Older Workers: Some Best Practices and Strategies for Engaging	 
and Retaining Older Workers (28-FEB-07, GAO-07-433T).		 
                                                                 
More Americans remaining in the workforce at older ages could	 
lead to benefits at several levels. First, working longer will	 
allow older workers to bolster their retirement savings. Second, 
hiring and retaining older workers will help employers deal with 
projected labor shortages. Third, older workers will contribute  
to economic growth and increase federal revenues, helping to	 
defray some of the anticipated costs associated with increased	 
claims on Social Security and Medicare. Despite all of these	 
gains to be had, there are barriers to continued employment for  
older workers. In addition, some employers remain reluctant to	 
engage and retain this group. It is in the nation's interest for 
people to work longer, which requires that barriers to continued 
work be removed sooner rather than later. This testimony	 
highlights issues discussed at a recent forum GAO convened on	 
engaging and retaining older workers, as well as prior GAO work. 
Forum participants included experts representing employers,	 
business and union groups, advocates, researchers, actuaries, and
federal agencies. These highlights do not necessarily represent  
the views of any one participant or the organizations that these 
participants represent, including GAO.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-433T					        
    ACCNO:   A66354						        
  TITLE:     Older Workers: Some Best Practices and Strategies for    
Engaging and Retaining Older Workers				 
     DATE:   02/28/2007 
  SUBJECT:   Employee incentives				 
	     Employee retirement plans				 
	     Employees						 
	     Employment 					 
	     Employment discrimination				 
	     Federal social security programs			 
	     Labor force					 
	     Lessons learned					 
	     Older workers					 
	     Retirement 					 
	     Skilled labor					 
	     Strategic planning 				 

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GAO-07-433T

   

     * [1]Summary
     * [2]Background
     * [3]Obstacles to Engaging and Retaining Older Workers
     * [4]Best Practices and Lessons Learned on Engaging and Retaining

          * [5]New Approaches Being Used to Engage Older Workers
          * [6]Flexible Schedules and Workplaces Needed to Attract and Reta
          * [7]Benefit Packages Help to Attract and Retain Older Workers
          * [8]Improving Employee Financial Literacy and Helping Employees

     * [9]Suggested Strategies for Policymakers and Employers
     * [10]Conclusions
     * [11]Contact and Staff Acknowledgments
     * [12]GAO's Mission
     * [13]Obtaining Copies of GAO Reports and Testimony

          * [14]Order by Mail or Phone

     * [15]To Report Fraud, Waste, and Abuse in Federal Programs
     * [16]Congressional Relations
     * [17]Public Affairs

Testimony before the U.S. Senate Special Committee on Aging

United States Government Accountability Office

GAO

For Release on Delivery Expected at 10:30 a.m. EST

Wednesday, February 28, 2007

OLDER WORKERS

Some Best Practices and Strategies for Engaging and Retaining Older
Workers

Statement of David M. Walker Comptroller General of the United States

GAO-07-433T

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss how providing additional
opportunities and incentives for older workers to continue to contribute
their considerable skills and knowledge is vitally important to the
well-being of both such individuals and our national economy. By the way,
while some people talk about "older workers," I prefer to use the term
"seasoned workers" to reflect the skills and knowledge that these workers
have. But whatever term we use, more Americans remaining in the workforce
at older ages could lead to benefits at several levels. First, working
longer will allow older workers, many of whom are not adequately prepared
for retirement, to bolster their retirement savings. Second, hiring and
retaining older workers will help employers deal with projected labor
shortages in the future. Third, older workers will contribute to economic
growth and increase federal revenues, helping to defray some of the
anticipated costs associated with increased claims on Social Security and
Medicare. Fourth, several studies show that the longer persons remain
mentally and physically active, the longer they are likely to live.

Despite all of these gains to be had, there are barriers to continued
employment for older workers. In addition, some employers remain reluctant
to engage and retain this group. While many, including GAO, have reported
on the benefits associated with work later in life, not enough has been
done to address this issue. Many employers are still unaware of the need
to engage older workers to meet their workforce needs, and few have
implemented programs to engage or retain older workers. Similarly, many
workers are not adequately preparing for retirement.

The number of older workers is potentially large and is a growing part of
the population. They represent a large and underutilized national resource
with the potential to improve the economic well-being of themselves and
the nation. At the same time, we must also consider those who cannot work
longer due to health limitations or disability and make proper
accommodations for them.

Because of your continuing interest in older workers, today I will present
the results of a recent forum on older workers, which I convened on
December 5, 2006, as well as discuss some of our prior work on this
topic.^1 At this forum, we brought together a diverse array of experts,
including some employers from AARP's "Best Employers for Workers Over 50"
program; representatives from business and union groups, and federal
agencies; along with advocates, researchers, actuaries, and academics, to
address issues related to engaging and retaining older workers.
Specifically, the forum participants discussed (1) obstacles that older
workers encounter when seeking continued work, (2) best practices for
hiring and retaining older workers, and (3) general strategies to promote
opportunities for older workers. The highlights summarized here do not
necessarily represent the views of any individual participant or the
organizations that these participants represent, including GAO.

This forum is the latest in a series that GAO has held in recent years.
The purpose of these forums is to bring together key stakeholders from
diverse groups to discuss emerging issues with the hope of identifying
areas of agreement. Such gatherings can serve as a catalyst for future
actions, both individually and collectively, on the issue being discussed.
For example, the Fiscal Wake Up Tour, a joint endeavor of GAO, the Concord
Coalition, the Brookings Institution, and the Heritage Foundation, grew
out of a forum on fiscal responsibility held in 2005 and is currently
visiting cities around the nation to promote fiscal awareness.^2 In
another example, a consortium of not-for-profit, private, and public
sector efforts, known as the Key National Indicators Initiative, emerged
from a forum on national indicators that GAO hosted and co-sponsored with
the National Academies in 2003.^3

1 The summary report of the forum is being released today as well. GAO,
Highlights of a GAO Forum: Engaging and Retaining Older Workers,
[18]GAO-07-438SP (Washington, D.C.: Feb. 28, 2007). For further
information on older worker issues, please see the following reports and
testimonies: GAO, Highlights of a GAO Forum: Workforce Challenges and
Opportunities for the 21st Century: Changing Labor Force Dynamics and the
Role of Government Policies, [19]GAO-04-845SP (Washington, D.C.: June
2004); GAO, Older Workers: Demographic Trends Pose Challenges for
Employers and Workers, [20]GAO-02-85 (Washington, D.C.: November 2001);
GAO, Redefining Retirement: Options for Older Americans, [21]GAO-05-620T
(Washington, D.C.: Apr. 27, 2005); GAO, Older Workers: Labor Can Help
Employers and Employees Plan Better for the Future, [22]GAO-06-80
(Washington, D.C.: Dec. 5, 2005); and GAO, Older Workers: Policies of
Other Nations to Increase Labor Force Participation, [23]GAO-03-307
(Washington, D.C.: Feb. 13, 2003).

^2 GAO, Highlights of a GAO Forum: The Long-Term Fiscal Challenge,
[24]GAO-05-282SP (Washington, D.C.: Feb. 2005). For more information on
the tour, see,
http://www.concordcoalition.org/events/fiscal-wake-up/index.html

Summary

The aging of the baby boom generation presents both a challenge and an
opportunity for our nation. Our past work has highlighted the importance
of engaging and retaining older workers, and also, unfortunately, how
little has been done to reap the benefits of this large and growing
national resource. We convened this forum to continue our efforts to
address issues associated with the aging of the American workforce.

Forum participants reported that obstacles to continued work at older ages
remain, including employer perceptions regarding older workers, workers'
perceptions regarding the benefits of working longer, and limited job
opportunities for older workers. To surmount some of these obstacles,
forum participants suggested a variety of best practices, including
offering more flexible work arrangements and adapting job design to suit
the needs of older workers. In addition, they said that the right mix of
benefits and incentives was needed to attract older workers and that
employees needed additional financial literacy skills to ensure they have
a realistic plan for retirement security. Participants offered a variety
of strategies to move forward on this issue. These included a national
campaign to promote work at older ages in the hope of changing the
national mind-set and to engage in a national discussion to reconsider
what "old" is, how we should think about retirement, and whether there
should even be a retirement age. Participants also suggested the
establishment of a national clearinghouse of best practices for engaging
and retaining older workers. Efforts to increase financial literacy may
also help workers plan for their futures and learn more about the benefits
of working longer. Finally, participants outlined several federal actions
that could help with this issue, including for the federal government to
act as a model employer of older workers and to consider specific
legislation or regulations that would increase flexibility for employers
and employees to create new employment models.

^3 GAO, Forum on Key National Indicators: Assessing the Nation's Position
and Progress, [25]GAO-03-672SP (Washington, D.C.: May 2003). For more
information, see http://www.keyindicators.org/

Background

In the 21st century, older Americans are expected to make up a larger
share of the U.S. population, live longer, and spend more years in
retirement than previous generations. The share of the U.S. population age
65 and older is projected to increase from 12.4 percent in 2000 to 19.6
percent in 2030 and continue to grow through 2050. In part this is due to
increases in life expectancy. The average number of years that men who
reach age 65 are expected to live is projected to increase from just over
13 in 1970 to 17 by 2020. Women have experienced a similar rise--from 17
years in 1970 to a projected 20 years by 2020. While life expectancy has
increased, labor force participation rates of older Americans only began
to increase slightly in recent years. As a result, individuals are
generally spending more years in retirement. In addition to these factors,
fertility rates at about the replacement level are contributing to the
increasing share of the elderly population and a slowing in the growth of
the labor force. Also contributing to the slowing in the growth of the
labor force is the leveling off of women's labor force participation rate.
While women's share of the labor force increased dramatically between 1950
and 2000--from 30 percent to 47 percent--their share of the labor force is
projected to remain at around 48 percent over the next 50 years. By 2025
labor force growth is expected to be less than a fifth of what it is
today.

The aging of the baby boom generation, increased life expectancy, and
fertility rates at about the replacement level are expected to
significantly increase the elderly dependency ratio--the estimated number
of people aged 65 and over in relation to the number of people of aged 15
to 64. In 1950, there was one person age 65 or over for every eight people
aged 15 to 64. The ratio increased to one to five in 2000 and is projected
to further increase to one person aged 65 and over for every three people
aged 15 to 64 by 2050. As a result, there will be fewer younger workers to
support a growing number of Social Security and Medicare beneficiaries.

The aging of the population also has potential implications for the
nation's economy. If labor force growth continues to slow as projected,
fewer workers will be available to produce goods and services. Without a
major increase in productivity or higher than projected immigration, low
labor force growth will lead to slower growth in the economy and slower
growth of federal revenues. These circumstances in turn will accentuate
the overall pressure on the federal budget, which will be encumbered with
increased claims for benefits for seniors such as Medicare and Social
Security, while relatively fewer workers are paying into the benefits
systems.

Figure 1: U.S. Elderly Dependency Ratio (Population age 65 and Older
Relative to Age 15 to 64), 1950-2000 and Projected 2005-2050

Note: Population Division of the Department of Economic and Social Affairs
of the United Nations Secretariat, World Population Prospects: The 2004
Revision and World Urbanization Prospects: The 2003 Revision. Data for
2005 through 2050 are projected. The elderly dependency ratio equals the
number of people age 65 and older divided the number between age 15 and
64, expressed as a percentage.

As Americans live longer and spend more years in retirement, several
factors contribute to the growing insecurity of retirement income. With
greater life expectancies, individuals need to finance more years of
retirement; however, many workers claim their Social Security benefits
prior to reaching the full retirement age, which results in lower monthly
payments. Not only do individuals need to make their money last longer;
they also bear greater risk and responsibility for their retirement
savings than in the past. About half of U.S. workers do not have a pension
plan through their employer, and those who do are less likely than in the
past to be covered by defined benefit (DB) plans. The shift from
traditional DB plans to defined contribution (DC) plans places greater
responsibility on workers to make voluntary contributions and make prudent
investment decisions. It also increases the importance of workers
preserving such savings for retirement. Moreover, rising health care costs
have also made health insurance and anticipated medical expenses
increasingly important issues for older Americans. A long-term decline in
the percentage of employers offering retiree health coverage has leveled
off in recent years, but retirees face an increasing share of costs,
eligibility restrictions, and benefit changes that contribute to an
overall erosion in the value and availability of coverage. Finally, it is
clear that Social Security, Medicare, and Medicaid are unsustainable in
their present form. When the needed reforms to these programs are made,
one result will be that millions of individuals will have to assume
increased responsibility for their economic security in retirement. These
trends suggest that more and more Americans will find they have inadequate
resources to finance retirement. For many, continued work past traditional
retirement age may be the solution.

We, along with others, have highlighted the need to engage and retain
older workers to address some of these challenges associated with an aging
workforce. In 2001, we recommended that the Secretary of Labor form a
broad interagency task force to develop regulatory and legislative
proposals addressing the issues raised by the aging of the labor force and
to serve as a clearinghouse of information about employer programs to
extend the work life of older workers. After strong encouragement from
this Committee, this task force, which includes representatives from the
Departments of Labor (Labor), Commerce, and Education, along with the
Social Security Administration, began meeting in 2006 and plans to focus
on three areas: employer response to the aging of the workforce;
individual opportunities for employment in later years; and legal and
regulatory issues regarding work and retirement. The task force intends to
release a report on its findings and strategies in summer 2007. In 2003,
we recommended that Labor review the Workforce Investment Act performance
measure regarding earnings to ensure that this measure does not provide a
disincentive for serving employed workers, some of whom might be older
workers.^4 Labor has partially addressed this issue, but the potential for
existing measures to have unintended consequences remains. In 2005, we
held a series of focus groups with workers and retirees to better
understand the factors that influence the timing of retirement. We found
that health problems and layoffs were common reasons to retire and that
few focus group members saw opportunities to gradually or partially
retire. Workers also cited what they perceived as their own limited skills
and employers' age discrimination as barriers to continued employment.^5
As part of this work, we also participated in a roundtable discussion with
employers to learn what they were doing to hire and retain older workers.
While these employers generally agreed that flexibility was the key
feature necessary to recruit and retain older workers, few of them had
developed programs to put this belief into practice.

^4 GAO, Workforce Training: Employed Worker Programs Focus on Business
Needs, but Revised Performance Measures Could Improve Access for Some
Workers, [26]GAO-03-353 (Washington, D.C.: Feb. 14, 2003).

^5 [27]GAO-06-80 , pp. 25-26.

Building on this body of work, we convened this forum on older workers to
address these issues.

Obstacles to Engaging and Retaining Older Workers

According to participants at our forum, some of the key obstacles that
hinder continued work at older ages include: first, employer perceptions
about the cost of employing older workers; second, employee perceptions
about the costs and benefits of continued work; and third, changes in
industry and job skill requirements, which may hinder older workers from
remaining employed or finding suitable new employment.

First, many employers cite both compensation--including the rising cost of
health insurance--and training costs as obstacles to hiring and retaining
older workers. In addition, forum participants reported that many
employers have not learned to place a high value on their experienced
workers, instead gearing their succession planning toward replacing older
workers with younger ones. Forum participants also cited negative
stereotypes surrounding older workers that include the belief that such
workers produce lower-quality work than their younger counterparts, and
less work overall. Also, many employers believe that older workers are
resistant to change. Finally, but not least, it was suggested that some
employers are hesitant to hire older workers for fear of age
discrimination lawsuits. While many employers express an interest in
recruiting older workers, our prior work has found that few develop
programs to do so.

At the same time that there is some resistance among employers to hiring
older workers, there are also strong incentives for workers to retire.
Participants noted that a "culture of retirement" exists in this country
which encourages workers to claim retirement benefits and stop working as
early as possible. The availability of Social Security at age 62 and high
effective tax rates on earnings between age 62 and Social Security's full
retirement age may discourage some workers from continuing to work once
they start claiming benefits. Workers who receive Social Security benefits
but have not yet reached the full retirement age will have their benefits
reduced by one dollar for every two or three dollars that they earn above
a set threshold due to the Social Security earnings test. As a result,
workers who have claimed Social Security benefits at 62 may not feel that
it is worthwhile to continue working. Also, the structure of traditional
DB pension plans may encourage retirement because pension laws have
prohibited working for the same employer while receiving benefits. While
the Pension Protection Act of 2006 does contain a provision that allows
plans the option of providing some benefits to participants who remain in
the workforce at age 62 and beyond, it is too soon to determine what the
impact of this policy change will be.^6 In addition to these financial
incentives, jobs that are physically demanding or have inflexible
schedules that compete with family caregiving needs also provide strong
disincentives to continued work.

For some, the incentive to retire lies in the lack of suitable job
opportunities. Some employers are reluctant to offer flexible work
arrangements such as part-time work to existing employees. In addition,
layoffs due to changes in the economy, along with the lack of skills
needed to compete in the global economy, are also challenges facing older
workers. Forum participants reported that employers who downsize may lay
off older workers sooner than younger workers, in part because older
industries tend to have a disproportionate number of older workers in
their labor force. Positions of some low-skill older workers also may have
been automated, eliminated, or outsourced. At the same time, displaced
older workers may lack the necessary training to make a career change. Our
past work has found that when older workers lose a job, they are less
likely than younger workers to find other employment.^7

Best Practices and Lessons Learned on Engaging and Retaining Older Workers

We, along with others, have previously reported on the importance of
flexibility in recruiting and retaining older workers. In order to
effectively engage older workers, forum participants suggested
implementing new recruiting approaches, workplace flexibility, the right
mix of benefits and incentives, financial literary education, and
consistent performance management systems. Moreover, participants warned
against designing a "one-size-fits-all" approach, noting the significant
differences among employers and employees.

^6 See Section 905 of the Pension Protection Act, Pub. L. 109-280.

^7 [28]GAO-02-85 , p. 3.

New Approaches Being Used to Engage Older Workers

Employers have found innovative recruiting techniques to identify and
recruit older workers. For example, some employers have established
partnerships with national organizations, such as AARP, to help advertise
themselves as employers of older workers. Other employers rehire their own
retirees for specific needs, both short-term and long-term. For example,
one employer actively retrains its employees for other distinct roles in
the organization.

Flexible Schedules and Workplaces Needed to Attract and Retain Older Workers

Labor force decisions of older workers are also influenced by the
availability of flexible work arrangements. Full and complete withdrawals
from the workforce are no longer as common as they once were, but rather
workers are more likely to seek out phased retirement or bridge employment
options. Employers who are creative in how they design jobs, and who allow
for flexible work locations away from the traditional office, have an
advantage in engaging older workers. One employer mentioned three reasons
older workers retire: (1) elder care responsibilities, (2) physical
constraints, and (3) a desire to pursue other interests. To address these
concerns, this employer provides workers 10 days off each year for elder
care, and flexible work schedules. Two employers have a "snow bird"
program, which allows employees who live in different places during the
year to work in both locations. Other employers have adapted job designs
to accommodate the physical constraints of older workers. One participant
mentioned a hospital that installed hydraulic systems in all of its beds
so the beds could fold into a sitting posture, a change that assisted
older staff in moving patients. In the second example, an employer
modified an assembly line so that cars on the line could be rotated to
grant easier access for mechanics who were unable to lie down to work on
cars.

Benefit Packages Help to Attract and Retain Older Workers

Benefit packages that complement some of these new work arrangements are
also important in attracting and retaining older workers. Some forum
participants' organizations offer benefits to both full- and part-time
workers. One employer offers medical benefits and tuition reimbursement
for employees working at least 15 hours per week, while another offers
employee discounts.

Modifying pension plans can also entice workers to work longer. One
participant's organization offers its employees the opportunity to retire
and return to work after 1 month while still collecting pension
benefits.^8 Another employer is considering matching a greater percentage
of older workers' DC plan contributions, thereby appealing to older
workers who may not have been with the company for a very long time.
However, not every employer can offer such a portfolio of benefits for
older workers who work part-time, due to the costs.

^8 This type of pension plan, known as a deferred retirement option plan
(DROP), is largely limited to the public sector.

Improving Employee Financial Literacy and Helping Employees Better Prepare for
Retirement

With older Americans living longer and spending more time in retirement,
workers will have to ensure they have a realistic plan to provide for
retirement security that may include working longer. Increasing financial
literacy can help workers better prepare for retirement by giving them the
tools to assess whether or not they have sufficient funds to retire at a
particular age. With DC pension plans becoming more common, the burden of
financial management on employees is growing, thereby increasing the
importance of financial literacy. To address this issue, one forum
participant's employer offers a retirement-planning program for employees
over 50 years old that includes individual counseling services. Another
participant mentioned automatic enrollment in retirement savings plans as
an effective way to help employees save for retirement, while also noting
that employees need ongoing education to ensure their portfolios remain
balanced. Such education should not be limited to only pension plans, as
participants highlighted the need to plan for future health care costs as
well.

To limit exposure to age discrimination litigation, one participant said a
consistent performance management system is essential for dealing with all
workers. Besides saying that all employees should be treated in a fair and
consistent manner, participants agreed it is also important to show older
workers that they are valued.

Finally, when discussing best practices, forum participants cautioned
against designing solutions with a "one-size-fits-all" approach due to the
variety of employers' needs and workers' knowledge, skills, and goals.

Suggested Strategies for Policymakers and Employers

Given the scope and importance of this issue, participants offered a
number of strategies to encourage older workers to remain in the labor
force and to encourage employers to engage and retain older workers. They
generally agreed that a change was needed in the national mind-set about
work at older ages and that a national campaign to promote this concept
was needed. Such a campaign could highlight the different types of work
older people are engaged in, the positive attributes of older workers, and
the benefits to employers of engaging and retaining older workers. To
change the "culture of retirement" that currently exists, one participant
suggested the need for a national discussion to reconsider what "old" is,
and how we should think about retirement, or if there should even be a
retirement age.

Participants also agreed that employers need information about the best
practices for engaging and retaining older workers. One strategy discussed
was the establishment of a national clearinghouse of best practices, such
as the different kinds of work structures, recruiting techniques, and
workplace flexibilities used by some employers to attract and retain older
workers.

Participants agreed that strategies that increase financial literacy may
help workers better plan for their futures and learn more about the
benefits of working longer. Although this is a long-term endeavor,
participants suggested that both public and private efforts may be needed
to promote financial literacy, including incorporating financial literacy
into the grade school curriculum, promoting the discussion of retirement
planning much earlier in workers' careers, and using faith-based
organizations as a conduit for financial planning.

Finally, participants discussed a number of ways that the federal
government could be a leader in encouraging older workers to remain in the
workforce. First, as an employer of millions facing the impending
retirement of many of its workers, the federal government should "lead by
example" and be a role model in how it engages and retains older workers.
Second, it can help to foster the kinds of public/private partnerships
that would promote the national campaign, begin a national discussion, or
contribute to the national clearinghouse discussed above. In addition, the
public sector, in cooperation with the private sector, can help displaced
older workers who need new skills to remain in the workforce. And third,
through specific legislation or regulations that would increase
flexibility for employers and employees, the federal government can help
create new models of employment for older Americans. For example, some
participants discussed the need for safe harbors in the tax code and the
Employee Retirement Income Security Act that would make it easier for
people to return to work after retirement and still collect their
pensions. The related provision in the Pension Protection Act, which
affords some flexibility in this area, represents a step in the right
direction. Another participant suggested that age discrimination laws may
have had some unintended consequences, and that these laws should be
reevaluated or amended to provide safe harbors that would encourage
employers to hire older workers.

Conclusions

Engaging and retaining older workers is critical for promoting economic
growth, improving federal finances, and shoring up retirees' income
security. Given the right mix of incentives, programs, and job designs, we
have an opportunity today to support those who wish to work later in life,
thereby reinventing the traditional concept of retirement, helping to
bolster individuals' retirement security, and fostering economic growth.
With the oldest members of the baby boom generation eligible to begin
collecting early Social Security benefits next year, time is running out
to seize this opportunity. We convened this forum because of the
importance of engaging and retaining older workers, and we congratulate
this Committee for its sustained leadership on this issue.

Given existing trends in the aging of baby boomers, pressures on federal
entitlement programs, and threats to individuals' retirement security, it
is in the nation's interest for people to work longer. Harnessing the
benefits of this growing group of potential older workers requires that
barriers to continued work be removed sooner rather than later. At the
same time, it is important to acknowledge that not everyone can work at
older ages, and proper accommodations are needed for such persons as well.

Despite evidence indicating the future importance of older Americans to
the workforce, barriers and perceptions continue to get in the way of
making progress. Forum participants generally agreed that employers do not
place a high enough value on experienced workers, and that suitable job
opportunities are lacking for older workers. These findings echo many of
those that we heard in our 2005 focus groups and reiterate findings from
our 2001 report. While some progress is being made, in the absence of
additional change, we risk a missed opportunity to engage those workers
who wish to remain in the workforce longer.

At our forum, there was a good deal of enthusiasm among participants to
confront this issue, and I hope that by sharing some best practices and
suggested strategies today progress will continue with renewed insight and
energy. At the same time, given the national scope of the challenge,
addressing it will require not only workers and employers. Clearly, there
is also a role for government to play, whether it be through becoming a
model employer of older federal employees or helping to foster flexible
work arrangements in the private sector to meet the needs of older
workers, or by considering legislative and regulatory changes, including
those that Labor's interagency task force may propose. Finally,
consideration of the current mix of federal policies--including Social
Security, Medicare, and pension laws--may be warranted to ensure that
their incentives are appropriate given future demographic changes and the
benefits that can be gained from work at later years for both individuals
and the nation.

Mr. Chairman, this concludes my remarks. I would be happy to answer any
questions you or the other members of the Committee may have. I am pleased
by your continued interest in this area and look forward to working with
you on this issue in the future.

Contact and Staff Acknowledgments

For questions regarding this testimony, please call Barbara Bovbjerg,
Director at 202-512-7215. Other individuals making key contributions to
this statement included Mindy Bowman, Alicia Puente Cackley, Jennifer
Cook, Scott Heacock, and Kevin Kumanga.

(130641)

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Highlights of GAO-07-433T, a testimony before the U.S. Senate Special
Committee on Aging

February 28, 2007

OLDER WORKERS

Some Best Practices and Strategies for Engaging and Retaining Older
Workers

More Americans remaining in the workforce at older ages could lead to
benefits at several levels. First, working longer will allow older workers
to bolster their retirement savings. Second, hiring and retaining older
workers will help employers deal with projected labor shortages. Third,
older workers will contribute to economic growth and increase federal
revenues, helping to defray some of the anticipated costs associated with
increased claims on Social Security and Medicare.

Despite all of these gains to be had, there are barriers to continued
employment for older workers. In addition, some employers remain reluctant
to engage and retain this group. It is in the nation's interest for people
to work longer, which requires that barriers to continued work be removed
sooner rather than later.

This testimony highlights issues discussed at a recent forum GAO convened
on engaging and retaining older workers, as well as prior GAO work. Forum
participants included experts representing employers, business and union
groups, advocates, researchers, actuaries, and federal agencies. These
highlights do not necessarily represent the views of any one participant
or the organizations that these participants represent, including GAO.

Obstacles continue to exist for older workers seeking continued or new
employment and for employers who want to attract or retain older workers.
The following obstacles, best practices, lessons learned, and strategies
to address some of these obstacles and promote work at older ages were
discussed at a recent GAO forum on older workers.

Key Obstacles

           o Some employers' perceptions about the cost of hiring and
           retaining older workers are a key obstacle in older workers'
           continued employment.
           o Workplace age discrimination, the lack of suitable job
           opportunities, layoffs due to changes in the economy, as well as
           the need to keep skills up to date, are all challenges facing
           older workers.
           o Strong financial incentives for workers to retire as soon as
           possible and some jobs that are physically demanding or have
           inflexible schedules provide strong disincentives to continued
           work.

Best Practices and Lessons Learned

           o Use nontraditional recruiting techniques such as partnerships
           with national organizations that focus on older Americans.
           o Employ flexible work situations and adapt job designs to meet
           the preferences and physical constraints of older workers.
           o Offer the right mix of benefits and incentives to attract older
           workers such as tuition assistance, time off for elder care,
           employee discounts, and pension plans that allow retirees to
           return to work.
           o Provide employees with financial literacy skills to ensure they
           have a realistic plan to provide for retirement security.
           o Treat all employees in a fair and consistent manner and employ a
           consistent performance management system to prevent age
           discrimination complaints.

Strategies

           o Conduct a national campaign to help change the national mindset
           about work at older ages.
           o Hold a national discussion about what "old" is to help change
           the culture of retirement.
           o Create a clearinghouse of best recruiting, hiring, and retention
           practices for older workers.
           o Strengthen financial literacy education to help workers prepare
           to retire.
           o Make the federal government a model employer for the nation in
           how it recruits and retains older workers.
           o Create a key federal role in partnerships to implement these
           strategies.
           o Consider specific legislation or regulations to increase
           flexibility for employers and employees to create new employment
           models.

References

Visible links

  18. http://www.gao.gov/cgi-bin/getrpt?GAO-07-438SP
  19. http://www.gao.gov/cgi-bin/getrpt?GAO-04-845SP
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-02-85
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-05-620T
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-06-80
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-03-307
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-05-282sp
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-03-672sp
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-03-353
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-06-80
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-02-85
  
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