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Bye-Bye Boomers?; Companies May Face Exodus As Workers Hit Retiring Age (Biogenesis)

Bye-Bye Boomers?; Companies May Face Exodus As Workers Hit Retiring Age; Some Bosses Are Afraid to Ask

Kelly Greene. Wall Street Journal. (Eastern edition). New York, N.Y.: Sep 20, 2005. pg. B.1
Abstract (Document Summary)
"You're no longer targeting who you're losing, and you're losing your most experienced people."

International Business Machines Corp. similarly taps some retirees to work on special projects so they can share their expertise with younger workers. And the company's 330,000 current employees are being encouraged to post detailed descriptions of their job experience in an online directory called the "Blue Pages," so that employees far from retirement can find "knowledge before it walks out the door," says Eric Lesser, an associate partner in IBM's business-consulting services unit in Cambridge, Mass.

"There's no stress," he says. Being on his feet all day means "you have to wear thick-soled shoes, but I've never known anything else."

Full Text (1182 words)
Copyright (c) 2005, Dow Jones & Company Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
WHEN EXECUTIVES AT Platte River Power Authority, an electric company in Fort Collins, Colo., surveyed its employees 18 months ago, they were stunned by a particular finding: 40% of the company's 200 workers said they intended to retire over the next five years.

With little chance of hiring from other stretched power plants -- and apprenticeships for technicians typically taking at least four years -- executives faced a stark reality. "We've got to be moving right now," says Dave Green, human-resource manager. He is scrambling to hire trainees and recently created a new job -- plant assistant -- to fill apprenticeships as soon as they open up.

Across a wide swath of industries, companies are starting to address the impending exodus of baby boomers -- the 76 million Americans born between 1946 and 1964. The oldest boomers will begin turning 60 years old next year. Just two years later, they can start collecting Social Security benefits. Many company retirement benefits kick in around the same time: most workers in traditional, defined-benefit pension plans become fully vested between the ages of 55 and 62. And those with 401(k)s or other defined-contribution plans can tap them with no restrictions starting at age 59 1/2.

Many baby boomers, of course, may decide to stay on the job longer than previous generations -- particularly to shore up savings. Still, the number of potential retirees is stark: more than 40% of the U.S. labor force will reach the traditional retirement age by the end of this decade, according to a new study by the Conference Board, a New York research organization. In the next seven years, the number of U.S. workers between ages 55 and 64 will grow 51% to 25 million, meaning the fastest-growing portion of the work force is the one at most risk of retiring soon. At the same time, the number of workers between ages 35 and 44 is expected to shrink by 7%.

Some sectors could be particularly hard-hit. About half the country's 400,000 electric-utility workers, such as those at Platte River, will be eligible to retire in the next five years, says Michael Ashworth, a researcher at Carnegie Mellon University in Pittsburgh. Half the U.S. government's civilian work force will also be eligible to retire in the same time period. And 40% of the manufacturing work force is expected to retire in the next 10 years, the National Association of Manufacturers warns. Overall, that could leave a shortage of five million skilled workers between 2010 and 2012.

To be sure, some fields are poised to lose large portions of their work forces because they have attracted fewer young people in recent years. And to corporate cost cutters, the thinning ranks might not seem like such a bad thing, especially in industries such as manufacturing where jobs continue to move overseas.

"A lot of companies do welcome the chance to have older workers leave, especially those with seniority-based pay systems, because they can be replaced with cheaper workers," says Peter Cappelli, a management professor at the University of Pennsylvania's Wharton School.

Still, retirements don't necessarily substitute well for layoffs, says Mr. Ashworth.

"You're no longer targeting who you're losing, and you're losing your most experienced people."

Some experts think the impact won't be as stark as the numbers suggest. Fully 70% to 80% of baby boomers expect to continue working in later life, several studies show. And amendments to the federal Age Discrimination in Employment Act outlawed age-based mandatory retirement in most industries in the 1970s. The upshot: most boomers can work as long as they like, barring layoffs. "Right now I have no plans to stop," says Leola Williams, a 73-year-old housekeeping manager at Baptist Health South Florida Inc. in Miami.

Still, many companies simply don't know how many of their workers plan to retire, and when -- in part because they fear that asking will open the door to age-discrimination claims, says Jeri Sedlar, co- author of the Conference Board's report. There are no federal rules against asking employees retirement-related questions. But the formal collection of such information could be used as fodder in a lawsuit if a company later laid off, fired, demoted, or failed to promote the workers who had been surveyed.

Some companies have sidestepped these concerns by querying workers anonymously or asking employees of all ages about their plans five years from now, says Linda Barrington, research director at the Conference Board.

In fact, when the Platte River utility decided to poll its employees about their exit strategies, "we reassured them ahead of time that we were not planning their retirement parties," says Mr. Green, the human-resource manager.

Some companies that are concerned about a wave of retirements are getting creative, including offering programs that let employees technically retire, yet stay connected to their employers.

For instance, Southern Co., an Atlanta-based electric utility with 26,000 employees, found that many workers already had made plans to retire in the next five or 10 years, but were also interested in coming back to work on a temporary basis. As a result, the company created a "retiree reservists pool" for its Georgia unit, a database of several hundred retired workers who can be called on during hurricanes and other emergencies to train new hires, and to staff short-term projects. Southern's human-resources department is trying to expand the concept to other business units.

Lincoln National Corp., a financial-services firm in Philadelphia with 5,500 workers, put together a task force last year to design flexible work arrangements for older employees who want to work part time or take longer vacations. Already, the firm is tapping older managers as mentors for new trainees.

Home Depot Inc. last year launched a partnership with AARP to recruit older workers, many of them laid off from other companies. "We needed more experience, more reliability, and people who were great with customers," says Dennis Donovan, executive vice president of human resources at the Atlanta home-improvement retailer.

Home Depot, with more than 325,000 workers, offers health coverage even to part-timers, which was enough to lure Dick Kiefer, 65, who retired from a thrift shop at age 62, but worked the bulk of his career as an appliance salesman for the former Montgomery Ward & Co. in Des Moines, Iowa. Now he qualifies for Medicare but is keeping his Home Depot job -- and recently increased his hours to 40 a week from 25.

"There's no stress," he says. Being on his feet all day means "you have to wear thick-soled shoes, but I've never known anything else."

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