The older workforce and its implications for the Connecticut economy
By John M. Baker, Ph.D., Resource Associate I, DOL

The aging Connecticut workforce is a topic of growing concern in human resource circles. As baby boomers approach retirement age, the younger age groups that are to take their place are sharply smaller. Does that mean the economy will confront a shortage of workers?

Recent analysis and demographic information paint a picture of an aging baby boomer population whose characteristics provide some reason to believe that as boomers age, they will not separate themselves from the world of work to the same extent that recent groups have. But, human resource professionals have great concerns about whether business really understands the magnitude of the problem and whether hiring managers are going to take the steps necessary to keep older workers in the workforce. In 1999, the Committee for Economic Development released a statement that emphasized the value of the older worker and recommended several actions that would help to encourage the continued attachment of older workers to the world of work.¹ Because of the numbers of workers available to replace the boomer population, companies are going to have to recruit from the older worker population. However, numbers alone are not the problem. The children of the baby boomers, the "baby boomlet" generation, who will just be entering the workforce as their parents leave, will need extensive training. Moreover, the skills that the boomers have cannot be easily replaced.

A recent recruitment story about CPI Aerostructures on Long Island illustrates both the problem and the kind of solution the older worker provides. CPI had new contracts and needed skilled mechanics. The issue for CEO Edward J. Fred was whether to hire younger workers and train them or to look at an unexpected new source of applicants: retired mechanics, many over 65, who responded to the advertisement for positions. "These were people who had spent their entire lives making planes," Fred says. "And some wanted to work just three or four days a week." The choice Fred faced was either an initial and somewhat lengthy investment in the new and inexperienced employee with a presumably long work life or selection of the seasoned worker ready to go but likely to want shorter work weeks and not have a long company career. The voice of experience proved decisive. The company chose two full-time and two part-time workers from the over 65 population. Fred notes that the hours worked might be fewer but emphasizes the advantages: "What we lose in time off, we make up for in the knowledge that their work is done right and on time." And, these older workers brought to the company another rather important value of their long work lives: their work ethic. They focus upon the work that needs to be done, value their work, and accept the overtime as needed, things that the younger workers at the plant now also seem more willing to do. Says Fred: "I attribute that directly to the fact that the retirees have instilled a new work ethic in them."² The older worker, many are realizing, has to be viewed as an irreplaceable resource not only for the individual company, but also for the economy more generally.

Recent boomer news has emphasized the reluctance of growing numbers of retirees to separate themselves entirely from the workforce. They stay for a variety of reasons. Many of those who retire find themselves returning to the workplace because they want to be there. Others return for monetary reasons. Census Bureau figures show that the number of Americans past retirement age and in the job market has risen by half in the past two decades. In the last ten years, the nation's age 65+ population in the workforce has risen from about 11.5 percent to about 14.0 percent. News accounts notice they are receiving some institutional support to remain at work. Most important among legislative efforts is the Senior Citizens' Freedom to Work Act of 2000 which "allows retirees between the ages of 65 and 69 to receive full Social Security benefits no matter how much they earn." Moreover, "some companies are replacing golden handshakes with new red-carpet strategies designed to encourage older employees to work past retirement age."³ Human resource professionals believe employers need to begin now to capitalize on these trends and introduce personnel policies that will encourage retention of older workers and their skills.

The value of the post-retirement workforce - problems of perception

At the same time as surveys point to increasing numbers of older workers in the market, unemployed older workers are still very likely to have considerable difficulties in finding suitable employment. A study from January 2000, Unemployment Compensation and Older Workers, showed that workers 55 and over tended to have longer periods of unemployment, were proportionately more likely to exhaust benefits, and returned to work in situations that paid significantly less than the employment they had lost. Moreover, although they wanted full-time work, they frequently found only part-time opportunities. Older workers, too, were more likely to have lost employment due to permanent layoff. The statistics become increasingly more negative the older the worker - longer unemployment, lower replacement wages, more part-time work.⁴ The study cites statistics and research from 1998, a period of economic expansion and low unemployment. The experience of older workers in the present job market is certainly likely to be somewhat worse.

One of the perennial complaints of employers is that younger workers are poorly prepared for the world of work. They not only lack basic skills required for particular kinds of work, but they also lack soft skills - things like communication, learning skills, working cooperatively - and do not seem to understand the importance to an employer of dependability - good attendance, punctuality, focus on the job. Older workers, as Edward Fred testifies, generally do not have these deficiencies.

Business attitudes towards older workers do seem to be changing, but problems remain. A survey by the Society for Human Resource Management (SHRM) finds that many employers have not yet begun to look at the needs they are going to face down the line.⁵ Moreover, management tends to retain negative perceptions of the value of older workers. The Committee for Economic Development noted that while "…employers rate older workers above average on experience, judgment, commitment to quality, attendance and punctuality, and low turnover…, [they] are [also] perceived by employers to be below average on flexibility and adaptability, acceptance of new technology, ability to learn new skills, and physical ability. But … there is no evidence that physical ability or cognitive function declines significantly during the years that the vast majority of older Americans remain employed." The Committee statement goes on to note that the reluctance of employers to provide older workers with training probably reinforces stereotypes. The older worker does not receive training and is less acquainted with new processes and techniques - and therefore appears less adaptable and capable.⁶ Companies will have to address such perceptions if they intend to retain older employees.

Connecticut trends favor long working life

Connecticut social and demographic trends are more favorable to long working life than is true of the US population more generally. As of 2001, Connecticut had a somewhat higher proportion of persons over age 50 than in the US as a whole. While 37 percent of Connecticut women and 30 percent of Connecticut men had passed the 50 year mark, in the US only 29 percent of women and 25 percent of men had done so. In Connecticut, proportionately more older workers remain attached to the labor market than in the US generally, particularly older men. Nearly 45 percent of older working men in Connecticut are in managerial or professional occupations, compared with 35 percent for the US generally. Significantly, too, eight percent more of older workers in Connecticut have employers who offer pension plans. All these figures point to an older working population in Connecticut that is better off than the overall older US population and likely to be in positions that they find personally rewarding. The Labor Department's most recent estimate of the Connecticut labor force puts it at 1,769,600. Some 63,000 persons over 65 remain in the labor force. That number will sharply increase, for the fastest growing part of the labor force over the next decade will consist of persons over 45 and by 2010 those over 45 will be 40 percent of the labor force.

These trends are particularly important because of the much faster rate of increased labor force participation that is emerging for older women. American Demographics, in a March 2003 study, commented that "…we are about to witness a major shift in retirement patterns, due largely to Boomer women - born in 1946 to 1964 - who may opt in the future to stay in the labor force past the traditional retirement age. And while older men are also likely to keep working longer than their fathers did, their participation in the labor force is expected to increase at a lower rate than that of women. Overall, more than a third of men and women, who in the past would have retired in their mid-60s, are likely to keep working." The Bureau of Labor Statistics, the study notes, projects that the number of working women 55 and older "…will increase by a whopping 52 percent between 2000 and 2010…." This increase will occur not only because the numbers of older women will grow much larger as boomers age but also because the situation of women in the labor force is changing substantially.⁷

The nature of the work women increasingly are doing will tend to let them stay on the job. More women work in office settings rather than factories or food service and make more money. Growing numbers of women are better educated. Nearly a third of working women age 45 to 54 have degrees as do 28 percent of those 55 to 64. Among those in the next older group, 65 to 74, only 19% have degrees. College degrees translate into better, higher paying jobs, particularly since the fastest growing occupations require higher levels of skill.⁸ In Connecticut these trends are somewhat ahead of those in the rest of the country. As a result, employers will find that the numbers of older women in the workforce will increase even more rapidly than nationally.

These projections represent good news for employers and for older workers, as well. For employers, this means that the older workers will be staying around until the children of the baby boomer generation are trained and ready to take their place. Yet, because of the declining numbers of workers in the age groups immediately after the boomers, the labor market is likely to favor those seniors looking for work. The boomers now approaching retirement are better educated than their predecessors. They also earn more than their counterparts elsewhere. In the increasingly technical and knowledge-based Connecticut economy, the most successful employers will be those best able to attract and retain the skilled and valuable resource that the older worker represents.

¹ "New Opportunities For Older Workers," A Statement by the Research and Policy Committee of the Committee for Economic Development, 1999, 19. [www.ced.org]

² Donna Fenn. "Respect Your Elders," Inc. [http://www.inc.com/home], Sept 1, 2003.

³ Korky Vann, "Aging Boomers Staying At Work," Hartford Courant [Statewide Edition]. March 27, 2001, p. D.8

⁴ Christopher J. O'Leary and Stephen A. Wandner, "Unemployment Compensation and Older Workers," January 2000, Prepared for the National Academy of Social Insurance conference "Health and Income Security for an Aging Workforce," January 26-27, 2000, National Press Club, Washington, DC.

⁵ SHRM Press Release (Alexandria, Va., June 22, 2003), [http://www.shrm.org/press_published/CMS_004818.asp]

⁶ "New Opportunities…," 28-29.

⁷ Peter Francese, "Working Women," American Demographics, March 1, 2003, v25, i2.

⁸ Ibid.

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Housing Update
2004 year-to-date permits up 15.1 percent

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development (DECD) announced that Connecticut communities authorized 558 new housing units in February 2004, a 22.9 percent increase compared to February of 2003 when 454 units were authorized.

The Department further indicated that the 558 units permitted in February 2004 represent a 19.0 percent decrease from the 689 units permitted in January 2004. The year-to-date permits are up 15.1 percent, from 1,083 through February 2003, to 1,247 through February 2004.

Among all Labor Market Areas LMAs), the Bridgeport LMA recorded the largest number increase (48 units) compared to a year ago. Milford led all municipalities with 54 units, followed by Danbury with 45 and Vernon with 16 units. From a county perspective, Middlesex County showed the largest year-todate gain of 79 units (or 88.8 percent).

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