| This week
VOL. 27 NO. 10, MAY 15-21, 2006
Employers brace for age shift
About half of state work force made up of baby boomersBy Chris O'Malley
IBJ Reporter Employers and economic development leaders, already lamenting that 36 percent of Indiana college graduates leave the state after graduation, may now have another “brain drain” to worry about.
Starting to retire are the baby boomers, those 76 million people in the United States born from 1946 to 1964. They make up 46 percent of Indiana’s work force.
Some economists say fears of a labor shortage are unfounded because of expected productivity gains and other offsetting factors. And some big employers might even welcome the demographic shift, seizing the opportunity to fatten quarterly profit by hiring a 21-year-old at half the pay of a seasoned worker.
But short-term-minded companies may lose more than intellectual capital and institutional memory as boomer retirements coincide with lower fertility rates, other observers argue.
By 2020, the number of so-called Generation Y workers—those born from 1977 to 1999—coming into the work force will be less than the number of baby boomer retirements, according to the “Bye-Bye Boomers” report by the Indiana Department of Workforce Development.
In many professions, such as education and health care, businesses are able to compensate by pushing productivity levels only so high. And they can’t outsource jobs to low-wage workers in or from other countries.
“We’re facing a crisis that’s just never been seen before in this country, ever,” warned Barry Spiker, a senior fellow at the University of Indianapolis’ Center for Aging & Community.
“Companies got as lean as they possibly could get in the late 1990s. There’s not as much as far as slack resources they can turn to.”
Spiker is among those making presentations at the “Managing the 21st Century Workplace: Value and Impact of Older Workers” conference May 18 at the Indianapolis Marriott Downtown.
The keynote speaker is Robert Butler, a physician and Pulitzer Prize-winning author who founded the National Institute on Aging.
The conference will share new statewide data, including the findings of “Gray Matters: Opportunities and Challenges for Indiana’s Aging Workforce,” a report written by former Indiana Economic Development Council President Graham Toft and Nadine Jeserich. The two now work at local economic development firm Thomas P. Miller & Associates.
According to the report, nearly 29 percent of Indiana residents will be age 55 or older by 2030, versus 22.4 percent last year.
Currently, 33 percent of Hoosiers age 55 or older are part of the state’s work force—putting Indiana near the middle of all states.
As older workers leave the work force, Indiana won’t see as much of a brain drain as many other states. Just 11 percent of the Hoosier population 55 or older holds a bachelor’s degree or higher. That places Indiana 46th among all states.
The report says that only 16 percent of that population are in high-skill occupations—placing Indiana 42nd. Worse, for reasons that aren’t entirely clear, the state ranked dead last in coaxing older workers back to college.
To meet the needs of employers hungry for educated workers, older Hoosiers will need to upgrade their skills, particularly as technology changes, said Ellen W. Miller, executive director of U of I’s Center for Aging & Community.
“Our work force vulnerabilities lie in the fact that our older workers rank near the bottom of the states in the areas of education, participation in high-skill occupations, and pursuit of advanced training or college-level education,” she said.
Some employers facing critical work-force shortages already are training older workers.
Registered nurse Donna Leinbach, 63, was out of work about 15 years as she raised three children. When she tried to go back to work, she learned that employers wanted current clinical experience. She enrolled in a nurse refresher course at St. Francis Hospital and Health Centers, which later hired her for a surgery recovery unit.
“I couldn’t have done it if they weren’t willing to help me. ... They invested in me and I’m thankful for that,” said Leinbach, who was so grateful that she volunteered to work the undesirable Friday night shift. That kind of loyalty—rarely seen in today’s younger generation—is one of the things employers say they value in older workers.
Another is their specialized knowledge. Spiker pointed to a report assessing the safety of the space shuttle fleet. It noted that many of the key personnel in the program were nearing retirement age.
“The eventual departure of these individuals will deprive the program of some of the highly skilled and experienced professionals needed to ... maintain adequate safety margins,” the report said.
The consequences aren’t so dire at Duke Energy Corp., the North Carolina company that recently acquired Cincinnati-based Cinergy and its Plainfield-based Indiana operations. However, “in work force planning, we identified that we could possibly lose up to or just over 40 percent of our workers in the next five to seven years because of age,” said Suzane Bradley, Duke’s diversity manager.
Lately, it has been scrambling to train a new generation of linemen before older ones leave. An apprenticeship can last four years.
After a round of early retirement offers a couple of years ago, Cinergy found itself bringing back as a consultant Kenny Burck. In his 35 years on the job, he knew the nuances of state and federal regulation better than anyone in the transportation department, where he trained drivers.
That knowledge is critical, he said, “especially when the auditor shows up and asks, ‘Why did you do it this way?’ The new people wouldn’t know.”
Burck now consults for Duke one or two days a week.
“This has been a great [retirement] transition for me,” he said, and, “I’m a very good deal for the company.”
Employers like St. Francis are trying to entice older workers to come aboard in a variety of ways. Recent retirees of the hospital system can return part time while still drawing retirement benefits. St. Francis also reconfigured nursing stations so that instead of one on a floor there may be several. That cuts down on walking—something that can be especially trying for older workers.
St. Francis also has offered more flexible work schedules.
“This is very attractive to the senior workers,” said John Ross, vice president of human resources.
Employers would be wise to focus their energies on retention and finding the best workers rather than on the projected demographic shift, however, argues Peter Cappelli, a University of Pennsylvania professor of management and director of the Wharton Center for Human Resources.
In his study “Will There Really Be a Labor Shortage?” he seeks to debunk what he calls a “myth” of a labor shortage due to retiring boomers. Yes, Cappelli says, it’s true that the baby bust generation that followed boomers is about 16 percent smaller than the boomer group.
But Cappelli lists a number of offsetting factors, such as rising college graduation rates. He also argues that it is unrealistic to assume boomers will retire at age 65, given the average life span is growing.
He also wrote that a larger generation—those now in their teens and 20s—will follow the baby busters. Further, he says labor shortage doomsayers fail to take into account productivity growth.
But the University of Indianapolis’ Spiker said the contributions of older workers are too important to ignore in the grand equation.
“It’s stuff the accountants don’t count,” he said.
The next phase of the Gray Matters study will survey employers to determine to what extent they foresee a skills shortage resulting from boomer retirements. The work also will encourage employers to assess how older workers are viewed by their organizations, the value they contribute, and what might be lost when they retire.
For more information on the May 18 conference, go to www.cac.uindy.edu. | |
