The slowing economy has dampened the demand for older workers, but not much. The number of workers 55 and older is still growing significantly while those younger than 45 struggle with widespread job loss.
An analysis of Bureau of Labor Statistics data by Challenger found that employment among those 55 and older grew by 3.7 percent from 25,686,000 in July 2007 to 26,631,000 in July 2008. The number of employed 20- to 44-year-olds declined by an average of 1.3 percent during the same period.
The fact is pared down companies may increasingly rely on seasoned veterans to get them through the downturn. They may cost more in salary and benefits, but their experience and knowledge make them highly valued.
The Challenger analysis also belies the myth that older workers are for the most part underemployed, seemingly able to find only part-time, hourly wage positions in retail and other low-skill service industries. The Bureau of Labor Statistics data show that the biggest employment gains for workers 55 and older occurred within management, professional and related occupations. The number of workers 55 and up in these positions increased by 659,000 or 6.5 percent over the last 12 months.
Some of the employment growth for workers 55 and older is due to the fact that this population is rapidly expanding as baby boomers age. However, population growth is not solely responsible for the employment gains. The number of Americans 55 and older grew by 2.7 percent over the last 12 months, while employment for these workers grew by 3.7 percent.
The preference for older workers has also resulted in a significant drop in the amount of time it takes job seekers 50 and older to find new positions.
The median job search for those over 50 winning positions in the second quarter lasted 4.2 months, according to the latest Challenger quarterly survey of discharged managers and executives. That is just about two weeks longer than younger job seekers, whose median job search time in the second quarter was 3.6 months.
The demand for older workers is particularly high in sectors that continue to experience growth despite the current economic malaise. One such industry is information technology, which will see the number computer systems analyst positions and network systems and data communications analysts increase 37 percent to 1,052,000 jobs by 2016.
This growth is already occurring in some areas. In Nebraska, for example, the Omaha World Herald cited census data showing that the portion of people age 50 through 65-plus employed as IT workers has grown from 12.4 percent in 2000 to nearly 24 percent in 2006.
This downturn will not last forever. Companies that are looking beyond the next few quarters of sluggish economic growth are anticipating significant labor shortages due to the large number of potential retirements. We say, ‘potential’ because some companies are taking steps now to delay these retirements and aging workers who are growing increasingly concerned about their nest eggs are more than happy to oblige.
A recent survey of 140 mid-size and large companies by Hewitt Associates found that 55 percent have evaluated the impact that potential retirements could have on their organizations. Sixty-one percent of the companies surveyed developed or plan to develop special programs to retain near-retirement workers, including phased retirements that allow would-be retirees to reduce their hours (and salaries) incrementally instead of all at once.
This is a win-win for employers and potential retirees. The employer gets the benefit of retaining experienced personnel who will have more time to pass along their corporate knowledge to younger workers. Aging workers benefit by not being thrust into retirement before they are mentally and financially ready.
The percentage of older workers who say they are very confident about having enough money to retire has fallen sharply from 27 percent in 2007 to 18 percent in 2008, according to the Employee Benefit Research Institute. In a recent AARP survey of 55- to 64-year-olds, 20 percent plan to delay retirement because of current economic conditions.
Inflation is having a significant impact on older workers’ ability to retire. The other major factor is falling home values, one which many Americans counted for continued growth in order to help fund their retirement. For many people, the plan of selling their home for a nice profit and moving into a one-bedroom condo was squashed with the collapse of the housing market. This may not be the case for those who stayed in one home for 25 or 30 years, but many families that kept upgrading their homes during the housing boom may now be stuck.
However, this does not mean that companies will have an easy time convincing the older workers to stay on board. Would-be retirees have more options than ever before. They can go to competitors, they can switch industries and some are even changing careers. Others may start their own consulting firms or spend their time volunteering for non-profit groups. Companies that want their older workers to stay have to ask and ask early.
Even companies that ask nicely may be rebuffed by older workers looking forward to taking a new career direction in their non-retirement years. The Economic Policy Institute reports that 43 percent of workers switch jobs after age 50 and 27 percent change occupations.
More and more older workers are starting their own businesses. The number of self-employed workers age 55 and older has grown 10 percent since 2005, from 2,602,000 to 2,853,000 as of July 2008.
Other older workers are embarking on second careers that they consider meaningful in terms of their impact on the community and society at large. Extrapolating on the findings of a new survey conducted among 3,500 baby boomers, the MetLife Foundation and Civic Ventures estimate that 5.3 million to 8.4 million 44- to 70-year-olds have already launched encore careers, which Civic Ventures defines as a new phase of work that offers not only continued income but the promise of greater meaning and the chance to do work that means something beyond themselves.
Of those between age 44 and 70 not already in encore careers, half say they are interested in moving into jobs in such fields as education, health care, government, and the nonprofit sector.
Older workers indeed have a lot more options between increased demand among traditional corporate employers, entrepreneurship and encore careers. Of course, this does not make the job search any easier for these individuals when they decide they are ready to move to the next phase of their career or return to the workplace after an attempt at traditional retirement.
The biggest obstacles most older job seekers face are self-imposed. Self-doubt and defensiveness about your age will handicap you in the interview.