The Aging Workforce: Business Strategies Used by Employers

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THE AGING WORK FORCE: BUSINESS STRATEGIES

The Aging Work Force: Business Strategies Used by Employers

S. L. Lemmon

Texas A & M University Commerce

Table of Contents

Introduction………………………………………………………………………………………3 Employee Benefits………………………………………………………………………………..3 Training an Aging Workforce…………………………………………………………………….5 Human Capital…………………………………………………………………………………….6 Summary…………………………………………………………………………………………..7 References…………………………………………………………………………………………8

The Aging Work Force: Business Strategies Used By Employers Introduction

Each year the Social Security Administration mails an annual statement to individuals that provides information pertaining to the benefits they will receive at retirement. Armed with this information, combined with knowledge of their personal savings, investments, and workplace retirement benefits, individuals plan their retirement strategy inclusive of not working past the age of 65. In 1983, however, Congress changed the normal retirement age to gradually increase from age 65 to 67 depending on the year of birth. As a result, individuals who once considered retiring between the ages of 62 and 65 are now required to spend more time in the work force. As a number of aging workers need to remain employed and because there is only a small labor pool of younger workers available to fill technically challenging positions, Businesses realize the importance of maintaining the employment of aging workers. Companies also realize that they must include cost containment procedures due to the higher salary demands of older workers. In consideration of both of these challenges, business use three primary strategies to perpetuate the continued employment of their aging work force, induce unemployed older workers back into the work force, and still practice cost containment. These strategies relate to employee benefits, training programs, and human capital investment. Employee Benefits

During the 1980s, the work force was bombarded with new workers that later became known as baby boomers. Now that it is 25 years later, these same workers are trying to decide at what age it is economically feasible to retire. To accomplish this, each individual must evaluate whether family responsibilities, current health conditions, and recreational desires outweigh the need for continued wages, pension plan contributions, and availability of health insurance (Mulvey, 2003). In order to retain aging workers, employers are evaluating company benefit offerings to determine what types of changes are needed to ensure the continued employment of aging employees yet provide cost containment for the company.

One company benefit frequently reviewed is the employer sponsored pension plan. Most company pension plans offer individuals an incentive to retire early by offering a considerable stipend to those individuals who retire prior to the age of 65. When added to the benefits to be received from Social Security, retirement can be quite attractive. However, to reduce the number of employees who retire, employers are beginning to offer pension plans that provide retirement benefits beginning at age 65 and after. In order to make this plan a little more attractive to the aging work force, employers are continuing to make contributions on behalf of the workers by including wage growth from additional earnings past the age of 65.

Health care insurance is a second benefit consistently analyzed by employers. Because of increasing health insurance premiums, employers seek to find plans that provide for major cost containment. To reduce the amount of insurance premium contributions employers pay, health insurance plans offered to aging workers are watered down versions of previous plans that offer reduced benefits such as pharmacy and/or medication limitations, increased deductibles, and out-of-network physician restrictions (McKethan, Gitterman, & Feezor, 2006). Additionally, employers are now...
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