The Surprising Impact of the Retiring Baby Boomer GenerationPublished: October 09, 2008 in Knowledge@Emory
There has been much ado made about the coming retirement of the large Baby Boom generation and the potential drain on the U.S. economy. But according to recent research, many of these older Americans may not retire exactly as planned, and their decision to work well into their late sixties and beyond will have many positive, and a few negative, consequences for the job market.
According to analysis from the Coyne Partnership, an Atlanta, Georgia-based strategy consulting firm, the impact of Baby Boomer retirement will not be as dramatic or as swift as once thought, as some of these over-55 workers have already retired early, and another even larger group opts to work part-time or full-time well past the traditional retirement age of 65. Kevin Coyne, a partner in the firm and a senior teaching professor in the practice of organization and management at Emory University’s Goizueta Business School, also notes that the impact of the tumults in the housing and stock markets could make even more seniors less able to retire as expected.
Trashing the Rocker
But Coyne adds that a bigger factor in the changing workforce dynamic is that Baby Boomers are thinking of themselves in a different way than previous generations of retiring workers. “Many people have a mental model of when someone should retire—maybe at 65. But for Baby Boomers, that perception is changing. We’re finding a small portion of people retiring early, but others wanting to work well into their seventies and beyond. This is a long run trend, not just a temporary delay.”
As the old perceptions and stereotypes of retirement fall away, notes Rick Gilkey, a professor in the practice of organization and management at Goizueta Business School and an associate professor of clinical psychiatry at Emory University School of Medicine, the over-60 set is embracing working longer and staying “engaged.” He agrees that the commonly held notion of a coming glut of retirees from the Baby Boom generation will not materialize. “This is really going to be diffused, as people delay retirement. We’re talking about a generation with a much longer life span—a much more active and healthier group,” he says. “This isn’t a group of people content to play shuffleboard and sit back in a rocker.” Gilkey believes that the largest proportion of soon to retire Baby Boomers are looking to stay working, even if that means engaging in a more “nontraditional” arrangement with an employer.
Jagdish Sheth, a chaired professor of marketing at Goizueta Business School, agrees with Gilkey, noting that today’s seniors are working as entrepreneurs, consultants, exploring part-time positions, full-time work, and returning to the non-profit realm to offer up their years of expertise. Sheth adds that the Baby Boom group benefited from the shifts in health in America—the anti-smoking campaigns and the fitness push—and they are living longer and better and looking to work longer as a result.
The Benefits of Working Longer
But just what are the benefits to the workplace and the economy if Baby Boomers are delaying retirement? Coyne notes that having workers pay into Social Security much longer than expected can only help to boost the program’s needy coffers at a time when record numbers of retirees could be receiving full or partial benefits. “The more years that this large group is paying into the system, the more solvent the Social Security trust fund will be.” Plus, he notes a variety of studies indicating that working longer improves the health of older Americans, and in turn, improves the impact on Medicare and Medicaid and on other health insurance programs.
Additionally, an older workforce plying their trade longer can help offset the fears of a coming labor shortage, adds Coyne. According to data from the U.S. Bureau of Labor Statistics and compiled by the AARP Public Policy Institute, the total labor force is projected to increase by 12.8 million people (8.5%) from 2006 to 2016, but with individuals aged 55 and over making up more than 90% of the increase. The growth of the 55-plus labor force is expected to increase 47% between 2006 and 2016, and the number of labor force participants ages 16 to 24 and 35 to 44 will decline between 2006 and 2016. According to the statistics, by 2016, individuals aged 55 and over may represent more than 1 in 5 workers, as compared to 1 in 6 in 2006.
Negative Implications for Employers
For those looking to start out in a given profession, the added competition of a large group of more experienced professionals could present a challenge. But Sheth adds that it isn’t older workers, but automation and technological shifts in business challenging younger workers, as many more entry-level jobs are eliminated by the changes. Gilkey acknowledges the concerns over a possible competition on the job front, but he adds that the value given to the employer of having a knowledgeable and seasoned base of employees available in a company should help to outweigh any drawbacks.
Nonetheless, not all employers may be willing and ready to accept an aging workforce. The idea that those working past retirement age will only meet with positive responses in the workplace may not be realistic. Age discrimination complaints or charges filed with the Equal Employment Opportunity Commission (EEOC) grew from 16,585 incidents in 2005 to 19,103 in 2007—up some 15%. Coyne adds that younger employees may also find themselves waiting longer for promotions, especially with many more seasoned workers ahead of them. This could be a cause of additional contention in the workplace, he adds. “You might also find certain older employees unable to keep up with the many technological changes or other shifts in the workplace.”
Employers may also need to change their approach to part-time work. As older workers indicate a preference for flexible working options, Corporate America has yet to keep up with the desire for meaningful employment on a part-time basis. Says Coyne, “The economy has yet to adjust to a large labor pool looking for skilled part-time jobs.” Sheth agrees, adding that “employers must note that older workers are looking for something different. They want job satisfaction, and they want to contribute back to the organization. These are individuals who need less supervision, and they want to be empowered. Autonomy and independence at work will be essential to leverage this talent pool effectively.”