How Aging Boomers Will Impact American Business
By: Source: AARP.org Date Posted: 2002-02-21 00:00:00-05:00
William D. Novelli
Executive Director and CEO, AARP
Presented at Meeting of The Wisemen,
The Harvard Club
New York, NY
February 21, 2002
Good evening. It is indeed a pleasure and an honor to be here tonight. What a well-named group. What a wellspring of wisdom…of experience. It's Olympian…and at the Harvard Club, no less. This brings to mind the time when President Kennedy was speaking at a dinner honoring Nobel laureates. He said, "This is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone."
Tonight, I want to talk about the future. More specifically, I want to talk about the impact that aging baby boomers are going to have on our future.
Yogi Berra probably said it best, "The future ain't what it used to be." America, like the rest of the world, is aging. People are living longer, and many are living better. At the same time, birth rates are declining throughout the world. Peter Drucker notes that, "In all probability, the single dominant factor in all developed and emerging countries will be population changes." This is having a profound impact on all aspects of our society.
For me, the milestone of turning 50 came ten years ago. Frankly, I didn't think it was any big deal. But society tried hard to convince me that it was. I got the humorous birthday cards reminding me that I was getting "old." I got the condolences from friends telling me that I was now officially "over the hill." And, yes, I also received the letter inviting me to join AARP.
But, I was thinking, "Hell, I'm just getting started… And, this AARP thing looks like a pretty good deal to me, I think I'll join." I never dreamed then that ten years later, I would be the one sending out the letters inviting people to join AARP.
We're pretty aggressive about recruiting new members. Right now, we're at 35.2 million and growing. The question people always ask me is, "How does AARP know when I turn 50?" I tell them we have this system of geo-synchronous satellites that circles the earth and keeps track of everyone… I even had one member come up to me in Dallas and say, "I'm not too worried about finding Osama Bin Laden. I figure that when he turns 50 AARP will find him."
Fifty is somehow the demarcation point signifying the beginning of old age - and it's deeply ingrained in our society. It's even evident in our language. Think about it. We become 21 as a glorious rite of passage. We hit 50 like a brick wall. Then, we turn 65 like it's the expiration date on a carton of milk gone bad.
But, this imagery is changing fast, because the baby boomers don't buy into the myth. And, it's changing because it simply isn't true, if it ever was.
Here's what is true: There is a whole new paradigm for life after 50 in America, and it is beginning to impact American business in very profound ways - most notably, the marketplace and the workplace. Peter Drucker also observed that, "The extreme youth culture of the last 40 years was based on demographics. It's an old rule that the population group that is both the biggest and growing the fastest determines the mood."
In the United States, that population group is the baby boomers - 76 million of them. And, we know from experience that Drucker is right. The boomers have deeply influenced every institution and stage of life they have encountered. And, now they are beginning to shape the 50+ market.
- A baby boomer turns 50 every 7.5 seconds.
- By 2005, half of all people between the ages of 50 and 74 will be boomers.
- The size of the 50+ population will more than double over the next 35 years.
- This is changing the fundamental age distribution in our population. In 1900, only 13 percent of the population was age 50 or over. In 2000, it was over 27 percent. And, by 2020, it will be over 35 percent.
People turning 50 today have half their adult lives ahead of them. That's a lot of time to buy products, use services, eat in restaurants, go to movies, stay in hotels, work out, build new homes (and renovate existing ones), rent cars, go back to school and experience other new adventures.
Marketers have traditionally thought of the period of life after 50 as one of diminishment - empty nests, retirement, solitary survivors. But that's clearly not the case. In fact, research conducted by Roper Starch Worldwide for our Modern Maturity magazine shows that people experience more life transition events in their fifties than in any other decade.
Moreover, while mature Americans make up 35% of the population, they have 77% of the financial assets and 57% of the discretionary income. Boomers - indeed, America - will experience the greatest transfer of wealth in world history. They are also at the peak of their earning years as they enter their 50s.
Boomers focus not so much on age as on lifestyle. To them, growing older is not simply a matter of just getting by, it's about being vital and enjoying the lifestyle they choose. Moreover, boomers want things their way, they want them now, and they want to be involved in the experience. For example, they don't just want to buy a car, they want "the total driving experience."
Basically, boomers like to have fun. And one of the precepts that guides their quest for fun is that they prefer spending money on experiences. They are looking for the new experience. They want to create their own experiences, because in this "been there done that" world of today, they are often bored, and searching for novelty.
It's also important to think about the different social roles that people experience as they enter life at 50+ - roles that often influence their behaviors as consumers. For example, there are 60 million grandparents in the United States - 72% of everybody over 50 in this country is a grandparent. Grandparents spend time and money with their grandchildren - over $30 billion in annual spending. Research shows that grandparents are taking their grandkids places in greater numbers than ever before, and our own research shows that eating in, going out to a restaurant, and watching television together are the activities grandparents and grandkids do most.
My point here is that not only are the baby boomers leading a demographic revolution that is changing the way we think about aging, they are also leading a consumer revolution that is changing the way we do business. And the two are connected: demographics and consumerism - we can't think of one without the other.
Let me give you an example. There's a TV commercial where a woman laments that she can't tolerate one more 18-year-old girl trying to sell her make up. This ad rings true for much of today's 50+ population. They want products, services, and experiences that relate to them, that speak to their values and lifestyles, and that demonstrate an understanding of - in fact, an empathy for - their wants and needs.
And, how can providers of goods and services relate effectively if they don't have at least some people like their consumers in their workforce?
In the book, The New Paradigm of Business: Emerging Strategies for Leadership and Organizational Change, author Robert Haas writes, "The most visible differences between the corporation of the future and its present-day counterpart will not be the products they make or the equipment they use - but who will be working, how they will be working, why they will be working, and what work will mean to them."
Harris makes a good point. In fact, we see four trends that are dramatically affecting the workforce and that we all need to be aware of as employers and employees.
Trend 1: Just as America is aging, so is the workplace. And this will have a tremendous influence on the "who, how, why, and what" that Harris writes about.
In this decade, the highest growth rate in the U.S. workforce will be among workers aged 55-64. In 2000, 13 percent of the workforce was 55 and older. By 2010, this figure will rise to 17 percent, or 26.6 million workers. By 2015, nearly one in five workers will be 55 or older. During that time, the number of younger workers, those aged 25-44, will actually decrease. All the while, critical shortages of qualified workers are expected, especially for service jobs.
Trend 2: Boomers see retirement as a transition; not a termination. That signifies a dramatic shift from what we think of as "retirement."
I come from a family of steel workers in Pittsburgh, and when my parents' generation retired, they did it the old-fashioned way. They really retired. I remember my uncle Andy. He came home from the steel mill one day, put down his lunch bucket, sat down on the porch and said, "That's it. I'm retired." And he was. Except for an afternoon walk to the Italian club, his new domain was that front porch.
Retirement as my Uncle Andy and millions of others in his generation practiced it is being replaced by a much more vital vision of how most of us will be living as we grow older. And that vision often incorporates work.
AARP's research shows that
- 8 in 10 baby boomers plan to work at least part-time
- 5% anticipate working full-time at a new job or career
- Only 16% say they will not work at all.
But this only tells part of the story:
- 35% will work mainly for interest and enjoyment
- 23% will work mainly for the income
- 17% envision starting their own business.
And these numbers all relate back to the issue of lifestyle. When we ask boomers how they think of their retirement vs. their parents, they say they will need more money, will be more self-indulgent, will be in better health and will live longer in retirement. In other words, they're not going to be stuffing those earnings inside their mattresses, they're going to continue being active consumers. They don't see retirement as a reason to live a diminished lifestyle. If anything, they see retirement as enhancing their lifestyle, giving them new found freedoms and opportunities to enjoy life on their own terms.
One of the key questions of course, is whether or not there will be jobs for boomers as they get older. We know from the first trend that the demand for older workers will be there. Yet, we also know that despite the Age Discrimination in Employment Act - which begins covering workers at age 40, by the way - age discrimination in the workplace is still a problem. But, I believe that employers will eventually accommodate boomers' desire to work as they get older. And the remaining trends help explain why.Trend 3: A change of corporate leadership is affecting the workplace, and the workplace is affecting corporate leadership.
About five years ago, the Wall Street Journal conducted a survey of the CEO's of 76 of the top 100 industrial companies. What they found is fairly astonishing in the context of today's workforce.
- 95% had wives who stayed at home while their children were young
- Not one had ever had to put his children in day care outside the home
- 87% had never experienced child-care issues that caused a hardship for the family.
Given the experiences of most of us in this room - both as employees and as managers - that was a different world. And as these corporate leaders "retire," they are being replaced by others who have had different experiences and who understand that the workplace has to change to meet the demands of a changing workforce.
The workplace is changing to meet alternative work styles and schedules. Businesses are run by men and women who increasingly understand the lifestyles dictated by the modern economy. Boomers recognize that working for a living means living while you're working, and new work models are constantly being developed and implemented to meet changing needs. And often, technology is leading the way. Today, we have more people working at home, or in remote locations outside of their office. We have flex-time, compressed work weeks, job sharing, help with elder care and phased retirement. And, this is only the beginning. As more and more boomers get closer to retirement age and technology continues to enhance our capabilities, we will see new work paradigms emerge that will impact the way we do business.
Trend 4: The final trend that plays into this is that a new image of aging is arriving to erase the negative stereotypes of older workers and beginning to increase their value to employers.
Traits exhibited by midlife and older workers take on renewed value in the modern economy - traits such as experience, loyalty, attention to task, perseverance, work habits, and emotional maturity. The myth about older workers being technologically challenged will disappear - It is beginning to now. As computers become more pervasive and more and more of the workforce has been using computers, the negative stereotypes about technology and age will vanish. It will no longer be an issue.
Midlife and older workers will benefit from the trend toward more flexible work schedules. This speaks directly to the point about the desire of people to continue working as they get older. The increased flexibility of part-time schedules, telecommuting, and other workplace innovations will especially accommodate midlife and older workers who are looking for a change.
Businesses and other organizations will need to do more to adapt to these trends and to the demands of aging consumers. And, so will workers.
But, many companies are not there yet. They do not yet recognize the attributes and the value that older workers bring to the workforce. We have been surveying the attitudes, perceptions, and policies affecting older employees in the American workplace since 1985. Our most recent survey, American Business and Older Employees, conducted last year found that:
- The majority of American businesses are not yet preparing for an older workforce.
- Older workers are still generally viewed by American businesses as lacking the ability to learn and to understand new technologies, and as not being flexible enough when asked to perform different tasks. And,
In a way, this is surprising older employees - those age 50 and above - were seen to possess all but one of the top seven qualities that companies consider most desirable in any employee. Older workers are regarded as:
- Committed to doing quality work;
- Getting along well with others;
- Having solid performance records;
- Possessing basic skills in reading, writing, and arithmetic;
- Being someone you can count on in a crisis; and
- Being loyal and dedicated to the company.
The only quality they fell short on that was considered highly desirable was: willing to be flexible about doing different tasks.
Now it seems to me that if these are the qualities employers think are important, and for the most part, these are the qualities older workers are viewed as having, then older workers will eventually be sought after - especially when human resource managers consider finding or keeping good employees the most important issue facing employers today.
But, the task of adapting doesn't rest on the shoulders of employers alone. Workers also have a responsibility to keep themselves employable as they get older. That means keeping up with the latest technologies, being willing to learn new skills, and being adaptable to work in new environments, performing functions they may not have done in previous jobs.
Earlier I quoted Yogi Berra. So, let me leave you with another one of his pearls of wisdom. As Yogi once said, "You can observe a lot just by watchin."
At AARP, we've been "watchin" older workers for a long time, and it is clear that companies and organizations in the future increasingly will depend on older workers. That's one of the reasons we advocate the value and benefits of older workers, why we defend their rights and fight age discrimination in the workplace, and why we have embarked on the first national effort to identify and honor companies exemplary policies and practices for workers 50+.
But whether we look at it from the perspective of employer or employee, one fact is clear: Not only are the baby boomers leading a demographic revolution that is changing the way we think about aging, they are also leading a consumer and workforce revolution that is changing the way we do business. And, this will be good for business and good for America.
preview