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Introduction
Today men on average retire at 63 and women at 62, So it stands to reason that workers would choose
and they can expect to spend 20 years in retirement. to extend their careers.1 But will they find employ-
But if Americans continue to retire as early as they do ment? Some evidence suggests that employers have
today, many will not have adequate income once they not been especially fond of older workers. For ex-
stop working. Social Security will provide less relative ample, older workers who lose a job have had a much
to pre-retirement earnings as the normal retirement harder time finding another.2 And many employers
age rises from 65 to 67 and those lucky enough to actually use sweetened early retirement incentives to
have a 401(k) plan are likely to find their balances get older workers to leave. On the other hand, today’s
inadequate. older workers are far better educated than older work-
One solution to the retirement security challenge ers just a decade ago; they are more physically fit; and
is for people to work longer. Working longer directly the shift from goods-producing to services-produc-
increases a person’s current income; it avoids the ac- ing jobs has reduced the physical demands of work,
tuarial reduction in Social Security benefits; it allows which should enhance the employment prospects of
people to contribute more to their 401(k) plans; it older workers.
allows their assets more time to accumulate invest- To get a better understanding of the employment
ment earnings; and it shortens the period over which prospects of older workers, the Center for Retirement
people have to support themselves with their retire- Research at Boston College (CRR) conducted a survey
ment assets. of 400 private sector employers.3 These employers
were asked to evaluate the relative productivity and
* Alicia H. Munnell is the Director of the Center for Retirement cost of white-collar and rank-and-file workers age 55
Research at Boston College (CRR) and the Peter F. Drucker and older and whether, on balance, older employees
Professor of Management Sciences at Boston College’s Carroll or job candidates were more or less attractive than
School of Management. Steven Sass is Associate Director for their younger counterparts.
Research at the CRR. Mauricio Soto is a Senior Research Asso-
ciate at the CRR. The authors wish to thank Marric Buessing,
John Prinzivalli, Melissa Roberts, and Geoffrey Sanzenbacher
for excellent research assistance, Christine Rhoder for flawless
communication with Matthew Greenwald & Associates, who LEARN MORE
conducted the survey with skill and efficiency, and Bob Triest,
for sage economic and statistical advice. The Center gratefully Search for other publications on this topic at:
acknowledges support from the Prudential Foundation for this www.bc.edu/crr/
project.
2 Center for Retirement Research
Table 1. Percent of Employers Characterizing Older Workers as “More”, “Equal”, or “Less Productive”
by Characteristic
Percent of
Respondent Defined benefit
Workforce 55 Industry Number of employees
older than 55 coverage
Assessment and over
All
100-
<15% 15%+ No Yes Goods Services <100 1000 1000+ No Yes
White-collar
More productive 56 63 52 67 54 56 61 58 46 59 46 56
Equal 35 33 40 33 40 38 29 38 50 36 46 39
Less productive 9 4 8 0 7 6 10 5 4 5 8 6
Rank-and-file
More productive 40 47 38 50 41 41 35 46 36 43 33 41
Equal 39 37 40 42 33 43 38 38 49 39 48 41
Less productive 21 17 22 9 26 16 27 16 15 19 18 19
Percent of employers 52 48 74 26 23 77 25 50 25 77 23 100
Source: Center for Retirement Research Survey of Employer Attitudes towards Older Workers (2006).
Issue in Brief 3
The first two segments of Table 1 suggest that per- and-file workers as less productive. Employers with
ceptions about the productivity of older workers vary defined benefit pension plans also tended to place a
with familiarity. That is, employers with a relatively relatively low value on the productivity of older work-
old workforce (more than 15 percent age 55 or over) ers. This is not surprising as these plans are often
had more positive views of the relative productivity of used to induce older workers to retire.
older workers. Respondents age 55 or over were also The survey asked employers about the impact of
more likely to have a positive view of the productiv- various characteristics that could affect the productiv-
ity of workers their age. Conversely, respondents in ity of older workers. The two characteristics most
“young” organizations, or who themselves were less frequently cited as advantageous, for both white-col-
than 55, were more likely to view older workers in a lar and rank-and-file workers, were 1) “knowledge of
negative light. These patterns hold for both white-col- procedures and other aspects of the job,” precisely the
lar and rank-and-file workers. strength of older employees cited in the psychological
Evaluations also varied with employer size and literature; and 2) “the ability to interact with custom-
benefit structure. Mid-sized firms (those with 100- ers,” consistent with many anecdotal conversations
1000 employees) tended to give older rank-and-file about the capabilities of older workers (see Figure
employees the highest ratings. Small firms and very 2).7 The least advantageous was “expectations for
large firms were less enthusiastic. In fact, more than how much longer workers will be working,” which as
a quarter of small firms characterized older rank- discussed later may have important implications for
the actual hiring decision.
Figure 2. Percent of Employers Citing Positive or Negative Impact of Various Factors on Older
Worker Productivity
Knowledge of
procedures and
other job aspects
Ability to interact
with customers
Ability to learn
new tasks quickly
Physical health
and stamina
White-collar
Expectations of
how much longer Rank-and-file
workers will
work -40 -20 0 20 40 60 80 100
Source: Center for Retirement Research Survey of Employer Attitudes towards Older Workers (2006).
4 Center for Retirement Research
Table 2. Percent of Employers Characterizing Older Workers as “More”, “Equal”, or “Less Costly” by
Characteristic
Percent of
Respondent Defined benefit
workforce 55 Industry Number of employees
older than 55 coverage
Assessment and over
All
100-
<15% 15%+ No Yes Goods Services <100 1000 1000+ No Yes
White-collar
More costly 37 45 40 38 44 38 36 38 46 37 47 39
Equal 46 33 43 36 38 42 44 41 41 43 37 42
Less costly 17 22 17 26 18 20 20 22 13 20 16 19
Rank-and-file
More costly 40 46 44 39 48 41 39 40 51 40 51 43
Equal 41 34 41 35 36 40 41 39 40 41 33 40
Less costly 18 20 15 26 15 19 20 22 9 19 16 18
Percent of employers 52 48 74 26 23 77 25 50 25 77 23 100
Source: Center for Retirement Research Survey of Employer Attitudes towards Older Workers (2006).
Issue in Brief 5
Implications
That employers value the productivity of older
The key result of this survey of 400 employers is workers is especially encouraging. This suggests that
that older workers have reasonably good prospects older workers could potentially accept lower compen-
for extending their working careers. Although older sation, if need be, to secure employment. In contrast,
workers are seen as costing more, they are also seen declining productivity would present a far more seri-
as more productive. The overwhelming majority of ous barrier to continued employment — requiring
employers said older workers were “as attractive” or more attention from management or a change in the
“more attractive” than a younger employee or pros- organization’s production methods, both of which are
pect. costly.
Table 3. Percent of Employers Characterizing Older Workers as “More”, “Equal”, or “Less Attractive”
by Characteristic
Percent of
Respondent Defined benefit
workforce 55 Industry Number of employees
older than 55 coverage
Assessment and over
All
100-
<15% 15%+ No Yes Goods Services <100 1000 1000+ No Yes
White-collar
More attractive 28 21 20 29 24 22 28 23 17 21 28 23
Equal 65 72 71 68 65 72 61 72 76 72 65 70
Less attractive 7 7 8 4 11 6 11 6 7 7 8 7
Rank-and-file
More attractive 11 17 13 21 12 16 16 15 14 16 11 15
Equal 68 66 68 67 63 70 60 71 71 67 71 68
Less attractive 21 17 19 12 25 15 24 15 15 17 18 17
Percent of employers 52 48 74 26 23 77 25 50 25 77 23 100
Source: Center for Retirement Research Survey of Employer Attitudes towards Older Workers (2006).
6 Center for Retirement Research
Also encouraging is that older decision-makers ter consideration, of course, is highly dependent on
and employers with an older workforce were more the socially determined “normal” age of retirement.
likely to find older workers more productive and gen- So the “chicken-and-egg” situation is this: it will be
erally as attractive or more attractive than a younger easier for individual workers to extend their careers if
employee or prospect. An aging workforce should all workers extend their careers.
produce more older decision-makers and more or-
ganizations with an older workforce, and therefore a Conclusion
more receptive environment for older workers.
The survey results clearly show that older manag- On balance, the survey paints a reasonably optimistic
ers and professionals have distinctly better employ- picture. The overwhelming majority of employ-
ment prospects than rank-and-file workers. About ers said older workers were at least as attractive as
one out of four workers currently hold white-collar younger employees. It will not always be easy for
jobs, and the percentage is greater for workers over older workers to extend their careers. But the survey
the age of 40.9 The rising educational attainment suggests that the potential exists. Pushing back the
of the U.S. labor force and the trend towards more average retirement age, from 63 to 65 or even 67, is
white-collar employment suggest that the share of thus an important and “reasonable” option for ad-
older workers in white collar occupations should if dressing the nation’s retirement income challenge.
anything be higher going forward.
But the survey results do raise important cautions.
Small employers — those with 100 or fewer employ-
ees — were generally less fond of older workers. And
large employers — those with 1,000 or more employ-
ees, were not especially attracted to older white-collar
workers. Small employers account for 38 percent of
total employment and large employers 37 percent.
Mid-sized employers, where the employment pros-
pects of older workers seem best, account for just 25
percent of total employment.10
A second caution is that the survey results clearly
show older rank-and-file workers as having weaker
employment prospects than older white- collar
workers. One in six employers said they were less
attractive than someone younger. Rank-and-file
workers also face a greater retirement income chal-
lenge than higher paid white-collar workers. They
generally depend more on Social Security for retire-
ment income and have few other assets — pensions,
401(k)s, or home equity — to offset the coming cuts
in benefits. To achieve retirement income security,
continued employment is thus especially important
for rank-and-file workers.
A final caution is the connection between em-
ployer attitudes, which the CRR survey measures,
and actual personnel decisions. Most other em-
ployer surveys, such as those cited in Appendix B,
also found positive evaluations of the productivity of
older workers. But do such evaluations translate into
employment opportunities? Several surveys report
that recruitment, training, and promotion decisions
are based on a narrower set of considerations, and
especially forward-looking considerations such as
“trainability” and potential length of service. The lat-
Issue in Brief 7
Endnotes
1 Munnell et al. (2006 forthcoming) find that working 8 The employers were asked whether an “employee or
an additional two to four years is sufficient to offset prospect age 55 or older is generally more, the same,
anticipated declines in the Social Security replace- or less attractive compared with a younger person
ment rate of a median earner. Rather than simply capable of the same job.”
working longer to offset any anticipated retirement
income shortfall, “reasonable” workers might re- 9 U.S. Bureau of Labor Statistics (2005b); and U.S.
spond in a more balanced way — by saving more (and Government Accountability Office (2001).
consuming less) when young; consuming less when
old; and working longer. 10 U.S. Bureau of Labor Statistics (2005a).
2 Hutchens (1993) and Chan and Stevens (1999). 11 In these regressions, the separate responses for
white-collar and rank-and-file workers are pooled into
3 The survey was conducted by telephone by Mat- a single data set, and the rank-and-file responses are
thew Greenwald & Associates. For a comparison of identified by a dummy. The regressions also control
selected characteristics of the survey sample with the for “non-profit” and percent of white-collar workers in
characteristics of the full universe of employers, see the employer’s workforce (not reported). The report-
Appendix A. For a summary of the findings of other ed standard errors and significance are corrected for
employer surveys, see Appendix B. cluster correlation by employer, which allows for error
correlation from employer-specific shocks. Separate
4 Warr (1994) and Skirbekk (2003). regressions for white-collar and rank-and-file workers
generate qualitatively comparable results.
5 The question asked was “Overall, would you say that
employees age 55 or older in [professional / support 12 See Wooldridge (2001) for more details on the
and production] positions are more or less productive ordered probit regression.
than younger workers doing similar jobs?”
References
Chan, Sewin and Ann Huff Stevens. 1999. “Employ
ment and Retirement Following a Late-Career Job
Loss.” American Economic Review 89: 211-216.
Appendix A
Representativeness of the CRR
Survey Sample
The Center for Retirement Research 2006 “Survey
of Employer Attitudes towards Older Workers” sampled
private for-profit and non-profit employers. The fol-
lowing tables compare the sample to the composition
of the U.S. labor market.
Appendix B
Other Employer Surveys on the
Evaluation of Older Workers
U.S. Surveys Foreign Surveys
AARP. 2000. American Business and Older Employees: Metcalf, Hilary with Pamela Meadows. 2006. Survey
A Summary of Findings. Washington, DC. of Employers’ Policies, Practices and Preferences Relat-
ing to Age. Research Report No 325 DTI Employment
A survey of 400 Midwestern employers, controlled Relations Research Series No 49. London, England:
for the size of the employer to produce a sample simi- U.K. Department for Work and Pensions.
lar to the CRR sample. Employers were asked to rank
qualities they valued in employees, and then evaluate A survey of 2,087 establishments in Britain, con-
older workers relative to younger workers (with older ducted in 2004 and 2005, found that half considered
workers defined as workers age 50 and over) in these potential length of service in hiring decisions and had
qualities. Older workers ranked high in most of the a maximum recruitment age.
qualities these employers valued the most, such as
work ethic, experience, and the ability to get along
with co-workers. These employers, however, also Henkens, Kene. 2005. “Stereotyping Older Workers
characterized older workers as resistant to change, to and Retirement: The Managers’ Point of View” Cana-
learning new technologies, and to doing new tasks. dian Journal of Aging 24 (4): 353 – 366.
Rosen, Benson and Thomas H. Jerdee. 1977. “Too Old McGregor, Judy and Lance Gray. 2002. “Stereotypes
or Not Too Old.” Harvard Business Review (November- and Older Workers: The New Zealand Experience.”
December): 97-106. Social Policy Journal of New Zealand 18: 163–177.
A survey of Harvard Business Review readers, The researchers analyzed questionnaires submit-
which also included responses to questions based on ted in 2000 by 1,000 employers and 2,000 union
case studies. The respondents characterized older members age 55 and over. The researchers found
employers as relatively rigid and resistant to change. significant agreement between the two groups in the
In the case studies, the respondents tended to direct characterization of older workers: that older work-
promotions and training opportunities to younger ers were more reliable, better with people, and more
workers. As in the CRR survey, older respondents productive than younger workers. They also agreed
were more sympathetic to the needs of older workers, that older workers were less flexible, harder to train,
and the researchers advised “for an older employee, and not well versed in the latest technology. Work-
the best prospects for fair and perhaps favored treat- ers, however, thought themselves more trainable and
ment appear to be in working for an older boss.” more willing to be trained than did the employers.
Issue in Brief 11
Appendix C
Regression Analysis
The measures of perceived productivity, cost, and tiveness indicate that employers see older workers in
attractiveness of older workers relative to younger general as “equal” in terms of both cost and attractive-
workers are qualitative, discrete variables with three ness.
categories (less, equal, greater). The relationship The coefficients indicate the direction and mag-
between various employer characteristics and these nitude of a particular characteristic on an employer
evaluations can be estimated using an ordered probit evaluation. Thus in the productivity regression, the
regression.11 The results of such regressions are pre- negative (and significant) coefficient on the variable
sented in Table A4. The cutpoints and the coefficient identifying “rank-and-file” workers is large enough
signs, and their statistical significance, are generally (-0.495) to pull the evaluation of such workers below
consistent with the tabulations presented in the body the “from equal to more” cutpoint (-0.282). This
of the Issue in Brief. indicates that employers see older rank-and-file
As the regression normalizes the data around workers, in general, as equally productive rather than
zero, the placement of the cutpoints indicates wheth- more productive than younger workers. The positive
er employers evaluate older workers in general as (and significant) coefficient on the “respondent is 55
“greater,” “less,” or “equal” to younger workers. In or older” variable means that an older respondent is
the productivity regression, for example, the cutpoint likely to see older workers as more productive than
separating “equal” and “greater” is less than zero.12 would otherwise be the case. In the cost regression,
This indicates that employers see older workers in the negative sign on this variable means that an older
general as having “greater” productivity. The location respondent is more likely to see older workers as less
of the cutpoints in the regressions for cost and attrac- costly than would otherwise be the case.
Dependent variables
Coefficient Productivity Cost Attractiveness
***
From less to equal cutpoint -1.470 -0.662 *** -1.361 ***
From equal to more cutpoint -0.287 + 0.427 *** 0.698 ***
www.bc.edu/crr
© 2006, by Trustees of Boston College, Center for The research reported herein was supported by the Pruden-
Retirement Research. All rights reserved. Short sections of tial Foundation. The findings and conclusions expressed
text, not to exceed two paragraphs, may be quoted without are solely those of the authors and should not be construed
explicit permission provided that the authors are identified as representing the opinions or policy of the Prudential
and full credit, including copyright notice, is given to Foundation or the Center for Retirement Research at Boston
Trustees of Boston College, Center for Retirement Research. College.