Older Workers Edging Out Younger Ones

Employers experience mixed blessings in the trend.

By Martha Lynn Craver, Associate Editor, The Kiplinger Letter

July 9, 2009

Many older workers are planning to work longer to improve their prospects in retirement. These older workers don’t have as much time as other workers to make up their losses from the current downturn, so they plan to work beyond their planned retirement age.

Many are also motivated by the high cost of health care and by higher prices for basic necessities. According to a recent survey by Watson Wyatt Worldwide, a human resources consulting firm, half of workers ages 50 to 64 now plan to work past age 65. Of those workers, 54% say they will work at least three years longer than expected. “The numbers are big and shocking but not surprising given that 401(k) savings and pensions are not what they used to be,” says David Speier of Watson Wyatt.

But it may be a mixed blessing for employers. Short term, it keeps valuable experienced people on the job and buys employers more time to cultivate replacements for the departing employees. But health care and disability costs are often greater for older workers than they are for more junior employees.

Firms may also find it tough to hang on to young talent whose career ambitions are thwarted by older colleagues who opt to hang around. “Opportunities for steady succession will definitely be backed up,” says John Challenger of Challenger, Gray & Christmas, an outplacement firm.

More retirees are coming back into the workforce as well, either part-time or full-time. Many are well educated and say they are bored. Others are finding that their retirement income is not as good as they thought it would be and need to return to work to maintain their standard of living.

These older workers and returning retirees are edging out younger workers for jobs. Unlike in previous recessions, employers are laying off younger workers and deciding to keep older ones, figuring they get more bang for the buck with experienced workers, says Pat Galagan, executive editor of the American Society for Training and Development.

In fact, employment among those over 55 is on the rise. From November 2007 to last May, it grew by over a million, despite a 5.5 million drop in total employment, says Andrew Sum of the Center for Labor Market Studies at Northeastern University.

Employers also are inclined to hire retirees instead of younger workers because of their good work ethic. Employers say they don’t have to tell older workers to turn off their iPods, tell them how to dress or remind them to come in on time.

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