The Employee Perspective: Costs and Benefits of Continued Work

1. Workforce Planning: Aging and EmploymentModule 4: The Employee PerspectiveBarbara McIntosh, Ph.D., SPHR • 2014 The development of this content was made possible through the support from a grant from the Alfred P. Sloan Foundation.

2. Module 4: Overview of the Employees’ Perspective • Why work? • Costs and benefits of continued work. • Alternative choices. • Decision to stay depends on: • Treatment. • Job satisfaction. • Continued challenge. • The next stage: Encore careers and bridge jobs. • Changing expectations about the work environment: Aging worker friendly? 

3. Why Work? Today, it is mostly about money and uncertainty: • Portfolio losses. • Fewer opportunities in the labor market. • Uncertainty about health care costs. • Uncertainty about family financial responsibilities. • Uncertainty about how far shrinking retirement savings need to stretch for 10, 20, 30 years. In reality, we are living longer, healthier lives and are able to work.

4. Why Work? AARP According to a 2013 AARP survey of individuals ages 50 and older:

5. Retirement Decision Factors

6. Meaning of Work • Enjoyment. • Most (89%) enjoy work. • Hispanic (especially women): 93%. • Whites (non-Hispanic): 88%. • By occupation. Health service workers—largest percentage (31%) of employees who do not enjoy their work. Members of the armed forces—only 6% do not enjoy their work. • Meaningful. • 97% small business owners. • 93% self-employed. • 90% employed by others. Source: Smyer, M., Besen, E., & Pitt-Catsouphes, M. (2009). Boomers and the many meanings of work. In R. Hudson (Ed.), Boomer bust? The new political economy of aging (pp. 3-16). New York, NY: Praeger.

7. Variation in Labor Force Participation Behaviors

8. Why Older Workers Leave Early • 45% (in 2011) left work earlier than expected. • Reasons: • Health problems or disability (63%). • Changes at employer—i.e. downsizing or closure (23%). • Caregiving for a spouse or family member (18%). • Changes in skill required for job (8%). • Other work-related reasons (20%). Source: Helman, R., Copeland, C., & VanDerhei, J. (2011). The 2011 retirement confidence survey: Confidence drops to record lows, reflecting “the new normal” (Issue Brief No. 355). Employee Benefit Research Institute. Retrieved from http://www.ebri.org/pdf/briefspdf/EBRI_03-2011_No355_RCS-2011.pdf

9. Half of Retirees Under 65 Retired Involuntarily Among adults ages 50+ who are retired, 33% said that they did not feel they had a choice except to retire. Feeling that retirement was not by choice is more common among younger retirees. • 54% of retirees under age 65 felt they had no choice but to retire. • 23% of retirees ages 65 or older felt they had no choice but to retire. Source: Associated Press and NORCCenter for Public Affairs Research (2013).

10. Retirement Choice

11. Costs of Continued Work Foregone opportunities: alternative time use (e.g., leisure, caregiving). Direct costs: Pension reduction. Commuting. Clothing. Payment for services you would perform if you had the time (e.g., house cleaning, yard work). Indirect costs: Health: exposure. Mental health: stress.

12. Benefits of Continued Work Direct: Salary/wages. Benefits. Continuing contribution to retirement plan. Access to company perks (e.g., corporate passes, reduced membership fees). Indirect: Challenge (use it or lose it). Being productive, feeling useful. Social connections, networking. General mental health. Sources: Bosse et. al., 1987; Reitzes, Mutran, & Fernandez, 1996; Gallo et al., 2000; McIntosh & Danigelis, 2005.

13. Choices To work or not to work: work, volunteering, family, leisure. To work but with alternative hours: full time, part time or part year (seasonal). To work in one’s primary occupation or another occupation (avocation): Variation in primary occupation (transition employment). Different occupation/industry: Pursue hobby or passion (bridge employment). Location change.

14. The Decision to Stay Depends on Individual Treatment Individual comparison/discrepancy theories What I need and what I receive (Maslow’s need theory). What I value and what I receive (Locke’s value theory; Vroom and Lawler’s expectancy theory). Equitable treatment and the way I am treated (Adam’s equity theory).

15. The Decision to Stay Depends on Job Satisfaction • Nine out of 10 older employed workers say their current job allows them to use their skills and talents somewhat (22%) or a lot (69%). Source: AARP, 2014. • Job satisfaction is directly linked to turnover and the intent to stay. • Older employees tend to have high levels of job satisfaction. Source: Shen, Pitt-Catsouphes, & Smyer, 2007.

16. The Decision to Stay Depends on Job Satisfaction

17. Job Satisfaction Evidence: Methodology for HRS Study Wave 1: Health and retirement survey (HRS) panel study (1992). Sample of individuals between ages 51 and 61. 3082 full- and part-time workers (2,195 FT; 887 PT). Gender (2,308 men; 774 women). Dependent variable: “How satisfied are you with your job?” Statistics: Correlation analysis and ordinary least squares (OLS) regression analysis.

18. Job Satisfaction Predictors: Regression Results All Full-time Part-time -Co-workers. -Co-workers. -Co-workers. -Stress. -Stress. -Freedom. -Odds lose job. -Fair pay. -Fair pay. -Age discrimination. -If lose, retire. -If lose, retire. -Age discrimination. -Odds lose job.

19. Gender Differences in Satisfaction with Work MenWomen -Co-workers. -Co-workers. -Fair pay. -Stress. -Stress. -Age discrimination. -Odds lose job. -Odds lose job. -Age discrimination. -Fair pay. -Absence/health issues. -Work even if they don’t need the money.

20. Results Summary Co-worker support is the most important predictor in deciding to remain working regardless of hours worked or gender. Hours of work For full-time workers, stress level is the second most important predictor. Age discrimination is also a predictor. For part-time workers, freedom is the second most important predictor. Stress is not a predictor, but concern about losing one’s job is. Gender Men are more concerned about fair pay and being absent. Women are more concerned about age discrimination and would keep working even if they did not need the money.

21. Research Implications More attention needs to be given to co-worker relationships—fits with teamwork emphasis. Future research: How do older workers compare to younger workers? Are all workers responding the same way to the changing workplace? Are there tenure-related determinants of job satisfaction? Are these determinants cohort-specific?

22. The Decision to Stay Depends on Continued Challenge • The National Study of the Changing Workforce found that older workers want the same or more responsibility on the job (87%), not less (12%) than they currently have. • Older workers’ career ambitions may be less visible. • Older workers may be motivated to accomplish more as they “cap” their careers. Source: Shen, Pitt-Catsouphes, & Smyer, 2007.

23. Decision to Stay: Employee Commitment Is Vital

24. Changes in the Work Environment: The Older Employee Perspective Culture. Respect. Visibility, credibility. Promotion. Recognition. Opportunities for co-worker interaction and support (e.g., age-integrated teams, projects).

25. Changes in the Work Environment: The Older Employee Perspective Recruitment and selection. Sources (implicit messages in outreach): Internal job postings. Employee referrals (older workers’ contacts). Nontraditional sources (e.g., postings at golf courses, churches). Trait evaluation: Diverse selection committees. Perception (real): Age discrimination.

26. Labor Market Experiences

27. Changes in the Work Environment: The Older Employee Perspective Hours, flexibility. • Sabbaticals. • Leaves of absence. • Phased retirement. • Rehearsal retirement. • Part-time work. • Part-year work. • Seasonal work. • Snowbird programs (like CVS Pharmacy).

28. Changes in the Work Environment: The Older Employee Perspective Rewards. • Direct compensation. • Alternatives? • Recognition. Development. • Challenge: Additional responsibilities (job enrichment), job rotation, new assignments, etc. • Training: Access and age-friendly pedagogy. • Mentoring: • Opportunity to share experiences, organizational learning. • Reverse mentoring in multigenerational workplace.

29. Changes in the Work Environment: The Older Employee Perspective The nature of the job itself. • Repetitive motions lead to musculoskeletal disorders. • Standing. • Lifting. The physical environment. • Age friendly (e.g., door knobs, handles, visibility issues). • Lights, heat, physical stressors. • Noise level. • Ergonomics.

30. Decision to Stay/Leave: Other Contributing Factors • Employees with high levels of cognitive ability are more likely to stay longer. • Employees with better cognitive ability have more coherent expectations about retirement. • Employees with high longevity expectations are more likely to retire later. • Expectations of reduction in Social Security benefits is associated with plans to retire later. Source: Parker, A. Carvalho, L,. & Rohwedder, S. (2013) Cognitive ability, expectations, and beliefs about the future: Psychological influences on retirement decisions (Michigan Retirement Research Center Working Paper 2013-298). Retrieved from http://mrrc.isr.umich.edu/publications/papers/pdf/wp298.pdf

31. One Out of Five Adults 65-67 Is Partially Retired "While partial retirement was virtually non-existent for 60-62 year olds in 1960, over the past 20 years more than 15 percent of workers in this age group are categorized as partially retired. For 65-67 year olds, the recent partial retirement rate is over 20 percent, up from 5-10 percent in 1960," according to a 2013 analysis of data from the Social Security Administration. Source: Fact of the Week. (Feb. 17, 2014). Sloan Center on Aging and Work. Boston: Boston College. http://www.bc.edu/research/agingandwork/archive_facts/2014/14-02-17.html

32. Bottom Line: Employment and Happiness

33. An Alternative: Encore Careers and Bridge Jobs • Majority of workers in their 50s and 60s plan to work after retirement. • 52% part time. • 9% full time. • 19% do not plan to work in retirement (Collinson, 2012).

34. Characteristics of Employees in Encore Careers • Age. • 60% are between 51 and 62 years of age. • 24% are between 44 and 50 years of age. • 16% are between 63 and 70 years of age. • 88% come from professional and white-collar jobs. • 67% have at least a college education. • 72% live in cities and surrounding suburbs. • Industry sectors. • Education: 30%. • Health care: 23%. • Government: 16%. • Nonprofit organizations: 13%. • For-profit businesses that serve the public good: 9%. Source: Metlife and Civic Ventures, 2008.

35. Evidence: We Are Working Longer • The number of workers ages 80 and older grew by 67% between 2000 and 2008. This was the fastest-growing cohort. • The oldest worker in America in 2012: Loren Wade, 100, works 30 hours, 5 days a week at the Winfield Walmart (since 1983). He estimates he walks 2-3 miles a day restocking, changing displays, working cash registers and serving customers. Source: Experience Works. (2012). America’s outstanding oldest worker—2012. Retrieved from http://www.experienceworks.org/site/PageServer?pagename=Americas_Oldest_Worker_photos_bios

36. Module Summary • This module offered multiple answers to the question, “Why work?” • The costs and benefits from continued work were addressed, as well as alternative choices. • The decision to stay depends on: • Treatment. • Job satisfaction. • Continued challenge. • There are changing expectations about the work environment: • What is an age-friendly work environment?  • HR must address multiple concerns from the employee perspective. • The next stage: encore careers and bridge jobs.

37. Occupational Employment Projections