Who Will Replace Retiring Boomers?
America is facing a slow-motion crisis in the workplace, courtesy of what is arguably the most written-about, joked-about, some would say pampered generation of Americans to ever earn a paycheck--the baby boomers.
As the nation’s postwar offspring--who now comprise nearly one-third of the population--edge toward retirement, employers are confronting a long-term work force shortage. By 2020, the number of people 55 and older will have soared by 73%, while the prime working-age group behind them will have grown just 5%.
This is a demographic shift without historical precedent.
In trying to fill their ranks, companies will have no alternative but to overcome the widespread perception of older workers as expensive and out of touch. They’ll have to find ways to keep boomers working longer--reversing the decades-old pattern of earlier and earlier retirement.
Many will no doubt be willing to keep working because they’ll either need the money or find retirement boring. But those independent-minded baby boomers will insist on doing it their way. And that means organizations must become more flexible than ever, allowing workers to call the shots more about how and when they work.
“There’s a real possibility that traditional work will be turned on its head,” says Thomas J. Grass, an Irvine-based consultant with Watson Wyatt Worldwide, a benefits consulting firm.
Many experts see companies increasingly bending to the needs of an aging work force. Telecommuting, job sharing, variable work schedules and worker “sabbaticals” could become the norm rather than the exception.
Benefits packages will be tailored more to the needs of older workers.
More companies will begin offering 401(k) plans to part-time workers, for example. Benefits that help cover the costs of long-term care for family members, especially the elderly, will become more prevalent. Workers will pressure businesses to expand their health care coverage, and to design work spaces to better accommodate those with chronic conditions.
After all, as the baby boomers have crashed through life, they’ve transformed the world around them. Thousands of schools were erected to educate them, and industries arose to cater to their needs. When they first moved into the work force, older workers were nudged out to make way.
“The baby boom generation has taught the world one thing,” says Ted Gibson, chief economist at the state Department of Finance. “It makes the world accommodate it as it rolls through.”
Now comes the chance for boomers to rewrite the books on the whole concept of retirement--or non-retirement, as the case may be.
A new study by the American Assn. of Retired Persons found that 80% of baby boomers believe they will continue to work during their retirement years, either for enjoyment or income. That compares with 12% of people over 65 who are in the work force today. The association said the results imply that dramatic changes are in store for the workplace.
That comes as no surprise to David Anderson, who--like many of his fellow boomers--still believes he can have it all as he grows older.
“I know how much money I’ll need to survive,” says the 36-year-old Hollywood man, a human resources executive at 20th-Century Fox Film Corp. “Twenty years from now, I see myself still with a major corporation, still in human resources and still enjoying my job. I’ll continue to want to go out to dinner and go on trips and make improvements to my home.”
Yet he also sees employers yielding to his and others’ needs for a slower pace and more free time. “I may not work 50 hours a week, but as long as I can contribute, I’ll do something,” he says. “I want something challenging, but I don’t want to burn myself out.”
Grass, 44, considers this in his own career. In the consulting business, long hours have always been the norm, and in years past no one in a senior position would consider, or be considered for, part-time work. “It was ‘Work the hours or you’re out,’ ” he says.
But that’s changing, he says, because of the demands of baby boomers. He pictures himself moving to part-time consulting or some other flexible working arrangement after about 55.
At the same time, he doesn’t see himself settling for being just “another body,” counting the minutes until he retires for good. “I want to feel useful. I want to be seen as adding value.”
Boomers Head Back to the Future
In the most optimistic view, older baby boomers will be workplace pioneers, forging progressive partnerships with employers and embarking on new ventures after their more traditional careers end. Their role model will be John Glenn, who will be 77 when he puts his space suit back on to ride in the shuttle this fall.
In some ways, that would be a return to the past.
Up until the early part of this century, people essentially worked until a few years before they died. The notion of a retirement filled with years of leisure is a decidedly modern concept, a device used to move aging workers out of the way for the younger crop.
When the boomers were wet behind the ears, the system worked well.
Now the demographic shift is forcing changes, experts say.
“I think we’ll see a swing back to the old model, where we don’t take it as a God-given right to have 20 to 30 years to just play,” says Los Angeles-based Watson Wyatt consultant Steve Vernon.
In fact, there are signs that the early-retirement trend may have already reversed course.
In 1950, nearly half of men 65 and older were still working; by 1985, just 16% were. But since then, the rate has remained flat. Many economists believe the numbers soon will begin to tick back upward.
“It’s the end of an era,” says Joseph Quinn, an economics professor at Boston College. “The long-term, early-retirement trend is over.”
Possible Boon to Economy
The impact of baby boomers delaying retirement could be profound.
In their highly influential book “Workforce 2020,” senior research fellows Richard Judy and Carol D’Amico of the Hudson Institute think tank predict that if enough baby boomers put off retirement, it could result in the creation of an additional hundreds of billions of dollars in economic output.
Yet there are many unanswered questions, and possible downsides to this scenario. Stereotypes about older workers will die hard, many warn, and boomers will still have to fight for what they want.
“It’s going to seem terribly painful to the baby boom generation when they have to take a loss in status or a loss in pay,” says Gary Burtless, a labor economist at the Brookings Institution, a Washington-based think tank.
Indeed, many middle-aged workers worry that they won’t be able to keep up in the working world of the future.
John Walley is a systems engineer manager designing cordless telephones at Rockwell Semiconductor Systems in Newport Beach. The 36-year-old is from a family of techies--his father, brother and wife are engineers, his mother a computer programmer.
As a father of two, with another child on the way, Walley--like many of his contemporaries--struggles to balance a demanding job with the needs of his growing family. He frets that at some point in the not-too-distant future, he’ll lose his edge.
“I worry that if I’m not more aggressive and more assertive and constantly growing at a high rate, that I may not be valuable to the company,” he says.
He admits that his views are colored by the experience of his father, who was laid off in his 50s. “Basically, the company said the value you bring versus your salary just doesn’t work out. It has taught me a painful lesson. You have to justify every day why an employer should keep you.”
Walley can’t picture himself eventually retiring to the golf course. “I’d go crazy doing that,” he says. Yet the route increasingly taken by retirees in his field--part-time consulting--isn’t the answer for him either.
“I don’t see myself working at a dynamic pace and then just quitting and saying ‘I’ll work just 10 hours a week,’ ” he says. “To get really challenging and stimulating work, you have to be a major contributor. To get that takes a lot of hours.”
For baby boomers, who yearn for the stability of their parents’ generation while acknowledging the uncertainty of today’s business world, there are no guarantees.
“It will be economically driven and value driven,” says Helen Dennis, a specialist on aging, employment and retirement at USC’s Andrus Gerontology Center.
“That’s a strong message for older workers. They must be highly competent, highly competitive and further the needs and goals of the organization.”
Aging Boomers May Come Up Short
Anderson fears that many of his fellow boomers won’t be prepared. “Unfortunately,” he says, “I don’t think a lot of people in my age group look beyond the next year or two. We’re used to 30-minute sitcoms and MTV video clips.”
Still, the inescapable reality is that many boomers won’t be able to afford to quit working when they hit their 60s, despite President Clinton’s calls to preserve Social Security. Although many are invested in 401(k) and pension plans, they’re still not saving enough. They’ll be living longer, and many will have college bills and mortgages to pay because they delayed having children and buying houses.
“A lot of 50-year-olds have kids in elementary school,” says Stephen Levy, director of the Center for Continuing Study of the California Economy. “You talk about retirement and Arizona and they look at you like you’re from Mars.”
That leads others to worry about a potential generational conflict arising between boomers who refuse to retire and frustrated Generation-Xers.
“A lot of my friends are competing with people in their 40s and 50s--the baby boomers--and there’s no room for advancement,” says Ray Maa, 31, of Orange, a Gen-Xer who is studying to be a computer network engineer.
“They’re taking up a lot of space.”
Youth May Still Be Served
Resentment could also arise among older boomers if they are shunted into less desirable or less powerful jobs.
Labor experts worry that businesses will be ill-prepared for the onslaught of older workers. They complain that most companies continue to vie for younger job candidates, while ignoring the need to retain--and retrain--mature employees.
The bias against older workers runs deep. Many companies are likely to try everything else to fill their work force needs first, experts say, including expanding operations offshore, hiring more immigrants and squeezing more productivity out of existing employees. They’ll continue to chase a shrinking supply of younger workers, possibly promoting them quickly to keep from losing them.
Kenneth Dychtwald, chief executive of Age Wave Inc., an Emeryville research and consulting firm, foresees possible clashes between older boomers who have been sidelined into less challenging positions and younger, less experienced bosses--”kids who never heard of the Beatles,” he says.
The deeply ingrained view of older workers as less productive is a holdover from a time when most work was manual and before recent improvements in health care, experts say. Older workers are more expensive in terms of salary and benefits, but research has shown that those costs are largely offset because they tend to be more reliable and stay on the job longer.
What’s more, studies show that older workers are just as productive and able to learn new skills as younger ones. The research firm Media Metrix Inc., for example, found that Gen-Xers spend about 31% less time using home computers than people over 45. Analyst Bruce Ryon says that older people bring more work home.
Even so, some see older boomers who must keep working for economic reasons getting shoved into low-paying drudge work--such as flipping burgers--because they’ll be perceived as lacking competitive skills.
Robert A. Jud, a Chicago-based corporate training and performance consultant, is skeptical about older boomers re-educating themselves to stay competitive.
“People try to duck out of corporate retraining as massively as they can,” he says. “Past 35, the number of people who actively invest energy and money in a continuing effort to improve or maintain their skill base is extraordinarily low.”
A Formidable Pool of Workers
Nonetheless, there will be opportunities for aging boomers.
As Burtless says, never underestimate the power of baby boomers to get their way. “This is the most powerful age group,” he says. “They write op-ed pieces, and moan and groan on the evening news.”
What’s more, the increasing service orientation of the economy will lend itself to older workers, experts say. Even factory jobs have become less physical because of increased automation.
The expanding use of technology will open up a world of possibilities, allowing boomers to take on second careers, start new businesses and pursue novel entrepreneurial ventures, many believe.
An older boomer might be retired from a longtime career, but what’s to stop him from selling goods or services over the Internet, asks Grass. “The world around us is changing. There are a lot of threads,” he says.
Some baby boomers are taking these changes to heart. Linda Hashi, 45, recalls that her creativity was sparked when she attended her daughter’s graduation from Loyola Marymount University last spring, and was inspired by the speech made by the 50-year-old valedictorian.
It got her to thinking that it’s never too late to learn. So now the Culver City woman is studying to be a dietitian. And while she hopes to continue working as an administrative assistant at UCLA for many years, she sees nutrition as a sideline she can fall back on whenever she wants.
“I think I’m really tapping into a potential that I didn’t really think I had or could access,” she says.
“You can’t predict how it’s going to be at age 65. I’m saying--hey, I’ll go for it as long as I can.”
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Lowering the Boom
Baby boomers, those born between 1946 and 1964, will soon begin to leave the work force. They now comprise nearly 30% of the U.S. population, or about 76.5 million people. Here’s how the aging of the boom generation will change the demographic and work picture:
Boomer Demographics
Between 1995 and 2025, the 65-and-older age group will have, by far, the largest percentage increase in California and nationwide:
Increase 1995-2025*
Age group 0-4
U.S.: 14.8%
California: 53.7%
Age group 5-17
U.S.: 18.6%
California: 70.3%
Age group 18-24
U.S.: 21.8%
California: 71.6%
Age group 25-64
U.S.: 19.5%
California: 42.0%
Age group 65 and up
U.S.: 84.7%
California: 85.5%
Southern California
Los Angeles County, somewhat “older” than Orange County, will remain so for the next 20 years. Percentage of population over 65:
1996
Orange County: 9.6%
Los Angeles County: 10.1%
2000*
Orange County: 9.7%
Los Angeles County: 10.5%
2010*
Orange County: 10.7%
Los Angeles County: 12.4%
2020*
Orange County: 13.8%
Los Angeles County: 16.4%
* Projection
Demographic Juggernaut
Births in the United States peaked in 1957 at 4.3 million, near the middle of the baby boom. The annual total subsequently declined until the mid-1970s and rebounded to a mini-boom in the early 1990s.
Baby boomers were born from 1946 to 1964
* 1996: First boomers turned 50
* 2000: Generation enters peak earning years (ages 36 to 54); tax coffers expected to swell
* 2011: First boomers turn 65
* 2020: Boomers end peak earning years; tax revenue expected to drop accordingly
* 2032: Projected date when Social Security will be unable to pay full benefits to elderly and disabled
Boomer Age Range in the Year
1965: 1-19
1985: 21-39
2000: 36-54
2010: 46-64
2020: 56-74
Baby Boom’s Impact
On Taxation and Education
* Generation trailing boomers is smaller and less educated; its contribution to income tax revenue will be less.
* Majority of echo boomers (baby boomers’ children) will enter college just as tax revenue declines.
Compensation and Benefits
* Health care costs rise as workers age
* Base salary and number of vacation days rise with tenure
* Most pensions are based on number of years worked and employee’s final salary
* Company’s matches in a defined contribution plan rise with age, as older workers tend to contribute a greater percentage of their larger paychecks.
Productivity Concerns
* Will output suffer as workers age?
* Will there be enough qualified younger workers to replace boomers?
* Will the shrinking percentage of younger workers generate enough revenue to fund benefits now accruing to older workers?
Baby Boomer Web sites* Baby Boomer Headquarters
https://www.bbhq.com
Trivia quizzes, statistics, class reunion notices, humor, links
* Boomers International
https://www.members.aol.com/boomersint/boomone.html
Essays, demographics, humor, links
Sources: California Department of Finance, Urban Institute, Office of the State Controller, Census Bureau, Watson Wyatt Worldwide, Baby Boom Headquarters Web site, Boomers International Web site. Researched by JANICE JONES DODDS and LOIS HOOKER/Los Angeles Times
