GAO Issues Report on Status of Unemployed Older Workers in the United States

The U.S. General Accountability Office (GAO) has released a report focusing on the status of unemployed older workers coming out of the recession. As a report to the Senate Special Committee on the Aging, the GAO's "Unemployed Older Workers: Many Experience Challenges Regaining Employment and Face Reduced Retirement Security" examines:

1. how older workers’ employment status has changed since the recession,
2. what risks unemployed older workers face and what challenges they experience in finding reemployment,
3. how long-term unemployment could affect older workers’ retirement income, and
4. what other policies might help them return to work and what steps the Department of Labor (Labor) has taken to help unemployed older workers.

The GAO concluded that "Although long-term unemployment hurts job seekers of all ages, it poses some greater challenges for older workers." Among other things, "older workers tend to stay unemployed longer, and those who regain employment generally sustain greater wage losses than do younger workers."

Without providing specifics, GAO recommended that, to foster the employment of older workers, the Secretary of Labor should consider what strategies are needed to address the unique needs of older job seekers, in light of recent economic and technological changes.

Labor agreed with our recommendation and noted a couple of its initiatives focused on the employment of older workers. Specifically, Labor cited its current evaluation of the Aging Worker Initiative demonstration project, which will assess the success of new interventions used by 10 local grantees to help connect aging workers with employment opportunities. In addition, Labor cited its sponsorship of the annual National Employ Older Workers Week that provides outreach opportunities for SCSEP grantees.

For an audio interview by GAO staff with Charles Jeszeck, Director, Education, Workforce & Income Security, go to GAO website.

Source: U.S. General Accountability Office Highlights (May 15, 2012)

United Kingdom: Survey Shows Retirees Would Prefer Gradual Retirement

A survey of people planning to retire this year in the United Kingdom shows that 40% of them would be happy to work past 65 if they had the chance. According to the Prudential Class of 2012 study, 48% of men and 32% of women would be happy to continue working past the standard retirement age.

Prudential reports that the main motivation for 68% of the retirees who want to stay in the workforce past 65 is a desire to remain physically healthy and mentally active, while 39% do not like the idea of retiring and just staying at home. Despite wanting to stay in work, only 13% would choose to continue to work full-time with their current employer. Rather 49% of them would prefer to work part-time, either with their current employer or in a new role, in order to strike a better work life balance.

Vince Smith-Hughes, retirement expert at Prudential, said:

Gradual retirement is an increasing trend among pensioners, whether this means remaining in the same job on a flexible basis or even setting up their own business! Those retiring at 65 will face an average of nineteen years in retirement which makes the financial and social benefits of working for longer an even bigger draw for a new generation of industrious retirees.”

Source: Prudential Assurance Co. Press Release (May 2, 2012)

United Kingdom: Cambridge Academics Approve Age 67 Mandatory Retirement

Cambridge University has introduced a compulsory retirement age of 67 for its academics to promote "intergenerational fairness" and enable career progression, according to press reports. Cambridge conducted the vote in response to the United Kingdom's abolition of the default retirement age, but it applies only to academic employees.

In voting for an "employer justified retirement age" (EJRA), the academics have decided that, upon reaching 67, they must either take their pension or reapply to stay at the University. Claire Churchard, writing in People Management, quotes Indi Seehra, HR director at the university as saying:

Introducing the EJRA for academics will support intergenerational fairness. It will allow our academics to progress through the promotional stages in the course of their career and help to create a balanced distribution of ages.

...

In an environment where innovation is needed, you need new people to come in to the cohort to create innovation. But you need the capacity to allow them in, and if you haven’t got people leaving then that will be a restriction on the capacity for new people.

Sources: People Management "Cambridge academics approve compulsory retirement age" (May 3, 2012); The Cambridge Student "Analysis: Should Cambridge dons be made to retire at 67?" (April 26, 2012)

New Hampshire: Aging Demographics a Cause for Concern

The Carsey Institute of the University of New Hampshire has issued a demographic report that while New Hampshire does not have a large population of seniors, a rapid increase in the older population is inevitable and coming soon. Among other things, in "New Hampshire Demographic Trends in the Twenty-First Century," the author, Kenneth M. Johnson, the Institute's senior demographer, argues that while New Hampshire’s large population of working-aged adults has provided much of the human capital the state needs to fuel continued economic growth, the lack of significant growth in these age groups is a cause for some concern.

New Hampshire’s age structure dictates that the number of older adults will increase rapidly in the next two decades. There are currently 97,000 65- to 74-year-olds in New Hampshire. In contrast, there are 179,000 55- to 64-year-olds and 226,000 45- to 54-year-olds.

New Hampshire's economy had been fueled by in-migration, but "the loss of migrants has an immediate financial impact on the state and implications for its human, intellectual, and social capital." During the recession, in fact, out-migration has resulted in New Hampshire experiencing a 10.6% net loss of the 20- to 29-year-olds coveted by employers. Thus, Johnson argues, "[a\ggressive programs exemplified by the 'Stay, Work, Play Initiative' should be considered to retain young adults, encourage those who left to return, and attract more young adults to the state."

Source: The Carsey Institute Publication Abstract (May 1, 2012)

Norway: State Employee Unions Seeking More Time Off for Senior Workers

According to press reports, labor unions representing state workers are demanding 12 extra days off every year, plus even more for senior workers over age 62, in order to make it easier for the employees to take care of aging parents, for example, and to discourage older workers from retiring. In particular, "[o]ne of the unions, Akademikerne, also wants workers over age 62 to receive 28 additional days off, in addition to the 30 days of paid holiday they get every year. That means senior employees would effectively get three months off every year."

As reported by Newspaper VG, Rikke Ringsrød, the union's chief negotiator in the state, since the government is trying to get more people to remain longer in work and senior political holidays (currently, all state employees over 62 years receive eight holidays a year, plus up to 6 days as may be agreed with the local employer) have proven to be useful, the union proposal is to provide flexible arrangements that each individual can choose between reduced fractional positions or other arrangements to choose to be in the job. He further suggests that these are employees who are of great benefit to employers, and that it is better that they are nine months on the job than they disappear from the workplace.

VG says that Government Ministers Rigmor Aasrud, responsible in government for wage, would not comment on the union proposals.

Source: Views and News from Norway "State workers want more time off" (May 2, 2012)

Australia: Commission Opens Broad Inquiry into Legal Barriers to Labor Force Participation by Older Workers

The Australian Law Reform Commission (ALRC) has released an Issues Paper for its Inquiry into legal barriers to mature age participation in the workforce and other productive work. According to the ALRC, "Grey Areas: Age Barriers to Work in Commonwealth Laws" is intended to form a basis for consultation--to encourage informed community participation by providing background information and highlighting the issues so far identified by the ALRC.

ALRC President Professor Rosalind Croucher said “There is often a complex interaction between things that are ‘barriers’ to workforce participation and things that are ‘incentives’ to leave the workforce. Leaving the paid workforce may also mean people are able to make a valuable contribution in other productive work—like the hugely important role of volunteers in our community.

The ALRC considers that six interlinking principles should guide reform in this area: participation; independence; self-agency; system stability; system coherence; and fairness. One key question we are asking in the Issues Paper is whether there are any other principles that should inform our deliberations. Other questions refer to changes that should be made to remove barriers in the various areas of law under review.”

In addition to this initial "framing" question, ALRC seeks responses to 54 other questions on age pension, income tax, superannuation, social security, family assistance, child support, employment, workers’ compensation and insurance, and migration. Among the employment questions that it raises are:

34. In what ways, if any, can the practices of private recruitment agencies be regulated to remove barriers to mature age employees entering or re-entering the workforce?

38. How does the operation of the modern award system affect mature age employees and in what ways, if any, can modern awards be utilised or amended to account for the needs of mature age employees?

41. Where is it best to include information about occupational health and safety issues relevant to mature age workers?

43. What measures involving regulation and monitoring, if any, should be introduced to ensure (a) employers are responsive to the needs of mature age employees; and (b) mature age employees are actively involved in developing and implementing such measures?

44. What are some examples of employment management best practice aimed at attracting or retaining mature age employees?

46. What other changes, if any, should be made to the employment law framework to remove barriers to mature age participation in the workforce or other productive work?

ALRC has provided an online form to make submissions on its inquiry.

Source: Australian Law Reform Commission Media Release (May 1, 2012)

United Kingdom: Study Outlines Financial Pressures Keeping Workers Employed after Pension Age

The Pensions Policy Institute has released a study finding that around a half of the United Kingdom's current over 50s will have to save more and work longer if they want an adequate income in retirement. Due to the dramatic increases in life expectancy, the vast majority of the over 50s who are working (around 85%) might have sufficient state and private pension income to meet a minimum acceptable standard of living in retirement if they continue to work and save until they are eligible to receive their state pension, but for many people an income in retirement at this level is unlikely to be considered adequate.

According to "Retirement income and assets: the implications for retirement income of Government policies to extend working lives," around 40% of today’s over 50s who are still working might have sufficient state and private pension income to have a retirement income that would allow them to replicate their full living standards in retirement, and a further 10% of the over 50s might have such sufficient pension income if they continue to work and save for between one and five years after their state pension age. However, 5% of today’s over 50s might have to work and save for between six and ten years after that age and a further 45% would have to work and save for 11 years or more to replicate their working life living standards in retirement.

The report also notes, however, that while the proportions of people working at older ages has increased, many people are compelled to leave work before state pension age due to circumstances beyond their control, such as health problems or the need to provide care for a family member. On the other hand, the report also notes that people in the highest wealth quintile are more than twice as likely to retire voluntarily before reaching their state pension age, than people in the middle wealth quintile, and that those with a Defined Benefit pension are almost twice as likely to retire voluntarily before their state pension age than those with no private pension income.

Sources: Pensions Policy Institute News Release (April 25, 2012); The Independent "Half of over-50s will be forced to work until age 77" (April 28, 2012)

Gallup Poll: Expected Retirement Age in United States Rises to 67

According to a Gallup poll, the average non-retired American now expects to retire at age 67, up from age 63 a decade ago and age 60 in the mid-1990s. Overall, 26% of non-retirees expect to retire before age 65, with 27% expecting to retire at age 65 and 39% after age 65. The percentage that expect to retire after age 65 is up from 21% in 2002 and 12% in 1995.

Gallup also reports it finds a steady, although less steep, increase in the average age at which retirees actually retired, from age 57 in 1991 to age 60 in 2012. The average retirement age first reached 60 in 2004 and has generally held there since. However, Gallup expects that the average should increase in future years if current non-retirees delay their retirement, as they report in the survey.

Gallup also surveyed how well off workers expect to be in retirement:

Younger nonretirees are also more optimistic than those closer to retirement age about their post-retirement financial situation. Slightly more nonretirees under age 40 believe they will have enough money to live comfortably in retirement (48%) than believe they will not (44%). By comparison, nonretirees aged 40 and older are more than twice as likely to think they will not have a comfortable retirement (64%) than to think they will (29%).

Source: Gallup Inc. News Release (April 27, 2012)

Germany: Chancellor Merkel Addresses Demographics of Aging, including Workforce

Chancellor Angela Merkel convened and addressed a demographic conference on how Germany needs to respond to its aging population. Among other things, she reenforce the need to to raise the retirement age to 67 "by saying that demographic changes in Germany called for it and added that having more experienced employees would increase companies' productivity," according to a press report.

According to Merkel, "Deshalb bin ich zutiefst davon überzeugt, dass wir Ältere im Erwerbsleben auch wegen ihrer großen Erfahrung wirklich brauchen." She also argues for more flexibility to work into old age and transition into retirement: "Mehr Flexibilität beim Arbeiten im Alter und beim Übergang in den Ruhestand – das ist eine ganz wichtige Sache, die viele auch wollen."

Working is just part of her demographic strategy, which addresses six main points: support for families, putting in place the right conditions for a longer working life, finding ways for older people to choose the way they work, cooperation among federal, state and municipal institutions, securing wealth and growth and limiting state debt. The Cabinet is set to approve this plan.

On the Chancellor's website, there is a copy of her speech to the conference, as well as video of her remarks.


Source: Deutsche Welle "Aging society keeps Germans working" (April 25, 2012)

A guide to Pensions

As you get older, you will inevitably stop working. This will vary depending on your job, age and health.
You may retire when you can, or you may work longer because you enjoy it, it’s not the same for
everyone.

Pensions are always an important factor in finances for senior citizens, so it helps to know a bit more about
them.

Employment Based Pensions

Not everyone receives this, but an employment based pension can provide extra money in your retirement.
This will most likely have required financial input from both you and your employer, but it essentially offers
a tax differed method of saving money. They are not an option for everyone, even in the same company,
and are also referred to as SSAS or Small Self Administered Scheme. It is also not always dealt with in terms
of money either, with the option of taking an SSAS in stock options or investment trusts occasionally being
an option.

State Pensions

State pensions are the most common elderly support pension available. These are given through the
government, as opposed to a company you worked for. The amount given can vary, commonly based on
the amount of years you have paid national tax insurance. In short, the more you have paid the more you
are likely to receive per week.

If you haven't paid national insurance, that usually isn't too much of a problem either. There is still a
minimum amount, providing the government has been paying tax credits on your behalf.

Early Retirement

If you decide to retire early, this will affect your pension. Since the pension pays you a certain amount, over
a long period in weekly instalments, retiring early will change these figures. Essentially, you will receive less
per week as you will be being paid more often in the long run.

For this reason, early retirement is not often recommended. Unless you have additional employment based
pensions, or a service pension from the army, to provide additional income, you will have less money per
week. Depending on your state pension, this can be severe or limit your options and lifestyle in the future.

If certain health problems related to your age are stopping you from working, you could also consider
working from home. Fortunately, today’s elders count with many products and services such as stairlift
solutions that will help to improve their living conditions.

Survey: Older Middle-Income Workers in U.S. Happy To Keep Working

Charles Schwab & Co. has released a survey finding that 76% of middle-income Americans who are between the ages of 50 and 69 say they are sticking with their jobs because they "want to" as opposed to being "stuck" in them because they can’t leave. In addition, 27% say this is the happiest time of their working career, and another 11% believe the best is yet to come.

In other results from the "2012 Older Workers & Money Survey," 59% of workers aged 50-69 say they like what they’re doing, and 49% like the people they work with. Also, 67% consider themselves ahead of the game when it comes to job skills and report being "intellectually stimulated," "still learning" and "working to [their] full potential" at their jobs.

There are some striking differences between people in their 50s vs. those in their 60s when it comes to overall contentment in the workplace. A significantly higher percentage of 60-somethings than 50-somethings say they don’t plan to stop working (34 percent vs. 25 percent, respectively). In fact, nearly twice as many workers in their 60s as 50s say they just don’t want to retire (32 percent vs. 19 percent). The study shows that people in their 60s are more likely to be working part-time and enjoying the flexibility of doing so, liking the people they work with, feeling they would be bored if they weren’t working, and not feeling ready to retire or simply not wanting to.

Conversely, more 50-somethings than 60-somethings feel “stuck” in their jobs, perceiving greater barriers to making a job change. They say they’re sticking with their current employer because they need the money (64 percent vs. 55 percent) or because they feel it would be tough to switch jobs in this economy (52 percent vs. 29 percent) or because they don’t want to start over and lose seniority (29 percent vs. 17 percent).

The survey polled 1,004 middle-income American workers between the ages of 50 and 69 from January 19 through January 30, 2012, to better understand their perspectives and outlook on working, financial well-being and retirement. Respondents had household incomes between $40,000 and $90,000. Results were also reported on workers and their families, and their financial health. The survey also noted that "Older workers tend to serve as mentors to their younger colleagues, with more than two-thirds of them (68 percent) providing advice on a range of topics, including how their younger colleagues can do their jobs better, how to handle professional issues and how to navigate around the organization."

Source: Charles Schwab & Co. Press Release (April 24, 2012)

Book Review: "Retirement on the Line"

Frank Koller, in reviewing Retirement on the Line: Age, Work, and Value in an American Factory by Caitrin Lynch, says that "Lynch convincingly argues that regardless of age, people 'just want to matter.' With a rapidly aging population, the U.S. has to find ways to better harness the tremendous experience, energy and wisdom of its older citizens."

Lynch's book is the product of five years of research exploring Vita Needle, a small private manufacturing company in suburban Boston, which began to concentrate 20 years ago on hiring workers nearing or over the traditional retirement age of 65 and which now has 49 employees, with an average age of 73 and a few of whom are over 90. Koller says that "Lynch's book, however, asks tough questions about the ethics of Vita's reliance on "eldersourcing" and its relevance to the broader economic challenges facing the nation."

In my writing about the competitive advantages of formal no-layoff policies, this issue comes up repeatedly: why bother with a management system so different from what everyone else uses?

Lynch's answers are similar to mine.

First, Vita's long-term financial success (which the firm argues is directly supported by its hiring of older employees) "suggests that a practice that can be good for business can also be good for workers." It's certainly not about "being nice" to old people.

Second, does any thinking person believe that conventional management systems -- the ones which so quickly shed so many millions of workers in recent years -- are currently working well for the country as a whole?

Source: Huffington Post "Paid Work -- Long Past 65 -- Can Benefit Everyone" (April 20, 2012)

Canada: Older Workers Less Likely To Participate in Job-Related Training

According to a study from Statistics Canada, older workers in 2008 were significantly less likely to participate in job-related training than their counterparts in the core working-age population. In "Job-related training of older
workers" by Jungwee Park, it is reported that, in the year from July 2007 to June 2008, 45% of workers aged 25 to 54 took at least one job-related course or program, compared with 32% of those aged 55 to 64.

Among the factors linked with significantly lower participation in training among older workers were lower annual income, low educational attainment, temporary employment and work in blue-collar or service jobs. Workers in the private sector, particularly those in goods-producing industries, were also less likely to take job-related training.

However, over the period since 1991 when statistics started being kept, the employer-sponsored training gap between older and core-age workers shrank appreciably. Between 1991 and 2008, the participation rate in employer-supported training among workers aged 55 to 64 more than doubled from 12% to 28%, while the training rate for workers in the core-age group, those from 25 to 54, increased from 29% to 38%.

Source: Statistics Canada The Daily (April 20, 2012)