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Challenges Experienced by an Aging Workforce

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By Scott B. Elkind, Esq.

There are cumulative studies which demonstrate that older workers will have poorer access to the labor force as compared to their younger counterparts, whether via active or passive discrimination based on age. For this reason, the age factor remains an important vocational determination factor when deciding disability cases.

The National Technical Assistance and Research (NTAR) Center to Promote Leadership for Increasing the Employment and Economic Independence of Adults with Disabilities in its March, 2013 Report entitled “Employer Strategies for Responding to an Aging Workforce” addressed how the challenges presented by an increasingly older workforce. By 2016, one-third of the U.S. workforce will be age 50 or older. With the increase in workforce age increases, the incidence of disability rises with a disability rate of 20% for works in the 45 to 54 year group and rising to 42% for persons 65 or older. In general, older people are more likely to have multiple disabling conditions and chronic disabling conditions. As a result of reduced values of retirement portfolios, income, and improved health/consequent increased life expectancy, a majority of older workers plan to work past the retirement age. Although, by 2020 40% of the U.S. labor force is expected to exit.

Older workers (aged 50 or older) are subject to ageism, stereotypes, and misinformation. Negative perceptions include inflexibility, unwillingness to adapt to new technology, lack of aggression, resistance to change, complacency, and the presence of physical limitations that increase group health insurance costs. Employers have cited the higher compensation rate, increase insurance costs, and increased expense in hiring/training/retaining older workers who are believed to produce lower quality work and are less productive than their younger counterparts. The belief among employers is that older workers do not possess current skill sets with their skills being dated. These older workers are not savvy in social media and are less connected than their younger peers. In addition, older workers are less mobile as they have established community roots and have equity tied up in their homes.

The majority of companies have no special provisions for older workers despite the impending critical mass. In fact, 25.8% of companies of organizations had not analyzed their workplace demographics at all with only 12% doing so to any great extent. Over one-third mad no projections about retirements with only 29.5% doing so to a limited extent, 24.1% to a moderate extent, and only 9.7% to a great extent. Less than one-third of the employers surveyed had adopted practices to recruit employees of diverse ages to a great extent with 16.5% not doing so at all. Required strategies necessary for the retention of these older workers include flexibility in task, work hours, work schedule, workplace and benefits.

These findings support similar findings made by NTAR in its May, 2012 report entitled “The Public Workforce System: Serving Older Job Seekers and the Disability Implications of an Aging Workforce.” This paper detailed the financial burdens placed upon older workers as a result of the Great Recession with over 50% of persons over age 50 not feeling that they would have enough money to live comfortably in retirement. One in four of these persons had exhausted their savings during the Recession.

Although the unemployment rate for older workers is lower than the national average, the assumption that they are less likely to lose their jobs is false. Age and experience does not protect older workers from displacement, the rate of which increases with the age of the employee. Persons aged 50 to 61 are just as likely to lose their jobs as person 25 to 34. Consequently, there is no “layoff advantage” for older employees. Further, older workers who lose a job have a more difficult time than their younger rivals in reconnecting with the labor market with persons aged 50 to 61 being one-third less likely to find work within 12 months as compared to workers aged 25 to 34. Even more concerning is that workers losing work at 55 years of age have only a 55 - 60% chance of finding new work within two years while 80% of their still employed peers remained in their jobs. Worse yet, older workers with disabilities have even lower rates of employment. In addition, displaced older workers face longer durations of unemployment and, even if successful in findings new employment, are confronted with declining wages.

Much of these positions are confirmed by the National Center for Chronic Disease Prevention and Health Promotion of the Centers for Disease Control, United States Department of Health and Human Services, in its July, 2012 publication entitled “Older Employees in the Workplace.” There has been an incremental rise in worker age due to the increase in the Social Security retirement benefit eligibility age, overall health of workers, need for health insurance, and self-responsibility for retirement funding (401K). Employers are concerned about older workers due to increased health risk with advancing age, higher absenteeism, increased cost over younger workers, higher pensions, and increased use of health care and other benefits. Older workers are confronted by a series of barriers to new employment including: reduced employment opportunities, decreased training participation, increased discrimination, increased disparities in health, and more challenging work conditions.

The Stanford Center on Longevity in July, 2013 issued a paper titled “The Aging U.S. Workforce: A Chartbook of Demographic Skills which also addressed the negative factors affecting older workers. By 2020, older workers aged 55+ will account for 25% of the U.S. labor force, up from only 13% in 2000. In order to prevent the turning out of older workers, changes in age discrimination policy need to be undertaken. In particular, policies that reduce retirement incentives, increase retirement ages by fiat, reduce the value of private and/or public pensions, and deter employment of older workers will need to be addressed. Again, negative age stereotypes remain which affect labor market outcomes and do not necessarily imply age discrimination. Additionally, there remains discrimination in promotion of older workers.

Older worker skills are lacking as they account for 20% of the manufacturing sector with another 14% working in service jobs (protective service, food preparation, health care support, etc.) similarly affected. Older workers are affected by longer periods of unemployment.

The National Bureau of Economic Research in its Working Paper issued in September, 2008 entitled “The Age Discrimination in Employment Act and the Challenge of Population Aging” further addressed barriers to employment for older workers. The aging population of the United States poses significant public policy challenges. Increasingly lower employment rates occur as persons age. Unfortunately, age discrimination law only focus on employment terminations and not employee retention or discrimination in the hiring of older employees. Further, any continued employment for person aged 65 and older is not likely to come from continued employment, but rather from part-time or shorter-term jobs resulting in “partial retirement.”

Due to the aforementioned factors, it is very clear that aging is a clear disadvantage in the workplace and remains a very pertinent consideration for disability cases.

 

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