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Workplace Diversity

Any discussion of the older worker in the first decade of the current century needs to take into account two seemingly disparate facts: the Baby Boomers are aging, but still under 65, and the youth generation is, in contrast, quite small. That leads directly to this apparent problem: Why are so many older workers being 'excessed' when there are so few workers to pay the freight for the Baby Boomers' Social Security pensions, and arguably to perform the work that needs to be done as well? In view of the shortfall any reasonable person might project -- in both workers to complete tasks and workers to support the retiring generation -- why are companies not trying harder to retain the older workers?

It is tempting to posit that it is simply natural selection, not unlike lions, tigers and bears. The young males want to control the herd and prey on the older males' weaknesses to accomplish it. In fact, however, there is abundant research that leads partially in that sociological/anthropological direction; the fact that many European Union nations have already begun serious grappling with the problem of displaced older workers is practically a guarantee that the problem is one of human relations, an area in which, arguably, European employee relations has taken civilization to a higher level than has been done in the United States; indeed, some studies and articles make it clear that human resources in the United States is failing the older worker. Partially, however, the phenomenon of removing older workers from the workforce can be seen as a move to the usual destination in any sort of U.S. business discussion, profitability (or at least, retaining capital).

The current extent of the problem

Not surprisingly, a survey of the trade press, and even the consumer press, reveals that the high tech industries seem to be particularly prone to age discrimination. A few studies reveal that the reason is that older workers are 'technology resistant' or fearful. That seems, however, to be a reason that would be prevalent in general industries, not in high tech itself where the older workers have probably spent most if not all of their working lives, updating their skills and knowledge just as fast as the younger staff members. In fact, the Institute of Electrical and Electronics Engineers-USA found that among its own unemployed members, for each additional year of age beyond 50, the member suffered an additional three weeks of unemployment. "In other words, the average 50-year-old tech worker will stay unemployed more than a year longer than his or her 30-year-old counterpart" (Information Week 1999). The same article noted that 17% of IEEE members had been asked to take early retirement, and that the U.S. Census Bureau substantiated the figures with its own: In a market hungry for computer expertise, it found that "17% of computer programmers over 50 are unemployed" (Information Week 1999).

IBM -- Big Blue -- has also been in the 'older worker' hotspot, although allegedly for a retiree, rather than a worker, problem. In 1999, IBM was switching its pension plan to a cash-balance plan rather than a traditional plan. Dave Finlay was calculating his future pension benefits and realized that he would receive more than 30% less under the new plan than under the old one.

Finlay ran a spreadsheet program to compare the old and new retirement benefits. After spending what he calculated to be bout 2,000 hours on the project, he posted his spreadsheet process on a Web site so that other IBMers to calculate their own benefits potentials. "Without that, I don't think we would have ended up filing suit," said Janet Krueger, a former IBM computer consultant involved in the suit. "His work allowed us to quantify the impact of the changes" (Quoted by Fillion 2004). NBC ran stories about the impact, and the United States Senate scheduled hearings on it. In response, IBM changed the pension plan to allow all employees at least 40 years old and with at least 10 years' service to choose between the old, traditional plan and the new cash-balance one. Findlay noted that the fact that they had converted when they did is what led him to retire, before he could be affected (Fillion 2004). Finlay was a senior engineer with 29 years' service to IBM.

This scenario, which avoids actual firing, is typical of the ways in which older workers (generally defined in most studies as over age 55, as it will be defined here) are removed from the workplace. Moreover, the phenomenon has been in the trade press since at least 1989, when Clogson wrote for EDN about age discrimination and older engineers.

In 1989, John Guarrera, chairman of the IEEE's age discrimination committee, offered some opinions as to the reasons high tech companies often pushed engineers into early retirement.

He noted that it is the nature of high-tech companies to rely on continually evolving technologies go survive and that those companies view recent graduates as skilled in those areas, while they believe the older engineer's skills are obsolete (Clogson 1989). Moreover, the prospect of lengthy projects, often as long as ten years, provides an excuse to pass over older engineers; the companies would rather have a young engineer, one likely to remain with the company, than someone who might retire in five years (Clogson 1989). Guarrera's opinion was echoed by David Corbett, president of a Boston-based outplacement firm, who noted that those in their 40s and 50s were regarded as "too mature, too old for the industry" (Clogson 1989).

The companies have to face the reality, however, of the 1967 Age Discrimination in Employment Act (ADEA), under which they can face lawsuits for discriminatory actions against older workers. (Additional legislation was the Older Workers Benefit Protection Act of 1990.) Fearing the ADEA, companies often require retiring workers to sign a document waiving their rights to sue their former employer under the ADEA. Guarrera thinks that if the company were making fair settlements, they would have no need of a waiver. Margaret Fernandez, a spokesperson for the Equal Employment Opportunity Commission (EEOC) noted that there is no problem in the waivers per se; the problem is that often, people are forced to sign the waivers (Clogson 1989). An attorney for the American Association of Retired Persons (AARP) in Washington, DC, says that some companies tell the employee he must sign the waiver or will not get the pay he is entitled to without a waiver (Clogson 1989).

While such instances as those are quite easy to identify as violating the ADEA, other means of removing older workers are more subtle. Arguably, in the years between 1989 and a 2003 report by the respected New York newspaper, Newsday, employers had learned other ways to diminish the numbers of older workers in their workforce in less obvious ways. Seal Dynamics laid off a 19-year veteran who had had glowing evaluations because the son of the founder, when he took over the company, wanted to surround himself with younger workers. One man half her age became her supervisor and criticized her constantly and put her on probation until she was finally laid off. She filed a complaint against the company, as did her boss, a woman who went through similar harassment (Mason-Draffen 2003). The company's attorney asserted that it had had "some difficult decisions to make, and they selected the people who they thought would be the most appropriate for running the business in the most effective way in the future" (Quoted by Mason-Dreffen 2003).

While Newsday printed a disclaimer saying that filing a suit was not proof of a misdeed, nonetheless, age discrimination suits had increased dramatically in the "weak economy" after September 11, 2001 especially. Mason-Draffen noted that "age discrimination cases rose 14.5% in 2002 to nearly 20,000 nationwide compared with the preceding year. Some experts say the increase indicates that older workers believe employers are using hard economic times as an excuse to get rid of them because they are more costly" (2003).

Mason-Draffen also chronicled some recent cases, including those involving:

Foot Locker, Inc., which EEOC ordered to pay a $3.5 million settlement for targeting older workers during a nationwide layoff.

Ford Motor Co., which settled a 2001 case resulting from the initiation of a performance rating system in which a disproportionate number of workers older than 40 received the lowest grade, "C," and were terminated. For paid $10.5 million (Mason-Dreffen 2003).

In addition, 6,400 Allstate insurance agents were given the ultimatum: forfeit valuable benefits and become independent contractors, or lose their jobs completely (Cohen 2003). The agents claim that they were singled out because "more than 90% of them were over 40" (Cohen 2003).

While the payoffs were large in those cases, the downsizing and layoff activities leading up to them, continuing throughout the 1990s, were also substantial. Affecting middle management more than other levels, the downsizings "exploded from an average annual 400,000 in the mid-'90s to 2 million in 2001, according to the Chicago-based outplacement firm, Challenger, Gray & Christmas. They dropped back slightly to 1.5 million in 2002" (Mason-Dreffen 2003). Those increases occurred despite the fact that age discrimination can be difficult to prove, although the Supreme Court had eased the plaintiff's burden of proof (Ormsbee 2002). Song 2001

University of California at Davis professor of computer science, Dr. Norman Matloff, noted that in the IT world, "old" can begin at age 35. In addition, "The market has become more difficult for older workers since Congress passed a bill in 1998 that doubled the number of foreign high-tech workers from 65,000 to 115,000 that could be brought into the country under 'H1-B' work visas" (Matloff, quoted by Song 2001). Since Matloff was interviewed, the cap has been raised to 195,000 (Song 2001).

Despite this, in 2000, 843,000 IT jobs went unfilled, with about 20% of those being the programming positions Matloff said were at the heart of the problem of assumed technical ignorance in the older workers, who have not been "groomed in the programming acronyms of the moment -- Java, C++ or XML -- yet employers require actual 'paid' work experience in these technologies" (Quoted by Song 2001).

Lommel reports that California social psychologist Stephen Richardson was instrumental in developing the idea that adolescence ends today at 35, not 19 or after college at 22, or at 25 after a few experiences of 'real life' (Lommel 2001).

If that is true, and certainly the youth culture suggests that it might be, then it is difficult to explain why employers think it ends a mere 20 years later. Lommel noted:

In a sharp reversal of a long downward trend, the number of age-discrimination complaints has jumped dramatically in the past 18 months, the Chicago Tribune reported recently. The newspaper said the sudden change reflects corporate America's determination to cut costs by weeding out many of its highest-paid workers. Last year, 16,000 people filed age-discrimination complaints with the Equal Employment Opportunity Commission, up 2,000 from the year before. It was also the highest number since 1995. And the surge continued into the first part of this year. Complaints for the first six months of fiscal 2001 are up 15% from the same period last year (2001).

History of the problem

In the 1980s, Rones & Herz noted that Federal efforts were toward extending worklives, and that employers had followed that lead by their attitudes isn labor negotioans and by offering generous and early pensions; at the same time, howver, employers ahd also induced current workers to retire earlier than planned to make room for new people in the workforce (1989). It would appear from this that the government and the employers were well aware of a significant fact: fewer people were coming into the workforce, while the huge Baby Boom generation was still in it. Without ever spelling it out, it would seem there was a 'market correction' to make room at the conference table for the younger workers.

In fact, in the 1980s, the last of the Baby Boom (1946-1964) was still entering the workforce, or at least, was at the start of their careers. So the attractions being offered were, arguably, as much to lure and keep them as for the older workers. Purcell noted that "The age profile of the working-age population, however, already is undergoing a substantial shift toward a greater number of older workers and a relative scarcity of new entrants to the labor force" (2000). According to the Bureau of the Census, the properotion of Americans age 65 and older will increase form 12.6% in 2000 to 10.3% by 2030. When Purcell wrote, the oldest Baby Boomers were 54 years old, and the youngest 36. "These 78 million individuals today make up approximately 55% of the U.S. population aged 25 to 54. Their sheer numbers suggest that the impact on labor markets could be substantial if this generation chooses to retire earlier (or to remain in the workforce longer) than did previous generations" (Purcell 2000).

Following are additional data about the age groups under discussion:

In 2003, there were 21.2 million workers age 55 and older, which was 15.4% of total employment.

Women between the ages of 55 and 64 have steadily increased their labor force participation rates from 42.0% in 1985 to 49.2% in 1995 and to 56.6% in 2003.

Persons age 55 and over accounted for 15.1% of the total labor force in 2003. The General Accounting Office (GAO) projects that this age group will account for 19.2% of the labor force in 2015.

In 2000, the average retirement age for men was 62 compared to 65 thirty years ago. The average age for women in 2000 was just under 63 compared to 65 in 1965.

According to the GAO, between 2000 and 2008, the percentage of teachers older than 55 will increase from 13% to 19%.

According to the same GAO study, people 55 and older in nursing and health-related fields will increase from 12 to 18 between 2000 and 2008" (U.S. Department of Labor Web site 2005).

As part of their discussion, Rones & Herz discussed older workers taking part-time jobs at lower pay as part of the demographic shift, and noted that those were scarce because it cost almost as much to train a part-timer as a full-timer.

Rones & Herz discussed the discrepancy between the income and worklife experiences of younger and older workers, and noted that "When any group's labor market experiences are found to be inferior to another's, the issue of discrimination is a subject for discussion" and that, despite limited research conducted at that time, it would appar that discrimination does take place in the job market -- that hiring, training, and promotion decisions involving older persons are not entirely age, sex, and race neutral" (1989). They also reported some of the data that did exist, including the findings that mature men in a sample investigated between 1966 and 1976, as they gained tenure and experience, had "a substantial decline (in real terms) in earnings" that occurred while earning increased for all workers. They concluded that "The poor earnings performance among older workers was determined to be unrelated to any decrease that might have been associated with job changing" (Rone & Herz 1989).

Rones & Herz proposed three reasons for this. The first was that older workers provided lower productivity, possibly related to skill obsolescence and/or employer reluctance to invest in training or re-training older workers. The second was worker's preference for increased leisure instead of increased work hours. Rones & Herz preferred a third conclusion, however: That employers "assume that older workers will accept lower levels of salary increases, or fewer of them, because older persons' ability to find comparable alternative employment is quite low." Certainly, that substantiates the recent and even the older consumer press reports on the subject.

On the other hand, another study "found little evidence of discrimination. In fact, they determined that about 90% of any loss in earnings in workers' new jobs reflected a loss of their firm-specific human capital" which cannot be tied (necessarily) to discrimination (Rones & Herz 1989).

Over the next few years, the decline in labor force participation for those 55 and older had leveled off, according to Besi & Kale: The rates declined from 38.2% of older men to 22.7% of older women. (1996). Reasons offered for the decline in workforce participation by older workers have been attributed to several factors. The American econmy has altered in favor of white collar and service occupations, and awa from blue-collar jobs. Besi & Kale note that for the new economy, age probably has less impact on productivity than before; additionally women are moving into the older age group at the same time demonstrating higher participation rates than earlier cohorts of women (1996).

The work of Besi & Kale does not suggest that there is a bona fide need to eliminate older workers from the labor market; less phyisically demanding tasks, as the authors point out, argue that it would be prudent to retain workers who were already skilled at their professions.

Possibly taking into account the small size of the generation entering the workforce, Guthrie & Schwoerer proposed that there was a "growing need to encourage and invest in continuous learning and development for all employees; they also argued that there was "recognition of the fact that a fuller understanding of valid, age-related differences rather than reliance on inaccurate stereotypes could enhance management practices as applied to employees in later career stages" (1996). They also noted, however, the concurrent opposite trend in the workforce, that of "hurrying the departure" (1996) of older workers while, at the same time, experience a slower inflow of new employees from the smaller generation of younger Americans.

On both counts, however, they believed that improving the skills of all employees would be crucial for all organization, given the trends toward upgraded skill requirementws accompanying technological advances in virtually all fields. However, they noted that a factor having an effect on openness to training is career stage. As presented by Guthrie & Schwoerer, there are apparently some issues concerning employees late in their careers that could make two opposing contributions to the issues involved in age discrimination. They note:

If these workers tend to be less confident about their ability to do well in training (i.e., training self-efficacy), have more negative attitudes toward training (i.e., training utility), view management as less supportive and, in general, report less need for training, then these perceptions may prevent capable employees from taking advantage of developmental opportunities, leading to premature obsolescence (1996).

This, in turn, would give employers a reason to terminate those employees, or to help or force them into taking early retirement.

However, Guthrie & Schwoerer believe that both the employee and the organization would suffer as a result.

Moreover, Guthrie & Schwoerer suggest that part of the problem of older workers accepting more training lies in their own perceptions. They say that "individuals in the late stage (of their career) perceive less need for training (than younger workers) in three major areas of skills: basic management skills, human resource management skills, and communication and technical skills for the future career" (1996). In addition, those workers reported lower levels of belief in the efficacy of training; most surprising, Guthrie & Schwoerer found no differences in managerial support for either age group (1996).

In addition, there is a disconnect between the older employees' perceptions of themselves and that of employers; surprisingly, in terms of both the employees' self-concept and the increased age discrimination suits, the findings of a study by the American Association for Retired People (AARP) and the Society for Human Resource Management (SHRM), indicated older workers are relatively highly thought of.

Older Workers vs. Younger Workers

Statement

Total Agree

Disagree Strongly

Total Disagree

Older workers tend to be more reliable than younger workers.

Older workers tend to be more fearful of technology than younger workers.

Older workers tend to have a higher level of commitment to the organization

Older workers tend to stifle creativity in the organization with old school ideas.

Older workers tend to be more motivated to do their work than younger workers.

Older workers have a harder time grasping new concepts than younger workers.

Older workers tend to have better overall work skills than younger workers.

Older workers tend to have higher rates of absenteeism than younger workers.

Older workers tend to be less flexible than younger workers.

Older workers tend to take longer to train than younger workers.

Older workers tend to be more costly to train than younger workers.

Older workers tend to be less likely to keep up with new developments

Younger managers tend to be uncomfortable supervising older workers.

Older workers tend to be uncomfortable reporting to younger workers.

Source: NewWorking with Jane Lommel, 2001

If it were true that older employees did not need any additional training, then the equation would be fairly simple; without doubt, if they were asked to leave companies in proportionally greater numbers than younger people, it would suggest a pattern of discrimination. On the other hand, "the popular business press suggests that organizations are experiencing extremely challenging times, and that continual development of employees is key to long-term organization adaptability and success" (1996). If that is true, then the problem is real and it is two-fold; the companies must adapt to thrive, and they must train or retrain employees who perceive no need of training. To compound the issue, the company, even if it loses employees who do not take advantage of training opportunities to remain current in their skills, risks an EEOC age discrimination suit based on numbers alone, without regard to the originating circumstances that produced the statistics. In addition, the authors admit that their study may not address rhe realities of even the 1996 world; their research hinged mainly on managerias skills such as delegating tasks and decisions and having negotiating skills, so that "one could argue that age and the associated career experience supplants the need for training in these skills" (1996).

In fact, Guthrie & Schwoerer indicate that it is the employer's responsibility, as well as being to the employer's benefit, to comunciate that training and career development is a lifetime process; doing so, they propose, could increase positive attitudes toward training, and that all of this could be done at little cost.

An earlier study had indicated that employees in large firms are " more satisfied and committed to their firms than younger employees (Smith & Hoy 1992). Their work was targeted toward undsrtanding how to deal with an increasingly older workforce. The low birth rate of the mid-sixties "will decrease the number of younger workers in both relative and absolute terms" (Smith & Hoy 1992). In addition, participation of the over-55 workers was expected to decline because they chose to retire early. Smith & Hoy suggested that this would be a bigger problem for smaller businesses as they compted with larger companies for the same prime-age employees, those 35 to 54 (remembering that in IT, prime age is under 35). They concluded that it would be more difficult for smaller companies to accommodate the changing employer base "in terms of the need for training, flexibility, and increased productivity" (Smith & Hoy 1992).

They do begin to hint at the situation that began to obtain by 2000, arguably. They suggested that firms would be dependent on the population of older workers, "not simply because of their incrrasing numbers, but because of the skills and experience they possess if higher levels of productivity are to be attained. The double-edged sword is apparent here, as well. Smith & How noted that "firms that are not growing rapidly or where technologies are not changing significantly may find an older workforce makes them less competitive. This is undoubtedly true in large firms where seniority systems exist and where older workers historically resist learning new skills" (1992). While the authors were specifically attempting to assess the impact of the aging workforce on small businesses, it is reasonable to conclude that the large firms, finding resistance, would seek to remedy the situation by releasing those workers.

Moreover, Smith & Hoy had concluded, despite a small amount of evidence to the contrary, that older workers have more favorable attitudes toward work; that being the case, their dismissal by large companies would make them available to the smaller companies; the very problem identified by Rones & Herz of older employees accepting lower levels of salary and benefits. Wagner (2003, July-August)

While it is apparent that there were concerns about older workers in the workforce well before 2000, it is amazing that ageism seems to have been present as early as 1985. At that time, however, it was not so much a case of easing out the older workers, but of not encouraageing them to remain. At that time, Packard said, the majority of firms had mandatory retirement policies and their pension plans were designed to encourage early retirement (1985). The Conference Board perceived a continuing loss in earlier momentum toward earlier retirement; it may be logical to conclude that in an economy in which it was advantageous to retire early, there was no need for hostility between employee and organization, and the ADEA and the 1990 legislation as well, perhaps, were easy to pass legislation requiring companies to provide what employees wanted. It was to everyone's benefit. In the current economic climate, however, in which jobs are at a premium, and there has been significant erosion of retirement income (with more on the way if the reforms to Social Security desired by President Bush are enacted), it is much more to the employer's benefit to both erode company-based retirement income and encourage, or coerce, older employees to take early retirement. While encouragement is not illegal, coercion is. And firing for age-based reasons is as well.

Even in that more robust economic era, there was no much interest by employees in transferring to less demanding jobs as they got older, a benefit offered by about 30% of the large firms Packard studied.

Even so, the offer had within it the seeds of ageism. Few chose to take such offers when available; Packard suggestd that it could reflect the desire of employees, even older ones, to move to higher paying jobs with more responsibility, rather than to lesser jobs that usually offered lower pay. "It may also suggest that such programs have little appeal to older workers, that they are not well tailored to the needs of older workers, that many older workers are not aware that such programs exist, or that use of these programs is discouraged by managers" (Packard 1985), suggesting ageism.

How the aging employee issue is handled elsewhere

The Baby Boom factor is also recognized by other developed nations that are seeking to keep aging populations from becoming a drain on national resources as there are fewer workers to provide benefits for more retirees. In several nations, thre are programs that reward people wh stay on the job with larger pensions when they do retire; the United Kingdom is one of these. In addition, a U.S. General Accounting Office report has summarized retirement policies in Japan, Sweden and the UK. Japan, which faces the most greatest severe aging problem, has severely cut its national benefits system to encourage workers to remain in the workforce (Wagner 2003, July-August).