Older Americans Impacting the Economy

Published in Woonsocket Call on September 25, 2016

Sometime in your life you might have heard this comment — older people are a drain on the economy. A newly released AARP report shatters this myth once and for all by detailing a rise in spending and workforce contributions of aging baby boomers.

AARP’s 28 page report, The Longevity Economy: How People Over 50 Are Driving Economic and Social Value in the US, takes a hard look at how our nation’s population of 111 million 50-plus consumers impacts the economy.

According to this report, released on September 20, the 50-plus age groups generates a whopping $7.6 trillion in economic activity (a $500 billion increase from 2013), including $5 trillion in consumer spending by people 50-plus. The researchers say the increases reflects the nation’s shifting demographic and spending patterns of this group due to longer life spans and prolonged employment.

Older Adults a Powerful Economic Force

The 50-plus cohort represents a powerful force that drives economic activity and the growth of this age group and has a transformative impact on the nation’s products and services.

According to the report, produced by Oxford Economics for AARP, members of the Longevity Economy are employed longer and making contributions within the workforce. In addition, the economic activity that comprises the Longevity Economy generates $1.8 trillion in federal, state and local taxes. As older people extend their work lives, they are fueling economic growth past the traditional retirement age of 65 as well as combating myths about how aging affects the economy.

“As the 50-plus demographic continues to grow, the market opportunities are too large to ignore,” said Jody Holtzman, senior vice president of market innovation, AARP. “With those in the ‘longevity economy’ wanting to maintain independence, employment and health for as long as possible, opportunities abound for companies to develop products and services to meet the demand. This report offers a strong roadmap for companies to address the needs of the 50-plus population.”

Look for the nation’s Longevity Economy to be more ethnically diverse. The report notes that by 2050, Black, Hispanic, Asian, and other non-white groups will make up 45 percent of the 50-plus population, compared with 26 percent in 2015. Demographic changes will influence the types of goods and services that the 50-plus population consumes and invests in, say the researchers.

Aging baby boomers and seniors will be a “contributing force” in the workplace and heavily into entrepreneurship. The report’s findings indicated that people age 50-plus are working longer, earning wages, spending more money, generating tax revenue, and producing economic value for an extended period of time. Those aged 55-64 have had the highest rate of entrepreneurial activity in the nation and over the last 10 years and one in three US businesses in that timeframe was started by an entrepreneur aged 50 or older.

The report’s findings pierces the long-held stereotypes that as one ages they become less productive, not as quick and agile when compared to younger employees. Researchers say while these observations may be true in some occupations, however, the report’s data suggests that in many instances productivity may increase in your later years. This may occur because older workers who are more highly educated are employed in more knowledge-based professions and less physically active ones.

Researchers observed that the Longevity Economy supported job sustainability. The AARP report found that in 2015 alone, nationwide spending by people aged 50 supported more than 89.4 million jobs and more than $4.7 trillion in the nation’s labor income — 61 percent of all U.S. jobs and 43 percent of labor income was related to this groups’ spending, impacting health services and education.

Meanwhile, the AARP report notes that The 50-plus population has a strong desire to stay independent and active while they age, resulting in businesses developing new technologies – such as remote monitoring, smartphone apps and ambient computing – that cater to them.

Finally, the AARP report found that baby boomers are not stingy. They donate at a larger rate than younger generations, with 80 percent of those 65-plus giving to charity in 2015. When not working boomers spend a lot of their time volunteering, too – individuals 55-64 spend 128 hours per year while those 65-plus spend 133 hours per year. In addition, 83 percent of the nation’s household wealth is held by those over 50 years old, say researchers.

In the Ocean State…

“In Rhode Island, we know that the 50+ population is an economic driver,” said AARP Rhode Island State Director Kathleen Connell. “On the younger end, the demographic represents key leaders in business, education and government. Sometimes it seems as if the ‘young innovators’ get all the press, but this core of established, successful and still quite energetic Rhode Islanders is undeniable. At the other end of the spectrum, $2.9 billion dollars in Social Security benefits are paid out to Rhode Islanders and a large portion of that spending is here in the state. Total economic output is estimated at $4.98 billion. People also would be surprised to know that Rhode Islanders 65 and older comprise 18 percent of the workforce.

“They are caregivers and philanthropists as well,” Connell added. “And their volunteer service is valued at $148 million a year. However, this is not to deny that many older people have real and pressing needs. That will grow as a percentage of the state’s population and we need to plan for those realities.

“Younger entrepreneurs are important to the state’s future,” Connell concluded. “But the brightest, in my opinion, recognize the 50+ population as both a market and a resource. Many are tapping the generation that came before them as an advantage as they grow their own successes. We want to see more of that. It’s a win-win we can’t pass up.”

It is no surprise to economist Ed Mazze that consumers age 50-plus are the most important demographic group for businesses to target. He says there are over 120 million people in this group (the baby boomers (born 1946 to 1964) and the Silent Generation (born from 1925 through 1945).

Mazze, Distinguished Professor of Business Administration at the University of Rhode Island, notes that boomers are willing to spend on technology, use social media, purchase online and represent a good market for many luxury products. “Many new products have been created for the Silent Generation in areas of food and pharmaceuticals and other products have been redesigned and reengineered such as appliances, automobiles and furniture for ease of operation,” he says.

“There are many in both markets still willing to pay full price for the products and services they buy if they feel they are getting full value for these purchases. These are two important consumer market segments that should not be neglected,” adds Mazze.

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Experienced Workers to Seek Greener Pastures in 2016

Published in the Pawtuket Times on January 25, 2016

In 2016, you can likely expect to see an increasing number of experienced workers seeking new employment. According to the recently released AARP survey, making “more money” was the key motivator for 74 percent of the survey respondents.

“The economy may be doing better these days,” said AARP Senior Vice President Jean Setzfand. “But a lot of workers are still worried about their paychecks. While our survey, which included many Baby Boomers and Gen Xers, found most people looking want more money, we also found a wide variety of reasons for their job search rationale.”

Looking for Greener Pastures

The “Experience in Work” survey (with its findings detailed in a 47 page report released this ), conducted for AARP’s new career website, aarp.org/work, finds that of the approximately 4 in ten inclined to seek new work this year, 23% are either extremely or very likely to try to find a new job this year, and another 16% say that they are somewhat likely to job-seek during that period.

Researchers say that respondents, ages 35 to 64, cite career growth potential (21%), better work flexibility (25%), more enjoyable work (30%), as well as better health benefits (28%) as reasons they plan to seek new employment this year.

Added Setzfand: “Things are so fluid that many of those likely to switch jobs this year say they do not expect to stay in the same industry. An even larger group of job searchers do not know what type of business they will end up in at all.”

The 10-minute, online, unbranded survey (a nationally represented sample of 1,291) conducted by Phi Power Communications, Inc., found that that experienced workers who are already looking for a new job say the tools most commonly used in their search are online listings (62%), personal contacts (40%), and company career listings (33%).

Most of those surveyed (62%) are currently employed, and a solid majority (66%) have been in the same job for at least five years, pointing up the need for likely job seekers to update their skills.

Meanwhile, experienced workers are willing to take the leap outside of their job sector. A quarter (24%) of those likely to switch companies say that they do not expect to remain in the same industry. An even larger percentage (42%) do not even know what type of business they will end up in.

But, finding new a new job is not a piece of cake. Age discrimination (42%) is listed as the biggest obstacle to gaining a new higher paying job, followed by “not being offered enough money” (37%), a poor regional or local labor market (24 %) and “lack of availability of full-time jobs with benefits” (23%).

According to Kathleen Connell, AARP Rhode Island State Director, the survey findings capture how older workers value their job experience. “They see career growth continuing at 50 rather than experiencing a decline in their value to employers; they believe they bring experience and knowledge to the table that can be leveraged to find flexibility that meets their financial needs and lifestyles; and many, for the first time, may be doing the math and realizing how much health benefits play a factor in their overall compensation,” she says.

While the survey respondent’s attitude reflected in this AARP phone survey seem obvious at age 50, Connell believes that many workers now think this way as they turn sixty years old and they anticipate another decade or more of full-time employment.

Connell adds, “Conversely, one can infer that people are insecure in a fragile economy and a culture of mergers and acquisitions that result in the arbitrary elimination of jobs. So, career flexibility is a means of adapting, if necessary. In Rhode Island, our scale makes it difficult for most people to easily replace a lost job. And therefore, people in their 50s may be looking to advance to new job possibilities before they hear footsteps.

“Still, what the survey may show most clearly is that older workers are looking for a bigger paycheck in order keep pace with inflation and, hopefully, to save more for retirement,” says Connell.

The Secret to Keeping Employee’s satisfied

Edward M. Mazze, Distinguished University Professor of Business Administration at The University of Rhode Island, sees the New England region and the Ocean States Economy slowly improving. Businesses are hiring employees with specific skills, to replace individuals that have either retired or left for new job opportunities, he says, adding that a company’s growth and new technology also create the need to expand and hire new employees.

“The needed skill set and knowledge base for many jobs have changed as a result of the way businesses compete in today’s market-place. Individuals with experience and a willingness to continue to learn will find jobs because they add value to their organizations, adds Mazze.

“Employees are an important asset of an organization no matter what their age or educational background,” says Mazze, noting that this intangible asset does not appear on the balance sheet.

The widely acclaimed economist sees the major challenge companies face today is how to keep their employees satisfied. This goes beyond pay for performance, he notes.

The formula for retaining employees is quite simple, says Mazze. “To build a good workforce, the company must make work interesting, recognize the accomplishments of its employees, provide good working conditions, have a competitive compensation system and an opportunity for the employee to be promoted and continue to learn, he notes.

But, Mazze adds a major key to keeping employees satisfied is the culture of the company and the values of management. “It is not unusual for experienced workers to have five or six job changes in their career – some because of better opportunities and others because of down-sizing and right-sizing companies as a result of economic and financial factors,” he says.

AARP’s website (www.AARP.org/Work) provides useful information, tools and connections to an array of resources. This website includes a job search engine, a list of companies that recognize the value of experienced workers and recruit across diverse age groups, and tips for workers of all experience levels seeking employment or exploring new workplace options.

Herb Weiss, LRI ’12 is a Pawtucket Writer who covers aging, health care and medical issues. He can be reached at hweissri@aol.com.

Report: Hiring Older Workers Makes Good Business Sense

Published in Woonsocket Call on May 3, 2015

Here’s a sound strategy for America’s CEOs to follow to improve their corporation’s bottom line. AARP’s recently released study suggests, just hire or retain older workers.

An AARP study, released on April 27, discredits widespread myths and misconceptions about age 50+ employees, showing that they have skills and abilities that can make them key to operating a successful business. The report, “A Business Case for Workers Age 50+: A Look at the Value of Experience 2015,” says that the argument for employing older employees has grown even stronger during the last decade, reinforcing a 2005 AARP study that found that these experienced workers are highly motivated, productive and even cost-effective.

Researchers claim that this study documents for the “first time why attracting and retaining experienced age 50+ workers is critical for businesses seeking an advantage in the labor market.”

Older Workers Sound Investment

“Leading employers across all industries value the expertise and experience of workers 50+ and know that recruiting, retaining and engaging them will improve their business results,” said AARP CEO Jo Ann Jenkins in her statement on the releasing the 92 page report.

Just as today’s 50+ population is disrupting aging and eroding negative stereotypes, today’s 50+ workforce is adding value by exhibiting traits that are highly sought after in today’s economy,” Jenkins added.

Adds Roselyn Feinsod, senior partner at Aon Hewitt, a multinational company providing human resources, retirement and health solutions, that prepared this report, “Workers age 50+ are highly valuable within many organizations – particularly in those industries that require highly skilled workers or workers with unique skill sets, such as health care or energy.”

Researchers say that the AARP report comes at a time when experienced workers are playing an increasing role in America’s workplace. In 2002, workers age 50+ made up only 24.6 percent of the workforce. By 2012, they were 32.3 percent. By 2022, they are projected to represent 35.4 percent of the nation’s total workforce.

The AARP new study addresses a widespread misconception that older workers cost “significantly more” than younger workers. In fact, adding more talented older employees to your workforce can result in only minimal labor cost increases, says the researchers, noting that 90 percent of large employers now base pay in part on job performance, rather than exclusively on length of employment.

In addition, in terms of retirement costs, only 22 percent of large companies now offer a defined benefit pension plan, down significantly from the 68 percent in 2004.
Looking at the 50+ segment of the workforce from a performance standpoint, AARP and Aon Hewitt say that older workers remain the most engaged age group. The study reports that 65 percent of workers age 55+ are considered “engaged”, based on survey data, while younger employee engagement averages 58 to 60 percent.

Although the generational differences in engagement might not seem large, “it takes only a five percent increase in engagement to achieve three percent incremental revenue growth,” the report finds. This can translate into a large company with $5 billion in revenue achieving a $150 million revenue increase as a result of even a five percent engagement improvement, the study says.

The report concludes “An engaged older workforce can influence and enhance organizational productivity and generate improved business outcomes.” Other advantages of older workers include their job experience, professionalism, strong work ethic, lower turnover, and knowledge.
AARP commissioned the study to assess the advantages of both retaining and attracting older workers. The analysis relies primarily on data from Aon Hewitt databases, an extensive literature review and interviews with 18 large employers to obtain anecdotal information on how they approach older workers.

Contributing to Rhode Island’s Economy

“We have noted in the past the relevance of Rhode Island’s so-called Longevity Economy,” said AARP Rhode Island State Director Kathleen Connell. “Despite being just 36% of Rhode Island’s population in 2013 (expected to grow to 38% by 2040), the total economic contribution of the state’s 50-plus population accounted for 46% of Rhode Island’s GDP ($24 billion). Now we see another reason to embrace the older population.

Connell notes that “This new report reinforces the value of older Rhode Islanders as they continue to be a key asset in the workforce. It is especially good to have reliable data that exposes the false concept that older workers cost significantly more than younger workers. The truth is, that older workers increase labor costs minimally while contributing experience and stability to businesses across the spectrum.

“Many employers in Rhode Island understand this. AARP Rhode Island gets frequent calls from business actively seeking older workers. They know the value and the wisdom they bring to the workplace,” says Connell.

According to Charles Fogarty, Director of the Division of Elderly Affairs (DEA), the recently released AARP study helps his agency spread this message, “older workers are expected to play a key role in sparking Rhode Island’s comeback.”

“We support policies and programs to help this crucial segment remain active in the labor force by connecting older workers to services and training,” says Fogarty, noting that AARP’s study confirms, “our seniors are a valuable asset in our workforce given their wealth of knowledge, ability to mentor younger colleagues, and commitment to hard work.”

Deputy Director Lisa D’Agostino, of the state’s Department of Labor and Training agrees with DEA’s Fogarty. “Age 50+ workers are a talented segment of our workforce that is often overlooked and untapped when businesses seek workforce solutions. Given today’s demand for a skilled workforce the solution is simple – mature workers can bring the talent, leadership and work ethic employers need,” she says, noting that labor force participation for this group is on the rise and unemployment rates are lower than that of the prime working age population and have been for the last ten years.

Oak Hill resident Hank Rosenthal, 64, confirms the importance and value of hiring older workers. But, during his two-year job search, after being laid off, he experienced job discrimination, he claims. “Having been interviewed by numerous Human Resource professionals, they just seem incapable of understanding that the years of experience someone has gained is an asset. They seem unable to appreciate that knowledge, experience, and even skills acquired over a lifetime can be transferred and used in virtually any organization or business,” he says.

Rosenthal, now gainfully employed, views his older contemporaries as being “more stable, reliable, have better work ethics and generally make great employees, in line with the observations of the AARP report. With the difficulty in finding employment he believes that companies have not figured this out yet. “What a terrible waste of human capital,” he says.

While older workers may be forced to continuing working to pay their bills, many employees will take jobs for both psychological and social fulfillment. Hiring and retaining older workers may be a simple way for American businesses to maintain their competitiveness in a world economy. The report says that this can easily be accomplished by having “flexible workplaces, options for transitioning to retirement and fostering generational diversity and inclusion.” The AARP report is a must read for any CEO or Human Resource Director.

For the full report, go to http://www.aarp.org/research/topics/economics/info-2015/business-case-older-workers.html.

Herb Weiss, LRI ’12, is a Pawtucket-based writer who covers aging, health care and medical issues. He can be reached at hweissri@aol.com.