Older Workers
Labor Can Help Employers and Employees Plan Better for the Future Gao ID: GAO-06-80 December 5, 2005Demographic changes pose serious challenges for employers, the economy, and older Americans. As the baby boomers near traditional retirement ages, the loss of experienced workers could have adverse effects on productivity and economic growth. Also, many older Americans face less-secure retirements due to rising health care costs, pension coverage changes, and fiscal pressures on the nation's retirement programs. Due to the growing importance of workers aged 55 or older, GAO examined: (1) areas of the labor market affected by the aging of the workforce; (2) factors that influence the timing of retirement; and (3) what employers are doing to hire and retain older workers.
All areas of the labor market are likely to be affected by the aging of the workforce. Like workers in general, a majority of older workers are employed in professional, management, service, office and administrative support, and sales occupations. However, employers in every occupation face the likelihood that a greater percentage of their workforce will be nearing retirement age. Potential skill gaps from impending retirements and a slowdown in the growth of the labor supply may make older workers a resource of growing importance. Focus group participants without a college degree cited health, finances, and layoffs most often as factors constraining the timing of their retirement and work decisions. Participants without such constraints, most often cited lifestyle and work perceptions as the factors driving their decisions. Also, despite survey findings showing that many older workers wish to gradually reduce their hours, overall, focus group participants indicated they either were not aware of options for continued work after retirement or that their current or former employer did nothing to retain them. Many saw barriers to future employment, including their own limited skills and perceived age bias. While some employers are making an effort to hire and retain older workers, such as offering flexible work arrangements, most have not yet made these efforts a priority. We found some examples of programs targeted toward older workers, and many employers express a willingness to initiate practices to retain older workers. However, most surveyed employers do not implement these practices widely. In addition, only about one-third of participants in a roundtable discussion of employers concerned about the aging workforce indicated that they provided a specific plan or program to recruit or retain older workers. Employers cite a number of barriers to offering more opportunities, such as federal pension regulations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
December 2005:
Older Workers:
Labor Can Help Employers and Employees Plan Better for the Future:
GAO-06-80:
GAO Highlights:
Highlights of GAO-06-80, a report to congressional committees:
Why GAO Did This Study:
Demographic changes pose serious challenges for employers, the economy,
and older Americans. As the baby boomers near traditional retirement
ages, the loss of experienced workers could have adverse effects on
productivity and economic growth. Also, many older Americans face less-
secure retirements due to rising health care costs, pension coverage
changes, and fiscal pressures on the nation‘s retirement programs. Due
to the growing importance of workers aged 55 or older, GAO examined:
(1) areas of the labor market affected by the aging of the workforce;
(2) factors that influence the timing of retirement; and (3) what
employers are doing to hire and retain older workers.
What GAO Found:
All areas of the labor market are likely to be affected by the aging of
the workforce. Like workers in general, a majority of older workers are
employed in professional, management, service, office and
administrative support, and sales occupations. However, employers in
every occupation face the likelihood that a greater percentage of their
workforce will be nearing retirement age. Potential skill gaps from
impending retirements and a slowdown in the growth of the labor supply
may make older workers a resource of growing importance.
Focus group participants without a college degree cited health,
finances, and layoffs most often as factors constraining the timing of
their retirement and work decisions. Participants without such
constraints, most often cited lifestyle and work perceptions as the
factors driving their decisions. Also, despite survey findings showing
that many older workers wish to gradually reduce their hours, overall,
focus group participants indicated they either were not aware of
options for continued work after retirement or that their current or
former employer did nothing to retain them. Many saw barriers to future
employment, including their own limited skills and perceived age bias.
While some employers are making an effort to hire and retain older
workers, such as offering flexible work arrangements, most have not yet
made these efforts a priority. We found some examples of programs
targeted toward older workers, and many employers express a willingness
to initiate practices to retain older workers. However, most surveyed
employers do not implement these practices widely. In addition, only
about one-third of participants in a roundtable discussion of employers
concerned about the aging workforce indicated that they provided a
specific plan or program to recruit or retain older workers. Employers
cite a number of barriers to offering more opportunities, such as
federal pension regulations.
Percentage of Workforce Aged 55 and Older, 1970-2000 and Projected 2010-
2050:
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO recommends that the Secretary of Labor design a comprehensive and
highly visible public awareness campaign as a way to help employers and
employees plan better for the future and by so doing, bridge the gap
between employer and employee needs. The campaign should involve other
relevant agencies and target employer organizations and groups that
interact with employees and, ultimately, encourage employers to find
ways to retain and recruit older workers, and assist older workers in
finding opportunities for continued work. The Department of Labor
generally agreed with our findings and recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-06-80.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Barbara D. Bovbjerg at
(202) 512-7215 or bovbjergb@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
All Parts of the Labor Market Will Be Affected by the Aging of the
Workforce:
Health, Finances, Lay-offs, and Perceptions about Lifestyle and Work
Are the Primary Factors Influencing the Timing of Older Workers'
Retirement and Work Decisions:
While Some Employers Make a Special Effort to Hire and Retain Older
Workers, Most Do Not:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Labor:
Appendix III: Occupational Categories:
Appendix IV: Focus Group Moderator's Guides:
Appendix V: Employer Participant List for Roundtable Discussion on
Older Workers:
Appendix VI: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Stress and Physical Requirements of Work by Occupation, 2002:
Table 2: Focus Group Participant Statements on the Importance of
Finances:
Figures:
Figure 1: Life Expectancy at Age 65, 1970-2000 and Projected 2001-2020:
Figure 2: U.S. Labor Force Growth Through 2080:
Figure 3: U.S. Elderly Dependency Ratio, 1950-2000 and Projected 2005-
2050:
Figure 4: Percentage of Workforce Aged 55 and Older, 1970-2000 and
Projected 2010-2050:
Figure 5: Older Workers (Aged 55 to 74) as a Share of the Total
Workforce (Aged 25 to 74) in each Occupational Category (Historical and
Extrapolated Data):
Figure 6: Number of Workers Aged 55-74 by Occupation (Historical and
Extrapolated Data):
Abbreviations:
ADEA: Age Discrimination in Employment Act:
BLS: Bureau of Labor Statistics:
CPS: Current Population Survey:
CRS: Congressional Research Service:
DB: defined benefit:
DC: defined contribution:
DROP: Deferred Retirement Option Plan:
EBSA: Employee Benefits Security Administration:
ETA: Employment and Training Administration:
HRS: Health and Retirement Study:
IRS: Internal Revenue Service:
OPM: Office of Personnel Management:
SSA: Social Security Administration:
United States Government Accountability Office:
Washington, DC 20548:
December 5, 2005:
Congressional Committees:
In the coming decades, the combination of increasing life expectancy
and declining birth rates is expected to reduce the number of workers
per retiree, a trend that will strain the finances of national pension
and health programs and may affect productivity and economic growth. In
addition, the impending retirement of the baby boom generation and
slower labor force growth will result in the loss of many experienced
workers and possible skill gaps in certain occupations. At the same
time, many older workers face the possibility of less secure
retirements. While longer life spans have increased the number of years
individuals spend in retirement, pension plans have increasingly
shifted financial and longevity risk to individuals and health care
costs have risen rapidly. In addition, the increasing ratio of the
elderly to younger workers will place added pressure on public benefits
such as Social Security and Medicare, both of which face long-term
financial problems. Though the oldest baby boomers have not yet reached
retirement age, new public policies may be necessary to address the
economic challenges these demographic changes present.
As we reported previously, these problems could be mitigated with
policies that remove disincentives to work for older Americans and
allow those who want to work to continue doing so either by delaying
retirement or retiring only partially.[Footnote 1] Working later in
life could help minimize job vacancies and skill losses, increase
personal retirement savings, and ease fiscal pressures on Social
Security and Medicare through increased tax revenues. Yet most American
workers take Social Security retirement benefits at age 62, and little
has been done to encourage those who can and want to work later in life
to do so.
We have prepared this report under the Comptroller General's authority
to assist Congress in addressing these issues. As it may prove helpful
in the deliberations of committees with jurisdiction over aging and
workforce issues, we have addressed this report to each of these
committees.
Due to the growing importance of older workers to the labor force, the
economy, and the future health of U.S. retirement programs, we
examined: (1) which areas of the labor market will be most affected by
the aging of the workforce; (2) the factors that most influence the
timing of older workers' retirement; and (3) what employers are doing
to hire and retain older workers.
To find out which areas of the labor market will be most affected by
the aging of the workforce, we developed a method of analyzing Current
Population Survey data from the Bureau of Labor Statistics (BLS) that
allowed us to perform a 10-year extrapolation of employment by age and
occupation. To identify the factors that most influence the timing of
older workers' retirement, we conducted 16 focus groups in four cities
across the country. In each city, we grouped participants, aged 55 to
70, into four categories according to their education and work status;
in addition, Washington, D.C., participants were screened to include
only current and former federal employees. We also analyzed data from
the Health and Retirement Study (HRS), a national survey of older
Americans produced by the University of Michigan, to better understand
their decisions and circumstances regarding work and retirement. To
identify what employers are doing to hire and retain older workers, we
reviewed the findings of several surveys of employers, some with
generalizeable samples and some of selected employers. With the
assistance of the Department of Labor's Employment and Training
Administration, we facilitated a roundtable discussion of employers'
concerns and strategies for their workforces. We conducted our work
between October 2004 and October 2005 according to generally accepted
government auditing standards. For additional information on our
methodology, see appendix I.
Results in Brief:
All areas of the labor market employ workers nearing traditional
retirement age and are likely to be affected by the aging of the
workforce. Almost 80 percent of older workers, those between the ages
of 55 and 74, are employed in professional, management, service, office
and administrative support, and sales occupations; these occupations
make up approximately 76 percent of the total workforce aged 25 to 74.
By 2014, the number of older workers in each of these occupations is
projected to grow considerably--some, such as professional occupations,
may grow by as much as 41 percent. Employers in every occupation face
the likelihood that a greater percentage of their workforce will be
nearing retirement age, and that impending retirements will result in
the loss of a significant number of experienced workers in a short
period of time. Given these potential skill gaps and a slowdown in the
growth of the labor supply, older workers may become a resource of
growing importance to employers.
Based on focus group discussions, participants without a college degree
most often cited health, finances, and lay-offs as the most important
factors constraining the timing of their retirement and work decisions.
Some of these older workers indicated they were forced to retire either
due to health problems or because they were laid off. Others stated
they have no choice about when to work and retire because their
finances dictate that they remain employed. For participants with a
choice about work and retirement decisions, work and lifestyle
perceptions were the most often cited factors that motivated the timing
of their work and retirement choices. For example, both college
graduates and non-college graduates who were satisfied with their
workplaces were more likely to say they will work indefinitely, while
those who said that they are not valued were more likely to say they
would retire. Also, lifestyle considerations were important to many
older workers with a college degree. For example, some older workers
said that the desire to have flexibility and control over their time
influenced their retirement decisions. Similarly, the HRS national
survey data indicate that just over 60 percent of full-time workers age
55 or older express a desire to gradually reduce their hours at their
current jobs. However, individuals in our focus groups generally did
not see opportunities to do that with their current employers, and they
did not perceive that their current or former employers sought to
retain them. In addition, many saw general barriers to future
employment such as outdated or limited skills on their part, age
discrimination by employers, and employment opportunities limited to
lower skilled, lower paid jobs.
While some employers are making an effort to hire and retain older
workers, most have not yet made targeting older workers a priority.
Certain employers have special programs in which they recruit older
workers. For example, the Home Depot has a partnership with AARP to
actively recruit older workers for full-time, part-time, and seasonal
work. We also found examples of employers who were making an effort to
retain certain older workers already on staff. Employers participating
in a roundtable discussion on the aging workforce reported using a
number of practices to hire and retain older workers, such as flexible
or reduced hours, mentoring, and training. Some studies have found
that, while a fairly large number of employers think that phased or
partial retirement is important, a much smaller number have actually
implemented such policies. Nonetheless, surveyed employers indicated a
willingness to initiate practices to retain certain older workers.
About 73 percent of employers in a study by Cornell University said
they would allow partial retirement, though they had no written policy
for doing so. In addition, only about one-third of the 16 employer
roundtable participants indicated that they provided a specific plan or
program to recruit or retain older workers, despite agreeing that the
aging workforce was an important issue for the future. Employers cite a
number of factors for not offering more opportunities, such as the
constraints of federal pension regulations.
This report contains a recommendation to the Secretary of Labor to
design a comprehensive and highly visible public awareness campaign as
a way to help employers and employees plan better for the future and by
so doing, bridge the gap between employer and employee needs. In
designing the campaign, the Department of Labor (Labor) should involve
other relevant agencies with regulatory jurisdiction or a clear policy
interest. We provided a draft of this report to the Department of
Labor, the Internal Revenue Service (IRS), the Office of Personnel
Management (OPM), and the Social Security Administration (SSA) for
comment. Officials from the Department of Labor provided written
comments (see app. II), and generally agreed with our findings and the
recommendation. In response to their comments, which highlighted
actions that the Department has already taken, we clarified our
recommendation to include other federal agencies in the development of
a public awareness campaign. OPM and SSA provided no written comments
on the draft, while Labor and the IRS provided us with technical
comments, which we have incorporated into the report as appropriate.
Background:
Significant demographic changes in the United States, such as the aging
of the baby boom generation (those born between 1946 and 1964),
increased life expectancy, and falling fertility rates pose serious
challenges for individuals, employers, and the economy. As the baby
boom generation retires, employers face the loss of experienced workers
and their skills and an expected slowdown in the growth of the labor
supply, which could have adverse effects on productivity and economic
growth. At the same time, many older Americans face a less secure
retirement as the increasing number of elderly relative to younger
workers will place added pressure on Social Security and Medicare, both
of which face long-term financial problems.
Demographic changes:
In the 21st century, older Americans are expected to make up a larger
share of the U.S. population, live longer, and spend more years in
retirement than previous generations. The baby boom generation is fast
approaching retirement age. The oldest baby boomers will start to turn
age 65 in 2011, just 6 years from now, and in just 3 years, they will
become eligible for Social Security benefits.[Footnote 2] The share of
the U.S. population age 65 and older is projected to increase from 15.6
percent in 2000 to almost 24.2 percent in 2030. In addition, life
expectancy is increasing. The average number of years that men who
reach age 65 are expected to live has increased from just over 13 in
1970 to 16 in 2005, and is projected to increase to 17 by 2020. Women
have experienced a similar rise--from 17 years in 1970 to over 19 years
in 2005. By 2020, women who reach age 65 will be expected to live
another 20 years. (See fig. 1.)
Figure 1: Life Expectancy at Age 65, 1970-2000 and Projected 2001-2020:
[See PDF for image]
[End of figure]
While life expectancy has increased, labor force participation rates of
older Americans only began to increase slightly in recent years. As a
result, individuals are generally spending more years in retirement.
The average male worker spent 18 years in retirement in 2003, up from
less than 12 years in 1950.
In addition to these factors, falling fertility rates are contributing
to the increasing share of the elderly population and a slowing in the
growth of the labor force. In the 1960s, the fertility rate was an
average of three children per woman.[Footnote 3] Since the 1970s, the
fertility rate has hovered around two children per woman, meaning fewer
future workers are being born to replace retirees. Also contributing to
the slowing in the growth of the labor force is the leveling off of
women's labor force participation rate. While women's share of the
labor force increased dramatically between 1950 and 2000--from 30
percent to 47 percent--their share of the labor force is projected to
remain at around 48 percent over the next 50 years. By 2025 labor force
growth is expected to be less than a fifth of what it is
today.[Footnote 4] (See fig. 2.)
Figure 2: U.S. Labor Force Growth Through 2080:
[See PDF for image]
Note: Percentage change is calculated as a centered 5-year moving
average of projections based on the intermediate assumptions of the
2005 Trustees Reports.
[End of figure]
The aging of the baby boom generation, increased life expectancy, and
falling fertility rates are expected to significantly increase the
elderly dependency ratio--the estimated number of people aged 65 and
over in relation to the number of people of aged 15 to 64. In 1950,
there was one person over age 65 or over for every eight people aged 15
to 64. The ratio increased to one to five in 2000 and is projected to
further increase to one person aged 65 and over for every three people
aged 15 to 64 by 2050. As a result, there will be fewer younger workers
to support a growing number of Social Security and Medicare
beneficiaries. (See fig. 3.)
Figure 3: U.S. Elderly Dependency Ratio, 1950-2000 and Projected 2005-
2050:
[See PDF for image]
Note: The elderly dependency ratio is the ratio of the population aged
65 years or over to the population aged 15 to 64. Data for 2005 through
2050 are projected.
[End of figure]
The aging of the population also has potential implications for the
nation's economy. If labor force growth continues to slow as projected,
fewer workers will be available to produce goods and services. Without
a major increase in productivity or higher than projected immigration,
low labor force growth will lead to slower growth in the economy and
slower growth of federal revenues. These circumstances in turn will
accentuate the overall pressure on the federal budget, which will be
encumbered with increased claims for benefits for seniors such as
Medicare and Social Security, while relatively fewer workers are paying
into the benefits systems.
An additional concern is the possible loss of many experienced workers
as the baby boomers retire. In the next 10 years, as workers near
retirement age, those aged 55 and over will make up a larger proportion
of the workforce. (See fig. 4.)
Figure 4: Percentage of Workforce Aged 55 and Older, 1970-2000 and
Projected 2010-2050:
[See PDF for image]
[End of figure]
Some research has indicated that the impending retirements of the baby
boom generation and the decline in the growth of the labor supply could
affect certain industries and occupations more than others.[Footnote 5]
These trends could create gaps in skilled worker and managerial
occupations, leading to further adverse effects on productivity and
economic growth.
These demographic changes and their economic and financial implications
are not unique to the United States. Other countries are also
confronting the economic and labor force effects of aging populations.
In fact, the challenges arising from these demographic shifts will be
less pronounced in the United States than in several other high-income
nations, such as Japan, Italy, and Sweden. In prior work, we found that
Japan, Sweden, and the United Kingdom had enacted retirement policy
reforms that included incentives for older workers to extend their
working lives.[Footnote 6] At the same time, these countries were also
seeking policies that would reduce barriers to employment for older
workers.
Changes in Retirement Security:
As they are expected to live longer and spend more years in retirement,
older Americans today face several challenges that contribute to the
growing insecurity of retirement income. First, while more older
Americans are working, many claim Social Security benefits when they
first become eligible and many more claim them prior to reaching the
full retirement age, resulting in lower monthly payments.[Footnote 7]
Data from the Social Security Administration show that in 2002 a
majority of people (56.1 percent) elected to start benefits at the
early retirement age of 62, thus receiving over a 20 percent reduction
in monthly benefits.
Second, workers bear greater risk and responsibility for their
retirement savings than in the past. About half of U.S. workers do not
have a pension plan through their employer, and those who do are less
likely than in the past to be covered by defined benefit (DB) plans,
which pay a specified amount per month. Employers have increasingly
shifted from traditional DB to defined contribution (DC) plans, such as
401(k)s, which are based on contributions to and investment returns on
individuals' accounts. Compared to DB plans, DC plans place greater
responsibility on workers to make prudent investment decisions and to
manage longevity risk. According to data from the Employee Benefits
Security Administration (EBSA), the number of participants in DB plans
in the United States increased by about 12 percent, while the number of
participants in DC plans more than tripled from 1978 to 1997.[Footnote
8] One study found almost 58 percent of families participating in an
employment-based retirement plan had only a DC retirement plan in 2001,
up from about 37 percent in 1992.[Footnote 9]
Furthermore, rising health care costs have made health insurance and
anticipated medical expenses increasingly important issues for older
Americans. A long-term decline in the percentage of employers offering
retiree health coverage has leveled off in recent years, but retirees
face an increasing share of costs, eligibility restrictions, and
benefit changes that contribute to an overall erosion in the value and
availability of coverage.[Footnote 10] A recent study estimated that
the percentage of after-tax income spent on health care will almost
double for older married couples and singles by 2030.[Footnote 11]
People with lower incomes will be the most adversely affected. The
study projected that by 2030, those in the bottom 20 percent of the
income distribution would spend more than 50 percent of their after-tax
income on insurance premiums and health care expenses, an increase of
30 percentage points from 2000.
Another implication of the changes in demographics, the shift to more
employee-driven pension plans, and rising health care costs is that
retirees may be more dependent upon public benefits such as Social
Security and Medicare than their predecessors. As older Americans face
less secure retirements, many may need additional income from continued
employment.
Partial Retirement:
If older Americans remain in the labor force longer at least on a part-
time basis, it could mitigate some of the economic pressures on Social
Security as well as supplement individual retirement incomes and help
finance health care. Researchers have noted that partial or phased
retirement options could encourage more older workers to stay in the
workforce longer. "Partial retirement," like "retirement," may mean
different things to different people. Some people consider themselves
retired when they are no longer working for pay, while others who
continue to work may consider themselves retired if they have reduced
hours, changed jobs, or are collecting some type of retirement benefit.
For the purposes of this report, we generally consider a person to be
partially retired if they classified themselves as partially or fully
retired but were still working for pay on a part-time basis. A partial
retiree may transition directly from full-to part-time work at either a
current or a new job, or may return to work after full retirement.
Phased retirement refers specifically to employees who reduce their
hours at their existing (previously full-time) job.[Footnote 12]
According to the Health and Retirement Study (HRS), about 20 percent of
older Americans who were working full-time in 1992 became partially
retired at some point by 2002. On average, partial retirees reduced
their work hours from full-time employment by half, about 22.5 hours a
week. Most partial retirees report that they have a pension plan from a
current or previous employer. About 47 percent have a DB pension plan,
41 percent have a DC plan, 11 percent have a hybrid plan, and 16
percent have no pension plan. However, almost 62 percent of partial
retirees do not have employer-provided health insurance from their
current or previous employer.
Research indicates that current pension regulations may be a barrier to
partial retirement. Regulations under the Internal Revenue Code of 1986
(the Code) currently prohibit "in-service" distributions from DB
pension plans until the employee attains the plan's normal retirement
age.[Footnote 13] Older workers who want to partially retire after
their plan's early retirement age, but before the normal retirement
age, will not be able to access their pension benefit if they continue
working for the same employer. However, they may legally access their
pension benefit if they leave their employer to work part-time with a
new employer. Some employers report that some employees will officially
retire and begin receiving pension income and then return to work after
a certain period of time, but this practice does not appear to be
widespread.[Footnote 14]
The IRS proposed regulations in November 2004 to allow for partial in-
service distributions of DB pensions.[Footnote 15] These proposed
regulations may alleviate the barriers to partial retirement posed by
current pension regulations. The new regulations would permit eligible
older workers who reduce their hours by at least 20 percent to receive
a pro-rated portion of their pension benefits. The arrangements would
need to be voluntary and in writing. Employer representatives who
provided feedback to the IRS at a hearing in March 2005 indicated that
the proposed regulations are a step in the right direction, though some
felt that they would be too administratively burdensome.
Concerns about permitting in-service distributions have been outlined
by the Congressional Research Service (CRS). They note that the effect
of in-service distributions on total lifetime work hours is unknown. By
allowing in-service distributions, some older workers may stay in the
workforce longer and increase total lifetime work hours. However, other
older workers may choose to reduce their hours when they would have
otherwise continued working full-time until reaching their plan's
normal retirement age, which could reduce their total lifetime work
hours. In addition, CRS notes that some observers believe permitting in-
service distributions would make the pension benefit become a tax-
subsidized wage supplement.[Footnote 16] At this writing, the IRS has
not yet issued final regulations.
Age discrimination and uncertainty about legal protections against age
discrimination may also affect older workers' employment opportunities.
Employees and job applicants aged 40 and over are legally protected
from age discrimination by the Age Discrimination in Employment Act
(ADEA). The ADEA applies to the following terms, conditions, or
privileges of employment: hiring, firing, promotion, lay-off,
compensation, benefits, job assignments, and training. The breadth and
impact of the ADEA continues to develop under case law by the courts in
interpreting key provisions.[Footnote 17] Some experts have noted that,
because of this, employers are unsure of how the law might apply to
phased retirement programs and are reluctant to expose themselves to
such legal uncertainty.
In our 2001 report that described these demographic and legal
challenges, we recommended that the Secretary of Labor convene an inter-
agency task force to develop legislative and regulatory proposals
addressing the issues raised by the aging of the labor force.[Footnote
18] To date this recommendation has not been implemented.[Footnote 19]
However, recent legislation introduced in Congress includes a provision
to create such a task force.[Footnote 20]
All Parts of the Labor Market Will Be Affected by the Aging of the
Workforce:
The aging of the workforce will affect all parts of the labor market.
Older workers are distributed throughout the economy and employers are
likely to be affected as their workers near traditional retirement
ages. By 2014, the number of older workers in each major occupational
category is expected to increase considerably, especially in white-
collar and service occupations. As the proportion of older workers
increases, their employers face the loss of a significant number of
workers with institutional knowledge and skills to retirement over a
short period of time. Given the potential loss of skills and the
expected slower growth in the labor supply, older workers may become an
increasingly important resource for employers.
Older Workers Are Distributed Throughout the Workforce and the Number
of Older Workers Will Grow in Every Occupational Category:
Like the workforce as a whole, the majority of workers ages 55 to 74
are employed in white-collar and service occupations.[Footnote 21] Data
from the BLS indicate that, in 2004, almost 80 percent of older workers
fell into these categories, which include professional, management,
service, office and administrative support, and sales occupations;
these occupations also make up approximately 76 percent of the total
workforce aged 25 to 74. In particular, professional and related
occupations, which include lawyers, teachers, and scientists, employ
the largest number of older workers--4.5 million or 21 percent of older
workers. Blue-collar occupations employ a smaller number of older
workers than white-collar occupations.[Footnote 22] Among blue-collar
occupations, production and transportation and material moving
occupations employ the most older workers. These occupations each
employ about 1.3 million older workers. For more information on the
types of jobs in each major occupational category, see appendix III.
Based on our extrapolations using data from the BLS, the proportion of
the workforce represented by older workers is expected to increase in
every occupational category.[Footnote 23] The share of total employment
comprised of older workers is expected to be largest in white-collar
occupations, as shown in figure 5. From 2004 to 2014, the proportion of
white-collar employment made up of older workers is expected to
increase from 19 percent to 23 percent. Over the same period, the share
of employment in service and blue-collar occupations comprised of older
workers also is expected to increase. Although some occupations may
have a smaller number of older workers, they may still be significantly
affected by the aging of the workforce because older workers make up a
considerable share of their workforce. For example, by 2014,
approximately 25 percent of farming, fishing, and forestry occupations
will consist of older workers.
Figure 5: Older Workers (Aged 55 to 74) as a Share of the Total
Workforce (Aged 25 to 74) in each Occupational Category (Historical and
Extrapolated Data):
[See PDF for image]
Note: Data for 2014 are based on GAO extrapolations.
[End of figure]
Similarly, by 2014, the number of older workers in each major
occupational category is expected to increase considerably, especially
in white-collar and service occupations. In earlier work in 2001, our
employment projections to 2008 also indicated that the largest change
in the number of older workers is expected to be in white-collar
occupations.[Footnote 24] Among the different occupations, the number
of older workers in professional occupations is expected to increase
the most--from almost 4.5 million in 2004 to more than 6.3 million in
2014, a growth rate of about 41 percent. See figure 6.
Figure 6: Number of Workers Aged 55-74 by Occupation (Historical and
Extrapolated Data):
[See PDF for image]
Note: Data for 2014 are based on GAO extrapolations.
[End of figure]
Management, business, and financial operations occupations employ the
second largest number of older workers, and employment in this area is
expected to grow by 35 percent, to almost 5.3 million in 2014. The
number of older workers in farming, fishing, and forestry occupations
is expected to grow the most, almost 68 percent in the 10-year period;
however, these occupations in aggregate account for less than 1 percent
of total employment of older workers.
At the industry level, the public sector, including federal, state, and
local governments, also employs a relatively large number of older
workers and faces the possibility of many retirements in the near
future. According to data from the BLS, almost 21 percent of the
nation's 3.2 million federal workers were aged 55 or older in 2004. At
the state and local government level, slightly more than 19 percent of
workers, out of a workforce of 16.7 million, were aged 55 or older. The
public sector has a greater share of older workers compared to private
industries in aggregate, where the share of workers aged 55 and over
was 14 percent, or about 15.1 million older workers in 2004.
Employers of Older Workers May Face Skill Losses and Many Job
Vacancies:
As the proportion of older workers increases in each occupational
category, employers face the possibility that the impending retirement
of the baby boom generation will result in losses of institutional
knowledge and create many job vacancies over a short time period. For
example, employers in white-collar management, business, and financial
operations occupations are expected to have the greatest share of their
workforce consist of older workers. According to our extrapolations
using BLS data, by 2014, older workers could make up 26 percent of
employment in these occupations. Given older workers' skills and the
fact that there may be relatively fewer younger workers available to
take their places, older workers may become an increasingly important
resource for employers.
With significant numbers of experienced, skilled older workers poised
to retire and an expected slowdown in the growth of the labor supply,
employers may need to retain or recruit older workers. This may,
however, be complicated by the nature of the jobs and older workers'
preferences. Data from the HRS indicates that while occupations that
tend to employ the most older workers are less likely to be physically
demanding, they are more likely to entail considerable stress. (See
table 1.) According to the HRS, almost 66 percent of workers in
managerial occupations and 63 percent of workers in professional
occupations report that their jobs involve much stress all or most of
the time, which is higher than reported for the other major
occupational categories. Survey data from the AARP indicate that not
having too much stress is an important consideration for post-
retirement work for the vast majority of pre-retirees and working
retirees.[Footnote 25] The degree of physical effort required by a job
will also be a consideration for employers as the workforce ages,
particularly for blue-collar and service occupations that employ a
large percentage of older workers. While relatively few workers in
white-collar occupations indicate that their jobs are physically
demanding, the majority of workers in many blue-collar and service
occupations report that their jobs often involve considerable physical
effort. For example, about 52 percent of those employed in service
occupations said that their job requires much physical effort all or
most of the time.
Table 1: Stress and Physical Requirements of Work by Occupation, 2002:
White-collar:
Occupation: Managerial;
Percent reporting that job involves much stress all or most of the
time: 65.5;
Percent reporting that job involves much physical effort all or most of
the time: 12.7.
Occupation: Professional;
Percent reporting that job involves much stress all or most of the
time: 62.9;
Percent reporting that job involves much physical effort all or most of
the time: 17.9.
Occupation: Sales;
Percent reporting that job involves much stress all or most of the
time: 54.4;
Percent reporting that job involves much physical effort all or most of
the time: 24.5.
Occupation: Clerical, administrative support;
Percent reporting that job involves much stress all or most of the
time: 55.6;
Percent reporting that job involves much physical effort all or most of
the time: 15.6.
Occupation: Services;
Percent reporting that job involves much stress all or most of the
time: 43.2;
Percent reporting that job involves much physical effort all or most of
the time: 51.6.
Blue-collar:
Occupation: Farming, forestry, and fishing;
Percent reporting that job involves much stress all or most of the
time: 46.6;
Percent reporting that job involves much physical effort all or most of
the time: 63.4.
Occupation: Mechanics and repair;
Percent reporting that job involves much stress all or most of the
time: 55.1;
Percent reporting that job involves much physical effort all or most of
the time: 53.4.
Occupation: Construction and extraction;
Percent reporting that job involves much stress all or most of the
time: 42.5;
Percent reporting that job involves much physical effort all or most of
the time: 66.2.
Occupation: Precision production;
Percent reporting that job involves much stress all or most of the
time: 47.8;
Percent reporting that job involves much physical effort all or most of
the time: 46.9.
Occupation: Operators;
Percent reporting that job involves much stress all or most of the
time: 46.0;
Percent reporting that job involves much physical effort all or most of
the time: 51.8.
Source: GAO analysis of 2002 HRS data.
Note: Occupational categories in the HRS are not exactly the same as in
the BLS and Current Population Survey (CPS) data. BLS and CPS
occupational categories were reclassified in 2003.
[End of table]
Health, Finances, Lay-offs, and Perceptions about Lifestyle and Work
Are the Primary Factors Influencing the Timing of Older Workers'
Retirement and Work Decisions:
Focus group participants without a college degree most often indicated
that the timing of their work and retirement decisions was constrained
by health, finances, and lay-offs. "Health" was the most often cited
factor for these participants, who reported that they had no choice but
to retire or limit work when they did because of health problems, while
others reported felt they had to continue working to earn more money,
and still others were laid off. For participants with a choice about
work and retirement decisions, work and lifestyle perceptions were the
most often cited factors that motivated the timing of their work and
retirement choices. For example, both college graduates and non-college
graduates who were satisfied with their workplaces were more likely to
say they will work indefinitely, while those who said that their work
environments have changed or that they are not valued were more likely
to say they would retire. Also, lifestyle considerations were important
to many older workers with a college degree. For example, some older
workers said that the desire to have flexibility and control over their
time influenced their retirement decisions. Across all the groups, few
saw opportunities to gradually or partially retire with their current
or former employer, and few felt that their current employer would
offer them incentives to continue working later in life. In discussing
obstacles to working later in life, participants across groups most
often cited lack of demand for their skills and age discrimination in
the workplace; many also felt that their employment options were
limited to lower paid, lower skilled jobs.
Health, Finances, and Lay-offs May Dictate When Some Older Workers Work
and Retire:
Health was the most-often cited constraint on work and retirement
decisions by participants without college degrees. Participants without
college degrees cited health as a constraint more often than college-
educated participants. Among participants in all the focus groups, many
indicated they had no choice but to retire or limit work when health
problems made them unable to work. For example, some participants said
that they would not be able to get a new job because their health
situation prevented it; others found that they could not stay at their
current job.
Relatively few participants in each focus group indicated that they
were compelled to work to acquire health insurance. The fact that at
least 95 percent of focus group participants had health insurance may
be an explanation. The rate of insured participants is similar to that
of the general population of older Americans. According to the U.S.
Census Bureau, of all Americans ages 55 to 64, about 87 percent have
some form of health insurance.[Footnote 26]
Although few participants stated that health insurance was a major
factor in their decisions about work or retirement, some participants
were generally concerned about health care. For example, one
participant stated, "If you don't have any health insurance it's tough
out there." Another was concerned that the cost for their health
insurance would be a barrier for employment. "I'm thinking they let me
go because of my age, and they don't have to pay extra insurance,
whatever they have to pay." On the other hand, others stated that they
were desirable employees to prospective employers because they already
had health insurance.[Footnote 27]
As with health insurance, focus group participants also did not often
cite pension rules as a reason for making retirement and work
decisions. In fact, much of the discussion on retirement income focused
on Social Security rather than on employer-provided DB pension plans,
even though at least 49 of the 152 participants were receiving income
from DB pension plans.
Some participants, particularly those in groups without college
degrees, indicated that they had no choice but to work because they
needed the income.[Footnote 28] Focus group participants without a
college degree cited issues related to finances when indicating that
their choices were constrained more often that those with a college
degree. Participants overall listed finances second most often as a
constraint. See table 2.
Table 2: Focus Group Participant Statements on the Importance of
Finances:
The thing that kept me from retiring for a while was that I was worried
about the financial aspect of it. The thought of having my income go
down so drastically was very frightening to me—It held me back for
several years. Now I kick myself that I waited as long as I did.
I wish I had thought about retirement when I was younger. You know, you
don't think about it when you are in your 20s and 30s, and you get
close to your 50s and 60s, and all you've got is your Social Security.
I have got a 401(k), but I can't retire on that. I can't see me
retiring for another 5, 6, or 7 years.
I have no retirement whatsoever. We got married very young, and we were
always one step ahead of being financially in trouble—We have lived on
[my husband's] pension, plus my part-time job—as a teaching assistant.
It's only 30 hours a week; it's not enough. To be honest, the people
around me now who are starting to retire are making me become pretty
panic stricken.
I would like to travel, but I don't know what financial shape we will
be in. As it looks right now, I don't think I am ever going to retire.
Source: GAO focus group with retirees and near retirees.
[End of table]
A recent national survey of workers by Rutgers University and the
University of Connecticut reached similar conclusions about the
importance of finances. Only 16 percent of respondents age 55 and older
believed they would be able to retire from full-time work by age
60.[Footnote 29] Twenty-four percent of all workers reported that they
would be working either full-time or part-time because they need income
after retirement.[Footnote 30] The study also found that 30 percent of
those with no more than a high school education plan to either work
full-time or part-time for needed income, compared with 17 percent of
college graduates.[Footnote 31]
Furthermore, some participants in our retiree focus groups said they
were forced into retirement when they lost their jobs, either by being
laid off or as several participants stated, "downsized." Participants
who had no college education and were already retired cited being laid
off more frequently than did others.
Workplace and Lifestyle Considerations May Influence Work and
Retirement Decisions for Some Older Workers:
Both working and retired focus group participants who reported that
they had a choice about when to work and retire most often said their
decisions were influenced by perceptions about their workplace, such as
satisfaction or dissatisfaction with the management. Workplace
perceptions were cited often both by participants with a college degree
and without a college degree. Some participants indicated that they
continued to work at their job not solely for income, but because they
perceived that their workplace was enjoyable,
I am eligible to retire—my boss, she is a lot of fun. As long as she is
[there] maybe 3, 4 or 5 years as of now—I am in a very good position.
If I decide to leave, I can leave. If I decide to stay, I would stay.
On the contrary, others left their jobs because they did not enjoy
their positions or their relationship with management, rather than
because of health constraints or other concerns.
[My reason for retiring] was upper management. We didn't agree, so
that's really what the big factor was—That's the only reason that I
left, otherwise, I would have stayed until I was 70. I would have
worked as long as I could have, as long as my health was good, but they
were edging me out.
Similarly, a number of participants indicated that they felt pressure
from their employer to leave their jobs. One participant said,
I felt like I was starting to get leaned on—.I felt they were pushing
me out— And one of the reasons was that one of my supervisors was about
40 and I was 65, and I think he felt more comfortable with a young
person because he could talk to that person.
Other participants indicated that they chose to discontinue working or
work part-time for lifestyle reasons, such as to have more flexibility
and control over their time.
The great thing is I also have the free time to do the things that I
want to do. It really is good if you can reach a point where you can
afford to work part-time.
Focus group participants with a college degree more often noted
lifestyle considerations as a reason to retire or continue working than
those without a college degree. For example, some college graduates
indicated that they would like to continue working for enjoyment or to
retire to volunteer. One participant commented, "I like to keep my hand
in my field. It keeps me cutting edge. I can take it or leave it."
A recent national survey of workers conducted by Rutgers University and
the University of Connecticut supports these findings. The survey found
that college graduates are more likely to view their retirement as a
time for volunteering or choosing to work part time, whereas 30 percent
of those without a college degree believe they will need to continue to
work for money.[Footnote 32]
Current and former federal workers in our focus groups most often cited
perceptions about the workplace as a reason for retiring. Workplace
perceptions were cited notably more often by federal participants who
said they had a choice about whether to work or retire than similar non-
federal participants. For example,
I was a manager—so at that time they had a reorganization. They bring
new management in and they made some changes, so it was very stressful.
At one point in time when they organized they want you to do more work
with less people—They had their own mindset where you didn't count. It
was very stressful. The opportunity [to retire] presented itself and I
just took advantage of it.
Few federal focus group participants indicated that they made work and
retirement decisions based on financial or health constraints.
Additionally, none of the federal retirees indicated that they had been
laid off by the federal government, whereas being laid off was cited
often by non-federal workers as the reason they stopped working.
Retirement Decisions May Be Influenced by What Older Workers Think Are
Viable Options:
Among all the focus group participants, few saw opportunities to
gradually or partially retire at their current or former employer.
Participants in each focus group indicated that they either were not
aware of opportunities to continue working after retirement or that
their current or former employer did nothing to retain them as workers;
differences between groups of college educated and non-college educated
participants were not significant. For example, in response to the
question, "What opportunity did your employer offer for phased or
partial retirement prior to your retirement?" one participant
responded, "They showed me the door and that was the end of it." Some
participants indicated that their current or former employers wished
that they would retire. In response to a question regarding
opportunities at their current employer for phased or partial
retirement, one respondent replied, "I think they were glad to get rid
of me." A few participants said that their current or former employers
offered them opportunities to gradually or partially retire. For
example, one person said, "If you are good at what you do, you can be
hired back on a consultant basis."
Similarly, recent research has shown that many older workers do not
follow through on their plans to reduce their hours in transition to
retirement. One study found that only 35 percent of older Americans who
wanted to reduce their hours in the next 2 years, prior to full
retirement, followed through on these plans.[Footnote 33] The reason
for the difference between these plans and actual behavior is unclear,
although one author of the study speculated that workers who want to
reduce their hours often must do so by finding another job, which can
entail difficulties that may ultimately lead to full retirement. Survey
data from the HRS indicates that almost 60 percent of full-time workers
aged 55 and over say they would like to gradually reduce their work
hours at their current job. But only about 20 percent of HRS
respondents who were working full-time in 1992 became partially retired
at some point by 2002 and the majority of partial retirees left their
full-time employer.
Focus group participants cited what they perceived as their own limited
skills and employers' age discrimination most often as barriers to
continued employment. These barriers were not cited more or less often
by different groups of participants. When asked what barriers they
perceived to continuing to work or finding a new job, some felt that
they lacked technological skills. For example, one participant stated,
"I could never go anywhere and work with computers." Age discrimination
was the second most frequently cited obstacle to participants working
later in life or finding a new job. Many felt that employers preferred
younger workers.
When they see your age, they don't even give you the courtesy of an
answer back. You know what it is, when they see your age they don't
know how capable you are. They just see the age and say I don't want to
mess around with you guys.
Similarly, a national survey found that 40 percent of older workers
believe that older workers are treated less fairly than younger workers
in the workplace.[Footnote 34]
In addition to employment barriers, many focus group participants felt
they had limited employment options. A number of participants indicated
that their employment options were limited to mostly lower skilled and
lower paid jobs. For example, one participant said, "I think there are
plenty of jobs, but I think you are going to have to work just as hard
as you did for $25 an hour as you do for $5."
While Some Employers Make a Special Effort to Hire and Retain Older
Workers, Most Do Not:
Some employers have actively attempted to recruit and retain older
workers. For example, AARP, an advocacy organization for people over
50, partners with select employers to provide opportunities for older
workers, and the federal government, one of the country's largest
employers, also offers some opportunities to retain select older
workers. Some employers participating in a roundtable discussion on the
aging workforce reported using special practices like mentoring
opportunities to recruit or retain some older workers.[Footnote 35]
However, as we reported in 2001, most employers are not yet engaged in
these practices.[Footnote 36] Only about one-third of participants in a
roundtable discussion of employers concerned about the aging workforce
indicated that their company had established a program designed to
recruit or retain older workers. The federal government also has not
made widespread efforts to recruit or retain older employees. Employers
have cited a number of factors, such as pension regulations, that
discourage or prevent them from offering more opportunities for older
workers.
Some Employers Use Special Practices to Recruit and Retain Older
Workers:
Some employers currently offer older workers incentives to work longer,
such as partial retirement. National survey data from HRS indicates
this practice is most common in professional and service occupations.
In 2002, about 20 percent of partial retirees were employed in
professional occupations and 17 percent in service
occupations.[Footnote 37] Among service occupations, partial retirees
were most often employed in food preparation and personal services
occupations, such as child care workers and home care aides.[Footnote
38]
In addition to offering some partial retirement opportunities, certain
employers have actively attempted to recruit and retain older workers.
Many employers believe older workers have certain advantages, such as
reliability, institutional knowledge and experience, and a strong work
ethic. AARP has established a "Featured Employer" program to encourage
its partner companies to recruit and retain older workers. Through this
program AARP collaborates with companies that are actively recruiting
older workers for full-time, part-time, and seasonal work by providing
information on employment opportunities. To date, AARP has entered into
partnerships with 13 large companies, which include firms in retail,
finance and insurance, health care, and staffing industries.
Employer representatives participating in a roundtable discussion on
the aging workforce listed numerous practices they use to recruit or
retain older workers. Overall, many participants agreed that
flexibility was the key feature necessary to recruit and retain older
workers. Specifically, individual employers listed these examples of
programs and practices offered to their older employees:
* using older workers as mentors for younger workers;
* offering workers the opportunity to work at different locations so
that they might live in different places over the course of a year;
* recruiting older workers at events geared toward seniors;
* launching a Web site and newsletter for older workers already
employed by the company;
* using training as a retention tool, with the understanding that
employees who are engaged and invested in their work are more likely to
remain at their current jobs; and:
* respecting some older workers' desire for less stressful work by
allowing former managers to work as staff members.
The federal government, one of the country's largest employers, offers
some opportunities to retain select older workers, some of which are
part of the opportunities for all workers, such as flexible schedules.
Also, some retirees may draw their pension and return to work on a
reduced schedule as "re-employed annuitants" or as private
contractors,[Footnote 39] but these opportunities are not targeted
broadly at older workers and the usage of these options does not appear
to be widespread. Similarly, we previously found that state and local
governments have addressed teacher shortages by implementing programs,
such as a Deferred Retirement Option Plan (DROP), that provide
incentives for older employees to remain on the job.[Footnote 40]
Most Employers Are Not Actively Recruiting or Retaining Older Workers
despite Indicating a Willingness to Expand Such Practices:
Although many employers indicate a willingness to recruit or retain
older workers, most employers are not currently engaged in these
practices, as we reported 5 years ago.[Footnote 41] National surveys
show that employers are interested in options to accommodate the desire
of older workers to reduce their hours or retire partially. One survey
from Cornell University indicated that 73 percent of organizations
would allow older workers to reduce their hours before retirement,
although few have a formal written policy allowing this reduction. In
fact, only 36 percent of organizations surveyed that would permit
reduced hours actually had an employee do this in the last 3
years.[Footnote 42] Some studies have found that, while a fairly large
number of employers think that phased or partial retirement is
important, a much smaller number have actually implemented such
policies.[Footnote 43] Another study that interviewed selected Fortune
500 company executives found that opportunities are ad hoc.[Footnote
44]
Only about one-third of the 13 participants in a roundtable discussion
of employers concerned about the aging workforce indicated that their
company or organization had established a program designed to recruit
or retain older workers, although most indicated a positive view of
older workers. These companies generally agreed that the aging
workforce was a serious concern for their organization in terms of
knowledge loss and job vacancies as older workers retire. Still, some
felt that it was only recently that their organization had become aware
of the severity of the challenges facing them in the future.
Despite employing a large number of older workers, the federal
government has not made significant, widespread efforts to recruit or
retain older employees. Although some specific programs and incentives
exist to recruit and retain select older workers, representatives of an
association of current and retired federal employees felt that the
federal government did not wish to keep its older employees in the
workforce longer but rather planned for them to retire and be replaced
by younger workers.
Employers, including federal officials, have cited a number of factors
that discourage or prevent them from offering more opportunities for
older workers. Some employers cite certain federal regulations as a
reason for not offering more opportunities for older workers to reduce
their hours before retirement, such as regulations prohibiting the
distribution of DB pension benefits while the employee is still working
for the company. Employers have also stated that pension regulations
may force some employees who wish to partially retire to do so at
another firm, or to retire and be hired back after a break in service.
Furthermore, one national survey showed that many employers perceive
that some older workers are resistant to new technology and roundtable
participants indicated that some older workers are resistant to change.
With regard to federal employees, some experts believe that the process
of rehiring retired federal employees is cumbersome and rules that
calculate retirement annuities based on the highest 3 years of pay
provide federal workers with a disincentive to reduce hours before
retirement. Also, some argue that current federal rules encourage
federal employees to leave the federal government and seek employment
elsewhere in order to collect their pension without an offset in their
wages.
Another barrier to offering opportunities for older workers noted at
the roundtable was the practice of retiring when eligible for pension,
Social Security, or Medicare benefits. Some indicated that defined
benefit plans encourage employees to retire when they maximize their
pension. However, another participant noted that even a combination of
DB and DC plans did not encourage workers to remain working later
because retiring around age 65 is traditional. Many employers at the
roundtable felt that eligibility for Social Security and Medicare tends
to drive workers' retirements. In fact, many of the employer
participants agreed that employees tend to retire in their mid-60s
because it has become the norm in the United States. One employer noted
"the entire nation has been preconditioned to expect to retire in the
mid-60s." Many of the employers agreed that raising the eligibility age
for Social Security and Medicare would be the kind of large-scale
change necessary to keep older workers employed later in life.
Conclusions:
The impending retirements of millions of older workers pose significant
challenges for the economy, employers, and workers. With these
retirements, employers may lose older workers' firm-specific and
general knowledge and skills, and there may not be enough younger
workers in the labor market to replace them. At the same time, older
workers themselves may need additional income from employment because
they face less secure retirements due in part to rising health care
costs and more years spent in retirement.
While many, including GAO, have reported on these trends and their
likely consequences, little has been done to address them. Despite
evidence indicating the future importance of older Americans to the
workforce, few employers have yet implemented widely available programs
to recruit or retain older workers. In addition, many older Americans
in our focus groups perceive that employers prefer younger workers and
prefer to see older workers retire rather than offer them more
opportunities to stay or find other work. This perception is at odds
with employers' statements at the roundtable and through surveys
indicating their readiness to address issues related to the aging
workforce. The disparities between actions, preferences, and
communications are a concern as the workforce ages.
With the first baby boomers becoming eligible for Social Security
benefits in just 3 years, the time to prepare for these challenges is
running out. Both employers and employees have a role to play in
addressing the gap between them. Employers could attract and retain
older workers by responding to their work and lifestyle preferences.
For instance, employers could give older workers more control over
their schedules by making greater use of flexible work arrangements
such as partial retirement, part-time work, job-sharing, and
telecommuting. Additionally, employers could respond to older workers'
perceptions about job stress by adjusting their job responsibilities
such as by allowing former managers to switch to support or mentor
roles. Also, employers could help their older employees learn new
skills by investing more in training, and strengthen internal policies
to address concerns about age discrimination. These efforts may also
help older workers feel more valued by their employers. For their part,
workers who are near traditional retirement age but who need or want to
continue working will need to position themselves to take advantage of
employment opportunities. For instance, they could learn new skills
through either on-or off-the-job training, and adapt to new
technologies and changes in the workplace. Additionally, older workers
could utilize available resources, such as those provided by advocacy
organizations like AARP, and communicate their needs and preferences to
employers. Workers also need to assess their financial status in
preparation for retirement, in particular the impact of reduced income
from earnings, and may need to consider options such as partial or
phased retirement.
While employers and employees must take an active role in addressing
the challenges of an aging population, there is also a role for
government to help as well. As we recommended previously, we continue
to believe an inter-agency task force on older workers, led by the
Department of Labor, would help various agencies better align their
efforts to remove barriers and create opportunities for older
workers.[Footnote 45] Continued coordination of issues related to older
workers by government agencies remains important, but the government
can and should play a greater role in helping employers and employees
prepare for these challenges. In addition to removing barriers and
creating opportunities, the government could help bridge the gap
between employers and employees.
Recommendation for Executive Action:
Enhanced public awareness of demographic trends, their likely
consequences, and possible solutions that could help promote both
economic growth and retirement security for individuals, could help
mitigate the potentially serious implications of the aging of the U.S.
labor force, avoid possible knowledge and skill gaps in the future, and
help ensure the financial security of older Americans. The Department
of Labor has taken sound first steps in this area, including convening
an intra-agency task force on older workers and working with business
leaders interested in issues concerning the aging workforce. However,
these challenges warrant a higher priority and a high-visibility
campaign involving a wider group of employers as well as employees.
Specifically, we recommend that the Secretary of Labor design a
comprehensive and highly visible public awareness campaign as a way to
help employers and employees plan better for the future and by so
doing, bridge the gap between employer and employee needs. In designing
the campaign, the Department of Labor should involve other agencies
that have either regulatory jurisdiction or a clear policy interest,
such as the Social Security Administration and the Health and Human
Services Department's Administration on Aging. The campaign should
target employer organizations and groups that interact with employees
and ultimately, would serve to encourage employers to find ways to
retain and recruit older workers, and assist employees in creating and
finding opportunities for continued work.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Department of Labor, the
Internal Revenue Service, the Office of Personnel Management, and the
Social Security Administration for comment. Officials from the
Department of Labor provided written comments (see app. II), which
generally agreed with our findings and the recommendation. Their
comments also highlighted some actions that the Department of Labor has
already taken in response to the challenges of an aging workforce.
Consequently, we clarified our recommendation to the Department of
Labor to include other federal agencies in the development of a public
awareness campaign geared to older workers and their current and
potential employers. The Office of Personnel Management and the Social
Security Administration provided no written comments on the draft. The
Department of Labor and the IRS also provided us with technical
comments, which we have incorporated into the report as appropriate.
We are sending copies of this report to the Secretary of Labor, the
Commissioner of Internal Revenue, the Director of the Office of
Personnel Management, the Commissioner of Social Security, appropriate
congressional committees, and other interested parties. We will also
make copies available to others upon request. In addition, the report
will be available at no charge on GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or at bovbjergb@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix VI.
Signed by:
Barbara D. Bovbjerg:
Director, Education, Workforce, and Income Security Issues:
List of Congressional Committees:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance:
United States Senate:
The Honorable Michael B. Enzi:
Chairman:
The Honorable Edward M. Kennedy:
Ranking Minority Member:
Committee on Health, Education, Labor, and Pensions:
United States Senate:
The Honorable Mike Dewine:
Chairman:
The Honorable Barbara A. Mikulski:
Ranking Minority Member:
Subcommittee on Retirement Security and Aging:
Committee on Health, Education, Labor, and Pensions:
United States Senate:
The Honorable Gordon H. Smith:
Chairman:
The Honorable Herb Kohl:
Ranking Minority Member:
Special Committee on Aging:
United States Senate:
The Honorable George Miller:
Ranking Minority Member:
Committee on Education and the Workforce:
House of Representatives:
The Honorable William M. Thomas:
Chairman:
The Honorable Charles B. Rangel:
Ranking Minority Member:
Committee on Ways and Means:
House of Representatives:
The Honorable Jim McCrery:
Chairman:
The Honorable Sander M. Levin:
Ranking Minority Member:
Subcommittee on Social Security:
Committee on Ways and Means:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to (1) describe the areas of the labor market that
will be most affected by the aging workforce, (2) determine the factors
that most influence the timing of workers' retirement, and (3) examine
what employers are doing to hire and retain older workers.
To address the first objective, we extrapolated employment data by
occupation and age 10 years into the future. To do this, we obtained
data from the Bureau of Labor and Statistics (BLS) describing the
number of people employed in different occupations and age groups from
1985 to 2004 based on data from the Current Population Survey. We
analyzed these data sets and found each to be reliable for purposes of
this study. Occupation categories included: management, business, and
financial operations; professional and related; service; sales and
related; office and administrative support; farming, fishing, and
forestry; construction and extraction; installation, maintenance, and
repair; production; and transportation and material moving occupations.
Because occupations were categorized differently prior to 2003, we
applied conversion factors provided by BLS to convert the pre-2003 data
and ensure consistency. Age groups were divided into the following
groups: 16-24; 25-34; 35-44; 45-54; 55-64; and 65-74. The number of
people employed in each age and occupation category was then averaged
in 10-year groups, 1985-1994 and 1995-2004. We then compared the rate
of change in employment by cohort between the two time periods for
those aged 55-64 and 65-74. Based on the assumption that the rate of
change for the two oldest age groups stays the same for the next 10
years, we extrapolated the employment levels of older workers, those
aged 55-64 and 65-74, in each occupation in 2014. We applied BLS's
projections of overall employment growth for each occupation and then
calculated the share of workers aged 55-74 as a percentage of the
workforce aged 25-74 in each occupation in 2014. To better understand
their decisions and circumstances regarding work and retirement, we
also analyzed data from the Health and Retirement Study (HRS), a
national survey of older Americans produced by the University of
Michigan. We analyzed this data set and found it to be reliable for
purposes of this study. Using data from the HRS and the RAND
Corporation supplement to the HRS, we created a definition of partial
retirement based on the hours or weeks worked per year and self-
reported labor force status. In order to be classified as partially
retired, a respondent must report the following: working for pay,
working part-time (defined as working fewer than 35 hours a week or
fewer than 36 weeks a year), and being either partially or fully
retired on the subjective retirement status or employment status
questions. Using this definition of partial retirement, we analyzed
characteristics of partial retirees, such as whether or not they
changed jobs to partially retire, their average reduction in work
hours, and pension and health insurance coverage. We also examined
partial retirement by occupation and self-employment status. In
addition, we analyzed data about older workers' desire to gradually
reduce their hours in transition to retirement and the degree of self-
reported mental stress and physical activity required by occupation.
To address the second objective, we gathered information from 16 focus
groups in four cities across the country: Chicago, Illinois; Phoenix,
Arizona; New York, New York; and Washington, D.C. We selected four
cities in which to hold focus groups based on geographic diversity and
potential for occupational diversity. To gather information from the
focus groups, we hired a contractor, IQ Solutions, to screen
participants, select sites for the groups, and moderate the groups. In
each city, participants were grouped into four categories: (1) retirees
with a college degree; (2) retirees with no college degree; (3) older
workers with a college degree; and (4) older workers with no college
degree. In addition, Washington, D.C., participants were screened to
include only current and former federal employees. Each group was
comprised of 8 to 10 participants who were age 55 to 70. We prepared a
series of questions that the moderator asked about the participants'
decisions regarding work and retirement. Participant responses were
recorded on audio tape and transcribed to text by IQ Solutions. To
analyze the transcripts, we developed a coding scheme to identify
common themes and patterns observed and responses were coded using
GAO's self-developed, internet-based Questionnaire Programming Language
software. Each code was reviewed and agreed upon by two analysts to
check for coding reliability. Code frequencies were downloaded and
analyzed using SAS software.
To address the third objective, we conducted interviews with several
experts and reviewed the findings of several surveys of employers
conducted by research organizations whose inquiries ranged from broad
human capital issues to specific questions about provisions for older
workers. We also participated in a roundtable discussion with
employers. The roundtable discussion was assembled by the Department of
Labor's Employment and Training Administration (ETA). The 16
participants represented several of ETA's national business partners as
well as other businesses and organizations that the Business Relations
Group within ETA works with on workforce development issues,
particularly those that have expressed an interest in recruiting and
retaining older workers. A GAO moderator asked a series of questions
that we developed regarding perceptions, challenges, and actions toward
older workers. (See app. V for a list of participants.)
We conducted our work between October 2004 and October 2005 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Labor:
U.S. Department of Labor:
Assistant Secretary for Employment and Training:
Washington, D.C. 20210:
NOV 16 2005:
Ms. Barbara D. Bovbjerg:
Director:
Education, Workforce, and Income Security Issues:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Bovbjerg:
The Department of Labor's Employment and Training Administration (ETA)
is in receipt of the draft Government Accountability Office (GAO)
report entitled, "Older Workers: Labor Can Help Employers and Employees
Plan Better for the Future" (GAO 06-80).
We agree with GAO about the need for public awareness of the
implications of the aging of the American workforce so that employers
and employees can better plan for the future. We also agree that there
is a need to help employers develop ways to retain and recruit older
employees and assist them in finding opportunities for continued work.
As GAO points out, the Department of Labor has taken steps to address
this issue, such as convening an intra-agency taskforce on older
workers and working with business leaders on issues concerning the
aging workforce.
In addition to these steps, ETA has initiated an outreach campaign to
inform employers about the benefits of hiring and retaining older
workers. This campaign also targets older workers to encourage them to
remain in or re-enter the workforce. The campaign materials - such as
an employer outreach kit, a Public Service Announcement, posters, and
brochures - are available to all workforce investment system
professionals, employers, and the public at-large. The message of the
campaign revolves around the theme, "Strength in Numbers," in
recognition of the important role that the baby boom generation will
play in the U.S. workforce over the next 25 years.
The campaign supplements National Employ Older Workers Week, an annual
week-long event that is intended to raise the awareness of employers
about the benefits of utilizing older workers. To commemorate this
event, most recently held on September 18-24, 2005, employment and
training providers across the country sponsored local events, including
job fairs, award ceremonies and conferences; issued press releases and
government proclamations; and launched websites to further promote and
raise awareness.
ETA has undertaken other efforts to provide information and assistance
to the workforce investment system and employers related to the
workforce implications of an aging American population including:
* In January 2005, ETA released a Protocol for Serving Older Workers to
the workforce investment system. The goal of this protocol is to
enhance the services provided to older workers, and to inspire the
workforce investment system to pursue innovative strategies for tapping
into this labor pool. The protocol outlines a set of action steps that
key stakeholders such as State and Local Workforce Investment Boards,
One-Stop Career Centers, mature worker intermediaries, service
providers and business and industry representatives can take to achieve
the goal of connecting employers with older workers.
* At ETA's Workforce Innovations conference in July 2005, a special
emphasis was placed on older worker issues, among other important
topics. Conference workshops focused on solutions to the challenges
employers face in recruiting and retaining older workers, effective
strategies for providing employment and training services to older
individuals, and skill assessment and training techniques for this
population.
* Through ETA's Business Relations Group, we have sponsored a number of
educational forums intended to inform employers about the benefits of
employing older workers.
While we consider these and other actions taken to be significant, we
recognize that more must be done. Therefore, the Department will
convene an interagency taskforce on the aging of the American
workforce. The taskforce will bring together agencies from across the
Federal government to work collectively to address the workforce
challenges posed by an aging population. This effort will build on the
earlier work of the Department's internal older worker taskforce. The
GAO study will be a valuable resource for the taskforce and the
Department as we consider additional steps to address this important
issue.
Enclosed are ETA's technical comments on the draft report. If you would
like additional information, please do not hesitate to call me at (202)
693-2700.
Sincerely,
Signed by:
Emily Stover DeRocco:
Enclosure:
[End of section]
Appendix III: Occupational Categories:
Major occupational categories: Professional and related;
Selected Sub-categories: Computer and mathematical Architecture and
engineering Life, physical, and social science Community and social
services Legal Education, training, and library Arts, design,
entertainment, sports, and media Healthcare practitioner and technical.
Major occupational categories: Service;
Selected Sub-categories: Healthcare support Protective service Food
preparation and serving related Building and grounds clearing and
maintenance Personal care and service.
Major occupational categories: Management, business, and financial
operations;
Selected Sub-categories: Advertising, marketing, promotions, public
relations, and sales managers Computer and information system managers
Construction managers Education administrators Food service managers
Top executives Accountants and auditors Financial analysts and personal
financial advisors Loan counselors and officers.
Major occupational categories: Sales and related;
Selected Sub-categories: Cashiers Counter and rental clerks Insurance
sales agents Real estate brokers and sales agents Retail salespersons
Sales representatives, wholesale, and manufacturing Securities,
commodities, and financial services sales agents Travel agents.
Major occupational categories: Office and administrative support;
Selected Sub-categories: Communications equipment operators Computer
operators Customer service representatives Data entry and information
processing workers Financial clerks Office and administrative support
worker supervisors and managers Office clerks, general Postal Service
workers Secretaries and administrative assistants.
Major occupational categories: Farming, fishing, and forestry;
Selected Sub-categories: Agricultural workers Fishers and fishing
vessel operators Forest, conservation, and logging workers.
Major occupational categories: Construction and extraction;
Selected Sub-categories: Boilermakers Carpenters Operating engineers
and other construction equipment operators Construction laborers
Electricians Pipelayers, plumbers, pipefitters, and steamfitters
Roofers Sheet metal workers.
Major occupational categories: Installation, maintenance, and repair;
Selected Sub-categories: Electrical and electronic equipment mechanics,
installers, and repairers Vehicle and mobile equipment mechanics,
installers, and repairers Heating, air-conditioning, and refrigeration
mechanics and installers Millwrights Precision instrument and equipment
repairers.
Major occupational categories: Production;
Selected Sub-categories: Assemblers and fabricators Food processing
Metal workers and plastic workers Printing occupations Plant and system
operators.
Major occupational categories: Transportation and material moving;
Selected Sub-categories: Air transportation Motor vehicle Rail
transportation Water transportation Material moving.
Source: U.S. Department of Labor, Bureau of Labor Statistics,
Occupational Outlook Handbook, 2004-2005 Edition and Bureau of Labor
Statistics, Current Population Survey, Unpublished data, "Table 23.
Experienced Labor Force, Employed, and Unemployed (Levels and Rates) by
Intermediate Occupation, Sex, Race, Hispanic or Latino Ethnicity, and
Age, Annual Average 2004."
[End of table]
[End of section]
Appendix IV: Focus Group Moderator's Guides:
[See PDF for image]
[End of section]
Appendix V: Employer Participant List for Roundtable Discussion on
Older Workers:
Debra Kilpatrick:
National Program Consultant:
AARP:
Jennifer Tracy:
Director of Staffing and College Relations:
Aramark:
Kathy Corcoran:
Principal L&OD Consultant:
Constellation Energy:
Barbara Hoenig:
Consultant on Mature Workers and Workforce Development:
CVS:
Steve Wing:
Director of Government Programs:
CVS:
Sara Freeman-Smith (by phone):
Director, Human Resources:
First Data:
Donna Yurdin:
Assistant Vice President, Organizational Effectiveness:
HCA:
Cindy Milburn:
Senior Director, Staffing:
The Home Depot:
Terry Hansen:
Manager, Public Partnerships:
IBM:
Rick Ohmer:
Pension Administrator:
Johns Hopkins Medicine:
Melanie Holmes:
Senior Vice President, Business Operations Support:
Manpower:
Andy Chaves:
Manager, Youth Programs, Talent Management:
Marriott:
Brooke Hirschfelder:
Work/Life and Diversity Program Manager:
MetLife:
Sue Roselle:
Staffing Manager:
Toys R Us:
Jan Magill:
Senior Program Officer, Center for Workforce Preparation:
U.S. Chamber of Commerce:
Eileen Bove:
Director of Human Resources:
Universal Health Services:
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Barbara D. Bovbjerg, Director (202) 512-7215:
Acknowledgments:
In addition to the contact named above, Alicia Cackley, Assistant
Director; Mindy Bowman; Anna Bonelli; Sharon Hermes; Kristy Kennedy;
Luann Moy; Lynn Musser; Nhi Nguyen; Corinna Nicolaou; Jay Smale; Roger
Thomas; and Rachael Valliere; made significant contributions to this
report.
FOOTNOTES
[1] GAO, Older Workers: Demographic Trends Pose Challenges for
Employers and Workers, GAO-02-85 (Washington, D.C.: November 2001).
[2] The age of eligibility for early Social Security retirement
benefits is 62.
[3] The fertility rate is defined as the total number of children born
per 1,000 women aged 15 to 44 years.
[4] Although a lower fertility rate contributes to the increased share
of retirees in the population, the increased participation of women in
the workforce has helped to reduce the number of retirees per worker.
Some researchers have hypothesized that a rising fertility rate would
correspond to a decline in the labor force participation of women.
[5] Arlene Dohm, "Gauging the Labor Force Effects of Retiring Baby-
Boomers," Monthly Labor Review, July 2000; GAO-02-85.
[6] GAO, Older Workers: Policies of Other Nations to Increase Labor
Force Participation, GAO-03-307 (Washington, D.C.: Feb. 13, 2003).
[7] The full eligibility age (or normal retirement age) for Social
Security benefits is being raised from 65 to 67 from 2000 to 2022. When
the full eligibility age was 65, the benefit reduction for taking
benefits at age 62 was 20 percent. When the age increase to 67 is fully
implemented, the reduction will be 30 percent. The reduction in monthly
payments for claiming early Social Security retirement benefits takes
account of the longer period of time over which benefits will be paid.
[8] EBSA data also indicates that the number of defined benefit plans
declined by 54 percent from 1978 to 1997.
[9] Craig Copeland, "Individual Account Retirement Plans: An Analysis
of the 2001 Survey of Consumer Finances," Employee Benefit Research
Institute, Issue Brief No. 259, July 2003.
[10] GAO, Retiree Health Benefits: Options for Employment-Based
Prescription Drug Benefits under the Medicare Modernization Act, GAO-05-
205 (Washington, D.C.: Feb. 2005).
[11] Richard W. Johnson and Rudolph G. Penner, "Will Health Care Costs
Erode Retirement Security?" Issue in Brief, Center for Retirement
Research at Boston College, (2004) No. 23.
[12] While we refer to phased retirement as any reduction in hours at
an existing job, it should be noted that proposed IRS regulations, 69
Fed. Reg. 65108 (2004), refer to a "bona fide phased retirement
program" as one that is a written, employer-adopted program under which
employees may begin working fewer hours and receiving phased retirement
benefits on or after a specified retirement date.
[13] In-service distributions refer to the receipt of pension benefits
while the participant is still employed with the employer that
sponsored the pension plan. Individuals with DC pensions are able to
access their pension benefits once they have attained age 59 ½
regardless of their work status.
[14] Proposed IRS regulations concerning phased retirement programs
(discussed below) do not address when a full retirement occurs and do
not endorse a prearranged termination and rehire as constituting a full
retirement. "Distributions From a Pension Plan Under a Phased
Retirement Program," 69 Fed. Reg. 65108 (2004).
[15] Ibid.
[16] Patrick Purcell, "Older Workers: Employment and Retirement
Trends," Congressional Research Service Report for Congress, Sept. 14,
2005.
[17] A recent Supreme Court ruling on the ADEA held that employees are
allowed to make "disparate impact" claims under ADEA, meaning that
employees do not have to prove intentional discrimination by the
employer. Smith v. City of Jackson, Miss., 125 S. Ct. 1536 (2005).
Another recent ruling held that employers are allowed to favor older
workers over younger workers even if the younger workers are age 40 and
over and, thus, are in ADEA's protected class. Therefore, a benefit
geared toward relatively older workers, such as partial or phased
retirement, would likely not be considered discriminatory toward
relatively younger workers who are age 40 and over. General Dynamics
Land Systems v. Clines, 540 U.S. 581 (2004).
[18] GAO-02-85.
[19] In November 2004, the Department of Labor's Employment and
Training Administration (ETA) did form an intra-agency taskforce,
composed of DOL staff only, focused on the issues and concerns of the
older worker population.
[20] See Older Worker Opportunity Act (S. 1826).
[21] The workforce refers to employment of the total civilian
population aged 16 and older. We define white-collar occupations to
include the following BLS occupational categories: management, business
and financial operations; professional and related; sales and related;
and office and administrative support. Blue-collar occupations include
the following BLS categories: farming, fishing, and forestry;
construction and extraction; installation, maintenance, and repair;
production; and transportation and material moving (for more
information on occupational categories see app. III). Occupational data
includes both public and private sector employment.
[22] In prior work we found that the movement away from blue-collar
work is more pronounced among older workers. See: GAO-02-85, 14.
[23] We define older workers as those between the ages of 55 to 74 for
purposes of our extrapolations. Labor force participation rates are
considerably lower in the age 65 to 74 group compared to the age 55 to
64 group. However, recently, labor force participation rates among
workers aged 65 to 74 have been rising and are projected to continue
rising as the population ages.
[24] GAO-02-85, 14.
[25] S. Kathi Brown, "Staying Ahead of the Curve 2003: The AARP Working
in Retirement Study," AARP, (2003) 7.
[26] According to the U.S. Census Bureau, among those aged 55 to 64,
approximately 67 percent of coverage was through an employer, 18
percent was through a public program, and 10 percent was through direct
purchase. Workers who are 65 or older or are disabled qualify for the
federal Medicare insurance program. Carmen DeNavas-Walt, Bernadette D.
Proctor, and Cheryl Hill Lee, U.S. Census Bureau, "Income, Poverty, and
Health Insurance Coverage in the United States: 2004," (2005) 74.
[27] For workers aged 65 or over federal law requires that employers be
the primary health insurer and Medicare becomes a secondary payer. Some
people are concerned that the provision stipulating Medicare as a
secondary payer creates barriers or at least complicates the
continuation of work past age 65. Specific concerns raised are that the
provision increases the cost of employing older workers, may prevent a
person working for a firm from getting a benefit to which he or she is
otherwise entitled, and therefore may be considered a tax on work, at
least at those firms offering such health benefits.
[28] Research has shown that having a college degree is often closely
tied to other outcomes such as higher income and better health.
According to one national study, in 2004, those over 25 with a college
degree on average earn $23,000 more than those without a college
degree. Moreover, 93 percent of those with a college degree reported
being in "excellent, very good, or good" health, compared to 82 percent
of those with a high school diploma. Institute for Higher Education
Policy, "The Investment Payoff: A 50-State Analysis of the Public and
Private Benefits of Higher Education," (2005) 7, 13.
[29] Scott Reynolds, Neil Ridley, and Carl E. Van Horn, "A Work-Filled
Retirement: Workers' Changing Views on Employment and Leisure," Work
Trends, (2005).
[30] Ibid, 5.
[31] Ibid, 6.
[32] Ibid, 6.
[33] Katherine G. Abraham and Susan N. Houseman, "Work and Retirement
Plans among Older Americans," Upjohn Institute Staff Working Paper No.
04-105, (July 2004) 18.
[34] Reynolds, Ridley, and Van Horn, "A Work-Filled Retirement:
Workers' Changing Views on Employment and Leisure," 11.
[35] The U.S. Department of Labor assisted us in assembling a group of
employer representatives to discuss the issues raised by the aging of
the workforce. See appendix VIII for more information.
[36] GAO-02-85, 4.
[37] In addition, 15 percent of partial retirees were employed in
clerical and administrative support occupations; 13 percent were
employed in operator occupations; 11 percent were employed in
managerial occupations; 11 percent were employed in sales occupations;
6 percent were employed in farming, forestry, and fishing occupations,
3 percent were employed in construction trade and extraction
occupations; 2 percent were employed in mechanics and repair
occupations; and 2 percent were employed in production occupations.
[38] However, data show that many partial retirees are no longer
working for their career employer, but rather are self-employed. Self-
employment is much more prevalent among partial retirees than among
full-time workers. According to the HRS, 36 percent of partial retirees
were self-employed in 2002 compared to 18 percent of full-time older
workers.
[39] Federal governmental plans are not covered by IRS regulations,
including restrictions on in-service pension distributions.
[40] GAO-02-85, 27-28.
[41] Ibid, 23.
[42] Robert M. Hutchens, "The Cornell Study of Employer Phased
Retirement Policies: A Report on Key Findings" Faculty Publications -
Labor Economics, (2003) 3.
[43] Hewitt Associates LLC, "Employer Approaches to Phased Retirement,"
(2003) 1; Laurene Graig and Valerie Pagenlli of Watson Wyatt, "Phased
Retirement: Reshaping the End of Work," Compensation & Benefits
Management, 1999, Vol. 16, No. 2; Jessica Collision, SHRM, NOWCC, CED,
"Older Workers Survey," (2003) vii.
[44] Lynne Morton, Lorrie Foster, and Jeri Sedlar, The Conference
Board, "Managing the Mature Workforce: Implications and Best
Practices," (2005) 20.
[45] GAO-02-85.
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