Hello Boomers,

As we all know, this recession has been very hard on older workers. Unemployed older workers (Baby Boomers) continue to find few who will rehire them – largely due to negative and false stereotypes.

If you ask any 30 something hiring manager about the pros and cons of hiring an older worker, you will likely hear that they are dependable, loyal, have a great work ethic, etc.

Those same 30 something hiring managers will also likely say they cost too much in health care and salary, produce less than a younger worker, are easily bored and disengaged from the work process, are unwilling to learn, etc.

We have argued against these unfair and inaccurate stereotypes but our arguments have largely been ignored. Hence the 99′ers – many of whom are Baby Boomers. Now Knowledge@Wharton provides a fairly comprehensive look at the negative perceptions and the corresponding realities. Some of their key findings include:

Older workers DO NOT cost more in terms of health care. They may take longer to recover from an injury but they take fewer sick days than younger workers. Health care costs can actually be lower for older workers who have fewer dependents and become Medicare eligible at 65, further reducing employer costs.

Older workers ARE NOT less productive than younger workers. According to Peter Cappelli of the Wharton Center for Human Resources, older workers have superior interpersonal skills, deal better with customers, have less turnover and less absenteeism. In his words, ”The evidence is unbelievably huge. Basically, older workers perform better on just about everything.” So is better performance, more experience, and greater knowledge that older workers bring to fill your business needs worth a higher salary?

Older workers DO NOT lose interest in their jobs. According to the Sloan Center on Aging & Work at Boston College, those who work past retirement age become more engaged and satisfied with their jobs.

Older workers DO NOT resist learning new things. The Sloan Center found that older workers ranked a challenging job and learning new things as top sources of job satisfaction.

So Wharton has once again shown that hiring an older worker is good for business. But there is another widely circulated opinion that believes if Baby Boomers retire there will be more jobs for younger workers. But many Baby Boomers cannot afford to retire. Aside from the long reign of unemployment, there are other reasons beyond excessive spending that have caused many Baby Boomers to be severely short of retirement savings.

Baby Boomers entered the work force during a time when retirement funding was derived from a ”three-legged stool”. The first leg was an employer sponsored defined benefit pension plan. The second leg was our own savings and the third leg was Social Security.

When defined benefit pension plans were largely abandoned by employers in favor of the much less costly 401K match, the first leg of the stool was severely threatened. Most employers now provide only a small percentage of retirement income with workers providing the rest via pretax contributions. For older Boomers like those turning 65 in 2011, this striking policy change occurred mid-career or later.

Retirement and savings trajectories were greatly impacted as the second leg of the stool, personal savings, was strained by the need to also self-fund most of the first leg. Since most employers didn’t increase wages as they abandoned defined benefit pensions, paychecks had to stretch to include more savings.

While the ability to save pre-tax helped, the fact that our funds became largely unavailable for years caused us to prioritize as we raised families, funded college degrees, paid mortgages and helped aging parents and grown children. We didn’t always save the maximum and my guess is that many younger workers are falling into this pattern too for similar reasons.

Personal savings portfolios and 401K plans are often largely tied to the fortunes of the stock market. Two major meltdowns since 2000 have decimated Baby Boomer retirement savings and they have little time left to make up the losses.

The third leg of the retirement stool is Social Security. It is under attack and no one knows what it will look like 5, 10 or 15 years from now. We all know that taxes will need to rise to adequately fund it for the present, let alone the future. Asking it to do more sooner is not the solution and asking Baby Boomers to retire early won’t create more opportunities for younger workers. In fact, it will do just the opposite.

According to Wharton insurance and risk management professor Olivia S. Mitchell, countries with policies that encourage people to retire at a younger age actually damage younger workers because the retired rely upon pension dollars (Social Security) funded by taxes. More retired citizens means higher taxes to pay increasing pension liabilities. Higher taxes cause companies to keep wages low and cut back on hiring. Workers facing low wages and high taxes spend less and save less, stifling economic growth. It is as Ben Bernanke calls it, “An invirtuous cycle.”

So what is the solution? Give older workers the opportunity to stay in the workforce as long as they can, as long as they want. This will not take jobs from younger workers but will instead help drive our economy through increased savings, lower costs for pension liabilities not yet claimed, and rising demand for goods and services.

If older workers DO NOT earn, older workers DO NOT buy. Don’t create a huge generation of unproductive, non-purchasing consumers any earlier than their health and their abilities require. Hire a Baby Boomer. It’s good for your business and it’s good for our economy.

You can read more about the Knowledge@Wharton study at: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2644

2011 February « myboomer2boomer blog.