Myths About Older Workers: The Truth Will Set You Free
By: Bob Skladany | Source: AARP.org
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Let’s challenge a few widely held and untrue beliefs about older workers.
Myth No. 1: Older workers don’t “fit” in an energetic and fast-paced workplace. They can’t keep up and don’t want to work as hard as is required.
Employment advertisements routinely refer to workplaces that are “fast-paced,” “fresh-thinking,” high energy; “vibrant,” “challenging,” and “constantly changing.” The ads evoke an image of people moving about incessantly and working non-stop during ever-longer workdays. Many people believe that the use of such language and imagery is code for “older, slower workers need not apply.”
Fast-paced work environments are also nothing new. Before high technology, fields such as manufacturing, mining, distribution, construction, transportation, and agriculture demanded long and arduous work days. People successfully toiled in these demanding occupations often right up to the day they retired or were no longer able to do the work.
Research by the Bureau of Labor Statistics shows no significant difference between the hours worked by younger and older employees. In fact, the length of the average work week has hovered around 40 to 45 hours for decades.
There is also evidence that older workers exhibit greater motivation and engagement than younger workers. According to a 2005 Towers Perrin/AARP report, “Older workers are more motivated to exceed expectations than their younger counterparts.” This observed behavior is seen in age 50+ workers no matter what their length of service and lends weight to the capability of older workers to function in demanding environments.
The widespread belief that older workers “are a little slow to catch on” is likely rooted in the decline in cognition speed as we grow older. While older workers may require additional time to learn a new skill or process, evidence indicates they have greater retention, higher learning achievement, and are far more likely to complete a new field of study than their younger counterparts.
Myth No. 2: Older workers are unwilling to share job knowledge and skills because they wish to ensure their own job security; in this way, they often block younger workers from advancing.
Staff reductions and large-scale layoffs put the fear of job loss in almost every employee. So no matter what their age, employees have enough self-interest to make them reluctant to share and exchange knowledge.
In addition, many employers concerned with “knowledge transfer” from older to younger colleagues have instituted structured mentoring programs. Employers indicate that older workers are exceptionally effective at sharing information and guiding younger ones. Older employees are vital to knowledge transfer. In fact, their failing to transfer knowledge is the far riskier personal strategy in today’s workplace.
Unfortunately, there are situations where slower organization and staff growth can result in a log jam of mid-level employees who can’t advance because of a lack of openings.
But it is wrong to blame the lack of advancement opportunity on older workers “hogging” more senior positions. In fact, the elimination of management levels and support-staff positions is what limits the upward mobility of early and mid-career employees.
Myth No. 3: Older workers cost more than younger workers. It is more expensive to retain or recruit them.
Traditionally, employers add up incremental compensation, health-care premiums, pension costs, and incremental paid time off incurred by older workers. Lo and behold, they conclude older employees are more expensive. They thus become prime targets for labor-cost reduction via downsizing.
But this “cost accounting” approach disregards several meaningful economic considerations.
1. Compensation: Older workers are compensated for their accumulated value resulting from extensive work experience. Even if an older person were to require additional training, those costs would be minimal. Furthermore, although there is increasing evidence that older workers are more productive and have fewer absences than their younger colleagues, there is no consideration given to the economic value or contribution of more highly paid, older employees. Decision makers are focusing on the compensation cost and not the economic value of the older workers.
2. Health benefits: Health care claims progress at a moderate pace, in line with age. There are only modest differences among individual claims until age 50 and then again at 65, when treatment of chronic illnesses may be needed. A recent article identified several major employers who reported that older employers actually cost less.
Older workers are far more likely to carry individual or two-person coverage, which in most cases is less expensive than family or parent-with-children coverage. In addition, employers are increasingly reporting that older workers are in far better health than people their age in previous generations—a trend that is expected to further mitigate health-benefit costs.
3. Retirement plan costs: The cost of traditional defined benefit (DB) pension plans (which pay fixed benefits per month) does increase with age and length of service. These pensions were designed to encourage workers to have long careers with the same company. Regrettably, many employers now view the retention value of DB pensions as a liability rather than a benefit. But the DB pension is going the way of the dinosaur. Large numbers of DB pension plan have been terminated or frozen to new entrants.
Defined contribution (DC) retirement savings plans, which promise periodic payments to individual retirement savings accounts and shift cost and investment risk from the employer to workers, now far outnumber DB pensions in the workplace. DC plans are generally less expensive and their costs are largely unrelated to age or length of service. The old “higher pension cost” is not relevant for employers providing only DC retirement savings plans.
4. Paid time off: It’s true that many employers provide more paid vacation to longer service employees. This has bearing on current employees, but it is irrelevant to newly hired older workers. So employers can’t argue that hiring older employees will cost more in terms of vacation time, because new hires traditionally have less paid leave.
The additional vacation days provided to long-service and older workers is in part offset by the fact that older employees have fewer absences than their younger coworkers and have greater reliability.
On average, the compensation and benefits costs of older workers only exceed those of younger workers by 1 to 10 percent, depending on the source. There is no survey that says older workers are less expensive based on direct compensation.
However, when you look at the big picture, older workers:
Myth No. 1: Older workers don’t “fit” in an energetic and fast-paced workplace. They can’t keep up and don’t want to work as hard as is required.
Employment advertisements routinely refer to workplaces that are “fast-paced,” “fresh-thinking,” high energy; “vibrant,” “challenging,” and “constantly changing.” The ads evoke an image of people moving about incessantly and working non-stop during ever-longer workdays. Many people believe that the use of such language and imagery is code for “older, slower workers need not apply.”
Fast-paced work environments are also nothing new. Before high technology, fields such as manufacturing, mining, distribution, construction, transportation, and agriculture demanded long and arduous work days. People successfully toiled in these demanding occupations often right up to the day they retired or were no longer able to do the work.
Research by the Bureau of Labor Statistics shows no significant difference between the hours worked by younger and older employees. In fact, the length of the average work week has hovered around 40 to 45 hours for decades.
There is also evidence that older workers exhibit greater motivation and engagement than younger workers. According to a 2005 Towers Perrin/AARP report, “Older workers are more motivated to exceed expectations than their younger counterparts.” This observed behavior is seen in age 50+ workers no matter what their length of service and lends weight to the capability of older workers to function in demanding environments.
The widespread belief that older workers “are a little slow to catch on” is likely rooted in the decline in cognition speed as we grow older. While older workers may require additional time to learn a new skill or process, evidence indicates they have greater retention, higher learning achievement, and are far more likely to complete a new field of study than their younger counterparts.
Myth No. 2: Older workers are unwilling to share job knowledge and skills because they wish to ensure their own job security; in this way, they often block younger workers from advancing.
Staff reductions and large-scale layoffs put the fear of job loss in almost every employee. So no matter what their age, employees have enough self-interest to make them reluctant to share and exchange knowledge.
In addition, many employers concerned with “knowledge transfer” from older to younger colleagues have instituted structured mentoring programs. Employers indicate that older workers are exceptionally effective at sharing information and guiding younger ones. Older employees are vital to knowledge transfer. In fact, their failing to transfer knowledge is the far riskier personal strategy in today’s workplace.
Unfortunately, there are situations where slower organization and staff growth can result in a log jam of mid-level employees who can’t advance because of a lack of openings.
But it is wrong to blame the lack of advancement opportunity on older workers “hogging” more senior positions. In fact, the elimination of management levels and support-staff positions is what limits the upward mobility of early and mid-career employees.
Myth No. 3: Older workers cost more than younger workers. It is more expensive to retain or recruit them.
Traditionally, employers add up incremental compensation, health-care premiums, pension costs, and incremental paid time off incurred by older workers. Lo and behold, they conclude older employees are more expensive. They thus become prime targets for labor-cost reduction via downsizing.
But this “cost accounting” approach disregards several meaningful economic considerations.
1. Compensation: Older workers are compensated for their accumulated value resulting from extensive work experience. Even if an older person were to require additional training, those costs would be minimal. Furthermore, although there is increasing evidence that older workers are more productive and have fewer absences than their younger colleagues, there is no consideration given to the economic value or contribution of more highly paid, older employees. Decision makers are focusing on the compensation cost and not the economic value of the older workers.
2. Health benefits: Health care claims progress at a moderate pace, in line with age. There are only modest differences among individual claims until age 50 and then again at 65, when treatment of chronic illnesses may be needed. A recent article identified several major employers who reported that older employers actually cost less.
Older workers are far more likely to carry individual or two-person coverage, which in most cases is less expensive than family or parent-with-children coverage. In addition, employers are increasingly reporting that older workers are in far better health than people their age in previous generations—a trend that is expected to further mitigate health-benefit costs.
3. Retirement plan costs: The cost of traditional defined benefit (DB) pension plans (which pay fixed benefits per month) does increase with age and length of service. These pensions were designed to encourage workers to have long careers with the same company. Regrettably, many employers now view the retention value of DB pensions as a liability rather than a benefit. But the DB pension is going the way of the dinosaur. Large numbers of DB pension plan have been terminated or frozen to new entrants.
Defined contribution (DC) retirement savings plans, which promise periodic payments to individual retirement savings accounts and shift cost and investment risk from the employer to workers, now far outnumber DB pensions in the workplace. DC plans are generally less expensive and their costs are largely unrelated to age or length of service. The old “higher pension cost” is not relevant for employers providing only DC retirement savings plans.
4. Paid time off: It’s true that many employers provide more paid vacation to longer service employees. This has bearing on current employees, but it is irrelevant to newly hired older workers. So employers can’t argue that hiring older employees will cost more in terms of vacation time, because new hires traditionally have less paid leave.
The additional vacation days provided to long-service and older workers is in part offset by the fact that older employees have fewer absences than their younger coworkers and have greater reliability.
On average, the compensation and benefits costs of older workers only exceed those of younger workers by 1 to 10 percent, depending on the source. There is no survey that says older workers are less expensive based on direct compensation.
However, when you look at the big picture, older workers:
- Have fewer absences
- Are equally or more productive than younger employees
- Have superior customer relations skills
- Are less likely to leave the job after a short time
- Require lower training costs
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