By Liz Carey
Washington, D.C. (WorkersCompensation.com) – With more senior citizens staying in the workforce, companies face higher costs as the workforce ages.
According to the Bureau of Labor Statistics, nearly 20 percent of adults over 65 are opting to continue working rather than retiring. That level is the highest it has been since 1965. And while many are opting to stay on the job for the sheer joy of working, others are staying because they can’t afford to leave.
Known as the Silver Tsunami, it’s projected that one in four workers will be over the age of 55 by the year 2020. According to the Bureau of Labor Statistics, the number of workers between the ages of 55 and 64 is estimated to climb to 29.3 million by 2020 and make up almost 18 percent of the labor force.
One of the challenges to an aging workforce, said Andy Dunagan, director of staff practice at Pritchard & Jerden, is that older employees impact a company’s workers’ compensation costs.
“These (workers’ compensation) costs come largely from the growth of employees with pre-existing and age-related medical conditions, as well as chronic illness,” Dunagen said in a blog post. “This is resulting in a much more difficult and time-consuming process to prevent and treat work-related injuries.”
According to Dunagan, workers’ compensation claims for back injuries, knee injuries, stress and cumulative trauma disorder increase as the proportion of aging workers grows. The increase in claims stems not from unsafe practices or hazardous working conditions, but because older employees may not be physically capable of doing the tasks associated with a position.
One way to prevent these injuries, Dunagan said, is to have pre-employment physicals and ability testing to ensure older workers can do the job they are applying for.
But for many organizations, that are seeing their employees stay on the job longer, the answers lay in re-evaluating the workplace. At BMW, for instance, in order to accommodate older workers, the company installed wood floors, and provided employees with special shoes to help with standing at assembly lines. And in order to help aging employees read small part numbers, the company increased the size of characters and provided workers with magnifying glasses.
But according to a report by NCCI, the aging workforce is NOT going to significantly increase costs. The 2012 report found that comparing workers’ compensation claims from older and younger workers, the injury rates and medical severities are similar. Additionally, the report said, the only difference in indemnity severity is due to older workers’ higher wages, which are covered by higher premiums.
But many companies hope to keep older employees on the job, according to a report by AARP. A spokesman for AARP said the organization’s 2015 study “A Business Case for Workers Age 50+” shows that workers over 50 have much to offer businesses.
“The (study) shows workers 50+ are highly motivated, productive and cost effective. The study also notes how ‘engaged” older workers are,” the spokeperson said via email. “The study also addresses the misconception that older workers cost ‘significantly more,’ noting 'minimal increases…in labor costs.'”
According to that study, 65 percent of older workers are engaged in work, compared to between 58 and 60 percent of younger workers. The study said this increase in engagement equates to a three percent incremental revenue growth meaning a large company with $5 billion in revenue may achieve a $150 million revenue increase based on just a five percent engagement improvement.
There are other benefits to older employees, experts said.
“Older workers are more loyal and have a better work ethic,” said Jacquelyn B. James, PhD., co-director of the Center on Aging & Work at Boston College in an interview with WorkersCompensation.com. “They also tend to be more engaged in their work and enjoy their work more. Also, they have more experience in a work setting, so they are less likely than younger workers to become rattled at work.”
James said she’s seen more and more employers figuring out the benefits of older workers, and modifying their work environments to suit the needs of older workers.
“I do think (companies like BMW) were the early adapters,” she said. “And now I think other companies are following suit. Employers are getting the message that workers are working longer and they doing more to accommodate them. Progress is slow, but it seems like we’re getting there.”
