Organizations must refocus their strategies for recruiting and retaining older workers to combat ... [+]
Talent scarcity continues to plague employers, especially in the U.S., where the Great Resignation is having an outsized impact on workforce retention and wages. Even with worries of a recession growing, the U.S. June jobs report affirmed sustained growth. For some employers, hiring remains perplexing and will continue to be so in the near future. How, then, can organizations overcome this challenge? Hint: the answers might be in the demographics.
The U.S. labor market has fallen considerably out of equilibrium ever since the current economic recovery began. According to the Bureau of Labor Statistics, the market as of May this year experienced a gap of more than five million between the supply and demand of workers. Prior to the pandemic, the economy was near equilibrium, with demand running slightly higher since 2018. The crisis, however, forced many out of the workforce, disproportionately affecting working parents, caregivers, women and people of color. And, according to the BLS, one group was more likely to leave and not return: older workers. Their exodus is a big reason for the developing chasm in the labor market.
Data in the recently released World Population Prospect report shows that the percentage of people 65 and over is rising quickly, from 10% today to 16% of the global population by 2050. Because the retirement age is also rising around the world, the importance of older workers to the workforce can’t be overstated.
This fact is not lost on human capital leaders. In Randstad Sourceright’s 2022 Talent Trends global survey, nearly 1 in 4 cite talent retiring or voluntarily leaving the workforce as having a negative impact on or being the greatest pain point for their organization.
The retirement boom
Workforce participation among this group, however, was severely disrupted by the pandemic. In the U.S., 2.4 million workers who were expected to participate in the workforce are now retired, according to the Federal Reserve Bank of St. Louis, which called the trend a “retirement boom.” Even though the majority of these participants were 65 and older, their decision to leave the labor market left a sizable talent gap that will take time to bridge. And the phenomenon isn’t limited to Americans.
The Institute for Employment Studies reported that the U.K. labor market has 310,000 fewer older workers than expected, with women accounting for the majority of those exiting the workforce. And research shows that, for the second year in a row, more than 15,000 Japanese workers opted to retire early in 2021, a trend not seen since 2002 and 2003.
It’s understandable why many near retirement have decided to leave the workforce during the pandemic. Concerns about health and safety played a major role in their decision, research showed. They also reassessed life goals, leading many to forgo the few years left in their career. The desire to stop working was not unique to older workers, but they were better positioned than others because of access to retirement benefits. Additionally, some took on greater caregiver responsibilities for family and others, which played a part in their decision.
The exodus of older workers has had a considerable impact on many organizations. Because this group tends to possess more institutional knowledge about their organizations, their departure is detrimental to knowledge transfer and culture continuity. Older workers also tend to be more stable and loyal in their career choices, which means better retention and accountability.
A resource employers need
With the latest data illustrating a constrained labor market, will additional early retirements lead to a larger skills gap? Fortunately, the trend appears to be reversing due to several factors.
U.S. workers 55 to 64 are now employed at the same level as they were before the pandemic, but those 65 and older are still down by more than 7%. It appears that high inflation and cost of living are forcing many to seek employment again. The downturn in the stock market has also made it more difficult to retire. Additionally, with 92% of Americans 65 and older now vaccinated, those workers may feel more comfortable returning to the labor force. But to attract and incentivize valuable people 55 and older, companies will have to reconsider their workplace culture and the perks and benefits they offer.
A June CNBC poll found that more than two-thirds of people who recently retired would consider rejoining the workforce if they were provided the right benefits. Flexible hours were the most important benefit (cited by 47%), followed by good pay and work-life balance. This indicates that many older workers are willing to work again, but probably not at the same intensity as they did pre-pandemic and certainly not for the same hours.
Some of those coming back can look to returnship programs to help them refresh their skills and prepare them for job search and interviewing. Companies such as Amazon, Intel, Wells Fargo and others offer such opportunities as they seek to attract experienced professionals. Additionally, states such as Utah are offering similar programs for its residents.
Aside from offering returnship programs, what else can companies do to attract and retain this group of desirable employees? There are several key considerations to keep in mind when creating a more compelling value proposition for older workers:
● Prioritize flexibility in workforce planning
Providing highly flexible hours or job sharing options may incentivize people who no longer desire a 40-hour work week. Furthermore, with COVID-19 outbreaks continuing to occur, offering remote work may help attract people who continue to stress about the health and safety risks of going into an office.
● Ensure access to training
Shifts in technology occur at a faster pace than ever before, and for those who have been out of the labor market – even for a short period –it can be daunting to learn how to use the latest tech tools. Providing access to the training workers need can help those returning to the workforce feel more comfortable with the expectations of their job and ensure greater engagement and adoption.
● Emphasize physical, mental and financial wellness
Wellness is an important issue among older workers, and it is key that employers to provide a range of programs aimed at addressing their specific needs. Things like preventive care, a variety of health care options, healthcare savings accounts, and employee assistance programs are all attractive offerings. Furthermore, generous retirement savings and other deferred compensation plans are critical to building a portfolio that older workers can later retire on.
With the ranks of older workers growing rapidly, organizations need to consider how to refocus their recruitment strategies to better attract this valuable group of talent. With so much to offer to their employers, those 55 and older can be an effective resource for overcoming the current talent scarcity challenge while adding to a diverse and vibrant workforce. As the saying goes, “Age is just a number,” but in the world of work, it can also be a tremendous asset.
