?Baby Boomers are getting older. Born between 1946 and 1964, the youngest members of this generation are turning 59 this year. The generational shift is being felt throughout the economy—and the workforce.
According to Moody’s, an estimated 70 percent of the drop in labor force participation since the end of 2019 was due to the retirement of aging workers. Baby Boomers are exiting the labor force at a higher rate than any other population; the labor force participation rate for Americans over age 55 has fallen 1.5 percentage points since before the pandemic.
In addition, research from Gad Levanon, chief economist at The Burning Glass Institute in New York City, shows that working-age population growth is slowing to a halt for the first time in U.S. history, a trend that will continue through the rest of the decade.
The Impact of the Labor Shortage
Economists agree that employers are going to face increasing talent shortages in the years ahead, especially if many of their workers are older.
“The most likely scenario for the coming year is a mild recession or slow growth,” Levanon said. “Job growth is likely to significantly slow down and may even turn negative later in 2023. At the same time, many older workers are retiring every day, [and] the working-age population is not growing.”
Michael Madowitz, director of macroeconomic policy at the Washington Center for Equitable Growth in Washington, D.C., spelled out the challenge even clearer: “There is no demographic wave coming to save employers.”
To be sure, HR won’t be powerless when addressing the talent shortage. “There’s much more to attracting talent than demographics,” Madowitz said, adding that there are many creative ways to attract and retain workers both old and young. Here are four tactics worth considering:
1) Cater to Older Workers’ Needs
If your goal is to convince older workers to stay in the workforce, then it’s critical to start tailoring jobs to fit their needs. At the top of that list are flexible scheduling and accommodations as these workers deal with changes in their personal lives.
“Companies that can innovate and meet older workers where they are, say with flexibility and leave to care for children, grandchildren or parents, can bring productive workers off the sidelines,” Madowitz said.
CallerSmart, a software development company in Knoxville, Tenn., offers older employees a range of support tools to help them succeed in the workplace, according to Kathryn Boudreau, the company’s operations and HR manager, who recommended that other companies do the same.
“Provide more incentives for older workers, like health support and more-inclusive work conditions, so they are inspired to avoid retiring sooner,” she said. “Let go of the target-based work model, and allow them to bring their more grounded energy to the workplace and benefit from it.”
By catering to older workers’ needs, employers can retain a group of well-educated employees who tend to be very productive because they already know the most efficient way to do their jobs.
“There are still jobs where being too old to work is a thing, but in a connected, service-dominated economy, employers that adopt the too-old-to-work paradigm are setting themselves up for failure,” Madowitz said. “For decades to come, the cohort of Americans reaching retirement age will be the best-educated retirees in history. It will be a problem for employers and the economy if old thinking from younger managers sidelines productive workers too soon.”
2) Ask Older Workers to Train the Next Generation
Once they reach age 65, most older workers will want to retire, even if they enjoy their jobs. But before that happens, employers should partner with older workers to develop training programs they can lead to make sure the next generation is well-equipped to continue in their positions.
“[We convince] experienced and unreplaceable talent to stay on longer and train their younger counterparts long enough [so they can] adapt well to the jobs they are replacing,” Boudreau said. “[Older workers] can mentor and train younger employees while also feeling recharged in the presence of a younger workforce, learning new skills and adapting to the changing world of technology and digitalization.”
3) Shift the Focus to Attracting Younger Talent
Lynx Software Technologies, a San Jose, Calif., software company serving the aerospace and defense sector, is dealing with industrywide labor shortages.
“The aerospace and defense industry is primarily composed of older workers, whether that be veterans or blue-collar workers,” said Amanda Blum, Lynx Software’s chief financial officer. “We are certainly starting to see a shift of that generation retiring and the next generation coming in.”
Since the 50-employee company is located in Silicon Valley, it has also experienced an uptick in applicants due to recent layoffs in the area’s tech sector. The company has made it a priority to attract younger workers by making positions more appealing to them.
“For us, we see that businesses have to shift to technology and processes that attract new talent,” Blum said. “For example, younger folks don’t leave—or even listen to—voicemails, so more-seasoned folks have to text. In the same way, what worked in tech for decades is changing.”
The company has discovered that while workers used to care more about stock options and other benefits, one of the younger generation’s top priorities is to work in a job where they can make an impact. Lynx Software strives to give them that opportunity.
“To attract new talent, while we can’t compete with the tech giants, we can provide an environment where all employees are able to make a difference in the company on a day-to-day basis,” Blum said. “When you are a small company, each employee’s involvement and contributions have a direct impact on the company’s success.”
4) Fill Positions from Within
The answer to addressing the labor shortage might be the most obvious: Search for talent currently working within the company, no matter the age of the worker.
“When the pool of outside workers is smaller and hiring is more competitive, employers can make large gains by looking inward,” Madowitz said, adding that the best approach is to invest in training and promoting current employees to fill positions in the short term and build a pipeline for the future.
“An anecdotal reason we saw so much labor market churn in the recovery [after the COVID-19 pandemic] was employees who had spent years working for an employer still found it harder to get promoted internally than at a competitor,” he said. “Creating better internal talent management has benefits for employers and the economy as a whole.”
Kylie Ora Lobell is a freelance writer based in Los Angeles.