The changing face of New Hampshire's workforce

With this issue, New Hampshire Business Review, in partnership with AARP New Hampshire, begins a regular series focusing on an issue that is – or at least should be – of increasing concern to the state’s businesses: employing older workers.
In this first article, Deborah Russell, director of workforce issues for AARP in Washington, D.C., discusses some of the concerns expressed by employers, and some of the myths that are associated with employing older workers.

Q. What’s the point at which you get the label “older worker”?

A. While the image of an older worker to most people is the white-haired lady who’s greeting people at Wal-Mart, it’s a myth. The reality is that older workers start at 40 — that’s the law. Forty-year-olds are Gen X’ers by the way – they’re mid-careers workers right now.

Q. You mentioned some statistics that shed light on why employers need to start thinking about retaining and recruiting older workers.

A. We’ve got 78 million baby boomers – the leading-edge boomers will be 65 in 2011. But you only have 47 million Gen X’ers, so the numbers don’t pan out in terms of having a full workforce.

Q. So coming down the line there’s not an endless supply of workers, especially with special skills.

A. Our job is to help employers understand that they may think it’s not an issue for them, but it is.

A great example is a pharmaceutical company that figured they were in good shape because the average age of their workforce is 40. But when they started breaking down the departments, they found that in R&D the average age there is 59, and these are scientists that are working on the same medication or whatever for years and years and years.

So you start to realize that, overall, you may be fine, but you may have departments where you’re about to lose people with institutional knowledge.

Q. Stereotypes still remain when it comes to older workers.

A. I get a lot of calls from reporters who want to know the kinds of jobs that suit older workers. I tell them that it depends on the person. There are 70-year-olds who are driving trucks and hauling things, and there are others who are sitting behind a desk and looking at a computer all day. So when it comes to what the vast majority of workers are doing, we’re going to see gray hairs sprinkled all through the workforce.

Q. What are the biggest myths involving employing older workers?

A. AARP came out with a study that was done for us by Towers Perrin that basically was trying to dispel some of the myths associated with older workers as well as to address the issue of cost.

One of those myths is cash compensation – that you have to pay older workers with lots of experience more. But the reality is that salaries are decided based on what the market is paying for that kind of job in that particular industry. The range is not going to keep going up exponentially just because of age.

Health care is one area where older workers can cost as much as 2.2 times younger workers. On the other hand, we contend a couple of things. Number one, if you look at the trends in the human resources field, you will find that many HR managers concerned about containing health-care costs are looking at other behaviors that are having an impact on health insurance — people who smoke, people who are obese. All of those things are having more of an impact on the cost of health care than age.

So in the aggregate, you may or may not have an older worker who costs you more – there are so many variables you can’t have a myopic view and look at health care and say that older workers cost more.

Q. The cost of keeping employees isn’t only tied to those issues either.

A. There are two other areas that we looked at that have huge financial implications – one is the cost of turnover. One health-care organization told us it can cost them as much as $98,000 to $120,000 to recruit and train one nurse. It usually takes a little over three years in order to see a return on investment. So when you start quantifying the cost of turnover, for some industries it can be almost prohibitive.

The other area is engagement. For the study, Towers went in with some assumptions that the older you get, the less engaged you are — you’re sort of riding the wave until it’s time to retire. But the reality is the exact opposite. We found that older workers are more engaged than younger workers, engaged in a way that they feel a personal responsibility for the overall performance of the company. They’ve been able to correlate engagement with the financial success of a company.

So you add all those pieces together and it does begin to break down those assumptions that many employers have about older workers and cost.

Q. What about adapting the workplace to older employees?

A. As the boomers get older, I think there are going to be new workplace design issues that will need to be addressed. If you’re going to have older people in retail, for instance, standing on their feet for long periods of time, what does that mean? Certainly in health care we’re starting to see this. Right now, for many of us in white-collar jobs, it’s going to be less of an issue because technology is going to march right along with us.

But even in manufacturing it’s changing. In our Best Practices book there’s a great example of an international trucking company that had older mechanics who just didn’t want to slide under the truck anymore, but these mechanics are invaluable – they can diagnose a problem in no time flat. So they changed the line so the trucks now come in upside-down, and they do all the mechanical work standing up.

Q. What about small businesses and older workers? That must be a bigger nut to crack.

A. Small employers tend to be the most innovative – they have no choice. They’re going to do what they need to do – but they are going to be just as impacted, perhaps even more adversely impacted, by an older workforce because the competition is going to be fierce for workers.

N.H.’s Changing Workforce series is a partnership between NHBR and AARP New Hampshire