We’re Working Longer Now, but Maybe Not Tomorrow

Americans have been working longer (in years) — and the researcher/author of this MarketWatch blog post says that is a good thing. But recent findings suggest that the primary factor has been increased educational attainment among men. With that pattern showing signs of slowing down, will the opportunities and desires to continue to remain in the workforce also be scaled back?

As a strong proponent of working longer, I have been delighted to see the increase in the labor-force participation of men age 60 to 74 in recent years.   I, and other researchers, attribute this pattern to a host of factors, including changes in Social Security (lower replacement rates as the full retirement age increases and the maturation of the delayed retirement credit); the shift from defined-benefit plans with strong early-retirement incentives to 401(k)s; an improvement in the health and education of older workers; less physically demanding jobs; the desire to postpone retirement until the availability of Medicare; and the joint decision-making of dual-earner couples.   With all these forces at play, my assumption was that we would continue to see gains in the labor force activity of older workers as they responded to declines in the retirement income system by remaining in the labor force longer.
 
A recent study by Gary Burtless of the Brookings Institution has caused me to worry.   Burtless explored the extent to which the increased educational attainment of older workers – both absolutely and relative to the attainment of prime-age workers – could explain their greater labor force participation. 
 
The gains in educational attainment among older men have been dramatic.  In 1985, only 15% of men age 60 to 74 had been to college; today that fraction has more than doubled, reaching 32%.  Similarly, in 1985, more than 40% of older men had not finished high school; today only 13% lack a high school diploma.
 
Just as important, the gap in education levels between older and younger men has largely disappeared.  For example, men in their early 60s are now as likely to have completed college as those in their early 40s.  These two groups are also similar in terms of the percentage who lack a high school diploma.  As the educational gap between older and younger workers has narrowed, so too has the wage gap.  Today, men age 60 to 74 earn about the same as their counterparts age 35 to 54.

Back to Work: From ‘Intern’ to ‘Return’

Our Indiana INTERNnet program has been touting "returnships" the last several years. The benefits are plentiful for both employers and those seeking to re-enter the workforce.

Check out some analysis below from the Challenger Gray & Christmas outplacement and consulting firm:

“Employers are consistently wary of employment gaps brought on by a layoff, parenthood, or some other life event that prohibits working. A ‘returnship’ for former or transitioning professionals with otherwise sterling employment records, but prolonged unemployment, solves this issue,” said John A. Challenger, chief executive officer of global outplacement and business coaching consultancy Challenger, Gray & Christmas, Inc.

“Candidates, such as returning mothers or retirees, who have been out of work for six months or longer are perceived as having outdated skills.  As a result, they are often screened out early in the recruiting process.  A ‘returnship’ on a resume shows the employer that the candidates are willing to learn, have updated training and recent on-the-job experience, making them much more marketable,” said Challenger.

“The benefit to companies, unlike with entry-level interns, is that returnees can be assigned more complicated projects depending on their previous industry experience and set of skills.”

According to an article in the Harvard Business Review, Goldman Sachs offered an 8 week paid “returnship” for non-client facing departments in 2008. The effort resulted in 6 hirings from the 11 attendees. Since then, the program has grown to include positions nationwide and helped 120 individuals return to the workforce, according the company’s 2011 Environmental, Social and Governance Report. Moreover, those enrolled took on advanced tasks, such as developing training programs or creating mechanisms for client confidentiality.

“Companies would be wise to invest in ‘returnship’ programs in order to find and develop the right talent for their organization, which does not always mean the youngest or most malleable. Older professionals, returning mothers, and veterans already have the on-the-job experience most internships are created to impart on college-aged job seekers,” said Challenger.

“Professionals interested in pursuing this sort of opportunity should not sit back and wait for a company to develop a ‘returnship’ program. Request meetings with high-level executives at companies that interest you and suggest starting such a program yourself. If you can convince one company of the benefits, others may follow suit.

“Professionals should treat the process as a constant interview. Take initiative, show how you can benefit the company, befriend those who are already employed with the organization, always be on time and professional, and seek feedback,” offered Challenger.
 
# # #
 
Who Benefits From “Returnships?”

The Returning Parent – Mothers and fathers who have left the job market to raise a family often return to biased employers who are wary of their skill sets and absence from the workforce.

Transitioning Military – Former military have extensive on-the-job training in new technology, leadership development, and discipline, but lack experience with corporate culture a “returnship” would offer.

Older Workers – Older professionals have to deal with age discrimination, as well as potential gaps in employment.

Expatriates – Workers going to other countries for employment would gain necessary and helpful experience in another culture.

Long-term Unemployed – Whatever the reason for the employment gap, a “returnship” would revitalize a resume.

Employers – Recruiting interns who already have extensive on-the-job experience is valuable for any employer, as these professionals are ready to hit the ground running and take on meatier tasks.
 

It’s Not All Bad News for Older Workers

Here are some contradicting numbers to ponder. According to data from the Government Accountability Office, 55% of workers 55 and older have been unemployed for 27 weeks with 36% out of work for more than a year. On the other hand, between January 2012 and May 2012 this same age group accounted for nearly three million (or 69%) of total employment growth in the country.

Global outplacement firm Challenger, Gray & Christmas has more statistics and analysis:

While a larger portion of older workers are experiencing prolonged unemployment, the overall unemployment rate for this group has seen improvement over the last two years, falling from 7.1% in May 2010 to a current level of 6.5%.

“The unemployment rate among older workers still has a ways to go before reaching pre-recession levels of about 3.0%, but the pace at which these job seekers are finding employment compared to younger ones suggests they could reach pre-recession jobless rates before anyone else,” said company CEO John A. Challenger.

“Older workers may be benefitting from a desire among employers to keep hiring to a minimum.  The economy is still only slowly recovering, so employers have repeatedly indicated that they are only adding workers when absolutely necessary.  In this environment, a seasoned candidate who brings a wide variety of skills and experience to the table is going to have an advantage over younger candidates.  For employers, one experienced candidate is worth two or three younger, greener candidates, in terms of the ability to make immediate and meaningful contributions to output and the bottom line,” said Challenger.

Belying the myth that older workers are finding only low-paying jobs in retail or other service-oriented industries, the latest employment statistics reveal that some of the biggest employment gains for those 55 and older have occurred among managers and professionals.  As of May 2012, there were 6.2 million Americans 55 and older employed in management, business and financial operations.  That is up 12% from 5.5 million in May 2010.  The number working in professional and related occupations has increased 10% from 6.8 million in May 2010 to nearly 7.5 million in May 2012.

Helping to drive the employment gains among experienced job seekers is the fact that a majority of companies recognize the value of having these workers on their payrolls.  In a 2011 survey of company executives and benefit administrators by Bank of America, about 94% said it is important to keep older workers due to their skills.  In order to attract and retain these workers, the survey found that companies are offering customized schedules, education on retirement and health care, and the ability to work from home.

More and more older workers are starting their own businesses.  The number of self-employed workers age 55 and older has grown 13% from 2.8 million in May 2010 to 3.2 million as of May 2012.  Most of the growth occurred among those 65 and older, whose ranks of self-employed increased from 820,000 two years ago to a record high of 1,030,000 as of May, according to data from the Bureau of Labor Statistics.

The Indiana Chamber and BizVoice magazine took an in-depth look at older workers in a study and series of magazine articles

Indiana Unemployment High, Yet Qualified Workers Still Hard to Find

It seems counterintuitive that with so many Hoosiers out of work, employers are having a difficult time finding qualified applicants. But our friends at Inside INdiana Business issued a release today that some might find surprising:

At this week’s conference, Wabash National Corp. Chief Executive Officer Dick Giromini, Brightpoint America President Mark Howell and Paragon Medical CEO Toby Buck all said they are having trouble finding workers with the technical skills needed to fill their openings.

David Floyd, who will become the chief executive officer of Warsaw-based OrthoWorx next month, says finding well-trained employees to staff Indiana’s growing orthopedics sector is going to be one of his biggest challenges in the job.

Anderson-based Xtreme Alternative Defense Systems President Pete Bitar echoed those concerns. He is a member of the newly-formed Indiana Aerospace and Defense Council.

Wabash National Corp. Chief Executive Officer Dick Giromini will be a guest on Inside INdiana Business Television this weekend to discuss the issue.

According to the Indiana Department of Workforce Development, the state’s economy has added 3,800 net private sector jobs this year, buoyed by 5,500 manufacturing jobs.

On the topic of training and re-entering the workforce, you might also check out my article in the new BizVoice about some steps being taken to educate the state’s older workers.