Managerial Attitudes Toward Older Workers

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Discussion Paper 07-05 in The Retirement Project series.

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Abstract

The economic burden of an aging population depends partly on older adults' employment rates, which in turn depend partly on employers' willingness to hire and retain them. This report reviews the literature on managerial attitudes toward older workers. Although the available evidence is incomplete and sometimes inconsistent, many firms appear to have serious reservations about older workers. Employment prospects may be especially bleak for rank-and-file workers and those with limited skills. Managerial attitudes toward older workers may improve in the future, however, as the population and workforce age.

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Introduction

The economic burden of an aging population depends partly on older adults’ employment rates. If workers continue to retire at the relatively young ages that have become the norm over the past generation, then the aging of the baby boomers will reduce the ratio of working taxpayers to older retirees. However, the economy could produce more goods and services if older people worked longer, boosting living standards for both workers and nonworkers and generating additional tax revenue to fund all kinds of government services.

Older people’s employment depends in turn on employers’ willingness to hire and retain them. Firms may be reluctant to employ older workers if managers believe they are less energetic and flexible than younger workers or lack up-to-date skills. Managers may view older workers as particularly expensive, either because they demand higher salaries than younger workers or they incur more health care costs. Some employers also may be reluctant to train older workers because they believe they will retire soon, making it difficult for employers to recoup their training costs. The lack of training opportunities may exclude older workers from the best work assignments, hurt their promotion chances, and depress job satisfaction and earnings growth. On the other hand, some employers may prefer older workers to their younger counterparts because they value their experience, maturity, and strong work ethic. It is not immediately obvious, then, how managerial attitudes affect employment prospects for older Americans.

This paper reviews the literature on employers’ willingness to hire and retain older workers, an increasingly important topic as the population ages. After a discussion of the benefits of delayed retirement, the current retirement landscape, and some theoretical issues in the demand for older workers, the paper examines findings from a number of recent surveys of employer attitudes toward older workers, both in the U.S. and other countries. It then compares these attitudes to evidence on actual employer practices, to better assess employment prospects for older workers. The final sections consider the apparent willingness of employers to train older workers and present conclusions.

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The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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