For more than a decade, labor academics and human resource executives have been preparing for the "next" generation—from the millennials, now the largest working population, to the newest members of the work force, Generation Z.
But older Americans increasingly are working later into life. While roughly 10,000 baby boomers a day will reach retirement age between 2011 and 2029, only about 5,900 a day are retiring.
Fred Hubacker, 75, continues to work a full schedule as executive director for Birmingham, Mich.-based turnaround and advisory firm Conway MacKenzie Inc. With more than 50 years in automotive industry experience, Hubacker frequently steps in as temporary CEO of floundering companies. Retirement just isn't an option—not yet.
"I can still do 12 hours if I need to and my guys know that," Hubacker said from his Cadillac en route to a meeting. "Some days it's only three hours. But I've still got my health and my experience and I would like to continue to put that to good use. I can still make contributions with my significant experience. I still have something to offer."
He's not alone. More than 265,000 Michiganders 65 years old and older were in the labor force in 2018. That's up from just 160,000 in 2010 and 163,000 in 2005, according to data from the U.S. Bureau of Labor statistics.
Next year, 26 percent of the U.S. work force will be 55 years old and older, compared to only 14 percent in 2002.
More so, labor force participation is expected to grow the fastest through 2024 among workers aged 65-74 and those 75 and older, according to BLS. Local experts urge employers and the younger labor force to embrace older workers as a boost to the economy and to prevent the fallout of an aging country—which puts pressure on public services and the health care industry as well as pummels economic growth.
Lessons from Japan
Japan is the oldest country in the world, with more than 26 percent of its residents 65 years old or older, compared to just 15 percent in the U.S. The result is steep population decline as its citizens die off in old age. Its population was estimated at 127 million in 2014 and expected to shrink below 100 million by 2049, according to the country's National Institute of Population and Social Security Research.
This also means Japan's domestic workers are aging out of the work force. By 2036, one in three people in Japan will be elderly.
A reduction in workers and greater reliance on the public sector is threatening Japan's economy and its government has taken radical action, by its standards, to rectify the problem.
In 2015, Japan began admitting foreign construction workers to alleviate industry shortages as it rebuilt from the 2011 earthquake and tsunami and in preparation for the 2020 Olympics in Tokyo. It repeated the effort in 2017 for nurses and other health care workers. Japan plans on accepting an additional 340,000 foreign blue-collar workers into its labor force through 2020.
But possibly Japan's greatest success is in keeping older people on the job. In 2004, it began raising the social security retirement age from 60 years old to 65 years old and required companies to raise or get rid of mandatory retirement age rules. It also encouraged companies to structure practices to hire retired workers. This has kept Japanese workers, particularly men, on the job well into their 60s and 70s.
More than half of Japanese men aged 65-69 are employed, up from about 40 percent a decade ago, The Wall Street Journal reported.
This has increased Japan's labor force by 4.4 million since 2012, despite a decline in its prime-age working population (those aged 15-64) by 4.7 million.
"Japan is a great example of why we need people to stay in the labor force longer," said Betsey Stevenson, an economist at the University of Michigan. "The U.S. is entering the same problem (aging population) and if people are retiring around 64, we're going to be carrying around a large number of people that are no longer able to produce. We have to maintain a dynamic work force. The longer people work, the more they will earn, the more they will consume and the more jobs they will create for others. Dropping out of the labor force, that costs other jobs for people. It's not just this static thing."
An aging work force presents ample opportunities for business, said Marick Masters, interim chair of the department of finance at Wayne State University and professor of management.
"Having an older work force provides great opportunities for building institutional capital in the workplace," Masters said. "Between great mentorship and the ability to experiment with working arrangements, productivity is boosted."
Masters pointed out that younger generations, particularly millennials, demand flexibility as many have started families and want more time to work off site. Older workers, whose children likely are grown and out of the home, provide an ample stopgap in hours where younger workers may have other responsibilities.
Employing older workers also reduces turnover rate. A 2015 AARP study showed a 29 percent turnover rate for workers older than 50, compared to 49 percent for workers under 50. That same study says workers aged 55 years and older are 5 percent more engaged at work than those under 55 years old, translating to a 3 percent growth in revenue.
But Stevenson worries companies are not adjusting to the realities of an aging population and work force.
Roughly 41 percent of global companies surveyed by Deloitte Consulting in 2016 said they considered aging of their work forces a competitive disadvantage.
And as more older workers put off retirement, younger workers are finding it harder to move up in their careers, according to a November USA Today/LinkedIn survey. Local experts, however, shrug off the concerns of the millennials and Gen Xers, instead urging employers to embrace our aging work force as a boost to the local and national economy.
"Age discrimination remains a real problem," Stevenson said. "During the Great Recession, employers weren't laying off their expensive 50-something workers, they were laying off their 20-somethings in droves. But data suggests those 20-somethings were able to find other jobs. Those 50-somethings that lost their jobs struggled to find another one. Employers seem to be less willing to take the gamble on an older worker. When they lose their job prematurely, their retirement is more of a struggle. Because we live longer, they will rely more on family members and government support, harming our economy. Don't be afraid of older workers staying in the labor force."
Aged, but educated
America's aging work force, however, tends to look like Hubacker, working in high-wealth, white collar careers.
Older workers that remain in the labor force tend to be more educated, white and live near major metropolitan areas, according to a Pew Research Center study from July.
About four in 10 baby boomers in the labor force had at least a bachelor's degree, versus 27 percent of those not in the labor force, according to Pew. In addition, those were more likely to be non-Hispanic white, 72 percent versus 70 percent.
Those workers also are living longer.
Stevenson said this is representative of inequality baked into the U.S. economic system.
"Who is staying in the work force longer? For the most part it's the people who are living longer. It's not driven by financial need, but by life expectancy," Stevenson said. "Growing inequality in the U.S. is evident as workers at the top end of the spectrum are in better health and are able to stay in the labor force longer."
Stevenson said educated workers and those in better health are also incentivized to work longer, which is good, but also a problem for the aging workers who are unable.
"A lawyer who pays into Social Security can work until he's 70 and draw more from the system," Stevenson said. "Whereas an auto worker that may have a physical disability from the labor of the job is forced to retire early and has limitations on the budget and will likely die younger. The lawyer is rewarded for staying in the labor force so long and living to 95."