Older Workers:

Labor Can Help Employers and Employees Plan Better for the Future

GAO-06-80: Published: Dec 5, 2005. Publicly Released: Dec 5, 2005.

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Demographic changes pose serious challenges for employers, the economy, and older Americans. As the baby boomers near traditional retirement ages, the loss of experienced workers could have adverse effects on productivity and economic growth. Also, many older Americans face less-secure retirements due to rising health care costs, pension coverage changes, and fiscal pressures on the nation's retirement programs. Due to the growing importance of workers aged 55 or older, GAO examined: (1) areas of the labor market affected by the aging of the workforce; (2) factors that influence the timing of retirement; and (3) what employers are doing to hire and retain older workers.

All areas of the labor market are likely to be affected by the aging of the workforce. Like workers in general, a majority of older workers are employed in professional, management, service, office and administrative support, and sales occupations. However, employers in every occupation face the likelihood that a greater percentage of their workforce will be nearing retirement age. Potential skill gaps from impending retirements and a slowdown in the growth of the labor supply may make older workers a resource of growing importance. Focus group participants without a college degree cited health, finances, and layoffs most often as factors constraining the timing of their retirement and work decisions. Participants without such constraints, most often cited lifestyle and work perceptions as the factors driving their decisions. Also, despite survey findings showing that many older workers wish to gradually reduce their hours, overall, focus group participants indicated they either were not aware of options for continued work after retirement or that their current or former employer did nothing to retain them. Many saw barriers to future employment, including their own limited skills and perceived age bias. While some employers are making an effort to hire and retain older workers, such as offering flexible work arrangements, most have not yet made these efforts a priority. We found some examples of programs targeted toward older workers, and many employers express a willingness to initiate practices to retain older workers. However, most surveyed employers do not implement these practices widely. In addition, only about one-third of participants in a roundtable discussion of employers concerned about the aging workforce indicated that they provided a specific plan or program to recruit or retain older workers. Employers cite a number of barriers to offering more opportunities, such as federal pension regulations.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Department of Labor agreed with this recommendation and continued work on a number of initiatives focused on the employment of older Americans. In addition to expanding the number of SCSEP participants--made possible by Recovery act funding, the agency has initiated a multi-site demonstration project designed to create new approaches to helping workers aged 55 and older in preparing for and obtain good jobs in high-growth, high-demand industries. The Department also continues to sponsor National Employ Older Workers Week and is working to address reauthorization of the Older Americans Act. Nevertheless, while GAO appreciates the Department's various efforts in this area, we do not feel that the Department's actions to date constitute a truly comprehensive and highly visible public awareness campaign, as recommended.

    Recommendation: Enhanced public awareness of demographic trends, their likely consequences, and possible solutions that could help promote both economic growth and retirement security for individuals, could help mitigate the potentially serious implications of the aging of the U.S. labor force, avoid possible knowledge and skill gaps in the future, and help ensure the financial security of older Americans. The Department of Labor has taken sound first steps in this area, including convening an intra-agency task force on older workers and working with business leaders interested in issues concerning the aging workforce. However, these challenges warrant a higher priority and a high-visibility campaign involving a wider group of employers as well as employees. Specifically, the Secretary of Labor should design a comprehensive and highly visible public awareness campaign as a way to help employers and employees plan better for the future and by so doing, bridge the gap between employer and employee needs. In designing the campaign, the Department of Labor should involve other agencies that have either regulatory jurisdiction or a clear policy interest, such as the Social Security Administration and the Health and Human Services Department's Administration on Aging. The campaign should target employer organizations and groups that interact with employees and ultimately, would serve to encourage employers to find ways to retain and recruit older workers, and assist employees in creating and finding opportunities for continued work.

    Agency Affected: Department of Labor


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