare Younger, poorer households of color with kids government spending on education and healthcare other than medicare

27 Implication Self-interested workplace agenda correlates too Older,wealthier white employees without kids healthcare and pension benefits, phasing retirement deals Younger, poorer households of color with kids healthcare benefits, higher low-end wages, job security

28 Job Satisfaction of U.S. Workers Annual, nationally representative sample Most to least satisfied Age categories: under & over

29 Recent Conference Board Research Employee Survey--Voices of Experience Retirement intentions and perspectives of employees 50 years of age or older 1600 employees at 8 Fortune 500 companies HR Executive Survey--Valuing Experience Practices and perspectives of employers on aging workforce issues 145 targeted HR executives (78% U.S. & 22% Europe and Canada)

30 Voices of Experience 48% (783) retire next 5 years. Reasons why 57% Pursue dream 28% Volunteer or contribute to society 25% Don t feel respected at my company 23% No longer want to work 21% Spouse/colleague retiring 20% Retirement package available 17% Met my financial goals

31 Voices of Experience Other reasons for planning to retire 12% To make a career change 10% Health reasons 10% To relocate 7% Want to start a business 8% Expect to lose my job 4% Physical tasks too demanding 3% To care for a dependent

32 Voices of Experience Those planning to retire Incentive keep me from retiring higher salary 46% flexible hours 46% promotion 33% telecommuting, less pressure 25% sabbatical, better benefits 13%

33 Voices of Experience 52% (861) not retiring in next 5 years. Reasons 69% Don t have the financial resources 64% Want to build up extra income 62% Find my job interesting 54% Work keeps me active 52% Need the medical benefits 33% My contribution to my company is appreciated 29% Company provides me with flexibility I need 29% Value the social network 12% Strong likelihood of promotion

34 Implication Can retain older workers wanting to retire, but at a cost

35 HR Executives concerns include benefits provided by and costs arising from older workers 71% HR executives responded aging workforce very or fairly important. Reasons why... 95% Talent shortage (benefit) 38% Rising health care costs (cost) 21% Need to preserve customer relations (benefit) 12% Losing senior executives to competitors (benefit) 12% Legal concerns (cost) 7% Limited pension funds (cost)

36 Contrasting Views Employee Perspective Survey respondent, Voices of Experience The company will be in for a real eye-opening as the older workforce is released. No one is teaching the intangibles of the job. You can teach an employee what a pump is and how it works-- but not what it sounds like when it is going bad. Employer Perspective Off the record meetings Don t respond until you feel the pain cost of loss We re not replacing those pumps benefit of loss

37 Implication Costs are the elephant in the room Not PC to discuss cost concerns, so many companies don t discuss at all Tough Issues have to be acknowledged to make progress on fuller integration of older workers into workforce Difficult to separate myth from reality e.g., research getting increasingly harder to conduct because of fear of law suits

38 Age Discrimination Charges Received by EEOC (Receipts) On Par with Decade Ago Age Discrimination Charges (Receipts) as % of All EEOC Charges (Receipts) 30.0% 25.0% 20.0% 19,573 Counts = Number of Age Discrimination Charges (Receipts) 19,809 19,921 19,618 17,416 15,719 15,785 16,008 17,405 19,124 15,191 14, % 10.0% 5.0% 0.0% FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 Receipts include all charges filed under the ADEA as well as those filed concurrently under Title VII, ADA, and/or EPA.

39 Business Best Practice Solutions Rehiring Retirees on Contract lower fixed costs--something every CEO covets, even at price of higher hourly flexibility for individual need clear understanding of legal constraints potential morale issues

40 Business Best Practice Solutions Phased Retirement What s the definition of Phased Retirement? - Leaving and returning as a consultant -Flex/Part Time - Mentorships/Coaching - Non-profit Leaves Phasing into Retirement Only want the right employees take it What are the legal issues & ERISA guidelines

41 Implication Individual deals because of Concerns about legality of policy Desire to select right employees

42 Net Labor Force of Older Workers Higher female labor force participation with each succeeding generation Earlier retirement with rising living standards Healthcare possible countering drag in U.S.

43 Generational changes still impacting women s labor force participation % of Women in U.S. Labor Force years old % of Men and Women in U.S. Labor Force, by age Men Women years old 75+ years old

44 Global Trend Labor Force Participation of Women aged years old Country United States Canada France Japan Source: OECD, Historical Statistics, 2001

45 Long-run Trend Toward Earlier Retirement as Living Standards Rise Average age of exiting labor force Average Age of Retirement Falling Japan Male Japan Female U.S. Male U.S. Female Germany Male Germany Female

46 Opportunity costs of early retirement rising in Europe as older population grows 20% 15% 10% 5% Percent of Potential GDP Foregone Rising in Europe as Workforce Ages and Retires Early 11.2% 10.5% 15.9% 9.5% 13.2% 12.6% 2.9% 9.3% 8.9% 9.1% 6.7% 6.9% 6.8% 7.1% 6.7% 0% Netherlands Germany Switzerland Ireland OECD avg Source: Herbersson & Orzag, IZA Discussion Paper No. 816

47 Implication Retirement age falling, participation rising Net effect increasing numbers of older workers growing macro opportunity cost

48 THE CONFERENCE BOARD Finding solutions together Help businesses strengthen performance and better serve society What business needs to know about society and its societal impact What policy makers need to know about business concerns and operating framework

49 THE CONFERENCE BOARD Finding solutions together What business needs to know Managing a three generation, ethnically diverse, global workforce will be more complicated than expected Important trends will be missed due to riskaversion to older-worker related research Society will be split on age-related issues and will look to employers to resolve

50 THE CONFERENCE BOARD Finding solutions together What policy makers need to know Business is worried about Lawsuits Being able to dismiss those not making the grade, with dignity Healthcare costs Business will continue to expand non-native U.S. employment (immigration, offshoring) for cost savings (wages and benefits)