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Baby's About to Retire: The "youth generation" is going gray, creating a fresh set of complications

They work everywhere. They run companies, teach algebra, oversee manufacturing plants and take orders at the local fast-food drive-thru. They're the baby boom generation, that large population bubble of nearly 80 million U.S. citizens born during an unusually fertile period from 1946 through 1964.

Since the first boomers began collecting paychecks more than 40 years ago, their issues and ideas have dominated the workplace. It was the country's first boomer president, Bill Clinton, who signed the Family Leave and Medical Act into law, and it was boomer Bill Gates who changed the way we use technology to get our work done.

The numbers make it clear why they've had such a big impact. In Illinois alone, there are some 2.9 million boomers, equal to more than one-quarter of the state's working-age population, according to the Illinois departments of Aging and Labor. 

Now, as the first wave of the generation often associated with youth gears up for 60th birthday celebrations next year, the graying boomers are likely to redefine what it means to be an older worker, and, perhaps, the needs of the entire workforce. There is disagreement, for instance, as to whether there will be a labor shortage because there are fewer people in generations X and Y coming up behind the boomers. Immigration and higher productivity levels make predictions difficult. 

But there is no question that some employers already are beginning to see a not-so-distant future in which a new kind of retirement will emerge, along with a need for new menu-like benefit packages and assistance in intergenerational communication.

Those companies that don't start proactively working to keep older workers are going to be blindsided when their older employees are freed from family responsibilities and start to leave, says Marilyn Moats Kennedy, founder and managing partner of Career Strategies, a Wilmette-based consulting firm that counsels companies on such issues as dealing with age diversity in the workforce.

"There's nothing more dangerous than a couple whose children are finally off the family dole," says Kennedy, who says it's important for companies to approach workers in their 50s to discuss such alternative working options as flexible hours or seasonal work before they walk out the door for good. "The new rallying cry is going to be, 'How can I extract the most money from the fewest hours?'"

Of course, some sociologists and economists point out that the boomer generation is much more diverse in terms of age and income levels than many commonly think. That very heterogeneity makes broad generalizations impossible, they say.

For example — despite their tie-dyed images — not all boomers came of age with the Vietnam War. Less than half of the generation, or about 32.8 million of them, were born between 1946 and 1954 and experienced the turbulent 1960s as adults or older children, according to the Metlife Mature Market Institute Analysis. Some 44.8 million so-called late boomers arrived between 1955 and 1964. This group's early political memories are of gas shortages and President Jimmy Carter wearing a sweater on national television to encourage the nation to dial down the thermostat.

The very fact that the generation is 18 years long may reduce the severity of its impact on the workforce, says Darren Lubotsky, an assistant professor at the University of Illinois' Institute of Labor and Industrial Relations.

"Baby boomers have this mystique in our minds as being a big block of people, but it's actually going to take a very long time to lose that many people out of the workforce," Lubotsky says. In addition, he says, immigration and improved technologies may offset the number of workers exiting the workforce.

Another element that would lessen the aging boomer's impact in any one industry or workplace is the varied nature of their economic circumstances. Here again, it's important to reexamine stereotypical notions of baby boomers. A study, The Lives and Times of the Baby Boomers, by two Duke University sociologists drove home the point that baby boomers are not all white suburbanites or wealthy professionals. While many at the top end of the spectrum are wealthy, the study found that boomers in midlife had the highest wage inequality of any recent generation and that the younger boomer set have the highest levels of poverty since the generation born before World War I.

As boomers age, the co-authors of the study believe, the poorer boomers will face higher risks of unemployment and worse health, even as policy changes are encouraging them to work longer.

"It suggests that there's no one-size-fits-all policy as we think about [the group] entering their later midlife," says Mary Elizabeth Hughes, an assistant professor of sociology at Duke and one of the study's co-authors. "There's a top and a bottom. Some are going to be very wealthy and some are not."

Indeed, while there's much talk about baby boomers taking charge of their work life and proactively redefining retirement, it's not altogether clear that those moves will all be voluntary. Sara Rix, a senior policy adviser with the AARP's Public Policy Institute, says some trends, such as companies scaling back on retiree health benefits and defined contribution pension plans battered by the stock market, likely will force some workers to continue in their jobs longer than they might otherwise have wanted to. On the positive side, Americans are remaining healthier longer and many want to work, she says.

So far, says Rix, there has not yet been a groundswell of employers working to retain aging workers, who tend to be more expensive. She's hopeful that aging boomers and the threat of a labor shortage will spur more companies to reach out to older workers. In addition, Rix says, the size of recent legal judgments against companies that were found to have discriminated against older workers also encourages age-friendly policies and may help deter such practices in the future. 

For its part, AARP also is honoring in an annual awards contest companies that adopt such age-friendly policies as flexible work time and part-time work with pro-rated benefits.

Considering that the labor-crunched health care industry is among the best-represented in AARP's annual list of good companies for employees 50 and over, Rix says she's hopeful market forces also will push companies to accommodate the needs of aging boomers.

"Employers aren't stupid," Rix says. "When they need workers, they're going to do what they can to retain them, and there will be a need to retain some of those older workers longer."  

One of the three Illinois companies that won a spot on AARP's honor role was Woodstock-based Centegra, a health care system. Berni Szczepanski, director of human resources at Centegra, acknowledged that a general shortage of workers and a high turnover rate had pushed Centegra to work on retention by focusing on improving peer-to-peer communication, offering flexible work hours and encouraging older workers through the implementation of a new program called Alumni Nursing. The company's retention rate has risen from 77 percent in the fiscal year ending in 2002 to 93 percent, she says.

Initiated about five years ago, the alumni program allows nurses to scale back hours to part time by narrowing their duties to the less physically demanding responsibilities of admitting and discharging patients. Their work also has the added benefit of freeing full-time nurses from administrative duties, Szczepanski says.

The program has been an ideal fit for 61-year-old Bonnie Bayser, who previously oversaw a staff of 50 as clinical director of primary care at Loyola University Medical Center in Maywood. These days, Bayser works 10 to 12 hours a week in two days, a refreshing change from her former 70-hour work weeks.

"The pay is something like less than half, but that's not the point," says Bayser, who notes that she enjoys a low-stress job that enables her to be a part of the hospital world that has always been her life. "I was a candy striper when I was 13, and I couldn't picture myself not doing something in health care." Many nurses in their 50s have expressed interest in the program to her, she says.

In addition to phased retirement, some companies are offering benefits that appeal to older workers who are still full-time workers but who are preparing for their later years. For example, Schaumburg-based Zurich in North America, an insurance and financial services company, offers long-term care insurance that can provide coverage toward the cost of services such as home care, adult day care, assisted living facilities or nursing homes. Employees pay the full cost of the insurance but enjoy the benefit of it being at a lower group rate, says Sarah Staggs, director of benefits at Zurich. At the same time, the company has remained committed to its fully funded company pension plan and offers low-cost or free health screenings and long-term care insurance.  

"The nature of our business is that we require higher skilled workers such as underwriters and claims adjusters," Staggs says, noting that employees aged 42 to 59 comprise just over 50 percent of the company's workforce. "These aren't just jobs you fill with people just walking out of school."  

But, like a family with many children, employers don't have the luxury of focusing exclusively on the boomer generation. The struggle to hang on to their mature workforce comes even as companies run by baby boomers are trying to understand and appeal to younger workers with different priorities.

In contrast to the boomers, the younger generations have grown up in an economy marked by layoffs and mergers and are typically more loyal to their families than employers, says Brian Sorge, vice president of client solutions at Lambert & Associates in East Dundee. Sorge, a consultant who says companies are increasingly asking for assistance on handling age diversity issues, says employers are struggling with younger folks who want to move up the ladder faster than in the past and are not as sold on the idea of paying dues. This mind-set is sometimes aggravated because many businesses are becoming age-weighted at the top, he says. Sorge also does role-playing workshops to help older managers understand the frustrations of their junior colleagues.

One tool for bridging generational differences is the concept of offering a menu of benefits so that each generation can choose those that are important to them, Sorge says. That may mean someone in their 30s might choose a three-month unpaid sabbatical after three years of work, while a boomer would opt for health-oriented programs or financial planning assistance.

But benefit menus will only go so far. Companies are just beginning to recognize and grapple with the generational struggles that are almost sure to follow in the wake the aging boomers. Michelle Jackson, director of the Illinois State Council for the Society of Human Resource Management, says employers are getting caught in the middle of the increasingly varied expectations that come with an age-diverse workforce. "Employers are getting hit by a double whammy," says Jackson.

 As the generation's name implies, baby boomers have always had a big impact. 


This feature, funded by a donor who asked to remain anonymous, was published

in memory of Michael H. Hudson, 
who was vice president of public affairs at Illinois Tool Works and chairman of the Illinois Issues board at the time of his death in 1992. Fellow board members established an annual article to examine an economic issue and its relationship to public policy.


Maura Webber Sadovi is a Chicago-based business writer and frequent contributor to Illinois Issues.

Illinois Issues, April 2005

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