Older Workers: Federal Agencies Face Challenges, but Have	 
Opportunities to Hire and Retain Experienced Employees		 
(30-APR-08, GAO-08-630T).					 
                                                                 
The federal workforce, like the nation's workforce as a whole, is
aging. As experienced employees retire, they leave behind	 
critical gaps in leadership and institutional knowledge,	 
increasing the challenges government agencies face in maintaining
a skilled workforce. We and others have emphasized the need to	 
hire and retain older workers as one part of a comprehensive	 
strategy to address expected labor shortages. The Office of	 
Personnel Management (OPM), as the government's central personnel
management agency, is responsible for helping agencies manage	 
their human capital. The Chairman of the Senate Special Committee
on Aging asked GAO to discuss (1) the age and retirement	 
eligibility trends of the current federal workforce, (2) the	 
strategies federal agencies are using to hire and retain older	 
workers, and (3) our observations on how these strategies	 
position federal agencies to engage and retain older workers. To 
address these objectives, we analyzed demographic data from OPM's
Central Personnel Data File, and interviewed officials at OPM and
selected federal agencies. OPM is taking action to address past  
recommendations related to better assisting agencies in using	 
personnel flexibilities. GAO is making no new recommendations at 
this time.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-630T					        
    ACCNO:   A81927						        
  TITLE:     Older Workers: Federal Agencies Face Challenges, but Have
Opportunities to Hire and Retain Experienced Employees		 
     DATE:   04/30/2008 
  SUBJECT:   Early retirement					 
	     Eligibility criteria				 
	     Employee incentives				 
	     Employee retention 				 
	     Federal agencies					 
	     Federal employees					 
	     Government employees				 
	     Human capital management				 
	     Human capital planning				 
	     Knowledge, skills and abilities			 
	     Labor force					 
	     Labor shortages					 
	     Older workers					 
	     Personnel recruiting				 
	     Retirement 					 
	     Retirement age					 
	     Skilled labor					 
	     Strategic planning 				 

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GAO-08-630T

   

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material separately. 

Testimony: 

Before the Senate Special Committee on Aging: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 3:00 p.m. EDT: 

Wednesday, April 30, 2008: 

Older Workers: 

Federal Agencies Face Challenges, but Have Opportunities to Hire and 
Retain Experienced Employees: 

Statement of Barbara D. Bovbjerg, Director Education, Workforce, and 
Income Security Issues and: 

Robert N. Goldenkoff, Director: 

Strategic Issues: 

GAO-08-630T: 

GAO Highlights: 

Highlights of GAO-08-630T, a testimony before the Senate Special 
Committee on Aging. 

Why GAO Did This Study: 

The federal workforce, like the nationï¿½s workforce as a whole, is 
aging. As experienced employees retire, they leave behind critical gaps 
in leadership and institutional knowledge, increasing the challenges 
government agencies face in maintaining a skilled workforce. We and 
others have emphasized the need to hire and retain older workers as one 
part of a comprehensive strategy to address expected labor shortages. 
The Office of Personnel Management (OPM), as the governmentï¿½s central 
personnel management agency, is responsible for helping agencies manage 
their human capital. 

The Chairman of the Senate Special Committee on Aging asked GAO to 
discuss (1) the age and retirement eligibility trends of the current 
federal workforce, (2) the strategies federal agencies are using to 
hire and retain older workers, and (3) our observations on how these 
strategies position federal agencies to engage and retain older 
workers. To address these objectives, we analyzed demographic data from 
OPMï¿½s Central Personnel Data File, and interviewed officials at OPM and 
selected federal agencies. 

OPM is taking action to address past recommendations related to better 
assisting agencies in using personnel flexibilities. GAO is making no 
new recommendations at this time. 

What GAO Found: 

Governmentwide, about one-third of federal career employees on board at 
the end of fiscal year 2007 are eligible to retire between now and 
2012. Many of these workers are concentrated in certain agencies. For 
example, nearly half of employees on board at the end of fiscal year 
2007 at the Departments of Housing and Urban Development and 
Transportation, and at the Agency for International Development and the 
Small Business Administration, will be eligible to retire by 2012. The 
proportion of workers eligible to retire is also expected to be high in 
certain occupations, including those considered mission critical, such 
as air traffic controllers and customs and border protection agents, 
where more than half of the employees will be eligible at that time. 
Retirement eligibility will be especially pronounced among the 
agenciesï¿½ executives and supervisorsï¿½over 60 percent of career 
executives are projected to be eligible by 2012. 

Federal agencies have a variety of flexibilities at their disposal to 
help them recruit and retain older workers, including using temporary 
hires to address short-term needs and rehiring retired federal workers. 
However, we found that agencies have not always been aware of the full 
range of available flexibilities. One agency we reviewedï¿½the Social 
Security Administrationï¿½is particularly at risk of losing a substantial 
portion of its workforce to retirement and has used a variety of 
strategies to hire and retain older workers, including offering 
recruitment, retention, and relocation bonuses. Other agencies, such as 
the Environmental Protection Agency, have developed alternative 
approaches to attract experienced workers to meet their mission needs. 
Moreover, certain governmentwide flexibilities, such as flexible and 
part-time schedules, while not focused directly toward older workers, 
are particularly attractive to them. 

Overall, the federal government already has a number of characteristics 
that appeal to all employees and is making progress toward becoming a 
model employer of older, experienced workers. For example, federal 
employees can telecommute, work flexible hours, and receive health and 
retirement benefits that older workers find especially attractive. OPM 
and Congress are taking steps to minimize some challenges that agencies 
face, but opportunities for improvement remain. For example, OPM has 
developed online decision support tools to provide agencies with 
guidance on how to use available hiring flexibilities and retention 
strategies. Congress has legislation pending that incorporates OPMï¿½s 
proposals to enhance agenciesï¿½ ability to hire and retain older workers 
by giving agencies the authority, without OPM approval, to rehire 
retirees without penalty. Agencies have a shared responsibility to 
pursue the full range of flexibilities and authorities available and to 
communicate this information within their own agencies. Collectively, 
these measures will help make federal agencies more competitive in the 
labor market for all demographic groups. 

To view the full product, including the scope and methodology, click on 
[hyperlink,http://www.gao.gov/cgi-bin/getrpt?GAO-08-630T]. For more 
information, contact Barbara D. Bovbjerg at (202) 512-7215 or 
[email protected] and Robert Goldenkoff at (202) 512-6806 or 
[email protected]. 

[End of section] 

Mr. Chairman, Ranking Member, and Members of the Committee: 

Like the nation's workforce as a whole, the federal workforce is aging 
and ever larger proportions are nearing retirement eligibility. When 
they retire, these older, experienced workers may leave behind critical 
gaps in leadership, skills, and institutional knowledge. At the same 
time, the rate of growth for the pool of younger workers is declining, 
and by 2025 overall labor force growth is expected to be only one-fifth 
of what it is today and much less than the projected growth in the 
number of retirees. As a result, the federal government and other 
employers may face increased competition in hiring skilled workers, and 
unless they develop effective retention strategies, employers will need 
to look more aggressively for workers with the right skills to meet 
their needs. 

Historically, the federal government has faced challenges hiring and 
retaining talented workers in key fields, and the looming retirement 
wave in federal agencies will only exacerbate these challenges. Older, 
experienced workers represent a large and underutilized national 
resource. Many experts maintain that older workers offer competitive 
advantages to employers because they often possess management and 
organizational skills that can be used in a variety of settings, and 
they bring to the job knowledge, experience, and productive work 
habits.[Footnote 1] In addition, today's older workers are better 
educated and healthier, and are expected to live longer than previous 
generations. As the nation's largest employer, the federal government 
is well positioned to serve as a role model for other employers. As 
with private sector employers, efforts directed at recruiting, 
engaging, and retaining a diverse workforce, including older workers, 
may serve to make the federal government a more competitive and 
productive employer overall. 

Because of this committee's continuing interest in older workers, we 
are especially pleased to be here today to discuss work that we have 
conducted at your request. In this work, we examined federal government 
efforts to tap the pool of older workers to meet its workforce needs. 
As requested, our testimony today, will discuss (1) the age and 
retirement eligibility trends of the current federal workforce; (2) the 
strategies federal agencies are using to recruit, hire, and retain 
older workers; and (3) our observations on how these strategies 
position federal agencies to engage and retain older workers. 

To describe demographic trends relating to the retirement eligibility 
and aging of the federal workforce, we analyzed information on the 24 
Chief Financial Officer Act (CFO) agencies from the Office of Personnel 
Management's (OPM) human resource reporting system, the Central 
Personnel Data File (CPDF).[Footnote 2] Based on our previous work, we 
have determined that the CPDF is sufficiently reliable for the 
informational purpose of this testimony. In reviewing strategies 
federal agencies use to recruit, hire, and retain older workers, we 
interviewed officials in selected agencies, including the Departments 
of Agriculture, Housing and Urban Development (HUD), Labor, and State, 
as well as the Internal Revenue Service (IRS), Environmental Protection 
Agency (EPA), Nuclear Regulatory Commission (NRC), and the Social 
Security Administration (SSA). We chose these agencies because they had 
relatively large proportions of employees who were eligible to retire 
or because they were implementing different approaches to hiring and 
retaining older workers. In addition, we interviewed officials at OPM 
to obtain their perspective on government retirement trends, and how 
agencies can address them. For the purposes of this testimony, we 
define an older worker as an employee aged 55 or over. We conducted our 
work from November 2007 to April 2008 in accordance with generally 
accepted government auditing standards. Those standards require that we 
plan and perform the audit to obtain sufficient appropriate evidence to 
provide a reasonable basis for our findings and conclusions based on 
our audit objectives. We believe that the evidence we obtained provides 
a reasonable basis for our findings and conclusions. See appendix I for 
a detailed discussion of our scope and methodology. 

In summary, the large proportion of federal workers who are eligible to 
retire now and will be in the near future presents challenges and 
opportunities for federal agencies. While the proportion of older 
workers eligible to retire varies across agencies, four agencies--Small 
Business Administration, the Agency for International Development, HUD, 
and the Department of Transportation--are well above the governmentwide 
average of 33 percent. Proportions of workers eligible to retire are 
projected to be especially high in certain occupations and in key 
leadership positions--64 percent of career executives are projected to 
be eligible by 2012. These trends underscore the importance of 
strategic workforce planning. As the government's human capital leader, 
OPM is responsible for helping agencies develop their human capital 
management strategies. Federal agencies have a range of flexibilities 
and authorities available that they may use to hire, engage, and retain 
workers. While only one of these flexibilities is largely focused on 
older workers--one that allows agencies to rehire retirees without 
offsetting the annuity--many, such as flexible and part time work 
schedules, are particularly appealing to older workers. One agency we 
reviewed--the Social Security Administration--is particularly at risk 
of losing a substantial portion of its workforce--at a time when it 
will experience unprecedented growth in demand for services. To deal 
with these losses, SSA has largely focused on using governmentwide 
authorities, including paying recruitment and retention bonuses for 
hard-to-fill positions and providing workplace flexibilities, such as 
flexible work schedules and alternative work sites. Other federal 
agencies are developing alternative approaches to hire and engage older 
workers. For example, the State Department maintains databases with 
information on retirees' skills and experience that it uses to identify 
individuals who may be able to assist when special needs arise, such as 
to provide tsunami relief for Indonesia. Overall, the federal 
government is making progress toward becoming a model employer of 
older, experienced workers. While there remain opportunities for 
improvement, OPM and the Congress are taking action to minimize the 
challenges agencies face in hiring and retaining older, experienced 
workers. 

Background: 

The percentage of older workers--those age 55 and older--is growing 
faster than that of any other age group, and they are expected to live 
and work longer than past generations. Labor force participation for 
this cohort has grown from about 31 percent in 1998 to 38 percent in 
2007. In contrast, labor force participation of workers under age 55 
has declined slightly. (See fig. 1.) 

Figure 1: Labor Force Participation of Workers under Age 40 to 55 and 
over: 

This figure is a multiple line graph showing labor force participation 
of workers under age 40 to 55 and over. The X axis is the year, and the 
Y axis represents the percentage. 
			
Year: "1998"; 
Age 40-54: 78; 
Age 55 and Over: 84; 
Under 40: 31. 

Year: "1999"; 
Age 40-54: 78; 
Age 55 and Over: 84; 
Under 40: 32. 

Year: "2000"; 
Age 40-54: 78; 
Age 55 and Over: 84; 
Under 40: 32. 

Year: "2001"; 
Age 40-54: 77; 
Age 55 and Over: 83; 
Under 40: 33. 

Year: "2002"; 
Age 40-54: 76; 
Age 55 and Over: 83; 
Under 40: 35. 

Year: "2003"; 
Age 40-54: 75; 
Age 55 and Over: 83; 
Under 40: 36. 

Year: "2004"; 
Age 40-54: 75; 
Age 55 and Over: 83; 
Under 40: 36. 

Year: "2005"; 
Age 40-54: 75; 
Age 55 and Over: 83; 
Under 40: 37. 

Year: "2006"; 
Age 40-54: 75; 
Age 55 and Over: 83; 
Under 40: 38. 

Year: "2007"; 
Age 40-54: 74; 
Age 55 and Over: 83; 
Under 40: 39. 

[See PDF for image] 

Source: GAO analysis of United States Bureau of Labor Statistics data. 

[End of figure] 

Many factors influence workers' retirement and employment decisions, 
including retirement eligibility rules and benefits, an individual's 
health status and occupation, the availability of health insurance, 
personal preference, and the employment status of a spouse. The 
availability of suitable employment, including part-time work or 
flexible work arrangements, may also affect the retirement and 
employment choices of older workers.[Footnote 3] 

As the government's human capital leader, OPM is responsible for 
helping agencies develop their human capital management systems and 
holding them accountable for effective human capital management 
practices. One such practice is strategic workforce planning, which 
addresses two critical needs: (1) aligning an organization's human 
capital program with its current and emerging mission and programmatic 
goals, and (2) developing long-term strategies for acquiring, 
developing, and retaining staff to achieve these goals. In developing 
these strategies, we have reported that leading organizations go beyond 
a succession-planning approach that focuses on simply replacing 
individuals. Rather they engage in broad, integrated succession 
planning and management efforts directed to strengthening both current 
and future organizational capacity.[Footnote 4] In implementing its 
personnel policies, the federal government is required to uphold 
federal merit system principles in recruiting, engaging, and retaining 
employees. Among other provisions, the merit system principles require 
agencies to recruit and select candidates based on fair and open 
competition, as well as treat employees fairly and equitably. Federal 
agencies can recruit skilled or experienced workers, many of whom tend 
to be older, to fill positions requiring demonstrated expertise. 

OPM is also responsible for administering retirement, health benefits, 
and other insurance services to government employees, annuitants, and 
beneficiaries. It develops implementing regulations when Congress makes 
new options available to federal employees and often takes the lead in 
advocating for new legislative options. 

We and others have highlighted the need to hire and retain older 
workers to address the challenges associated with an aging workforce. 
In so doing, we have called upon the federal government to assume a 
leadership role in developing strategies to recruit and retain older 
workers. At our recommendation, Labor convened a task force composed of 
senior representatives from nine federal agencies[Footnote 5] and 
issued its first report in February of this year.[Footnote 6] The 
report provides information on strategies to support the employment of 
older workers, strategies for businesses to use that leverage the 
skills of an aging labor pool, individual opportunities for employment 
of older workers, and legal and regulatory issues associated with work 
and retirement. While the task force's focus was the private sector, 
some of the strategies it identified are relevant for federal agencies 
as well, for example, providing flexible work arrangements and 
customized employment options that include alternative work schedules 
and part time work. 

The Growing Number of Retirement Eligible Employees in the Federal 
Workforce Highlight the Importance of Strategic Workforce Planning: 

As we and other organizations have previously reported, the federal 
workforce is aging, with an increasing number of employees eligible to 
retire.[Footnote 7] Many of the workers who are eligible to retire in 
the 24 CFO agencies are in executive and supervisory positions, as well 
as in mission-critical occupations. These trends point to the 
importance of strategic workforce planning to help agencies forecast, 
with greater precision, who might retire, when they might retire, and 
the impact of their retirement on an agency's mission, and, using this 
information, develop appropriate strategies to address workforce gaps. 

The percentage of older workers and workers nearing retirement 
eligibility varies across the federal government, with some agencies 
employing more such workers than others. For example, as shown in 
figure 2, the percentage of career federal employees in the 24 CFO 
agencies age 55 or older ranged from about 9 percent at the Department 
of Justice to about 38 percent at the Small Business Administration and 
Department of Housing and Urban Development in fiscal year 2007. 

Figure 2: Age Distribution of Career Federal Employees at CFO Agencies 
in Fiscal Year 2007: 

This figure is a combination vertical bar graph showing age 
distribution of career federal employees at CFO agencies in fiscal year 
2007. The X axis represents the agencies, and the Y axis represents the 
percentage. 

Agencies: CFO Agencies; 
Age < 40: 26; 
Age 40-54: 50; 
Age > 50: 24. 

Agencies: AGRICULTURE; 
Age < 40: 26; 
Age 40-54: 50; 
Age > 50: 25. 

Agencies: AID; 
Age < 40: < 40: 19; 
Age 40-54: 51; 
Age > 50: 31. 

Agencies: COMMERCE; 
Age < 40: 30; 
Age 40-54: 44; 
Age > 50: 26. 

Agencies: DEFENSE; 
Age < 40: 23; 
Age 40-54: 53; 
Age > 50: 24. 

Agencies: EDUCATION; 
Age < 40: 25; 
Age 40-54: 44; 
Age > 50: 31. 

Agencies: ENERGY; 
Age < 40: 20; 
Age 40-54: 51; 
Age > 50: 30. 

Agencies: EPA; 
Age < 40: 22; 
Age 40-54: 53; 
Age > 50: 26. 

Agencies: GSA; 
Age < 40: 23; 
Age 40-54: 48; 
Age > 50: 29. 

Agencies: HHS; 
Age < 40: 25; 
Age 40-54: 48; 
Age > 50: 28. 

Agencies: DHS; 
Age < 40: 45; 
Age 40-54: 40; 
Age > 50: 15; 

Agencies: HUD; 
Age < 40: 17; 
Age 40-54: 47; 
Age > 50: 37. 

Agencies: INTERIOR; 
Age < 40: 23; 
Age 40-54: 50; 
Age > 50: 27. 

Agencies: JUSTICE; 
Age < 40: 40; 
Age 40-54: 50; 
Age > 50: 9. 

Agencies: LABOR; 
Age < 40: 24; 
Age 40-54: 46; 
Age > 50: 30. 

Agencies: NASA; 
Age < 40: 20; 
Age 40-54: 59; 
Age > 50: 22. 

Agencies: NRC; 
Age < 40: 25; 
Age 40-54: 48; 
Age > 50: 28. 

Agencies: NSF; 
Age < 40: 21; 
Age 40-54: 46; 
Age > 50: 33. 

Agencies: OPM; 
Age < 40: 24; 
Age 40-54: 45; 
Age > 50: 31. 

Agencies: SBA; 
Age < 40: 14; 
Age 40-54: 48; 
Age > 50: 38. 

Agencies: SSA; 
Age < 40: 29; 
Age 40-54: 43; 
Age > 50: 29. 

Agencies: STATE; 
Age < 40: 29; 
Age 40-54: 46; 
Age > 50: 25. 

Agencies: TRANSPORTATION; 
Age < 40: 22; 
Age 40-54: 57; 
Age > 50: 21. 

Agencies: TREASURY; 
Age < 40: 22; 
Age 40-54: 51; 
Age > 50: 27. 

VETERANS AFFAIRS; 
Age < 40: 20; 
Age 40-54: 49; 
Age > 50: 31. 

[See PDF for image] 

Source: GAO analysis of CPDF data. 

[End of figure] 

Importantly, about than one-third of federal workers will be eligible 
to retire over the next 5 years. Thirty-three percent of federal career 
employees on board as of the end of fiscal year 2007 will be eligible 
to retire during fiscal years 2008 through 2012. In comparison, about 
20 percent of federal career employees on board as of the end of fiscal 
year 1997 were projected to be retirement-eligible during fiscal years 
1998 through 2002. 

Many workers projected to become retirement eligible by 2012 are 
concentrated in certain agencies. As figure 3 shows, the agency rates 
range from a low of 20 percent at the Department of Homeland Security 
(DHS) to a high of 46 percent at four agencies--the Agency for 
International Development (AID), the Department of Housing and Urban 
Development, the Small Business Administration (SBA), and the 
Department of Transportation (Transportation). 

Figure 3: Percentage of Career Federal Employees Eligible to Retire by 
Fiscal Year 2012: 

This figure is a vertical bar graph showing percentage of career 
federal employees eligible to retire by fiscal year 2012. The X axis 
represents the agencies, and the Y axis represents percentage. 

Agencies: AGRICULTURE; 
Percentage: 35. 

Agencies: AID; 
Percentage: 46. 

Agencies: COMMERCE; 
Percentage: 35. 

Agencies: DEFENSE; 
Percentage: 33. 

Agencies: EDUCATION; 
Percentage: 39. 

Agencies: ENERGY; 
Percentage: 40; 

Agencies: EPA; 
Percentage: 34. 

Agencies: GSA; 
Percentage: 39. 

Agencies: HHS; 
Percentage: 31. 

Agencies: DHS; 
Percentage: 20. 

Agencies: HUD; 
Percentage: 46. 

Agencies: INTERIOR; 
Percentage: 38. 

Agencies: JUSTICE; 
Percentage: 29. 

Agencies: LABOR; 
Percentage: 37. 

Agencies: NASA; 
Percentage: 31. 

Agencies: NRC; 
Percentage: 35. 

Agencies: NSF; 
Percentage: 38. 

Agencies: OPM; 
Percentage: 45. 

Agencies: SBA; 
Percentage: 46. 

Agencies: SSA; 
Percentage: 39. 

Agencies: STATE; 
Percentage: 32. 

Agencies: TRANSPORTATION; 
Percentage: 46. 

Agencies: TREASURY; 
Percentage: 35. 

Agencies: VETERANS AFFAIRS; 
Percentage: 34. 

[See PDF for image] 

Source: GAO analysis of CPDF data. 

Note: These data on retirement eligibility reflect the workforce as of 
the end of fiscal year 2007 and do not include actual or projected 
staff hiring or attrition at CFO agencies between 2007 and 2012. Some 
workforce turnover is common at federal agencies; however, in some 
cases more staff are leaving the agency than are being hired. 

[End of figure] 

Estimated retirement eligibility rates will also likely vary at the 
component level--that is, by bureau or unit. Thus, even those agencies 
that have relatively low overall percentages of retirement eligible 
employees may have components that have higher percentages of 
retirement-eligible staff, which, in turn could affect the 
accomplishment of mission tasks and strategic goals for agency 
components and for the agency as a whole. 

Certain occupations have particularly high rates of workers eligible to 
retire. As shown in figure 4, 50 percent or more of the workers in 24 
of the 315 occupations with 500 or more staff we reviewed are eligible 
to retire by 2012. Several of these occupations, such as air traffic 
controllers, customs and border protection interdiction agents, and 
administrative law judges are considered mission critical. Federal law 
requires mandatory retirement at specified ages for some occupations, 
such as air traffic controllers who must retire at age 56. 

Figure 4: Certain Occupations with High Retirement Eligibility Rates by 
Fiscal Year 2012: 

This figure is a vertical bar graph showing certain occupations with 
high retirement eligibility rates by fiscal year 2012. The X axis 
represents occupations, and the Y axis represents percentage 

Occupations: Administrative Law Judge; 
Percentage: 85. 

Occupations: Correctional Institution Administration; 
Percentage: 68. 

Occupations: Industrial Specialist; 
Percentage: 63. 

Occupations: Construction Control; 
Percentage: 60. 

Occupations: Air Traffic Control; 
Percentage: 58. 

Occupations: Chaplain; 
Percentage: 57. 

Occupations: General Maintenance & Operations Work Family; 
Percentage: 56. 

Occupations: Carpenter; 
Percentage: 56. 

Occupations: Hearings And Appeals; 
Percentage: 55. 

Occupations: Boiler Plant Operator; 
Percentage: 54. 

Occupations: Appraising; 
Percentage: 54. 

Occupations: Crane Operating; 
Percentage: 54. 

Occupations: Librarian; 
Percentage: 54. 

Occupations: Distribution Facilities & Storage Management Series; 
Percentage: 53. 

Occupations: Facility Operations Services; 
Percentage: 52. 

Occupations: Geology; 
Percentage: 52. 

Occupations: Health System Administration; 
Percentage: 52. 

Occupations: Customs And Border Protection Interdiction; 
Percentage: 51. 

Occupations: Packing; 
Percentage: 51. 

Occupations: Engineering Technician; 
Percentage: 51. 

Occupations: Property Disposal; 
Percentage: 51. 

Occupations: Meteorological Technician; 
Percentage: 51. 

Occupations: Industrial Engineering Technician; 
Percentage: 51. 

Occupations: Engineering Equipment Operating; 
Percentage: 50. 

[See PDF for image] 

Source: GAO analysis of CPDF data. 

Note: Retirement eligibility rates are for occupations with 500 or more 
employees as of the end of fiscal year 2007 that exceeded the 
governmentwide rate of 33 percent by 50 percent or more. 

[End of figure] 

Retirement eligibility will be especially pronounced among the 
agencies' executives and supervisors (see fig. 5). Of the approximately 
7,200 career executives as of the end of fiscal year 2007, 64 percent 
are projected to be retirement eligible by 2012, up from 41 percent in 
2008. For supervisors who are not career executives, 45 percent will be 
eligible to retire by 2012. 

Figure 5: Projected Retirement Eligibility Rates for Career Employees 
from Fiscal Years 2008 to 2012: 

This figure is a multiple line graph showing projected retirement 
eligibility rates for career employees from fiscal years 2008 to 2012. 
The X axis is the year, and the Y axis is the percentage. 

Year: "2008"; 
Employee: 17; 
Supervisor: 41; 
Executive: 25. 

Year: "2009"; 
Employee: 20; 
Supervisor: 48; 
Executive: 31. 

Year: "2010"; 
Employee: 24; 
Supervisor: 54; 
Executive: 36. 

Year: "2011"; 
Employee: 27; 
Supervisor: 59; 
Executive: 40. 

Year: "2012"; 
Employee: 31; 
Supervisor: 64; 
Executive: 45. 

[See PDF for image] 

Source: GAO analysis of CPDF data. 

Note: The term "executives" as used in this testimony includes 
political appointees above GS-15, those in the Senior Executive 
Service, those in the Senior Level and Senior Technical and 
Professional pay plans, and equivalent positions. The term "supervisor" 
as used in this testimony includes those whose duties involve 
assigning, directing, and supervising the work of others on a regular 
basis, as well as management officials who are not executives, but 
whose duties involve formulating agencies' policies. 

[End of figure] 

Although most federal employees do not retire immediately upon becoming 
eligible,[Footnote 8] the increasing number of employees becoming 
retirement eligible in the near future points to the need for agencies 
to examine how these trends will affect them. In so doing, agencies 
should take into account location, occupation, and grade level of 
potential retirees, and develop appropriate succession planning 
strategies, which may include retaining older, experienced workers, to 
address the likely impact. At the same time, it will be important for 
agencies to consider their organization's strategic goals and the 
critical skills and competencies needed to meet future program 
outcomes, and to develop strategies to address any gaps in the number, 
skills, and competencies needed to achieve those outcomes. 

Federal Agencies Have a Variety of Options Available to Hire and Retain 
Older Workers, but Some Federal Practices Make It Difficult to Use 
These Options: 

Federal agencies have a range of flexibilities at their disposal to 
help them engage and retain mission critical staff, including older, 
experienced workers. SSA, an agency that stands to lose a relatively 
large proportion of its experienced workforce in the upcoming 
retirement wave, is using many of the available governmentwide 
flexibilities to address workforce shortages. Some other federal 
agencies have developed alternative approaches that facilitate hiring 
and retaining older workers to meet their workforce needs. Despite the 
availability of recruitment, retention, and other flexibilities, 
agencies still face human capital challenges. In our past work, we 
found that agencies are not always able to make full use of available 
flexibilities, in part because they did not fully understand them. 

OPM's Human Capital Policies and Guidance Are Aimed at Attracting and 
Retaining a Diverse Workforce: 

As the government's human capital leader, OPM sets human capital 
policies for federal agencies. In many cases, OPM serves as the 
gatekeeper by approving or disapproving an agency's request to use some 
hiring authorities or other flexibilities. Other authorities do not 
require OPM's approval.[Footnote 9] While only one of the available 
flexibilities is largely focused on older workers--dual compensation 
waivers--many, such as flexible and part time work, are particularly 
appealing to older workers. OPM does not specifically target older 
workers in its policies. Instead, efforts are focused on workers who 
possess the right skills and experience to meet agencies' workforce 
needs, without regard to age. 

Governmentwide Hiring Authorities. Under existing rules and 
regulations, agencies have the authority to use a number of different 
approaches to hire workers, including older workers, without obtaining 
OPM approval. Among other approaches, they include using: 

* temporary appointments for short-term needs;[Footnote 10] 

* temporary assignees from state and local governments, colleges and 
universities, Indian tribal governments, and qualified not-for-profit 
agencies under the Intergovernmental Personnel Act (IPA);[Footnote 11] 

* commercial recruiting firms and nonprofit employment firms;[Footnote 
12] 

* consultants for temporary or intermittent employment;[Footnote 13] 

* contractual arrangements: commercial temporary help for brief periods 
of time, and contracts for services, as long as the contracts follow 
federal procurement regulations.[Footnote 14] 

Agencies can also use additional hiring authorities by obtaining OPM's 
approval or by notifying OPM on a case-by-case basis of their intent. 
These include the following: 

* Dual compensation waivers[Footnote 15] to rehire federal retirees-- 
OPM may grant waivers allowing agencies to fill positions with rehired 
federal annuitants without offsetting the salaries by the amount of the 
annuities. Agencies can request waivers on a case-by-case basis for 
positions that are extremely difficult to fill or for emergencies or 
other unusual circumstances. Agencies can also request from OPM a 
delegation of authority to grant waivers for emergencies or other 
unusual circumstances. These waivers by their nature are largely for 
older workers;[Footnote 16] 

Text Box: The Internal Revenue Service (IRS) uses its dual compensation 
waiver to bring back retired Revenue Agents to train less experienced 
agents--an effective way, officials say, to pass down critical 
knowledge without pulling experienced employees away from their primary 
focus--auditing tax returns. 

* Special authority to hire for positions in contracting--agencies can 
rehire federal annuitants to fill positions in contracting without 
being required to offset the salaries. Agencies are required only to 
notify and submit their hiring plans to OPM;[Footnote 17] 

* On-the-spot hiring without competition--this may be used in 
circumstances where (1) public notice has been given and (2) OPM has 
determined there is a severe shortage of candidates or a critical 
hiring need, such as in certain medical or information security 
occupations, or occupations requiring fluency in Middle Eastern 
languages;[Footnote 18] 

* Veterans' recruitment appointment--agencies may hire certain veterans 
without competition to fill positions up to the GS-11 level or for 
disabled veterans at any level;[Footnote 19] 

* Enhanced annual leave computation--agencies may credit relevant 
private sector experience when computing annual leave amounts.[Footnote 
20] 

Flexible Schedules and Workplaces. Flexible schedules and workplaces 
are often extremely important to older workers. For example, some 
research indicates older workers want to set their own hours and to be 
able to take time off to care for relatives when needed.[Footnote 21] 
In addition, older workers nearing retirement may prefer a part-time 
schedule, for example, as a means to retire gradually. Federal agencies 
have work schedule flexibilities that they can provide to their workers 
without prior approval from OPM. These include: 

* Part-time schedules--allow employees to work on a part-time basis; 
however, part-time work late in a career may result in a lower 
retirement annuity and may affect other benefits.[Footnote 22] 

* Flexible work schedules--allow full-time or part-time employees to 
determine their hours of work within established parameters or modify 
the typical work schedule of 8 hours a day, 5 days per week by, for 
example, permitting schedules of 10 hours per day, 4 days per 
week.[Footnote 23] 

* Alternative work sites--allow employees to work from home or outside 
the traditional office.[Footnote 24] 

Text Box: As part of a strategy to attract experienced workers away 
from highly paid private sector jobs, the Nuclear Regulatory Commission 
(NRC) offers its employees enhanced workplace flexibility, including 
the options of working from home and of setting alternative work 
schedules. Officials report that these options have sometimes been 
pivotal in convincing older workers to come to work for NRC. 

Compensation Flexibilities. Agencies also have authority to provide 
additional compensation to employees. These include: 

* giving recruitment, relocation, and retention incentives to 
employees;[Footnote 25] 

* raising the pay rate of critical positions in an agency (requires OPM 
approval after consultation with OMB);[Footnote 26] 

* providing certain eligible physicians allowances of up to $30,000 per 
year. This flexibility requires OMB approval;[Footnote 27] and: 

* using special rates, premium pay, and other compensation 
flexibilities to recruit and retain specified health care employees, 
under a delegation agreement with OPM.[Footnote 28] 

A Case Study: How One Agency Uses Available Flexibilities to Address a 
Looming Retirement Wave: 

One of the agencies we reviewed--the Social Security Administration 
(SSA)--is particularly at risk of losing a substantial portion of its 
workforce at a time when it will experience unprecedented growth in 
demand for its services. SSA faces looming shortages particularly in 
some mission critical positions, despite enhancing its human capital 
planning efforts. The agency is experiencing service delays, even at 
current staffing levels. For example, SSA had over 750,000 disability 
claims awaiting a decision at the hearing level at the end of January 
2008, leading to an average waiting time in fiscal year 2008 of almost 
500 days. These backlogs could increase in the future, given SSA's 
demographic profile. Indeed, according to SSA's data,[Footnote 29] 
about 40 percent of its current workforce will be eligible to retire by 
2012, and by 2017 that proportion will grow to more than half. The 
prospects for hiring new employees to replace retirees over this 
timeframe remains unclear. According to SSA officials, while the fiscal 
year 2008 budget provided sufficient funding to allow SSA to replace 
all of the employees that leave--and to add additional employees in 
some areas--budgetary constraints have prevented the agency from hiring 
enough new workers in the past and future hiring will depend upon the 
resources available. Even when SSA can hire, the agency faces stiff 
competition from the private sector, especially for jobs in the 
accounting, legal, and information technology fields. 

The potential impact of retirements varies across the agency and will 
affect occupations SSA deems critical. By 2012, the proportion of those 
eligible to retire will generally range from 25 percent to 59 percent 
across such occupations. However, the proportion of administrative law 
judges eligible to retire is far higher--about 86 percent will be 
eligible by 2012 and nearly all by 2017. Moreover, SSA stands to lose a 
substantial portion of its leadership staff. Of its 138 Senior 
Executive Service (SES) members, 62 percent are now eligible to retire 
and nearly 80 percent will be eligible by 2012. Of the over 6,000 
supervisors, nearly 39 percent are currently eligible to retire and 57 
percent could retire by 2012. 

SSA has increasingly used information technology solutions in an effort 
to improve its human capital management. For example, to better 
understand where to place its human capital emphasis, SSA has developed 
an approach that uses historical data to project future retirements. 
The model projects who is likely to retire, and SSA uses these 
projections to estimate gaps in mission-critical positions and to 
identify regional and headquarters components most affected. With these 
estimates the agency develops action plans focused on recruiting and 
hiring, retention, and staff development. SSA has also developed user- 
friendly automated tools to help job applicants complete the 
applications process. This system keeps both applicants and managers 
advised of where the application is in the process. 

SSA has used a variety of strategies to hire and retain older workers, 
some of which include the human capital flexibilities available to all 
federal agencies. For example, SSA offers recruitment, relocation, and 
retention bonuses to individuals with needed skills and considers an 
employee's private sector experience when computing annual leave 
status. The agency also offers workplace flexibilities, such as 
alternative work sites and flexible work schedules, seminars on 
dependent care for elderly family members and children, and learning 
opportunities such as midcareer and pre-retirement seminars. In 
addition, SSA provides the options of a phased retirement program-- 
allowing employees to work on a part time basis during the years 
immediately prior to retirement--and a trial retirement program-- 
allowing workers to return to work within a year of retiring if they 
repay the annuity they've received. However, SSA officials told us that 
the programs have been rarely used because of the financial penalty 
workers would face. 

Under a delegation of authority from OPM, SSA has used dual 
compensation waivers to hire experienced retirees to fill staffing 
shortages in critical areas when these shortages constituted an 
emergency. From November 2000 through December 2006, SSA used this 
authority to rehire nearly 1,300 federal annuitants who were 
knowledgeable and proficient at processing complex, difficult workloads 
and who needed little or no training to fill mission critical workforce 
gaps.[Footnote 30] This waiver authority expired in 2006 and was not 
renewed. However, SSA has been granted a waiver to reemploy 
administrative law judges to help reduce the disability hearings 
backlog. In addition, SSA was granted a waiver to rehire federal 
annuitants to provide relief in areas affected by hurricanes Katrina 
and Rita. SSA officials reported that when they have been allowed to 
use dual compensation waivers, their experiences were extremely 
positive. 

Beyond using existing flexibilities, SSA has developed recruitment 
efforts that reach out to a broader pool of candidates, some of whom 
are older workers. For example, SSA began recruiting retired military 
and disabled veterans in 2002 because of its commitment to helping 
veterans. SSA is also beginning to reach out to older workers in order 
to achieve its diversity goal of attracting a multigenerational 
workforce. These steps have included developing recruiting material 
featuring images of older and younger workers. 

Other Federal Agencies Have Developed Alternative Approaches to Hire 
and Engage Older Workers to Meet Their Workforce Needs: 

In addition to SSA, we interviewed officials in several other agencies 
and learned that some have developed their own approaches to hiring and 
engaging older workers. 

* Identifying and recruiting retirees with critical skills by using 
technology. The Department of State has developed two databases to 
match interested Foreign Service and Civil Service retirees with short- 
term or intermittent job assignments that require their skill sets or 
experiences. One database--the Retirement Network, or RNet--contains a 
variety of information, including individuals' job experiences, foreign 
language abilities, special skills, preferred work schedule, and 
favored job locations. To identify individuals with specific skill 
sets, officials match information from RNet with another database that 
organizes and reports all available and upcoming short-term job 
assignments. For instance, in 2004, the agency identified current and 
retired employees familiar with Sumatra's culture and language and sent 
many of them to Indonesia to help with the tsunami relief efforts. 
According to officials, this technology has allowed them to identify 
individuals with specialized skills and specific job experience within 
hours. Before these systems were in place, the search for specific 
individuals would have taken days or weeks, and even then, the list of 
individuals would have been incomplete. Because different personnel 
rules apply to Foreign Service and Civil Service positions, the agency 
typically brings Civil Service retirees on as contractors--nonfederal 
employees without any reduction to earnings or annuities--and may hire 
Foreign Service retirees as federal employees who may earn their full 
salaries and annuities.[Footnote 31] 

* Hiring older workers through nonfederal approaches. The Environmental 
Protection Agency (EPA) has designed a program that places older 
workers (55 years and over) in administrative and technical support 
positions within EPA and other federal and state environmental agencies 
nationwide. Instead of hiring older workers directly into the 
government as federal employees, EPA has cooperative agreements with 
nonprofit organizations to recruit, hire, and pay older workers. Under 
these agreements, workers are considered program enrollees, not federal 
employees. EPA's Senior Environmental Employment (SEE) program started 
as a pilot project in the late 1970s, and was authorized by the 
Environmental Programs Assistance Act in 1984.[Footnote 32] According 
to EPA, many SEE enrollees come from long careers in business and 
government service, offer valuable knowledge, and often serve as 
mentors to younger coworkers. Depending on their skills and experience, 
program enrollees' wages vary, starting at $6.92 per hour and peaking 
at $17.29 per hour. Using the SEE program as a model, the Department of 
Agriculture's Natural Resources Conservation Service (NRCS) recently 
developed a pilot project called the Agriculture Conservation 
Enrollees/Seniors (ACES) program.[Footnote 33] Officials from both EPA 
and NRCS told us that their programs are crucial in helping agencies 
meet workload demands and providing older workers with valuable job 
opportunities. 

* Partnering with private firms to hire retired workers. In partnership 
with IBM and the Partnership for Public Service, the Department of the 
Treasury is participating in a pilot project that aims to match the 
talent and interest of IBM retirees and employees nearing retirement 
with Treasury's mission-critical staffing needs. Working together, the 
three organizations are designing a program that intends to send 
specific Treasury job opportunities to IBM employees with matching 
skill sets and experience; help create streamlined hiring processes; 
provide career transition support, such as employee benefits counseling 
and networking events; and encourage flexible work arrangements. 
Officials are developing the pilot project within existing 
governmentwide flexibilities that do not require special authority from 
OPM. As one official suggested, designing such a project may reveal the 
extent to which existing federal flexibilities allow new ways of hiring 
older workers. 

* Engaging older workers through mentoring. Three of the agencies we 
spoke with are in the beginning stages of formalizing mentoring 
programs, recognizing that mentoring relationships help pass down 
knowledge to less experienced workers as well as engage older workers. 
According to one official at NRC, fostering mentoring relationships is 
essential for his agency. Not only do these relationships help to 
transfer knowledge to less experienced workers, they also help senior- 
level staff build strong professional relationships with junior 
employees. 

Several Challenges Exist to Hiring and Retaining Older Workers in the 
Federal Government: 

Despite the availability of recruitment, retention, and other 
flexibilities, agencies still face human capital challenges. In our 
past work, we found that agencies were not always able to make full use 
of available flexibilities, in part because they did not fully 
understand the range of flexibilities at their disposal and did not 
always educate managers and employees on the availability and use of 
them. In addition, we found that inadequate funding and weak strategic 
human capital planning contributed to the limited use of these 
flexibilities. Moreover, OPM did not take full advantage of its ability 
to share information about when, where, and how the broad range of 
flexibilities are being used and should be used to help agencies meet 
their human capital management needs. 

Several federal hiring procedures can also pose challenges and make it 
difficult for the federal government to compete with private sector 
employers. Cumbersome federal hiring procedures can make it difficult 
for older workers, as well as all other applicants, to get a federal 
job. Recently, the Partnership for Public Service reported that older 
workers face a number of challenges to getting a federal job. Many of 
the issues they raise affect applicants of all age groups. For example, 
for many of the jobs open to the public, too little time was allowed 
between the time the job was announced and the deadline for submitting 
a complete application. For this and other reasons, a majority of older 
workers they surveyed thought that applying for a federal job is 
difficult. To address the cumbersome and complicated federal hiring 
process, the report recommended that federal agencies publicize federal 
jobs beyond the internet, make federal job announcements and the 
application process more user-friendly, and keep applicants informed of 
their application status.[Footnote 34] 

Furthermore, the dual compensation rule, which requires annuitants' 
salaries to be offset by the amount of the annuities they receive, can 
create a financial disincentive for retirees wishing to return to 
federal service. Unless federal agencies receive authority to grant 
waivers of this rule, retired federal workers--unlike private sector or 
military retirees--would be working for reduced rates of pay. Other 
rules make it difficult to use flexibilities. For example, federal 
employees close to retirement may face reductions in the monthly 
retirement benefit if they choose to work part-time--or use a phased 
retirement approach--near the end of their careers. 

Federal Employment Has a Number of Attributes Attractive to Older 
Workers: 

Overall, the federal government is making progress toward becoming a 
model employer of older, experienced workers. Research has identified 
characteristics of work environments that older workers value that can 
serve as a model for federal agencies as they seek to hire and retain 
older workers. While there remain opportunities for improvement, OPM 
and Congress are taking action to minimize the challenges faced in 
hiring and retaining older, experienced workers. 

OPM and Congress Are Taking Steps to Minimize Challenges: 

As we discussed earlier, individual agencies have strategies that they 
can use to address some challenges to employing older workers, but 
actions from OPM, as the government's human capital leader, and 
Congress play pivotal roles in changing the landscape of rules 
regarding federal employment. 

OPM has taken steps to provide agencies with guidance on how to use 
available flexibilities and authorities. For example, in the fall of 
2005, OPM put a hiring flexibilities decision support tool online to 
assist agencies in assessing which flexibilities would best meet their 
needs. This Hiring Flexibilities Resource Center provides in-depth 
information on a variety of flexibilities, including Direct Hire and 
Excepted Service. In January 2008, OPM updated its handbook on federal 
flexibilities and authorities, also online, which provides more 
information on both recruiting and retention strategies agencies can 
use to promote the positive aspects of the federal government. 
Responding to past findings about the length of time it takes to hire 
new employees, OPM has established a strategic goal to improve 
recruitment and retention, including faster hiring, hiring more 
veterans, rehiring annuitants, and faster application processing. 

OPM has also encouraged federal agencies to consider a broad spectrum 
of employees as they seek to meet workforce needs. According to OPM, 
federal human capital managers are facing increasing competition in 
attracting and retaining talent. To meet this challenge, OPM has 
developed a new approach, called the Career Patterns initiative, for 
bringing the next generation of employees into federal positions. In 
its Career Patterns guidance to agencies, OPM identifies, among other 
things, scenarios that describe the particular characteristics of 10 
types of individuals, including students, new professionals, 
experienced professionals, and retirees who could help broaden the pool 
of potential employees for federal jobs. 

OPM has also recently proposed legislation to Congress that would 
enhance agencies' ability to hire and retain older workers. One 
proposal would give agencies the authority to grant dual compensation 
waivers without having to obtain OPM approval. The proposal calls for a 
yearly and lifetime limitation on how many hours an individual can be 
reemployed. A second proposal would increase the ability of employees 
to work on a part time basis during their pre-retirement years by 
changing the way the CSRS annuities based on part time services are 
computed. 

Congress has taken action to address the retirement risks in selected 
occupations. For example, in 2006, Congress enacted legislation 
allowing federal agencies to hire federal retirees to fill acquisition- 
related positions without requiring annuity offset.[Footnote 35] The 
authority to use this provision expires on December 31, 2011. Agencies 
are required to consult with OPM and OMB in developing their plans for 
reemploying annuitants in acquisition-related positions and to submit 
their plans to OPM. OPM officials indicated that they have reviewed and 
approved 9 agencies' plans for consistency with the statutory criteria 
for reemploying annuitants in those positions. In addition, bills 
incorporating OPM's proposals related to dual compensation waivers and 
part time employment are currently pending in Congress.[Footnote 36] 

Federal Employment Already Has a Number of Characteristics Appealing to 
Older Workers and Other Employees: 

Although the availability of flexibilities generally varies by agency, 
agencies already have the authority to offer a number of the 
flexibilities and practices older workers find appealing in an 
employer. For example, AARP--one of the largest interest groups for 
individuals age 50 and older--developed criteria to evaluate an 
organization's performance in recruiting, engaging, and retaining this 
cohort and has, since 2001, used these criteria to identify the best 
employers for workers over 50.[Footnote 37] Features of these criteria, 
as described by AARP, overlap with many of the flexibilities that 
federal employment offers. Their availability and usage in the federal 
government are shown in table 1. 

Table 1: AARP's Criteria for Selecting the Best Employers for Older 
Workers and Their Usage in Government: 

AARP Criteria for selecting the best employers for older workers: 
Recruiting; 
Advertise in publications that target diverse age groups; 
Develop recruiting material that appeals to workers of all ages; 
Availability and usage by federal agencies: Available; usage varies by 
agency. 

AARP Criteria for selecting the best employers for older workers: 
Training opportunities; 
Provide opportunities for training, continuous education/learning, and 
career development; 
Availability and usage by federal agencies: Available; usage varies by 
agency. 

AARP Criteria for selecting the best employers for older workers: 
Alternative work arrangements; 
Provide for flexible hours, telecommuting, and phased retirement; 
Availability and usage by federal agencies: 
Available; usage varies by agency. 

AARP Criteria for selecting the best employers for older workers: 
Benefits, including health and retirement; 
Provide for health benefits, including the percentage of the premium 
that workers are required to pay and whether they are offered to part-
time employees; long-term care insurance; defined benefit or defined 
contribution retirement plans; 
Availability and usage by federal agencies: Available governmentwide. 

Source: AARP and GAO analysis: 

[End of table] 

One area where the government is particularly strong is the 
availability of health benefits. Federal agencies offer health benefits 
and pay a sizable portion of the cost. Health insurance may be an 
especially attractive recruitment and retention tool to older workers 
since employees generally need only 5 years of federal service with 
health insurance while employed to carry that benefit into retirement. 
The federal government also offers retirement benefits and life 
insurance, and provides the opportunity for employees to purchase long- 
term care insurance. 

In other areas, agencies generally have the authority to offer a 
particular practice, but their actual usage varies by agency depending 
on the agency's needs, the nature of the work and other factors. For 
example, with respect to alternative work arrangements, the federal 
government offers a number of programs that help employees balance 
their personal and professional responsibilities, including 
telecommuting, part time employment, and flexible schedules. 

Concluding Observations: 

A looming retirement wave could result in a possible "brain drain" for 
federal agencies unless they employ effective succession planning 
strategies--strategies that include hiring younger workers as well as 
retaining older workers who possess needed talents and skills and who 
can share these talents and skills with the next generation. 
Importantly, the government already has a number of tools in its human 
capital tool kit that provide agencies with flexibility they need to 
recruit and retain older workers. Moreover, federal employment offers a 
range of benefits and employment flexibilities, such as the 
availability of part-time employment that can make these jobs 
particularly attractive to older workers, as well as all demographic 
groups. 

Still, while the federal government is making progress toward becoming 
a model employer of older workers, opportunities for improvement 
remain. First, our demographic analysis shows that while the federal 
workforce is aging, and an increasing number of employees will become 
eligible for retirement in the coming years, these trends will have 
varying degrees of impact within particular agencies. As a result, it 
will be important for agencies to fully understand and forecast the 
implications of these trends so they can implement timely and 
appropriate succession strategies. Second, as certain federal agencies 
have developed alternative approaches to hire and engage older workers, 
it will be important for agencies to share lessons learned from these 
practices governmentwide. And third, despite the availability of 
employment flexibilities and practices that allow employees to balance 
their professional and personal responsibilities, individual agencies 
do not always take advantage of them. 

Consequently, it is incumbent upon OPM to continue to work with federal 
agencies to help ensure they have (1) the flexibilities they need to 
attract and retain a diverse workforce that includes older workers; (2) 
the awareness of these flexibilities, as well as guidance and technical 
assistance needed to implement them; and (3) mechanisms to share best 
practices and lessons learned in attracting and retaining older 
workers. Becoming a model employer is a shared responsibility and it 
will be important for agencies to, among other actions, take advantage 
of available flexibilities and guidance on their use and communicate 
this information throughout the agency. Collectively, these measures 
will help make federal agencies more competitive in the labor market 
for all demographic groups. 

Mr. Chairman, Ranking Member, and Members of the Committee, this 
concludes our prepared statement. We would be pleased to respond to any 
questions that you may have. 

Contact and Staff Acknowledgments: 

For questions regarding this testimony, please call Barbara D. 
Bovbjerg, Director, Education, Workforce, and Income Security at 202- 
512-7215 or Robert N. Goldenkoff, Director, Strategic Issues at 202- 
512-6806. Other individuals making key contributions to this statement 
include Dianne J. M. Blank and Belva M. Martin, Assistant Directors; 
Nicholas Alexander; Jessica Botsford; Clifton G. Douglas, Jr; Karin 
Fangman; Cheri L. Harrington; Isabella Johnson; Mary Y. Martin; Rachael 
C. Valliere; Kathleen D. White; and Greg Wilmoth. 

[End of section] 

Appendix I: Scope and Methodology: 

Our objectives were to describe (1) the age and retirement eligibility 
trends of the current federal workforce; (2) the strategies federal 
agencies are using to recruit, hire, and retain older workers; and (3) 
our observations on how these strategies position federal agencies to 
engage and retain older workers. 

Demographic Trends: 

To describe demographic trends relating to the retirement eligibility 
and aging of the federal workforce, we analyzed information on the 24 
CFO agencies from OPM's human resource reporting system, the Central 
Personnel Data File (CPDF). We analyzed data on the age, retirement 
eligibility, occupations, projected retirement rates, and other 
characteristics of the career federal workforce. We used the following 
variables: agency, occupation, date of birth, service computation date, 
pay plan/grade, and supervisory status. All these variables were 97 

percent or more reliable. Using the CPDF information, we analyzed the 
age distribution of career federal employees at CFO agencies by age 
groupings (under 40, 40-54, and 55 and over). We also analyzed the 
percentage of career federal employees on board at the end of fiscal 
year 2007, who would be eligible to retire from fiscal years 2008 to 
2012, and the percentage of workers eligible to retire in occupations 
where the retirement rates exceeded the governmentwide average. As a 
proxy for those occupations that may be at risk due to high retirement 
eligibility rates, we selected occupations with 500 or more employees 
as of the end of fiscal year 2007 that exceeded the governmentwide rate 
of 33 percent by 50 percent or more. For this report, we defined older 
workers as those 55 and older. 

Strategies Available to Federal Agencies to Hire and Retain Older 
Workers: 

To address this objective, we reviewed strategies available to federal 
agencies to hire and retain older workers through governmentwide hiring 
authorities and other flexible arrangements, we interviewed officials 
at OPM and other selected federal agencies, including Labor, and we 
reviewed previous GAO work relating to older workers and federal human 
capital strategies. We also reviewed relevant laws, literature on 
hiring and retaining older workers, and documents on federal human 
capital flexibilities. As a case study, we selected the Social Security 
Administration (SSA), to describe the strategies that one federal 
agency has taken to hire and retain older workers. We selected SSA 
because it is at high risk of losing a large proportion of mission- 
critical employees and because it risks losing these employees at the 
same time the need for its services will peak. 

We interviewed human capital officers at selected agencies to collect 
such information as: 

* the extent to which agency officials think they will be affected by 
retirements over the next decade; 

* the information agencies have used and presently use to guide the 
identification of the probable effects of retirement and how agencies 
determine appropriate courses of action; 

* strategies that have been taken or will be taken regarding 
recruiting, hiring, and retaining older workers; and: 

* characteristics and scope of these strategies, including human 
capital authorities or special legislation regarding flexibilities that 
are available to them. 

To identify and describe alternative strategies, we performed a 
literature search and conducted interviews with government and private 
sector experts. The strategies that we describe were developed by the 
Departments of Agriculture, HUD, and State, the Internal Revenue 
Service (IRS), Environmental Protection Agency (EPA), and Nuclear 
Regulatory Commission (NRC). We selected these strategies because they 
were developed internally to met specific agency needs but could be 
used elsewhere in the government. 

Observations on How Strategies Position Federal Agencies to Engage and 
Retain Older Workers: 

To address this objective, we reviewed previous GAO work and conducted 
interviews with federal officials at OPM and selected agencies and 
experts at AARP and other organizations that serve older individuals to 
determine how the federal government is progressing toward becoming a 
model employer. We chose the AARP criteria for selecting the best 
employers for workers over age 50 to compare to characteristics of 
federal employment because of its exclusive focus on older workers. 

We conducted our work from November 2007 to April 2008 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

[End of section] 

Footnotes: 

[1] See, for example, GAO, Highlights of a GAO Forum: Engaging and 
Retaining Older Workers, GAO-07-438SP (Washington, D.C.: February 
2007); AARP, The Business Case for Workers Age 50+, (Washington, 
D.C.:2005); Partnership for Public Service, A Golden Opportunity: 
Recruiting Baby Boomers Into Government, (Washington, D.C.: January 
2008); Department of Labor, Report of the Taskforce on the Aging of the 
American Workforce, (Washington, D.C.: February 2008). 

[2] Pub.L. No. 101-576 (1990), as amended. The CFO Act agencies are 24 
major executive agencies that are subject to the CFO Act. In 2007, the 
CFO Act agencies employed 98 percent of federal employees. 

[3] For more information, see GAO, Redefining Retirement: Options for 
Older Americans, GAO-05-620T (Washington, D.C.: April 2005). 

[4] GAO, Human Capital: Succession Planning and Management Is Critical 
Driver of Organizational Transformation, GAO-04-127T (Washington, D.C.: 
Oct. 1, 2003). 

[5] These agencies were the Departments of Commerce, Education, Health 
and Human Services, Labor, Transportation, and the Treasury; the Equal 
Employment Opportunity Commission, Small Business Administration, and 
the Social Security Administration. 

[6] Department of Labor, Report of the Taskforce on the Aging of the 
American Workforce, (Washington, D.C.: February 2008). 

[7] We define retirement eligibility as being eligible for an unreduced 
(full) annuity. The specific rules vary by retirement plan. Under the 
Civil Service Retirement System (CSRS), the minimum age and service 
requirements are age 55 with 30 years of federal service, and under the 
Federal Employees Retirement System (FERS), the minimum age is between 
55 and 57 (depending upon year of birth) and 30 years of service. In 
both CSRS and FERS, employees are also eligible to retire at either age 
60 with 20 years of service, or age 62 with 5 years of service if they 
had federal careers shorter than 30 years by the time they were 60 or 
62. 

[8] According to OPM data, as of 2004, for voluntary retirements, 
retirement-eligible employees stay an average of 3.1 years before 
actually retiring. 

[9] OPM, Human Resources in the Federal Government Flexibilities and 
Authorities, January 2008. 

[10] See 5 C.F.R part 316, subpart D. 

[11] This allows federal agencies to bring in temporary assignees for 
the mutual benefit of the federal government and the nonfederal entity. 
See 5 U.S.C. ï¿½ï¿½ 3371-3375, 5 C.F.R. part 334. 

[12] See 5 C.F.R. part 300, subpart D. 

[13] See 5 U.S.C. ï¿½ 3109, 5 C.F.R. part 304. 

[14] See 5 C.F.R. part 300, subpart E. 

[15] See 5 U.S.C. ï¿½ 8344 and ï¿½ 8468, 5 C.F.R. part 553. 

[16] Some agencies have agency-specific dual compensation waivers. 

[17] This authority expires December 31, 2011. 

[18] See 5 U.S.C. ï¿½ 3304(a)(3), 5 C.F.R. part 337, subpart B. 

[19] See 5 C.F.R. part 307. 

[20] See 5 U.S.C. ï¿½ 6303(e) and 5 C.F.R. 630.205. 

[21] AARP, Staying Ahead of the Curve: The AARP Working and Retirement 
Study. (Washington, D.C.: September 2003) 

[22] See 5 U.S.C. ï¿½ 3402, 5 C.F.R. part 340, subparts A and B. 

[23] See 5 U.S.C. ï¿½ 6122, 5 C.F.R. part 610, subpart D. 

[24] See, e.g., ï¿½ 359 of Pub. L. No 106-346 (October 2000). 

[25] See 5 U.S.C. ï¿½ï¿½ 5753-5754, 5 C.F.R. part 575, subparts A, B, and 
C. 

[26] See 5 U.S.C. ï¿½ 5377 and OPM Bulletin No. 91-09. 

[27] See 5 U.S.C. ï¿½ 5948, 5 C.F.R. part 595. 

[28] See 5 U.S.C. ï¿½ 5371. 

[29] We used data from SSA's 2008 Retirement Wave Report. We did not 
independently verify reliability. Data used by SSA are generally 
consistent with data used by OPM. 

[30] While using waiver authorities to rehire annuitants, SSA had also 
received a waiver to offer early retirement to some employees. Agency 
officials told us that the purpose of this waiver was to "right size" 
or free up resources to hire workers in positions where they are most 
needed. 

[31] According to State Department officials, the Department has 
received some dual compensation waivers for specific Civil Service 
positions, such as those located in Iraq or for work in support of 
processing passports. These waivers allow Civil Service retirees to 
return to work earning full salaries and full annuity payments. The 
Department of State can hire back Foreign Service retirees on an 
intermittent schedule with full salaries and annuities up to certain 
limits if the Secretary authorizes. 

[32] Pub. L. No. 98-313. 

[33] NRCS developed ACES under the authority of section 1242(b)(4) of 
Title II of the Farm Security and Rural Investment Act of 2002. 

[34] Partnership for Public Service, A Golden Opportunity: Recruiting 
Baby Boomers Into Government, (Washington, D.C.: January 2008). We 
found the methodology used by the Partnership to be sufficiently 
reliable for our use, including the survey methodology used to 
determine how many older workers think applying for a federal job is 
difficult. 

[35] General Services Administration Modernization Act, Pub. L. No. 
109- 313 (Oct. 6, 2006). 

[36] See S.2003 and HR.3579 relating to dual compensation waiver 
authority and HR.2780 relating to part time work for retirement annuity 
computation. 

[37] AARP, formerly named the American Association of Retired Persons, 
is now known as AARP.

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