[Senate Hearing 110-68]
[From the U.S. Government Publishing Office]
S. Hrg. 110-68
THE AGING WORKFORCE: WHAT DOES IT MEAN FOR BUSINESSES AND THE ECONOMY ?
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HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
FEBRUARY 28, 2007
__________
Serial No. 110-3
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon GORDON SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas RICHARD SHELBY, Alabama
EVAN BAYH, Indiana SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware MEL MARTINEZ, Florida
BILL NELSON, Florida LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island ARLEN SPECTER, Pennsylvania
Julie Cohen, Staff Director
Catherine Finley, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening Statement of Senator Herb Kohl........................... 1
Opening Statement of Senator Gordon Smith........................ 3
Panel I
David Walker, Comptroller General, U.S. Government Accountability
Office, Washington, DC......................................... 4
Donald Kohn, Vice Chairman, Board of Governors of the Federal
Reserve System, Washington, DC................................. 23
Panel II
Marcie Pitt-Catsouphes, director, Center on Aging and Work/
Workplace Flexibility, Chestnut Hill, MA....................... 49
Javon Bea, president and CEO, Mercy Health Systems, Janesville,
WI............................................................. 65
Preston Pulliams, district president, Portland Community College,
Portland, OR................................................... 69
APPENDIX
Prepared Statement of Senator Larry Craig........................ 83
Statement submitted by HR Policy Association of American Benefits
Council........................................................ 84
Statement submitted by NCCNHR.................................... 88
Comptroller General's Highlights of a GAO forum, Engaging and
Retaining Older Workers........................................ 91
Information submitted by AARP.................................... 116
A Report on the Survey of Students 40 and Older, conducted by the
Portland Community College..................................... 136
Report prepared for the Oregon Age Boom Conference by the
University of Indianapolis..................................... 170
(iii)
THE AGING WORKFORCE: WHAT DOES IT MEAN FOR BUSINESSES AND THE ECONOMY?
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WEDNESDAY, FEBRUARY 28, 2007
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 10:32 a.m., in
room SD-628, Dirksen Senate Office Building, Hon. Herb Kohl
(chairman of the committee) presiding.
Present: Senators Kohl, Carper, Casey, Smith, and Corker.
OPENING STATEMENT OF SENATOR HERB KOHL
The Chairman. Good morning. We welcome our witnesses to
this hearing. They will talk about both the challenges and the
opportunities that we confront as our aging population changes
the face of our workforce.
Today, people over the age of 65 make up about 12 percent
of the population, but they will make up almost 20 percent in
the next 25 years. In other words, one out of every five
Americans will be a senior by the year 2030.
Experts are talking about what this demographic wave will
mean for Social Security, Medicare and long-term care. But as
we will hear today, we must also address another piece of the
puzzle, namely, how the retirement of the baby-boomers will
impact the strength of our Nation's businesses and our economy.
According to one estimate, as the baby-boomers reach
retirement age, businesses will face a severe shortage of 6
million workers by 2012, and that will grow to 35 million
workers by 2030. Slower growth in the labor force means slower
economic growth and, therefore, lower living standards for
everybody in our country.
In essence, the retirement of the baby-boom generation
threatens to limit the potential of our economy, to lower the
speed limit on how fast it can grow. Today, the Federal Reserve
will present a projection by its economists that economic
growth could decline significantly to 2.2 percent by 2015,
compared with an average of 3.2 percent over the past 40 years.
But demography is not destiny. Today, only about 20 percent
of men and 12 percent of women over age 65 participate in the
labor force at all. Our challenge is to boost those numbers.
Studies show that as older Americans live longer and
healthier lives, many are planning to work longer. According to
a recent survey, 80 percent of boomers expect to work past the
traditional retirement age. Some may recognize the physical and
mental benefits of work, while some may need the additional
income to remain financially secure as they struggle to stretch
their retirement savings.
A few businesses today are paving the way to attract and
retain older workers. One example who will testify today is
Mercy Health System of Wisconsin, who was named AARP's number-
one employer for older workers because of policies such as
flexible work schedules without a loss of benefits.
However, surveys show that while most employers are aware
of the looming brain drain, they are not prepared for it. We
cannot afford to wait until the retirement wave is upon us. We
must encourage businesses to adopt policies now to attract and
retain older workers as they are confronted with the coming
labor force shortage.
The message could not be more urgent, as time is short.
For, after all, the first of the baby-boom generation will
reach retirement age next year.
Today, I am pleased to be introducing two bills that
benefit older workers and businesses in America.
First, along with Senators Cochran, Durbin, Lincoln and
Craig, we are proposing a tax credit for businesses that employ
older workers and offer flexible work programs without a loss
of health or pension benefits. Many older workers would delay
retirement if their employers, like Mercy Health System,
offered flexible work schedules with benefits.
Second, along with Senators Cochran and Durbin, we are
introducing a bill to extend COBRA health coverage for older
workers, improve their access to Federal job training programs,
and establish a national clearinghouse of best practices for
hiring and retaining older workers, the sort of clearinghouse
that GAO will recommend today.
Senator Smith and I have made this issue a priority for
this Committee. Together, we spearheaded a Department of Labor
task force on the aging workforce, and its findings and
recommendations are due this summer. We are also working
together, along with Senator Conrad, on a bill that will
include a range of additional ideas to make it easier for older
Americans to stay in the workforce longer.
This effort must go beyond legislative proposals. We need
to begin a national discussion to change the way we think about
retirement. A one-size-fits-all approach will no longer match
the very different plans that seniors and baby-boomers have for
their later years. So we must incorporate this new mindset into
our national culture. As we will hear today from our witnesses,
our Nation's economic future depends on it.
I turn now to my esteemed colleague and the Ranking Member
on this Committee, Senator Gordon Smith.
OPENING STATEMENT OF SENATOR GORDON H. SMITH
Senator Smith. Thank you, Chairman Kohl, for holding this
important hearing.
We thank all of our witnesses and those attending today. I
look forward to a productive discussion.
As the Chairman has just indicated, we are about to
experience an unprecedented demographic shift with the aging of
the baby-boomer generation. Many, including myself, have
referred to this as a demographic and aging tsunami.
According to the Bureau of Labor Statistics, by 2030, about
24 percent of the population, or 66 million Americans, will be
age 65 or older. Compare this to 2000, when just over 15
percent of our population was over age 65.
The aging of our population, along with a number of other
trends, will have significant impact on many aspects of our
society, not the least of which will be strains on Social
Security, Medicaid and Medicare.
The aging of America will also impact our labor market,
including potential labor shortages. This would hurt both
competitiveness of many American businesses and our economic
growth as a whole.
We also must be concerned with a possible brain drain. Our
workforce will be losing some of our most experienced workers,
many of whom have skills that are simply not easily replaced.
However, the effects of these trends can be mitigated if
older workers--and, again, I emphasize older workers by their
own choice--decide to stay in the workforce longer. I am
pleased to be working with Chairman Kohl to address this issue.
In response to our urging, the Labor Department has
convened the Task Force on the Aging of the American Workforce.
This initiative has brought together agencies from across the
Federal Government to collectively address the workforce
challenges and help develop opportunities for our aging
population.
The task force plans to finalize its findings and
recommendations sometime this summer. I look forward to their
input, and I expect it will provide us with many legislative
ideas and opportunities to get ahead of this problem.
In addition, I am working with Senators Kohl and Conrad to
develop legislation addressing the older workers issue.
Specifically, our bill will provide incentives to older
Americans to stay in the workforce longer, encourage employers
to recruit and retain older workers, and eliminate barriers to
working longer.
So I thank all of you for being here today.
I want to particularly thank one of my constituents,
Preston Pulliams of Portland Community College. He is with us
today. Portland Community College has been a leader in
supporting older learners who want to remain in the workforce,
and I look forward to hearing from him and his valuable
insights on this matter.
So, thank you, Senator Kohl. That is all I have.
The Chairman. Thank you, Senator Smith.
Senator Corker, do you have any comments you would like to
make?
Senator Corker. I will listen to the wisdom of--I am
looking forward to the report that they are going to be making
from the floor. Thank you.
The Chairman. Thank you so much.
Senator Corker. Yes, sir.
The Chairman. Senator Casey, do you have any comments?
Senator Casey. I, as well, will wait for the testimony.
Thank you.
The Chairman. Thank you so much.
We turn now to Panel 1. Our first witness will be David
Walker, who is comptroller general of the United States and
head of the U.S. Government Accountability Office, GAO.
Mr. Walker has long taken an active interest in retirement
policy and issues confronting our aging population. He and his
staff have been an invaluable resource on this issue, and their
work has been a real catalyst for action. We are pleased that
Mr. Walker is here today to tell us about his most recent
contribution, a forum that he convened on older workers.
Our second witness on the first panel will be Dr. Donald
Kohn, who is Vice Chairman of the Board of Governors of the
Federal Reserve System. Dr. Kohn has served as a member of the
Board of Governors since 2002. He was sworn in as Vice Chairman
in June of 2006.
He has more than 20 years of experience at the Federal
Reserve and holds a Ph.D. in economics from the University of
Michigan. Dr. Kohn is here to discuss declining labor force
participation in an aging society and the impact on the labor
force and on economic growth.
We are very pleased to have you both with us this morning,
and we will take your testimony.
Mr. Walker, we would love to hear from you.
STATEMENT OF DAVID WALKER, COMPTROLLER GENERAL, U.S. GOVERNMENT
ACCOUNTABILITY OFFICE, WASHINGTON, D.C.
Mr. Walker. Thank you, Mr. Chairman, Senator Smith, other
senators of the Senate Aging Committee. I assume that my entire
statement will be entered into the record, Mr. Chairman----
The Chairman. Without objection.
Mr. Walker [continuing]. Therefore, I will move to
summarize.
I am pleased to be here today to talk to you about the
opportunities and need for incentives for older workers to
continue to contribute their considerable skills and knowledge
and why it is vitally important, not just to them as
individuals, but also to our national economy.
By the way, many people use the term ``older workers.'' I
prefer the term ``seasoned workers'' in order to recognize the
considerable skills, knowledge, and experience that these
individuals, who have more years, can bring to our workforce.
As I know you are aware of, and as I know that my colleague
at the table will testify, there are dramatic demographic
changes that are a certainty that we are going to face, and,
therefore, there is a need to focus on this issue.
There are a number of benefits that could be attained by
better capitalizing on the tremendous national resource
evidenced by and reflected in older workers.
First, many of these individuals need to work longer in
order to boost their retirement savings.
Second, having seasoned Americans work longer will help
employers deal with the projected labor force shortages that we
expect to occur.
Third, having individuals contribute their skills and
knowledge longer will help us with economic growth and will
enhance Federal revenues, as well as helping to defray some of
the anticipated costs associated with the tsunami of
entitlement spending that is on our horizon.
Last, but certainly not least, several studies have shown
that the longer people are mentally and physically active, the
longer they are likely to live and, in many cases, the happier
they might be.
Despite all the potential gains of having seasoned
Americans work longer, there are a number of barriers that have
prevented them from doing so. Some of these are legal, some of
these are cultural, and some of these are reflected in other
areas.
We clearly believe that more needs to be done by employers
as well as individuals and possibly the Government in order to
facilitate the more effective utilization of this large and
growing national resource.
At the same time, we must recognize that there are some
Americans who, because of physical disabilities or otherwise,
may not be able to work longer, despite the fact that our
economy is becoming more knowledge-based, and, therefore, brain
power rather than brawn power is really what will drive most of
our future economic growth.
On December 5, 2006, we held a forum at GAO on this issue.
I believe a copy of the report has been provided to all the
Senators, and I will not discuss it in detail. But I will tell
you that it was a very informative session. There were a number
of observations and recommendations that came out of that
forum.
It is important to note that individuals from broad
perspectives came together, agreed on a number of issues, but
that this summary does not necessarily reflect the opinion of
any individual or organization that participated, including
GAO, although I am happy to let you know what our views are in
the Q&A session.
Forum participants reported that obstacles continue to
hinder the ability of individuals to work longer; that certain
employer perceptions regarding older workers are outdated and
need to be effectively addressed; that there are a variety of
best practices, however, that some employers are utilizing in
order to attract and retain more seasoned workers, including
more flexible work arrangements and adapting their job design
to better suit the needs and interests of seasoned workers;
that they are also modifying their benefit programs and other
policies to try to help achieve this objective.
There clearly was a recognition that there is a need to
enhance financial literacy, because, in many cases, quite
candidly, we have individuals who are retiring who do not
realize that they cannot afford to retire, that they will not
have enough income to be able to maintain their standard of
living for the period of time that they are likely to live post
their retirement date.
There are a number of things that I think should be
considered, including looking to determine whether or not our
existing pension laws, our social insurance programs, might
need to be modified in order to encourage people to work
longer, not necessarily to require them to work longer but to
encourage them to work longer.
We also need to look at our age discrimination laws and our
employment and training practices to find out whether they
might have to be modified in order to better capitalize on this
resource.
In summary, engaging and retaining older workers is
critical for promoting economical growth, improving Federal
finances, and shoring up retirees' retirement income security.
Given existing trends and the aging of baby-boomers, pressures
on Federal entitlement programs, and threats to individuals'
retirement security, it is in our Nation's interest to
encourage Americans to work longer.
Despite evidence indicating the future importance of
seasoned Americans to contribute longer to the workforce, there
are various barriers and misperceptions that continue to get in
the way of making progress.
Clearly, there are things the Federal Government should
consider doing, including, among other things, promoting the
formation of a public-private partnership and a Federal
clearinghouse to be able to increase awareness of this issue
and to promote best practices among interested parties.
Thank you, Mr. Chairman. I am more than happy to answer any
questions that you and the other members have after my
colleague has an opportunity to speak.
[The prepared statement of Mr. Walker follows:]
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The Chairman. We thank you, Mr. Walker.
Now we turn to Dr. Donald Kohn.
STATEMENT OF DONALD KOHN, VICE CHAIRMAN, BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM, WASHINGTON, DC
Mr. Kohn. Thank you, Mr. Chairman.
Chairman Kohl, Senator Smith, Members of the Committee, I
am pleased to be here today to discuss some recent research at
the Federal Reserve on the effect that population aging may
have on the growth of the labor force.
I, too, will be reading a somewhat condensed version of my
testimony, and I will be referring to charts at the end of my
testimony that are also on the easel over here to my right.
As we all know, the United States is at the front edge of a
massive and important shift in the demographic composition of
the population. Exhibit 1 shows that, around 2003, the
population of those age 62 and older began growing as a share
of the population age 16 and older. According to projections
from the Bureau of the Census, shown in the shaded area of the
exhibit, this upward trend in aging will steepen noticeably in
the next few years.
A subset of the adult population is in the labor force,
that is, are either actively looking for work or have a job,
and this is shown in Exhibit 2. Because the participation of
men and women in the labor force declines sharply after age 50,
the rising share of older individuals will put significant
downward pressure on the total labor force participation rate
in coming years, provided the basic pattern of participation
over the life cycle is maintained. That is the pattern you can
see on the chart in the rise and, in particular, the fall after
age 59 in that participation.
Changes in the labor force behavior within age groups also
have the potential to affect labor force participation. Exhibit
3 shows that by the time men born in 1935 reached age 30, about
97 percent of them were in the labor force. In contrast, only
about 92 percent of the 30-year-old men born in 1976 were in
the labor force.
Now, until recently, this decline in the labor force
participation rate of successive generations of men had been
more than offset by a steady increase in the participation
rates for each new generation of women. Women born in the
1920's and 1930's had low participation rates at age 30, but
three-quarters of the 30-year-olds born in 1960 were in the
labor force. However, participation rates for more recent
generations of 30-year-old women have not risen any further,
and you can see the red line levels out in that chart.
Economists at the Federal Reserve have developed a model
that combines information on the decline in labor force
participation at older ages with information on changes in the
labor force participation across generations. Exhibit 4 shows
the actual participation rate, the model's estimate of the
underlying trend between 1995 and 2006, and the model's
projection of the trend in participation out to 2015.
Now, as you can see from the red line in that chart, the
estimated trend has been declining since about 2002 and is
projected by the model to fall substantially further by 2015. I
would add that if the chart were extended, that line would
continue to move downward.
That decline in the overall participation rate, coupled
with the slowing in the growth of the working age population
projected by the Census Bureau, would be consistent with a
slowing in the annual growth of the labor force from the
roughly 1.25 percent average of recent years to only a .25
percent rate of increase in labor force by 2015.
Now, this forecast is predicated on a number of
assumptions, some of which may not be borne out. As I outline
in Exhibit 5, several factors that are not incorporated into
the model may work toward raising the labor force participation
rate. In particular, increasing longevity and improvements in
health may induce many more individuals to remain in the
workforce well past age 65.
For their part, employers, upon facing slower growth in the
labor force, may attempt to attract and retain older workers by
enhancing wages and benefits, creating more flexible work
strategies and schedules, and increasing training.
Government policies can also influence the attractiveness
of remaining in the workforce. For example, to raise
participation rates among older individuals, policymakers could
seek ways to preserve or enhance the incentives to work beyond
traditional retirement age.
Finally, to a limited extent, immigration has the potential
to alter the future pace of labor force growth.
Some of the influences described above may already be
boosting the participation rate relative to the model's
prediction. As shown in Exhibit 6, the labor force
participation rate of individuals aged 62 and older has been
rising markedly since 1995. To some extent, this increase
simply reflects the aging of a generation of women who were
more likely to be in the labor force throughout their lifetimes
than earlier generations. However, the magnitude of the rise is
greater than can be explained by this factor alone.
Reflecting the considerable uncertainty that surrounds any
long-term economic projection, economists hold a range of views
about the pace of future labor force growth.
A projection from the Congressional Budget Office is shown
in Exhibit 7. The CBO foresees the pace of trend labor force
growth slowing to .5 percent by 2015. That is a smaller
deceleration than projected by the model that the Board staff
has, but it is still a very significant slowing.
As I indicated at the outset, the aging of the population
has important implications for future generations. Because
total output is equal to output per worker times the number of
workers, a slowdown in the rate of labor force growth will, all
else equal, tend to slow the growth of output, and that is
shown in the rightmost column of Exhibit 7.
Moreover, if the growth in the labor force is lower than
population growth, output per person will, all else equal, rise
even more slowly than output per worker.
Indeed, as indicated by comparing columns 1 and 2 with
column 3 in the exhibit, both the Federal Reserve's staff
projection and the CBO projection for growth of the labor force
through 2015 are lower than the growth of the population
expected in that period by the Census Bureau. Consequently, on
these projections, the level of output per person will be lower
than it would have been without population aging.
Increasing labor force participation would help reduce
these effects, but is unlikely to completely offset them. Thus,
without an offsetting increase in productivity growth, the
aging of the population likely means that output per person
will have to be lower than it would have been in the absence of
population aging.
Accordingly, a critical question is how that burden will be
distributed across generations. If we do nothing, it will by
default fall entirely on future generations. However, by
foregoing some consumption today to increase national saving,
we can take on some of that burden today and thereby raise the
living standards of future generations.
A rise in saving can achieve that shift, because the extra
savings would be used to increase the Nation's stock of capital
or increase our net holdings of foreign assets. Increasing the
amount of productive assets owned by Americans increases the
amount of consumption that future generations will be able to
enjoy.
Determining the best way to distribute the burden
associated with the aging of the population should be high on
society's list of priorities.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Kohn follows:]
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The Chairman. Thank you, Dr. Kohn.
Mr. Walker, your forum participants said that most
businesses are not focused on this issue and may not act until
there is a crisis.
Given the labor force projections, do you think that
Government has an important role to play in encouraging
businesses to act sooner to attract and to retain older
workers?
Mr. Walker. Given the significant national implications
that both of us have talked about, I do think that there is a
broader public interest. I think that consideration needs to be
given as to how public-private partnerships might be able to be
used in order to enhance public education, and to facilitate
sharing of best practices.
I also think that Government should look at its own
policies and programs to determine what it can do to lead by
example. For example, the Government is the largest employer in
the United States. What can and should we do in order to lead
by example with regard to our own policies with regard to
seasoned workers?
Furthermore, as the Government looks down the road
entitlement reform, namely Social Security, Medicare and
Medicaid, tax reform and health-care reform, what can be done
to try to facilitate and encourage people to work longer? I
think there is a lot there.
Hopefully, we will get some of that out of the Labor
Department's interagency task force that you referred to
earlier. We are anxious to see what they come up with.
The Chairman. Isn't it true--and I think you are saying it
is true--that our whole philosophy in this country, which has
been at 65 people just naturally retire, and our entitlement
programs are predicated on that and pension programs are
predicated on that, and we sort of drum it into the mindset of
people in our country that when you get to be 65, you retire--
that whole philosophy must change if we are going to get older
people in the workforce?
Mr. Walker. Mr. Chairman, I think you are exactly right. I
think a lot of times, people don't realize that Federal
policies can have unintended consequences.
Let me take my father as an example, who was an executive
with what now will be AT&T. He, was looking into determining
when he was going to retire, and the fact that Social Security
said you could retire at 62 had a significant psychological
impact on him.
Furthermore, his employer piggy-backed on the Social
Security early retirement age and made the employer-sponsored
programs equivalent to the Social Security program. So, there
were tremendous psychological factors that were involved here.
When you get right down to it, Social Security is not material
to his particular retirement income, but that is something we
need to think about.
Frankly, I would respectfully suggest, I don't know if
there is anything as a normal retirement age anymore. Maybe
there is an age at which you get full benefits, where you don't
end up having a penalty if you end up leaving earlier, or where
you might get a supplement if you retire later. But words
matter, and I think we need to think about our terminology and
think about our policies in light of the tremendous changes in
the economy and in light of the workforce shortages that we are
expected to see in the future.
The Chairman. That is very good.
Dr. Kohn, I think you are telling us that if we don't
somehow anticipate what is happening, and perhaps even if we
do, we will not be able to change the outcome; our standard of
living is likely to be affected considerably by this change in
demographics.
Mr. Kohn. That is correct, Mr. Chairman. You can see it in
the chart over there on Exhibit 7, and I think, partly, you see
it in comparing the first or second column with the third
column.
We have a situation in which the labor force will be
growing less rapidly than the population. That means each
worker, in effect, is working for more people, and the
consumption of the folks who aren't working, who are dependent
on the other folks, will have to be supported by their work.
So we will have increases in standards of living, but they
won't be as rapid as they would be without the aging
population. You can see, looking at, say, columns 4 and 5
there, we have enjoyed about a 2 percent increase in average
standards of living over the last 10, 11, 12 years. Now, look
down to the last column, and that is about a 1.5 percent
increase in the average standard of living. If people expect
their recent gains to continue, they are going to be
disappointed.
So I think, yes, we do need to take steps to share the
burden of how people retire and want to retire across
generations. I think we need to take the steps that you and Mr.
Walker have been talking about to encourage people to
participate more in the labor force, to have more flexible work
rules, to make sure that the Federal Government rules and the
entitlement programs aren't putting barriers up, either
psychological or real barriers, to people adopting a more
flexible attitude toward retirement.
These are serious questions that stretch across generations
that we need to confront.
The Chairman. Thank you so much.
Senator Smith.
Senator Smith. Thank you, Mr. Chairman.
Mr. Walker, we are going to hear from a community college
president from Oregon soon about skills. I am wondering, when
you had your GAO older workers forum, did you focus at all on
the skills gap that may exist for seniors and what we can
better do to help remedy that?
Mr. Walker. We did talk some about that. Probably the
biggest skills gap that exists is that many seasoned Americans
aren't as proficient with technology as younger workers are, in
part, because----
Senator Smith. I would be in that number, too, by the way.
Mr. Walker. Yes, and I would imagine there would be a lot--
but we don't have to identify everybody. [Laughter.]
That is a real challenge. Now, some jobs require
proficiency with regard to the use of technology and some
don't. But I think that is clearly an issue that more attention
has to be focused on, and that was probably the single biggest
issue that came out.
Senator Smith. Yes. You know, I am just astounded at how
much new technology comes out every year that is baffling to
folks. That is probably undoubtedly an area where we can do a
better job incentivizing community colleges to reach out and
fill that gap.
I don't know if you have a comment on that, Dr. Kohn.
Mr. Kohn. I agree that that is a problem for all of us, I
think, most of us in this room. But I do think that technology
also helps to simplify job tasks to a certain extent, and
people can be taught. I don't think I am as teachable today as
I was 30 years ago, but I don't think I have stopped learning,
and I am using technology a lot better and a lot smarter than I
did just a few years ago.
So I think there are ways of adapting jobs and adapting the
technology to most of the people in society. You don't need to
be cutting-edge, high-tech to use this.
The technology is helping, I think, and should actually
help older workers stay in the labor force by structuring the
jobs in a more flexible way, for example, meaning that you
don't have to commute by car. Telecommuting and things like
that are also a product of technology. So I think it is a plus
as well as a problem.
Mr. Walker. I think we also have to keep in mind that,
because of some of the comments that have been made earlier,
many individuals may not want to embrace learning technology
because they are planning to retire by a certain age, because
they want to or because they think they can afford to, which,
in many cases, they can't.
I think that one of the things that clearly has to happen
is that we need to do more to help individuals plan, save,
invest and make more informed decisions about when they really
can afford to retire.
There are many Americans that don't realize that, with
expected life spans, they have to have a lot more money than
they may have at the point in time that they retire. That would
provide them, then, another incentive to improve their skills
such that they will ultimately be in a position to where they
can retire comfortably at that point.
The Pension Protection Act also was a positive step
forward, which Congress passed last year. It provides some
flexibility for individuals to go from full-time work to part-
time work and draw on their pensions. That was a huge barrier
before, because you had to change employers in order to draw on
your pension, which, obviously, didn't make a whole lot of
sense.
So we are starting to make some changes that I think are
necessary, but much more needs to be done.
Senator Smith. I wonder if you can speak to financial
planning literacy. I wonder if there is more that we could do
at the Federal Government to foster that.
I have a bill that requires Social Security every year to
send seniors a retirement readiness checklist what with
questions such as will it take for you to retire, what income
will you need, have you determined your life expectancy, and
what are you saving?
I think you mentioned, David, that the savings rate is
negative. I think most people--and if there are seniors
watching this--understand that that calculation made by the
Government is literally about two lines: What did you make,
what did you spend, and the net is the savings rate.
But I wonder if you could speak to the issue of what the
Federal Government can better do, perhaps through the Social
Security Administration, to facilitate financial planning
literacy.
Mr. Walker. Well, first, it is my understanding that for
the last 2 years in a row, Americans spent more money than they
took home, now, possibly because of taking out home equity
loans--I mean, there are a lot of ways you can get there. But
the last time that that happened, it is my understanding, was
1932 and 1933, which weren't particularly good years for the
economy.
Now, we are in a very different situation than 1932 and
1933. I think one of the things we have to recognize is that we
need to look at our education programs, and we need to start no
later than high school and probably earlier than high school
with regard to financial literacy. It is amazing to me how few
young people really understand the basics.
Unfortunately, many Americans are following the bad example
of their Federal Government. They are spending more money than
they make. They are adding debt at record rates, and they are
facing increasing debt service costs due to compounding
interest.
So I would say that Government needs to lead by example
more, but I would also say that we need to figure out how
Government can work at all levels to increase financial
literacy and related education efforts, starting early.
Yes, we should think about what else could be done for
individuals who are approaching retirement. But, quite frankly,
in many cases, that is too late because people need to start
thinking about planning, saving, investing and preserving for
retirement so they can benefit from the miracle of compounding,
because if they just find out late in the ball game, they have
a lot fewer options.
Senator Smith. Dr. Kohn.
Mr. Kohn. Senator, financial education has been a major
initiative for the Federal Reserve over the last few years.
Importantly, we are responding not only to the issues that Mr.
Walker and you are talking about, the fact that people are
living longer and need to think more carefully about what they
have, but also the increasing complexity of the instruments
available to people to borrow and to save.
People need to understand the implications of what they are
doing, the implications of the contracts they are signing for
their future welfare. The Federal Reserve has a number of
programs starting in schools, working hand in hand with school
systems across the country to start this education process. But
it is a big and growing problem.
The financial miracle of our markets has extended a lot of
opportunities down the income scale, across the age scale--
opportunities for borrowing and saving that weren't there 5,
10, 20 years ago. But extending those opportunities means that
we need to make sure the folks that are newly attracted in the
financial system understand what they are getting and what the
implications are.
It is a big issue.
Senator Smith. Thank you very much.
The Chairman. Thank you, Senator Smith.
Senator Corker.
Senator Corker. Yes, Mr. Chairman.
Thank you. This has been great testimony.
Yesterday, in our offices, we went through some of the
tremendous financial implications to our country and to
individuals as it relates to the very subject matter you are
talking about right now. Obviously, Congress has not been
particularly adept at dealing with some of these upcoming
issues, and yet people working longer and saving more can be
one of those things that actually can give us some breathing
room and actually be productive for us.
I would love to hear some specific policy measures--I know
you all have talked about incentives--both to encourage people
to stay longer in the workforce, but also to addressing the
savings side, which, obviously--as I traveled around the State
of Tennessee extensively over the last couple of years prior to
being here, I have a tremendous fear that we are going to have
not just a tsunami as it relates to the workforce issue, not
just a tsunami as it relates to Social Security and Medicare
within Government, but I just see so many people that are going
to be devastated in later years because of a lack of
understanding about saving for retirement and not having the
funds in place.
I would like to hear specific proposals that we here in the
Senate might engage in to actually correct this.
Mr. Walker. Well, I have mentioned a few things already,
but let me note that I think we have four serious deficits in
America today. We have a budget deficit. We have a balance-of-
payments deficit, of which the trade deficit is a subset. We
have a savings deficit. We have a leadership deficit.
Now, on the savings deficit, saving is critical to our
future economic growth. It is critical to improving our
standard of living over time. With savings, you get investment.
With investment you get R&D. With R&D, you enhance
productivity. With enhanced productivity, you can improve
economic growth and you can improve our standard of living.
We have dis-savings at the Federal level, because we are
running large deficits, larger than advertised, because we are
spending all the Social Security surplus. We have negative
savings rates for individuals, and that is a matter of concern.
I think Americans need to recognize the reality that Social
Security, Medicare and Medicaid will be reformed, and that
people will have to assume more personal responsibility for
saving and investing and preserving those savings for
retirement.
Now, that is going to be for younger people more than,
after, people who are already retired or are nearing
retirement. You are going to see little to no changes, in all
likelihood, for those individuals. But the people who are not
retired or who are not approaching retirement age, are going to
have to assume more personal responsibility.
I think the other thing we have to recognize is we have a
lot of tax incentives for saving. They result in a lot of
foregone revenues. So we need to do a better job of analyzing,
do they really increase the savings rate? Second, who benefits
from those tax incentives?
I think one of the things, quite frankly, that we are going
to have to think about, possibly in conjunction with Social
Security reform, is whether or not there base ought to be a
mandatory savings on top of a reformed and defined benefit
Social Security program, e.g., 2 percent mandatory savings,
payroll deduction, going into an individual account, into a
real trust fund, with real fiduciary responsibilities, with
limited investment options along the lines of the Federal
thrift savings plan, that would provide a pre-retirement death
benefit, that would help to fund for long-term care, that would
help to link people to the markets and how investments work.
So I think we are going to have to think outside the box,
because I think our historical approaches, quite frankly, have
not been very effective.
Mr. Kohn. Senator, I think if I could build on one of the
remarks Mr. Walker made about people coming to realize what
they can and can't count on in Social Security and Medicare,
here is an example where, I think, the sooner we can act, the
better.
I think people have to see action by their elected
representatives to address these problems, so they can see what
they can and can't count on in the future, so they can do the
planning they need to do to have the savings, the flow of
income, that they want to have in retirement.
These are issues in which the longer we delay attacking
them, the worse the issues get. That demographic imperative
means that you are not going to really cut benefits or make
major changes for people near retirement. You want to give
people a warning. This would be only fair. The longer we wait,
the more that tsunami, that upswing in that chart, comes into
play, the fewer people that can be affected by these changes.
So I think one of the really most important things that you
could do as our elected representatives is to tackle these
programs soon, so that people know and can plan on what they
need to save. That would be No. 1.
No. 2, I agree that you should be looking at the incentives
to save in the tax system. We have moved into the direction, to
some extent, of taxing returns from savings a little less than
we used to. But this is one of the issues raised by the tax
commission last year, and that is something that you should be
looking at. I don't know whether we are in the right place or
not. That is really your decision.
But I think that interaction of the tax system and savings
would be another fruitful place to look, as well as some of the
things that we were talking about before, whether Social
Security, Medicare, ERISA regulations, pension regulations are,
at least, not giving people the wrong signals about when they
should retire.
Senator Corker. Mr. Chairman, thank you for this testimony.
I hope that each of you will meet personally with me later
on. We want to set something up. We follow very much what both
of you do, and I just see human tragedy on the horizon.
So many people are working for companies--you go, you talk
to them in the lunchroom where they are working, and they say,
``Oh, my company has a 401(k),'' and you say, ``Well, how much
are you putting into it?'' ``Nothing.''
I think that all of us together need to show leadership to
cause people to really begin to act in a different way. I
certainly realize that we in Congress have not shown much
leadership as it relates to the financial issues that we are
going to be dealing with down the road as it relates to Social
Security and Medicare.
I thank you, and I look forward to meeting with you
personally. I appreciate it.
The Chairman. Thank you, Senator Corker.
Senator Casey.
Senator Casey. Mr. Chairman, thank you very much for
putting this hearing together. It is a very important issue.
I want to thank both of the members of this panel for your
testimony today as well as your work and scholarship that goes
into the testimony you provide today.
I want to make one comment. Senator Corker and I are in our
first year, and we know the benefit of seasoned workers. Our
colleagues who have been here ahead of us give us the benefit
of that every day.
I come from a State where we have a higher percentage of
those over 65 than virtually any other State, other than
Florida. The last time I checked, it was about 15.6 percent
over 65. The rest of the country around 12.4 percent or 12.5
percent, somewhere in that.
So we have in Pennsylvania, I know, both the reality of
that demographic and also, I think, the opportunity to be able
to test ideas maybe before other States do.
Certainly, seasoned workers--and, Mr. Walker, I am glad you
gave us that terminology. It is important to use the right
terminology. But I have no doubt that those workers play a
vital role in the economy of Pennsylvania and the country.
I think one of the important points both of you have made
is that this isn't just a good thing to do. That, in and of
itself, would be helpful to younger workers to have the benefit
of that experience that their colleagues provide. I think it
would provide, if not an economic benefit, certainly an
intangible benefit you really can't define.
But the point you have made is that making sure that we are
providing incentives for seasoned workers to stay in the
workforce longer is not just an economic benefit, but there is
an economic imperative here.
Mr. Walker, I was struck by your introduction in the GAO
report, where you say in the first paragraph, ``By 2025, the
labor force growth is expected to be less than a fifth of what
it is today. Without a major increase in productivity or higher
than projected immigration, low labor force growth will
ultimately lead to slower growth in the economy and slower
growth in Federal revenues.'' We can't say that enough, and I
am glad that both of you have highlighted that.
Then, also, there was a CBO number which I am reading from
some of the summaries of the testimony: ``From today to 2017,
CBO projects that slower labor force growth will slow average
economic growth to 2.6 percent, compared to an average of 3.2
percent over the past 4 years.''
All of that by way of background to highlight the
imperative. I guess the question I have is very simple, and I
invite both of you to weigh in on this.
In terms of the strategies, the real basic strategies the
U.S. Senate should deal with, whether it is changing the
national mindset, whether it is changing the culture of
retirement, whether it is financial literacy, the clearinghouse
idea that is highlighted in the GAO report, legislation or
regulation to increase flexibility from employers--of those
strategies--because we know what the problem is, and we know
what the imperative is.
Of those strategies, what are the ones that you think are
most effective and most likely to be the subject of action in
the U.S. Senate?
Because too often we talk about theories, but we need to
move the ball down the field, so to speak, expeditiously.
Of those strategies or others, what do you think are the
most important, first? Second, what do you think are the most
likely to have success in the U.S. Senate and the House?
Mr. Kohn. Well, Senator, I would hate to choose. I would
like to say all of the above and dodge the question in that
way. But I do think that the problem is serious enough that we
can't afford to operate on some dimensions and not others.
As you were talking, I was thinking about my own mother,
who was a resident of Pennsylvania and who retired as a teacher
and then went back to work part-time, using some of her teacher
training, at the Philadelphia Museum of Art. She had a second
career of 20 years after her retirement. She had the
opportunity because it was part-time, the hours were flexible,
and they used the skills that she had acquired as a teacher in
the Pennsylvania school systems.
So I think that, to a considerable extent, people, through
their private initiatives, will do a lot to solve these
problems. Businesses will see that their incentives are to make
work available that people can do, to be flexible. Individuals
will be incentivized by the fact that they are living longer
and feeling better. They are capable of working. They get a lot
of satisfaction, as I know my mother did out of her work
experience. I think, to a large extent, this will be taken care
of by the private market.
But we need to be very certain that people in the private
sector are educated to what is possible and what can be done.
We have all worked in places that are reluctant to make changes
because there could be costs to them. But if they can see that
other firms have made changes to accommodate seasoned workers,
that there haven't been the costs that they might fear, I think
that this would be very important.
So it is information, it is policies. I just don't think we
can choose certain things.
Senator Casey. Thank you.
Mr. Walker. Senator, I believe that, ultimately, market
forces will come together and they will force people to act.
But we need to figure out what we can do to encourage
people to act sooner rather than later, because this is a
national imperative. This is not a want; this is a need. We
need to do something here.
Now, I would respectfully suggest that there are probably
several categories.
One category would be: What are some of the things that
need to be done, that need to be done cooperatively, that might
require public-private partnerships, not necessarily just
involving the Federal Government, but also involving State and
local Government public education, the clearinghouse idea,
financial literacy efforts? What can be done at different ages
to try to help in that regard?
Second, let's make sure the Government leads by example.
The Federal Government is the largest employer in the United
States. Let's make sure that our Government policies and
programs are such that we are actually leading by example here.
Then, last, I would say that there are certain things that
only the Federal Government can do. The Federal Government is
going to have to reform Social Security, Medicare and Medicaid,
sooner rather than later. The Federal Government is going to
have to engage in comprehensive health-care reform, and it is
going to have to engage in comprehensive tax reform, probably
in installments over a number of years, but we need to get
started.
So there are certain things that we should encourage. There
are certain things that we should do in partnership with
others. There are certain things that we should lead by example
as the largest employer in the country. There are certain
things that only the Congress, in conjunction with the
President, can do, and that has to deal with legislative
actions.
Senator Casey. Thank you very much.
The Chairman. Thank you very much, Senator Casey.
Gentlemen, I cannot say how much we appreciate your being
here today and giving us the benefit of your experience and
your wisdom. It has made a big contribution to this hearing and
to the whole effort that we are engaged in. So we thank you for
coming here today.
Mr. Walker. Thanks.
I would like to thank our staff. Our staff does a great
job, and I just try to make sure I don't let them down.
The Chairman. Thank you.
Mr. Kohn. Thank you, Mr. Chairman.
The Chairman. Thank you.
Now, we will turn to our second panel.
Our first witness on the second panel is Dr. Marcie Pitt-
Catsouphes. She serves as director of the Center on Aging and
Work, a unique research center at Boston College. She holds an
MSP from Boston College and a Ph.D. from Boston University. She
is here to describe the impact of the aging workforce on
businesses and what they could do, but are not currently doing,
to prevent a brain drain.
The second witness will be Javon Bea, president and CEO of
Mercy Health System. I am proud to say that Mercy Health
System, based in Janesville, WI, is ranked the number-one
employer for older workers by AARP, in part because of its
flexible work schedules.
Mr. Bea's leadership and success in the business world is
widely recognized, and I hope other companies will follow his
example. He will discuss his company's need for older workers,
his policies for hiring and retaining older workers, as well as
a need for other companies to adopt similar policies on a
Nation-wide scale.
We have a third witness from the State of Oregon, who
Senator Smith will say a word about.
Senator Smith. Thank you, Mr. Chairman.
It is my pleasure to again welcome Dr. Preston Pulliams. He
is a great Oregonian, and he is also the district president of
the Portland Community College. He will be discussing Portland
Community College as it is supporting older learners who want
to remain in the workforce and partnering with businesses to
assist them in retaining older workers.
So thanks for coming, Preston.
Mr. Pulliams. Thank you, Senator.
The Chairman. Thank you.
Ms. Pitt-Catsouphes.
STATEMENT OF MARCIE PITT-CATSOUPHES, DIRECTOR, CENTER ON AGING
AND WORK/WORKPLACE FLEXIBILITY, CHESTNUT HILL, MA
Ms. Pitt-Catsouphes. Good morning, Senator Kohl, Senator
Smith and Members of the Special Committee on Aging. I
certainly thank you for the opportunity to come and speak
before you today.
This morning, I would like to address four key points.
First, as we have already discussed, the time really is
right.
Demographers have used the metaphor of the pig and the
python to describe how the baby-boomer population group has
changed the contour of virtually every societal institution.
Today, the boomers have passed the midsection of that python.
An average of 4.6 adults will turn 65 each minute in 2007. By
2025, this will increase to an average of 8.0 adults per
minute.
The projections for the aging of the labor force are also
dramatic, and these statistics compel us to pay attention. If
you consider older workers to be those who are 45 years and
older--and I want to emphasize that this is an age demarcation
that is often used at the workplace--older workers comprise
approximately 40 percent of today's workforce.
Labor economists anticipate a significant increase in the
percentage of older workers over the next 5 years, a 48 percent
increase in the number of workers aged 55 to 64 and a 40
percent increase in those 65 and older.
There really are three basic sets of reasons why anywhere
from two-thirds to three-quarters of older workers anticipate
working into their 70's.
First, as we have discussed, our life spans have expanded,
and most people report they enjoy relatively good health during
their older years. This makes it possible for people to
consider working longer. If older adults leave the labor force
as early as 62, they could have two decades or more in
retirement, and many boomers are telling us this is just too
long for full-time retirement.
Second, many boomers do not have sufficient savings, as we
have discussed, for the 20 or more years of retirement. These
boomers will face precarious financial situations if they
retire completely, and a substantial number will, in fact,
outlive their savings. This is the have-to reason.
Third, a significant portion of boomers indicate they also
want to work, because being employed offers many quality-of-
life benefits.
My second point is that flexible work options, indeed, are
important. Although a majority of older workers expect to work
past what has become our traditional retirement age, few of
them, in fact, less than 10 percent, report they want to work
on a full-time, full-year basis.
Older workers are seeking flexible employment situations
which includes opportunities, choice and control. These
flexible work options can take many shapes, but they include
options for different starting and quitting times, the number
of hours worked, the number of months they work each year,
provisions for entering and exiting, re-entering the workforce,
and remote work.
The access that older workers have to flexible work options
may well be one of the most critical factors in their decisions
about whether they can and they want to remain in the labor
force. But here is the rub: Only a minority of U.S. workers has
access to the flexible work options that they both want and
need.
My third point is that employers are not yet taking many
steps to get ready for the aging of the workforce. Indeed, many
employers are aware of the predictions about the anticipated
labor force shortages, and they acknowledge the value that
older workers already do add to the workplace.
Let me first speak to the labor force shortages briefly. As
we have discussed, many labor force economists feel that U.S.
businesses, at least those in some industries and in some
regions of the country, will face either workforce shortages in
general or may not be able to find the talent they need for
specific occupations.
The second point is the one that is most compelling for
employers, that, in fact, there may not be enough people to
fill jobs in some professions which depend on experienced
workers, and these could confront challenges if a majority of
the boomers abruptly transition into full-time retirement.
Specific industry sectors, such as health care, may be
particularly vulnerable to occupational replacement needs.
The second point here is the value of older workers. This
past year, our Center on Aging and Work/Workplace Flexibility
conducted a study to explore the perspectives of U.S. employers
about the aging of the workforce, their readiness to respond,
and including their adoption of a range of flexible work
options.
The first thing that is important is the employers reported
positive attitudes about their own older workers, these they
have already hired, particularly when compared to their
assessments of young-adult employees and workers at mid-life.
It is particularly important to note that the employers
were likely to report that it is very true that older workers
tend to bring attributes that can directly contribute to
organizational success. These included their high level of
skills compared to what is needed for the job, their
professional networks, their client networks, and their desire
to lead and to supervise.
Despite these positive attitudes, however, only a small
percentage of employers in our study seemed to be getting
ready. For example, a fourth of the employers stated their
organizations had not analyzed the demographics of their own
workforces at all, and only a third of the employers reported
that their organizations had made projections about the
retirement rates of their own workers to a moderate or great
extent.
Over half of the employers say that they have made a
strategic link between flexible work options and business
effectiveness. Unfortunately, less than half of the employers
say that they allow most or all of their full-time employees to
access different forms of flexible work options.
The fourth point is that employers are interested in
information about promising practices. In closing, I would like
to share with you just a couple of lessons I have learned about
the ways employers pilot-test innovative practices.
First, they want a strong business case for the innovation.
Second, they want solid, research-based evidence about the
probable outcomes of innovative practices.
But as important as these first two steps are, they are
rarely enough to spur employers into action. Business
practitioners often want to see examples of innovative practice
as implemented by other employers before they are willing to
try the innovations at their own workplace.
For this reason, this spring, our center is pilot-testing a
benchmarking data base project for promising practices. We feel
such a data base with rich information about the real-life
experiences will help employers adjust to both the
opportunities as well as the demands of our 21st-century world
of work.
Thank you very much.
[The prepared statement of Ms. Pitt-Catsouphes follows:]
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The Chairman. Thank you very much.
Mr. Bea.
STATEMENT OF JAVON BEA, PRESIDENT AND CEO, MERCY HEALTH SYSTEM,
JANESVILLE, WI
Mr. Bea. Thank you, Chairman Kohl, Ranking Member Smith,
Members of the Committee, for this opportunity to discuss the
shortage that we see of health-care workers coming forth in our
industry.
Mercy Health System currently operates 63 facilities
throughout southern Wisconsin and northern Illinois. We are
based out of Janesville, WI.
As Chairman Kohl mentioned, last fall, we were named as the
number-one employer in the Nation by AARP for workers over 50.
Currently, 28 percent of our workers are over the age of 50,
and we expect this number to grow in the upcoming years.
We actually started to analyze this problem about a decade
ago--the impending shortage of health-care workers.
Just a couple of interesting statistics that isn't in my
written testimony that I came across is that we employ at Mercy
hundreds of physicians, and by 2020, the number of physicians
that are expected to retire each year is going to be greater
than the number who graduated last year.
In 2001, an American Hospital Association survey showed
that 75 percent, 75 percent, three-quarters, of the 168,000
vacancies in health care were nurses. That is a real--it is
hard to run a hospital without nurses.
So, basically, we decided some time ago that we needed to
start to change our systems of scheduling. We started talking
to our older workers, older physicians, nurses and said, ``What
do we need to do in order to keep you in the workforce
longer?'' It came back, as Marcie just stated, flexibility.
They want more control over their time, their lives, to be able
to pursue other things.
So we developed a system that really provides flexibility
in hours of the day, days of the week, seasons of the year, and
location of work site. That way, we are able to recruit older
workers but, more importantly I think, maintain workers that we
have invested a great deal of time, money and training in
through the years, who are still very healthy and have
forgotten the idea that, ``Boy, I am going to leave at age 55
so I can pursue some interest ``or'' I can spend winters with
my husband in Florida.'' What we have done, then, is make that
possible for them to do it now and stay in the workforce.
One of our most popular benefits is what we call our work-
to-retire program, which allows employees over age 50 the
opportunity to work reduced hours, pool hours, work at home,
and still maintain all their benefits.
In the work-to-retire program, if you are age 55 or over,
you can work seasonally. So you work 1,000 a year at your
discretion, and then you can still maintain full benefits
throughout the entire year. So that allows individuals, as I
said, to spend winters in Florida, to pursue other interests.
Some people go on mission work. We just had some nurses go over
and do some mission work in Kenya for 6 months, came back to
their jobs, and maintained full benefits.
What we have done, also, in addition, is invest a great
deal of resources in training programs in order to help even
our non-skilled personnel to be able to adapt to new technology
changes.
We have invested heavily in mechanical assisted lifting
devices at all of our hospitals that allow older nurses to be
able to lift patients more easily using these mechanical
assisted lift devices--doing whatever we need to do to keep
people, again, who are highly skilled, highly experienced, at a
time in their lives where their children are raised, they do
want to give back to society, they do want to keep working, but
they just don't want to be in that 8:00-to-5, Monday-through-
Friday, daily grind all year long.
So throughout the years, we basically have also found--and
this is more of an intangible note--that we have less
complaints, patient complaints, regarding the care provided by
our older workers. Our data shows that our older workers, our
older nurses, are simply, generally--there are always
exceptions--kinder, more patient, gentler, and they relate.
You have to be really sick to get into a hospital today.
You are usually older, and I think the more mature worker can
actually relate to many of our patients sometimes more than our
younger workers.
So as a consequence, our older workers serve as good
mentors. They serve as good role models. We started to discover
on the patient floors where we had older workers that we had
better patient satisfaction, because they were having a
positive influence in a mentoring role on our younger nurses.
So as a business, we really think that we benefit, as well
as our older workers benefit. Some of our folks, because they
are highly skilled physicians, nurses, they tell us that they
are at a point--and with our retirement program, they are not
so much working for the money.What they don't want to do is
have to work the Monday through Friday, 8 to 5, all-year grind.
So they really want to continue to contribute to society.
So we really believe that providing programs will help
older workers stay in the workforce. It is a win-win for
businesses, as well as the workers.
I think what I would like to do is just thank you again for
inviting me and then open up to any questions.
[The prepared statement of Mr. Bea follows:]
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The Chairman. Thank you, Mr. Bea.
Mr. Pulliams.
STATEMENT OF PRESTON PULLIAMS, DISTRICT PRESIDENT, PORTLAND
COMMUNITY COLLEGE, PORTLAND, OR
Mr. Pulliams. Good morning to Chairman Kohl, Ranking Member
Smith and Members of the Committee. I want to thank you for the
opportunity to testify this morning and to talk about this
subject of the aging workforce and its impact on business and
economy, but also what the local community college can do in
this situation.
At Portland Community College, we are experiencing, in
part, a trend or a national trend in terms of aging baby-
boomers and pre-boomers returning to college or school, not
simply for enrichment but also for re-training and re-
careering.
In a conference that we are hosting today back in Portland,
OR, at the college, we are releasing the results of three
studies that directly impact the subject that we are discussing
today.
The first is the Oregon Gray Matters, which is a study of
the impact of the aging population on Oregon's workforce.
The second is the AARP employer poll on workers 50-plus, a
survey of some 400 Oregonian employers to determine how they
are preparing for anticipated work and labor shortages.
No. 3, Boomers Go To College, which is a survey at the
college, by the college, of students who are 40 years of age or
older. We believe that this last report may be the first
detailed picture of the needs and aspirations of baby-boomers
as they enroll in college and other lifelong learning programs
across this country.
What we are learning from this work is that 43 percent of
Oregon businesses report that they very likely will face a
shortage of qualified skilled workers in the next 5 years. But
nearly two-thirds of them have also noted that they have taken
little or no action regarding these projected labor shortages.
At the same time, approximately 80 percent of Oregon's
older workers are planning on working past traditional
retirement years. Furthermore, four out of five older students
enrolled at the college are not taking courses simply for
personal enrichment but to upgrade their skills and re-enter
the workforce or re-career.
Given the right conditions and incentives to both older
workers and employers, Oregon can count on this aging workforce
to meet most of its projected workforce needs within the next
decade.
Whether Oregon capitalizes on this great potential will
depend on whether the State can bring together the necessary
range of business, civic, education, and Government actions and
partnerships to overcome the barriers older workers experience
in working longer.
For example, we must work to overcome the misperception
that many employers have about older workers. While a number of
businesses surveyed indicate that tapping into the
institutional knowledge of long-term employees is extremely
important, many businesses believe that older workers are more
costly to employ.
However, AARP's research finds that workers over 50 make up
for any increase in health-care costs with low turnover and a
resulting reduction in recruitment costs, training costs and
loss of institutional knowledge.
To maintain a competitive edge in a tightening labor
market, employers need to help design a workplace that attracts
and retains workers who are eligible to retire. This may
include flexible work schedules, enhanced training
opportunities and competitive benefits.
To stay competitive in a changing labor market, older
workers require skills training and education. However, few
have the luxury to complete a 4-year degree or perhaps even a
2-year degree through traditional semesters and quarters.
Juggling work, home, family and school obligations, older
students are extremely motivated to complete their studies in a
relatively short timeframe through alternative modalities, such
as distance learning, to enable them to translate their
education quickly into meaningful employment.
Colleges can do much to support the older student by
increasing flexibility in class scheduling and content,
providing credit for prior work experience, expanding college
counseling and advisement services to assist older students to
successfully reach their goals, and developing internships and
other workplace training programs in partnership with local
employers in the community.
At Portland Community College, we have developed several
strategies to help older workers stay in the workforce.
The first is the Older Worker Transitioning Program, where
our college, in partnership with several businesses and
nonprofits, have begun a program to help baby-boomers near
retirement to plan for their future. The partnership, Work by
Design Northwest, is built around three stages for its
participants: discover, design and engagement.
In discover, our participant explores his finances and
health to set the stage for planning. In design, he uses the
information to develop a life path. In engagement, they connect
with educational institutions, such as our college or community
organizations, to pursue new careers, volunteer opportunities
and other interests.
The second is a short-term skills training by the college
Career Pathway Program, which has developed 17 professional
technical offerings, most of which are appropriate for older
workers who are no longer capable of working physically
demanding jobs. They are delivered in a compressed schedule, so
students can get back to the workforce quickly.
These programs, which are eligible for WIA funding and
support, are scheduled with the working adult in mind,
organized in cohorts so students can provide support to each
other, linked directly to high-demand occupations.
The college has also developed processes to provide college
credit for prior learning, as well as for work-based learning
that employers might provide. Our objective is to make sure
that all legitimate college-level learning is captured and
leads to credentialing along the way.
The third is helping business manage the aging boom. PCC's
departments are anticipating or working with businesses' needs
to manage impending boomer retirement, to customize service
training programs for employers. The planning workshops also
lead to customized services, such as multi-generational
management, supervisory training, mentoring programs for older
workers so they can transition, again, into less strenuous
work.
In closing, I would like to thank you again for an
opportunity to testify this morning on behalf of the 1,200
community colleges across this country. I sincerely appreciate
your interest and consideration in terms of the work we do in
our institution in addressing this issue.
Thank you very much.
[The prepared statement of Mr. Pulliams follows:]
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The Chairman. Thank you, Mr. Pulliams.
Senator Smith, would you like to ask some questions?
Senator Smith. Yes, thank you, Mr. Chairman.
Preston, I was struck by a comment in a survey you did--
that some businesses were fearful that to employ seniors or an
aging population was more expensive. How big an obstacle is
that? I think you cited AARP to show that that actually wasn't
the case.
Mr. Pulliams. Yes. Again, in our surveys and in terms of
our meetings, in terms of training programs with business and
industry, that appears to be one of those barriers that we are
trying to address. We are also sharing those studies around our
district so that businesses will realize that that is, indeed,
not the case.
But, again, in our surveys, we are finding that that is one
of those, I guess, stereotypical kinds of views about this
particular part of the population, but it is, indeed, not the
case.
Senator Smith. Do you think that businesses in Oregon have
a sense of the labor issue and the resource that PCC is for
them for finding qualified seniors who still want to work?
Mr. Pulliams. Well, in terms of my experience there in the
last 3 years, when I arrived in this position, I have had now
many conversations with local business and industry leaders,
managers and CEOs, and they are becoming very aware of this
problem. As a matter of fact, in my conversations with them,
this tends to be the number-one issue now.
So as I get more familiar with the business and industry
leaders in the community, they are beginning now to call me. At
first, I was trying to knock on their doors and get
appointments with them. In the last year, this has been really
an issue that they are contacting me and working very closely
in terms of these programs.
Senator Smith. I was going to ask that. So you find a
receptive audience and an improving audience in terms of
employers in Oregon who are looking to you as a resource.
Mr. Pulliams. I certainly do, Senator. Times are changing.
Senator Smith. What kinds of businesses are you finding
most often that you are doing business with, who come to you?
Is there a category? Is it high-technology? Is it food service?
Can you categorize it at this point?
Mr. Pulliams. Usually, in areas of high-skilled areas,
particularly technology industries, recently a lot of contact
with health-care facilities, as was testified earlier by the
gentleman to my right; also the construction industry,
welding--those areas where you have the boomer generation now
retiring and moving out of. Now employers are recognizing these
potential shortages, and they are now contacting us.
There is also an attraction for trained employees of color,
because of our large enrollment of non-traditional and students
of color in the community college sector.
Senator Smith. Do you find that businesses are responsive
to what Mr. Bea indicated has helped Mercy, and that is having
flextime schedules, so that they can get seniors if they can
provide them the kind of work schedule that still lets them
enjoy some aspects of retirement age?
Mr. Pulliams. I am finding that also to be the case in the
Portland area, particularly in a number of the large health-
care systems in our district, the realization that we simply
have to do business differently.
I am also facing the same situation as a large employer in
the area in terms of shared job responsibilities, flexible
schedules and the willingness to be non-traditional in terms of
how we look at employees from the past.
Senator Smith. Thank you very much, Preston.
Mr. Chairman, it seems to me that businesses are going to
learn the message ahead of time that they have to get creative
in employment and how they schedule people, because the work
pool is going to be older in the future.
The Chairman. Thank you so much, Senator Smith.
Marcie, Mr. Walker's forum participants said that the
Federal Government should help create new models of employment
for older Americans through specific legislation, for example,
offering employers tax credits as a way to motivate employers
to hire older workers.
I would assume you believe that we are not going to tackle
this problem effectively without a panoply of Government
legislation to change the culture.
Ms. Pitt-Catsouphes. When we talk to employers, we often
help them think about the kinds of changes that they need to
implement as kind of a four-step model, and I think this may
help answer your question.
The first huge hurdle we have to get across is awareness.
You have heard several people testify this morning that
although, on the one hand, employers understand the labor force
is different and there may be occupational shortages, on the
other hand, since it is not in front of them necessarily this
year or this quarter, they may not be taking action steps. So I
think that the first hurdle for us to get over is an issue of
awareness.
The second one that they always go through is an alignment
with their key business strategies, and I will come back to
that in a minute.
The third thing, of course, is some kind of adaptive
action, and we have talked a lot about flexible work options
and what helps to stimulate and motivate them.
The last piece of that is for them to assess their impact.
I think strategies such as tax incentives are very, very
helpful in the first two steps. It gets the attention of
employers who might, in fact, not yet be paying attention.
There are many employers--I am interested in terms of the
projected retirement rates at Mercy. Last week I was at a
conference of about 400 employers, and when we asked people
what they expected in retirement rates, we were getting
retirement rates of anywhere from a third to 60 percent. When
you ask them what they are doing about it, very few of them
indicate they are taking many steps.
I think that, on the one hand, they have an awareness, but
that awareness has not become so acute that they are doing
anything. I think measures such as tax incentives get their
attention.
I think the second thing, when you talk about alignment
with key business strategies, one of the first things, of
course, that employers ask about is how that may impact some
kind of a business case. Thought leadership is important, and,
again, I think it gets their attention.
The Chairman. Thank you.
Javon, you seem to have been particularly effective in
tailoring incentives for people to stay on in the particular
business that you are operating. Is it true that there are
general things, but there are also particular things a business
can do, depending upon the business that they are in?
Mr. Bea. Yes, definitely, Chairman Kohl. I think that what
we have found is that turnover is expensive, you know,
recruiting, training new people. So, the longer that we can
keep our workers that are skilled--and unskilled even--in the
workforce, we think that the resources that we expend, the
expenses that we incur to keep our older workers in the
workforce is offset by the savings that we have through longer
retention.
One other key statistic is that one-third of the current
Nation's 750,000 physicians that are post-residency physicians
are over age 55 and are projected to be retiring when the baby-
boom generation is at the time of their greatest medical need.
So, as Marcie alluded earlier, health care is especially
facing a growing labor shortage of both skilled and unskilled
workers, and we just decided that we needed to start now at
putting in programs.
Really, what it took was the commitment, the desire, to
change our scheduling mechanisms, to change our way of doing
business, to adapt to people who wanted to be able to take a
season of the year off or work certain days or take an extended
vacation. We felt that that was wiser on our part to do than
just to find ourselves in shortages.
Many hospitals today are closing units, entire nursing
units, because they have nursing shortages. As I mentioned
earlier, 75 percent of all the health-care worker shortage,
168,000, are nurses.
So we realized, with 63 facilities, that we needed to begin
taking measures now, not to speak of the fact that we felt
since the senior senator from Wisconsin is Chairman of the
Committee on Aging, we had better step it up a notch, too, you
know. [Laughter.]
The Chairman. Thanks a lot.
Preston, any comments you wish to make about this paradox,
that while so many companies do realize that they are going to
face a shortage of qualified workers, so few of them seem to be
responding in a way that anticipates the problem that they are
going to be facing in just a few short years? What are your
thoughts about this paradox?
Mr. Pulliams. What I am seeing in terms of our area in
Portland, OR, is that they are really quickly beginning to
realize that there is not a pipeline of younger workers or
trained workers to fill those who exit in retirement and
whatever. As that hits them, that is when they call my office
and want to know what can the community college do.
Also, there seems to be an increase in terms of
partnerships now, in terms of business and industry being
willing to work with us at the community college, in terms of
joint programs, where they can work with us to help recruit
perhaps skilled workers or to help counsel those who are
retiring to perhaps come back as a part-time worker in the same
industry. So it is changing, as was reported earlier by the
first panel.
The numbers are really revealing the shortage, and people
are really grabbing onto this reality, and they are getting
quite creative in terms of how they are addressing this. But it
continues to be a struggle in terms of people being aware and
of what they can do and how they can react.
The Chairman. Thank you very much, Preston.
Senator Casey.
Senator Casey. Mr. Chairman, thank you very much again for
our second panel here and this great information.
One organizing or unifying subject in all of your
testimony, one way or the other, that I have noticed is health
care. I want to focus on that for a couple of moments.
Doctor, I appreciate the work that you have done at Boston
College, and I say that as a graduate of Holy Cross, long time
ago rivals. But your school passed us a long time ago, so we
are not even in the same league, athletically. I hope we are in
the same league, academically.
But, in particular, when you were trying to summarize your
testimony--and I know you read or summarized this part of it,
and I am not sure what page this is, but you said, ``Specific
industry sectors such as health care may be particularly
vulnerable to labor force replacement needs anticipated for
specific occupations.'' Then you had examples, which I don't
think you got to because of the limited time.
Your paper says, ``Ten of the 20 fastest growing
occupations are concentrated in health services. These
positions include medical assistants, 59 percent growth;
physicians' assistants, 49 percent growth; home health aides,
48 percent growth; medical records and health information
technicians, 47 percent growth.'' I am struck by that, because
in our State--as I mentioned before, Pennsylvania has the
second-highest population over 65. Our fastest-growing
population, literally, is 85 and up. I know that Wisconsin and
Oregon and other States are facing similar challenges.
But in my work in State Government, we spent a good deal of
time on long-term care issues and, in particular, this real
urgent need for health-care workers, from the lower-skilled
positions to the higher-skilled positions.
I really believe that people that do this work are not only
essential for our future in terms of the services they provide
and the skilled care they provide, but I think they provide a
kind of ministry that is so critical to the fabric of America.
I know from my own experience--my father was in a hospital,
several, in the last months of his life--last couple of years,
actually, of his life. I knew that even what is considered a
low-skilled worker in the scheme of skills or the range of
skills--a nursing assistant who comes in to a bed and takes
someone who, in his case, could not move from one side to the
other, had to have the pad underneath his body folded the right
way, and the tiniest little person could do that because she
had skill. I remember my family, that might have been bigger
than she was, couldn't do it because we didn't have that skill.
So I reflect upon that in a very personal way.
Tell us more about that, though, the urgency of making sure
that those health-care jobs are filled and how grave the
challenge is.
Ms. Pitt-Catsouphes. Well, thank you, Senator. I appreciate
the question.
The health-care industry is important for us to look at for
several reasons. When we anticipate or look at the projections
around labor force shortages or, specifically, occupational
replacement needs, the health-care industry is fascinating, in
part because of course it is such a critical need for our
country, as you pointed out.
The second thing, which we have been focused on today, is
that it happens to be one of those industries with several
occupations that are so-called ``aging out.'' The third thing,
which is equally interesting, and this has been for a while in
certain health-care occupations, is that they have had to think
of very creative ways of attracting new and, in many cases,
younger workers into the so-called pipeline. So, in that sense,
they have more experience than a lot of other industries.
When you have this kind of double-whammy effect, you have
an aging workforce on the one hand, but you have occupations
that may not be attracting as many younger workers, so, as a
consequence, all those things are happening.
But the health-care industry is also interesting, because,
of course, the aging of our population means there is going to
be a higher demand.
So, when you have all of those factors simultaneously,
that, in fact, is one of the reasons, in addition to some good
thought leadership, that the health-care industry is out front
in this arena.
Our conversations with employers would suggest that there
are other industries that are also in similar situations but,
of course, different occupations: for example, retail. If you
look at the anticipated expansion of that, they have similar
pressures as health care.
You know, much like my colleague just commented on,
retailers are also beginning to say that they are finding that
customer service relations, in fact, can be improved when the
experienced workers not only are dealing directly with
customers but sort of modeling very positive behavior for their
younger colleagues.
So I think that you are exactly right, that although the
conversations understandably turn to industry sector, that,
really, where the pinch is felt, and that is where employers
are paying a lot of attention, is in specific occupations.
Thank you.
Senator Casey. Thank you.
I have to run, but I do want to say to both of your
colleagues that the work that you are doing in the context of a
community college and in the context of a health-care facility
and institution is critically important. We appreciate that. We
appreciate the fact that we can find and identify models that
are working.
I want to see how we are doing in Pennsylvania in the
context of both of your contributions. But we appreciate the
good examples you provide.
Mr. Pulliams. Thank you, sir.
Mr. Bea. Thank you.
The Chairman. Thank you so much, Senator Casey.
In bringing this hearing to a conclusion, I think between
yourselves, the three of you, and the two people who testified
before you, plus the questions and the responses that we got,
there is a keen, keen awareness of the problem that we are
facing.
There are a multiplicity of recommendations that have been
made today that probably would give us a tremendous ability to
impact this whole problem we are facing successfully, just on
the basis of what we have heard today, what we have said today
and the things that we have discussed today.
Of course, the problem, the difficulty, the challenge is to
get the things we have discussed out there in policy, in
position, in taxes, in reform, in legislation--not an
unawareness of the problem or not an unawareness of what needs
to be done, but getting it done. I mean, that is really what we
are facing.
I think what you have brought here by way of your
experience, your thoughts and your recommendations really adds
an awful lot to our understanding of the problem that we face,
to its importance and to the solutions that we need to seek and
find and put in place.
So I thank you. We all thank you for journeying here to
Washington today and for testifying in front of this Committee,
and you have made a real contribution.
With that, the hearing is closed.
[Whereupon, at 12:05 p.m., the Committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Senator Larry E. Craig
Chairman Kohl, I want to thank you for holding a hearing on
this important topic. I know you are well aware of the enormous
changes the retirement of the baby boom generation will have on
our nation.
We face several challenges when it comes to responding to
our Aging workforce in a manner that is beneficial and
practical for both baby boomers and the business community.
Some of these challenges include concerns about the costs of
retaining older workers or negative stereotypes about older
Americans. Fortunately, implementing policies that will benefit
Aging workers and benefit businesses are not mutually
exclusive.
As many of the witnesses today have noted, there are
numerous reasons why older workers will benefit from staying in
the workforce past traditional retirement age. I wanted to take
a moment to highlight the fact that many older workers remain
in the workforce, not simply because of financial concerns, but
for their overall health. Several studies have shown that
having a social network and being intellectually challenged are
incredibly beneficial for the mental and physical health of
older Americans. The statistics indicate that that more
Americans are beginning to realize that. In the past 10 years,
the percentage of men and women aged 62 and older who are paid
employees has increased.
However, this message has not reached all Americans who are
facing retirement. While we should not try to force individuals
to stay in the workforce, it is important that work place
options are available to allow older Americans to reap the
benefits of remaining in the workforce.
Fortunately, businesses will also benefit from retaining
older workers. Older workers provide invaluable institutional
knowledge and save businesses on recruitment and training
costs. There are negative perceptions out there about older
workers, but some companies are already proving that older
workers have a lot to offer.
I am pleased that Javon Bea of Mercy Health System is here
today to talk about their experience with older workers. If I
may, I would like to point out what I feel is a particularly
significant observation that Javon Bea made in his testimony.
He noted that the older older workers in the Mercy Health
System are ``no longer working as much for the money as they
are working to make a contribution to society.'' This is yet
another compelling argument for older workers. It is an
opportunity to have employees who are personally invested in
the work they are doing.
Mercy Health System has provided an excellent example of
how businesses, and older Americans, can benefit from remaining
in the workforce. Now our goal has to be to encourage other
businesses to follow Mercy's example.
Finally, I just want to say that I am proud to join
Senators Kohl and Lincoln in cosponsoring the Older Worker
Opportunity Act. This bill will provide tax incentives for
businesses to create flexible work programs in order to retain
older workers. I am confident that these kind of incentives
will go a long way in reducing the negative impact that
retiring workers will have on our nation's economy. Given our
evolving workforce and economy we must continue to reexamine
our definition of retirement. Even the United State Senate,
where the average age of a Senator is 60, can provide an
example of Americans working past retirement age.
Again, Chairman Kohl, thank you for calling this hearing
and I look forward to hearing from our witnesses.
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