As workforce ages, industries struggle to prepare for wave of retirements
By Jason Alcorn and Jason Tomassini,
Within a year of Johnney Pollan’s retirement, Dow Chemical asked him to come back. This time as a contractor.
With his pension after 31 years of work and his health-care benefits, he and his wife were living comfortably in East Texas. And he could devote more time to his hobby, archaeology.
But he answered the call, and his retirement plans have been put on hold — for more than a decade now. Pollan was one of a few hundred people skilled in a propriety language used to run processes at Dow’s plants. Many of them retired at once, and the company was caught in the lurch.
“A lot of the expertise was going out the door,” said Pollan, 64. “And they found that they really needed it.”
There’s more to come. Of the 4,200 Dow employees in Freeport, about 40 percent will be eligible for retirement within four years.
Nationally, similar trends are emerging. Yet human resources experts, workers and executives from a range of industries say businesses are largely unprepared to accommodate an aging workforce or to cope with its eventual retirement.
“They are oblivious,” said economist Steven Sass of the Center for Retirement Research at Boston College.
Many industries find themselves in a quandary. They often need older workers for their expertise, yet they also may need to accommodate their physical disabilities and their desire for more flexible schedules. And as workers stay on the job longer, they may need training in new technologies or work procedures.
In the past decade, the number of seniors in the labor force has grown nearly 60 percent, according to the Bureau of Labor Statistics. By 2018, the number of workers 65 or older is projected to climb to 11 million, from 6.5 million today.
Baby boomers are fueling the trend. Healthier and better educated than any previous generation, many plan to continue working, at least part time, well past traditional retirement age. Human resources managers say voluntary retirement nearly stopped after the stock market collapse in 2007.
“When do people choose to retire?” asked Karen Smith, a senior researcher at the Urban Institute. “When they are able to replace their income.”
So employers face a dual challenge. They have to keep older workers productive and then, when those workers do leave, find qualified people to replace them. In 22 industries — among them engineering, agriculture, real estate and health care — more than three in 10 workers are 50 or older, according to a 2007 study from the Sloan Center on Aging & Work at Boston College.
“Suddenly, there’s this call that the baby boomers are retiring,” said Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School. “What did you think they were going to do? Stay until they die?”
“Companies are not very long-term-oriented,” he added. “They don’t spend much time worrying about what might be coming down the pipe in the future.”
In a third-floor hotel conference room in Cambridge, Mass., near biotech labs and the buildings of MIT, several dozen human resources managers recently paid more than $2,000 each to learn more about workforce planning — how to make sure a business has the right people for the job now and in the future.
Bob Redlo, who spoke to the group, leads workforce planning and development at Kaiser Permanente, with 8.8 million members the nation’s largest managed health-care company. Kaiser’s aging workforce is a critical issue, he said.
Last year, almost 12,000 Kaiser employees retired — more than 7 percent of the company’s workforce. Forty percent of its nurses are older than 50. The average age of its clinical lab scientists is 57; they typically retire at 63.
“It’s been mitigated a little because of the economy, but I think it’s a huge problem for us,” Redlo said.
Age and experience mean better quality and patient satisfaction, he said. Older workers are also highly trained and can be expensive to replace.
Call it the bathtub effect. Among the engineers at Lockheed Martin’s missiles and fire-control division, “most were hired into the industry in the ’60s and ’70s,” said Gary McPherson, vice president of human resources for the Lockheed unit. Then new hiring dropped off, which means fewer workers between age 35 and 45. Graph it out on a piece of paper and you see “a bathtub in the middle,” between the original generation and a wave of recent college graduates, he said. Forty to 60 percent of McPherson’s division will reach retirement age at the same time.
Like many companies, Lockheed focuses on the 15 to 20 percent of older workers in what McPherson calls “very critical positions,” such as lead missile propulsion engineers. Although the company has developed mentoring programs that pair veterans with younger workers to pass along experience, the chief risk — as at Dow — is that there simply are not enough qualified replacements.
In Texas, home to Dow and the Lockheed unit, public schools have de-emphasized vocational education, said John Ray, dean of information and community resources at Brazosport College.
“Today, you don’t have students with experience in working with their hands,” Ray said.
Brazosport, a community college near Freeport, has joined with petrochemical companies to train students while hosting courses for new hires at companies such as Dow and BASF.
While Dow has recognized the long-term employment trends the industry confronts — “We’re having to look for alternative supplies,” said Troy Bearden, Dow’s services leader for its Houston area operations — the consequences are sobering.
“If you would ever get into a situation when you didn’t have the trained and skilled folks available to operate the units,” said Bruce Raiff, who oversees “knowledge transfer” programs for Dow’s Texas operations, “you’d have to shut the units down.”
Employers in other industries, coping with the same employment profile, say they face their own challenges. Disability costs can rise with older workers. And workplace adaptations to accommodate decreased mobility may be needed. On the flip side, older workers who do not retire could slow the career ladder for younger workers, while newer technology that is second nature to millennials can put off older workers. Yet older workers are also more highly engaged and absent less often than young workers, according to the Sloan Center.
Any of these issues can create intergenerational tension, and managers may have to adapt to an unprecedented range of ages in the workplace.
Know-how, passed on
Some companies have already taken action, designing programs to allow older workers to move to more flexible jobs, teach part time or retain health benefits via phased retirement.
Older nurses at Kaiser, for example, can switch to less physically demanding positions while training the next generation of health-care workers. Nursing schools are not doing the job, said Kaiser’s Redlo, adding that his nurses make excellent instructors because they know the hospital system.
Many companies have joined with academic institutions to pass knowledge from an older generation to younger ones.
Two years ago, Brazosport College opened its Center for Processed Technology, a sleek building with modern classrooms and simulated control rooms. Outside, the building — a glycol and water distillation plant, 10,000 square feet of metal pipes, tanks and switches — resembles the chemical plants lining the highways in nearby Freeport. The center and plant are underwritten in part by local employers such as Dow and BASF.
“The equipment is smaller in scale, but it behaves just like the real thing,” said Bennett Willis, 69, who worked at Dow for 33 years and has taught at Brazosport for 12. Since 2006, Dow has sent new hires who do not have a degree in processed technology to a 14-week training program at Brazosport, taught by retired Dow employees such as Willis and Pollan. Fifty-three students have completed the program this year.
On a recent weekday, a class of new Dow employees learned to control the temperature of a chemical process. Student Cameron Keating, a 40-year-old Army veteran, communicated via walkie-talkie with students and instructors in an imitation control room, where a flipped switch could simulate a catastrophe. As a temperature gauge climbed to unsafe levels, Keating and his classmates had to figure out how to fix it.
“You need to increase the output, P-111,” Keating said, referring to a liquid control pump.
“You mean 112?” asked a voice on the other end.
“Oh yeah, 112,” Keating responded. “Should be 40 percent.”
The rate stabilized, the temperature dropped and the faux crisis was averted.
Arizona State University and other institutions have created incentives for older, tenured faculty members to retire to open positions for younger faculty and reduce costs.
At Sodexo, which provides food service and facility management, employee feedback led to the creation of an employee group on intergenerational workplace issues with regional chapters across the country.
“It’s not like Gen-Xers and Gen-Yers need to be like their baby boomer boss,” said Chris Weiser, who leads the group. “It’s not about baby boomers having to learn to text 140 words a minute. It’s about understanding that everyone has some style differences.”
“For the first time in history you have four generations in the workplace,” he added. “It’s critical that we have these conversations.”
The benefits of not retiring
“Retirement policies are intended to retain and attract,” said Sass, of the Center for Retirement Research.
But boomers reaching retirement age in droves could transform the relationship between older workers and their employers.
“End-of-career employment in the private sector will have to change,” Sass said.
If the process is underway in health care and engineering, progress elsewhere is slower. Pension rules that reduce benefits for part-time work, the threat of age discrimination lawsuits, and union contracts can protect older workers, but they also slow change.
Employment also looks different for older workers than for younger ones, experts say. It takes them more than a year, on average, to find work, compared with 36 weeks for those younger than 55, according to the Bureau of Labor Statistics. Older workers are more likely than ever to change jobs after they turn 50, often because of layoffs or buyouts. For many, that means a second career — and lower wages — in a different field. And low-income workers face greater risk as they age, Sass said.
The upshot, according to experts, workers and executives, is that the conventional notion of retirement has broken down.
“In the absence of employer-defined benefit plans, the structure that eased employees into retirement no longer exists,” Sass and Alicia Munnell wrote in their 2008 book, “Working Longer.”
But Kaiser’s Redlo said employers will adapt. “It’s good for our business to keep our older workers working,” he said.
In some cases, it’s good for the employees as well.
“Sure, you could pay me more money and I could work less hours, but I don’t think that’s going to happen,” said Pollan, the once-retired Dow employee. “I enjoy doing what I do.”
Alcorn and Tomassini are fellows at News21, a national initiative promoting innovative journalism, at Columbia University Graduate School of Journalism. News21 fellows Melissa Galvez, Michael Keller and Dewi Cooke contributed to this report.
When I get tired and when I get old, I’ll stop. Helen Axelrood, 82, opened her psychotherapy practice in Chicago more than 30 years ago.
If I didn’t work, I wouldn’t probably be as old as I am now. Bill Church, below, 88, works in the welding shop he built in his garage in Aiken, S.C.
Because I like to stay busy. And I live by myself, so I need the money, you know. Rosa Hernandez, 73, above, is a day-care attendant in Houston
If I was financially well off and could travel, most of the time I wouldn’t mind not working at all. But that’s not the circumstance. Irvin Nick erson, 67, is a dining-hall manager in Abingdon, Va.
Tell me where’s it written that I should be sitting at home watching TV, drinking beers or getting a potbelly or whatever? Winston Valentine, 68, works for the Chicago Transit Authority.
Maybe if I reach 100 or past 100 I’ll probably want to slow down a bit. Samuel Myers, 96, has a dry-cleaning business in Silver Spring.
About every two, three years I’d go in and say, “Hey, I’m 68, I’m 70, I’m 75, I’m 80 — is it time for me to quit? And they’d say no, and they kept giving me little raises, so I just thought it was wonderful. Leon Hale, 90, has written a column for the Houston Chronicle for 20 years.