The U.S. population is aging, and Iowa’s population is aging slightly faster than most other states.

By 2012, workers age 55 to 64 will account for more than 19 percent of the labor force, up from around 16 percent now, according to projections from the U.S. Bureau of Labor Statistics. With the pending retirement of the Baby Boomers, the oldest of whom will be eligible for early Social Security benefits in 2008, many analysts are predicting growing labor shortages in the future, with some fields facing problems now. Fifty-eight percent of human resources managers responding to a 2005 AARP survey said it is more difficult today than it was five years ago to find qualified applicants.

“You’re going to have a situation where 30 to 40 percent of a company’s workforce may be looking at retirement soon,” said Ann Black, associate state director of communications with AARP Iowa. “A number of Iowa companies are looking at this and doing really progressive things, while others haven’t even begun to look at it yet.”

With a declining proportion of younger workers and projected shortages, many employers will turn to older workers.

“Companies are creating flexible schedules, telecommuting options, training, phased retirement and many other things to attract older workers,” said Michael Lynch, president of Manpower of Des Moines. “It’s just a matter of necessity.”

According to a recent study commissioned by AARP, nearly one in five workers at a typical Fortune 1000 company is retirement eligible today, with another third becoming eligible in the next five to 10 years. For Iowa’s largest industry, manufacturing, more than 33,000 workers are older than 55, up 7.9 percent since 2004.

“People will not be retiring as they have in the past,” Black said. “When the labor crunch comes, the nation’s largest corporations are likely to feel the impact most profoundly, partly because of their hiring patterns over the last 30 to 40 years. Millions of Boomers are poised to retire, and depending on what they do, there may not be enough younger workers with the skills to replace them.”

Black said around 80 percent of Baby Boomers said they either want or need to continue working past the normal retirement age, creating a group of workers who could potentially fill the gap created by worker shortages.

Traditionally, many employers have viewed older workers as inflexible, less productive than their younger colleagues and more expensive because of higher salaries and health-care costs, Lynch said. When hard times forced layoffs, older workers were often the first to go. But now, many employers are trying to retain older workers by rooting out age bias and setting up complex flexible work arrangements tailored to their needs.

“Everyone thinks there are increased costs, and while yes there are, they are offset by the value of their work,” he said. “The older workers have vast knowledge and experience that might not directly relate to the field they are hired for, but does translate to more productivity.”

Older workers are usually more highly motivated than their younger counterparts, Lynch said, and usually have better interpersonal skills.

“Studies show the older generation has a greater foundation in people skills and decorum,” he said. “And while individual health-care cost does rise, older workers usually have no dependents, which will bring the cost back down.”

So how to retain older workers or attract them into a company has become an important question, Black said. At the top of the list of things older workers are looking for, according to a recent Towers Perrin study commissioned for the Iowa Governor’s Conference on 50+ Workers, are financial rewards, specifically health-care coverage and competitive retirement benefits. Close behind are intangibles, including work-life balance, respect for their skills and recognition for individual contributions.

AARP research yielded similar findings, with flexible work options, opportunities for training and new experiences identified as being important to most older workers.

Based on Iowa Workforce Development statistics, the number of jobs in Iowa filled by employees age 55 and older totals 242,058, an increase of 9.4 percent from 2004. Polk County has 39,208 workers over the age of 55, or around 15 percent of total employment. Lynch said local companies must become more flexible in their hiring practices in order to avoid worker shortages.

“They have to find a way to make it work,” he said. “If you hire a 26-year-old, realistically, they are not going to be with the company in 20 years. If you get two to three good years from them, then you should be excited. So, older workers, who may only work a few more years, can add a lot of value to the workplace for the same amount of time.”

Six regional forums on older workers were held in September in Iowa as part of a mature worker program being developed by the Iowa Department of Elder Affairs, the National AARP Foundation and AARP Iowa, Black said. The sessions were designed to collect information about the attitudes of Iowa employers toward older workers.

The forums found that companies need more information on how to develop flexible work arrangements, including part-time work opportunities, flexible hours, job sharing and phased retirement, and that a workplace that supports and includes cultural differences needs to be promoted at all levels of businesses.

They also found that employers view providing affordable health insurance coverage for full-time and part-time older workers as a major obstacle to hiring older workers.

Extending health insurance to part-time workers who aren’t eligible for Medicare is one approach to holding on to older workers, Black said.

“Many have been laid off and are simply entering a new phase in their life,” she said. “After years of work, they may not want to jump back into full-time [employment].”

Lynch said workplaces will have to be more flexible in general, not just to retain or bring in older workers, but also for younger workers.

“The idea of work-life balance is becoming more and more important,” he said. “So, what is the difference in allowing for flexible schedules for someone because they have children at home and doing the same thing for someone who is semi-retired? That is the wave of the future, and employers will just have to accept that.”

Unfortunately, Lynch said, many companies have not begun to explore this issue or to identify appropriate solutions for the near and longer terms.

“Executives might know this is a looming problem, but I don’t think they have a good sense of how vulnerable they are,” he said. “Even when the cost might normally favor hiring new employees, companies need to keep in mind the business advantages that experienced long-service employees offer.”

A 2002 online survey that elicited responses from 150 senior human resources executives across a wide range of industries, found that few employers were actively planning for the coming changes in workforce demographics.

Similarly, a 2003 survey of more than 400 human resource professionals conducted by the Society for Human Resources Management found that only one-third of U.S. companies were pursuing or expected to pursue strategies to retain employees interested in working past traditional retirement age.

Several economic factors influence older employees’ decision to remain in the workforce. The stock market boom of the 1990s and the bust at the turn of the century have left many older workers questioning whether they have sufficient financial resources to retire, Black said. So, many are looking at phased retirement or at never retiring.

“There is a lot of interest in this issue,” she said. “Companies are beginning to pay attention.”

Black said more than 225 people attended a recent conference in Des Moines focusing on these issues, with representatives from business, government and non-profit organizations.

The new attitudes come as age-discrimination complaints are declining. Although some serious cases do remain, age discrimination complaints filed with the Equal Employment Opportunity Commission have dropped 13 percent in the last two years. Despite the encouraging trends, Lynch said some discrimination, though not blatant, still occurs and must be addressed.

“We have to get the message out to front-line human resources people,” he said. “They get a stack of resumes on their desk, and many times, they immediately eliminate those of older employees, due to the stereotypes of an older worker. It is not active discrimination, but it is taking place.”

The Towers Perrin study commissioned by AARP listed several steps a company should take to prepare itself for the coming shift in workforce demographics, such as making an inventory of its current talent and defining its future needs, model cost trends to understand the business case for investments needed to attract or retain older workers and studying the available labor pool.

The study also found that half the respondents to the Society of Human Resource Management survey said they are seeing many new workers who lack overall professionalism, written communication skills, analytical skills and business knowledge. Though skills such as manual dexterity may decline with age, the study said other skills, such as verbal communication, improve or remain stable until very late in life.

The study also concludes that older workers are often more motivated to exceed expectations on the job than their younger counterparts. Motivation is strongly correlated with employees’ overall levels of “engagement,” i.e., willingness to invest discretionary effort in their work, and companies with more highly engaged employees outperform their industry peers on a range of key business and financial measures, the study said.

Towers Perrin’s analysis also indicates that replacing an experienced worker of any age can cost 50 percent more of the individual’s annual salary in turnover-related costs, and the cost is even higher in jobs requiring specialized skills, advanced training and extensive experience. The benefits of a stable workforce and avoiding turnover costs can exceed the incremental compensation and benefit costs for an older worker, the study found. Added compensation and benefit costs are only marginally higher in many cases, thus, the cost of employing workers will be offset by the costs of hiring and getting new employees up to speed.

“Research has shown that, on average, people have nine different career changes, in some form, before they are 32,” Lynch said. “People are more mobile. You just aren’t going to see a person stay with the company 20 years anymore. So, companies have to realize that hiring a younger worker might mean filling the position again.”

Lynch said another factor to consider is the wisdom older workers can pass on to the younger employees.

“There is a lot of expertise lost when an older employee leaves a company,” he said. “Any opportunity to retain that expertise should not be taken for granted.”