The American business world is facing a gargantuan challenge—one that it still hasn’t fully reckoned with. The issue is not inflation or foreign competition, supply chain issues or margin pressure, or even the disruptive impact of AI. And for global companies, the problem is even bigger. To make matters worse, most corporate leaders are approaching this dilemma, if they’re giving it any attention at all, with a twentieth century mindset when finding solutions requires twenty-first century thinking.
What is this quandary? Simply put, we’re in the midst of a massive demographic shift that is going to completely upend the workforce.
The United States—along with other developed nations—has a rapidly aging population that is going to wreak havoc on the labor force. Today, there are more 55 million Americans aged 65 and over. That's nearly 17 percent of the U.S. population. Some 10,000 people a day are turning 65, and by 2040 it is projected there will be 80 million Americans over the traditional retirement age. This is creating a historic talent drain as huge numbers of Baby Boomers retire.
There is an obvious strategy to counter this trend: Encourage more of these older workers to extend their careers.
To an extent, that’s already happening. According to a Pew Research study, the older workforce in America has nearly quadrupled in size since the mid-1980’s and the U.S. Bureau of Labor Statistics predicts that older adults are projected to account for 57 percent of labor force growth over the next decade. Workers 75 and older are the fastest-growing age group in the workforce, according to Pew. On a global scale, people between the ages of 45 and 64 account for 40 percent of the working age population in OECD countries, up from 28 percent in 1990. And that is expected to grow, according to an OECD study.
With today’s lifespan approaching 80 in the U.S. and over 80 in many other developed nations, a new reality is setting in. People want to work longer, can work longer, and in many instances will need to work longer. The benefits to companies can be enormous, not to mention putting an ease on what will be crushing government costs for older populations in general. As birth rates continue to decline and people live longer, this is a trend that is here to stay. The recent report on China’s dramatic birth-rate decline accentuates the point.
But corporate leaders need to get a lot more proactive about attracting and retaining older workers if they’re going to avoid huge deficits in the number of qualified employees they need to keep their businesses growing.
“Companies don’t have an option,” says Michele Evans, who spent twenty-five years in executive HR, including roles at Microsoft and Meta and is the founder and CEO of NxtWaves, a membership group that works in promoting long-term career vibrancy. “The talent gap is real and planning for it over the next decade or so will give them a true competitive advantage.”
The biggest challenge for companies looking to embrace aging workers is getting past the way that the business world has traditionally treated them. There's an institutional and systemic ageism that has been ingrained in corporate policies and it typically begins when employees are in their mid-50's. The drum beats louder as they move into their 60's.
Promotions slow down or are non-existent, upskilling and training stops, and plans are put in place to ease out these high- priced professionals—who by the way have performed their way to higher salaries. The playbook is to find someone who is less expensive, more tech savvy, and “modern” in their thinking. The belief is that if they don’t move the older people out and promote younger people in their place, they will lose those younger ones—an unfortunate misconception.
Ask any employed 50-something person in the business world if they think about this issue and you’re sure to get a nod. For some industries, like advertising and technology, the anxiety starts for employees in their 40's. A study by ProPublica and the Urban Institute showed that more than half of older workers (in this case those who have at least turned fifty) are pushed out of longtime jobs before they choose to leave. A healthy 50-year-old may live to be 90. Getting re-employed is not only a challenge but is often a step backward into lower paying jobs.
Moving out older workers has been the wash-and-repeat in the corporate world for nearly a hundred years, starting with the establishment of social security. In all fairness, when Social Security was created by the U.S. government in the 1930’s, the life expectancy of the average American was only 62. While it created a financial pathway for many people who had put in a lifetime of work, it also created the concept of what we know today as retirement. Most people in the 1930’s didn’t get to enjoy the spoils of the program, as they didn’t live much past when the benefits kicked in. Today, more than 55 million Americans are on the Social Security ranks and the future of the system is challenged.
A 2023 study conducted by the OECD and Generation, a global employment nonprofit organization, underscored the built-in ageist attitudes in the business world. According to the study, employers perceive professionals who have passed the mid-career threshold of age 45 as lacking drive and openness to innovation, yet employers also admit that this same group consistently matches or exceeds the performance of younger colleagues. The researchers call it the “age performance paradox.” The study encourages the business world to rethink the current, outdated classification of mid-career years as being from 45 to 54, and extend the upper end of that range to age 60. This especially makes sense as more seasoned employees can help with business and marketplace changes.
The introduction of AI into the workplace does not disqualify older employees, argues Kevin Delaney, co-founder of Charter, a future-of-work media and research company. In fact, the opposite may be true. “In reality, older workers might be better equipped for working with AI, as the ability to delegate work and review what comes back are some of the most critical skills for applying AI tools effectively,” says Delaney. “Those skills tend to be more developed in workers with longer tenures and more management experience, suggesting that organizations can't afford to overlook older workers when implementing AI into their business.”
In a survey of 1,200 people over age 55, Civic Science, a Pittsburgh based consumer analytics platform found that people in white-collar occupations experienced almost twice the level of ageism as those in service, craftsman, or technical roles. Women reported even higher levels of ageism than their male colleagues.
Companies are quick to cite studies that as cognitive decline sets in, employees are not as productive. But the reality is that only 11.7 percent of older adults have some type of cognitive impairment. That’s not much higher than the 10.8 percent of adults ages 45 to 65. The American Academy of Neurology reports that mild cognitive impairment affects only 15 percent of people ages 75 to 79.
“The idea that cognitive decline is inevitable as we get older is not only ageist but ignores a growing body of evidence that some aspects of cognition actually improve as we age,” says Dr. Mark Lachs, a geriatrician and physician scientist at Weill Cornell Medicine in New York City. He cites data that some elements of cognitive functioning, like verbal memory, vocabulary, and certain kinds of reasoning abilities, can improve well into our 70’s.
There are many professions that have no age barriers, limitations, or mandatory retirement age. Think doctors, academics, actors, and entrepreneurs, as well as farmers, tradesmen, and laborers. Martin Scorsese just scored an Academy Award nomination at 81. Then there's politics, of course. Ten U.S. Senators are over 80. And President Biden is running reelection at age 81 in what looks like it will be a rematch with Donald Trump, who will turn 78 this year.
Why then does the business world punish its most seasoned and experienced employees by pushing them out of the workplace in their 60's when they are still performing? Old habits. Old structures. Old thinking.
“American business has operated around a set of structures and many times they are trapped in those structures. Age is one of them. Today’s problems were yesterday’s solutions,” says Renetta McCann former CEO, Worldwide of Starcom MediaVest. Now in her late 60’s, McCann has reinvented herself as first a chief talent officer and then a chief inclusion experience officer. Her work includes how companies might view older employees and what they can offer.
Encouragingly, there are some cracks developing in the age ceiling. Brian Cornell, the 63- year-old CEO of Target, upended the company’s age-65 retirement standard by agreeing to stay on for an additional three years. The same happened at 3M and Boeing. Many big law and accounting firms continue to have mandatory retirement ages, some as low as 60, but that too is changing as partners ask for “extensions.” In researching this story, I spoke to multiple people who confirmed this, but none would go on the record. One person told me that in his firm, which has had a mandatory retirement age of 62, just about everyone is now working beyond that threshold.
But how do companies create this for mid-level people who aren’t CEO’s or partners? In other words, how do they craft a solution for everyone?
The French multinational L'Oréal is a leader in this area. In 2022, it launched “L'Oréal for All Generations,” a new program for workers of all ages. With 15% of their employees over 50, they believe that companies should take an active role in transforming this into an opportunity. Some initiatives include intergenerational diversity, health and well-being intiatives, and, more importantly, developing employability by offering training and development to employees of all ages, not just the usual younger professionals.
“With dynamic careers lasting longer than ever, our ‘L'Oréal for All Generations’ initiative acknowledges that we are at a unique moment in history when four generations are working together,” says David Greenberg, CEO of L'Oréal USA and president of the company's North America zone. “In this new environment, where age inclusivity will be vital, we must not only recruit and develop talent at all stages of their careers with wellbeing benefits to match, but to create opportunities for people to exchange their valuable knowledge and experiences with enthusiasm. As someone who has been building a career for nearly 40 years, I personally welcome this evolution.”
In the U.K., a business called Work/Redefined, who are global age-inclusion experts, worked with AXA UK on how they could better support their older workers. According to Lyndsey Simpson, CEO and Founder of Work/Redefined, board level training was developed, outlining the key issues and challenges along with an action plan around age. AXA UK went on to become the group’s first age-inclusive accredited employer in the insurance industry and the program is now being rolled out globally.
In the post-pandemic world, companies are going into overdrive to enhance employee benefits to make their employees happy. They're especially worried that younger employees are no longer going to be loyal for the long run. Yet when it comes to their older employees, who tend to be more loyal and in most cases have already raised their children, there is a lack of commitment to benefits that are relevant to their life stage. Menopause is a great example, as is caregiving. Some solutions are emerging like Wellthy, a company benefit that provides personalized support for employees and their care needs.
Employers haven’t helped themselves by over-hiring, then slashing jobs, freezing salaries, reducing salaries, and pushing long-tenured people out as the way to reduce expenses.
As LD Bennett, Ph.D., who owns her own company and works with major corporations in finding talent, training, and coaching says, “Many younger professionals are becoming entrepreneurs. They ask themselves do I want to work for a company that will push me out in my 50’s, as they watch what is happening to their parents.”
Bennet adds, “Many companies don’t know how to think about their older employees. People 60 to 75 are just not the same as past generations. They are active and healthy. There are many examples of cognitive superstars making big contributions.”
In her practice, she changes the conversation from age to understanding what a company wants to accomplish, and then seeing if a candidate has the right skills and experience and will fit into the culture.
How can companies start to rethink how they think about their older employees? The OECD/Generations report suggests recruiting mid-career and older workers while putting in place training and fair performance measurements that can extend work lives and bring more value to a company’s growth.
UK based airline EasyJet has launched a recruiting campaign encouraging adults over the age of 45 to join as cabin crew members. The campaign, called “Empty Nesters Take Flight,” is targeted to anyone looking for a new career challenge in the second half of life.
Lindsey Pollak, the best-selling author of The Remix: How to Lead and Succeed in the Multigenerational Workplace, recommends creating employee resource groups that draw employees from all age groups. “It helps to break down barriers. Employers think older employees make younger employees uncomfortable. It just isn’t the case,” she says, adding that “input from people of all generations in a work project can actually create better outcomes for businesses. Younger professionals bring new perspectives and older employees bring experience and wisdom.”
Employers have built-in biases with front-line managers who are quick to ignore job inquiries from people over 50. In addition, age-biased algorithms have been created to weed out older prospects. While HR departments have instituted programs for unconscious bias training, they have done little to equip their own people with age related biases.
Offering benefits that are targeted to employees over 45 is a way for companies to not only show that they are committed to them, but that they value their work. Examples include a specific effort to alert these more experience workers that they can take advantage of tuition programs for upskilling and that the company will recognize those efforts. Personal development content produced for employees at midlife is another way to show that a company believes in them. Here's another move that could have a huge impact: Get rid of all mandatory retirement ages. It’s an old model that isn’t relevant any longer. Retaining employees longer will help to soften the talent drain.
Inevitably, people do step out of the workforce, and Evans suggests that companies can do more in that journey. If someone chooses to stay employed until they are in their 70’s, they may live another 20 or more years. How can companies help to prepare them for the next phase of their life? It may be to work for the company in a different capacity or to give them skills for their next reinvention.
Enlightened companies like L'Oréal have already taken the steps to prepare for the big talent drain. The reality is already here. Business leaders who don’t pay attention to this historic challenge will struggle to preserve the most important asset of any company: The people who get the work done.
Michael Clinton is the special media advisor to the CEO of the Hearst Corporation and author of ROAR into the second half of your life.
