When my husband retired a few months ago he said he was disheartened by the way his company treated him and other older employees. He stated it seemed as if the company was trying to get rid of him so they could hire younger, cheaper employees. But he stated that they didn’t know anything, and the company wasn’t willing to train them. He spent most of his last 5 years training new employees (unofficially, of course). By shoving out the older employees, the company was losing valuable institutional memory and knowledge. But were these older workers really that expensive to the company?
Does it seem to you sometimes that our culture doesn’t value age and experience? Does it seem that your employer is more interested in the younger workers than in you?
A current study commissioned by the American Association for Retired Persons (AARP) interviewed 10 major U.S. employers, who stated that “the experience, maturity and positive attitudes of their 50+ workers provide enormous value to their businesses.” Older workers have “deep institutional knowledge,” have more social and interpersonal skills, and more job skills.
But many employers figure older employees are too expensive. The study looked at the four components of compensation: cash compensation, health care benefits, retirement benefits and paid time off. It found that:
1. There is no difference in cash compensation between workers doing the same job. I know personally that’s true. My two sons, with only 5 years’ experience each, are making as much as my husband when he retired (all three were in professional jobs). Sure, when they start out new workers may make less, but they swiftly begin to demand more and they usually get it if they’ve value. So the older worker is not necessarily making more in pay.
2. In retirement benefits, it is true that employers that have defined benefit (traditional pension) plans pay more in retirement costs for older workers who have worked longer. But most companies are switching away from these plans because of their cost, and moving toward defined contribution (401k) types of plans, which are based on pay. And pay, as we saw above, is about the same for older and younger workers.
3. The study showed that workers aged 50-65 used on average 1.4 to 2.2 times as much health care as younger workers, because of the higher incidence of long-term medical conditions (like diabetes, heart conditions, etc.). But older workers are more aware of the necessity to actively participate in their health care. Younger workers, who think they’re invincible, continue to smoke, eat, and drink (big generalization here, I know).
4. Because most paid time off (PTO).is based on longevity, PTO costs to employers for older workers are nearly double those for younger workers. The cost, of course, is in lost productivity and increased cost of replacements.
OK, in two of these areas (PTO and health care) older workers cost employers more. But in retirement benefits and cash compensation, they usually don’t.
I believe the increased cost of older workers is more than offset by their value. Next time your employer says “older workers cost more” remind him/her and youself, “You get what you pay for.”
Tags: AARP, baby boomer employees, older workers
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