Working longer is one option for those who find they haven’t saved enough to retire. Not only does this give them more time to save, but it also shortens the period in which they will have to rely on their retirement assets to support themselves. But some employers may not take kindly to workers postponing retirement.

A new study from the Center for Retirement Research at Boston College in Boston notes there is some evidence that employers are not especially fond of older workers. They may use “sweetened early-retirement incentives” to get these workers to leave. And the study points out that older workers who lose their jobs have a much more difficult time finding another.

But the survey of 400 private-sector employers in the U.S. also found that older workers have reasonably good prospects of extending their careers. Although older workers are seen as costing more, the report says, they are also seen as being more productive. The overwhelming majority of employers surveyed said older workers are “as attractive” or “more attractive” than younger employees or prospects.

The authors of the study, Alicia H. Munnell, Steven A. Sass and Mauricio Soto, note that people in their 50s and 60s are more physically fit than they were in the past, and the physical demands of many jobs have declined. As well, today’s older workers are far better educated than older workers were just a decade ago.

Psychologists have identified two types of cognitive abilities, the authors say. One is the ability to master new material quickly; the other relates to accumulated knowledge, verbal meaning and word skills. Evidence shows people are less able to master new material quickly as they age, but there is no decline in their performance in the second of these abilities. In fact, older workers have often accumulated substantial knowledge and have devised efficient ways to do their work, the authors say.

The survey also showed employers’ perceptions of the productivity of older workers varies with familiarity. Employers with a relatively older workforce — more than 15% of employees aged 55 or older — have more positive views of the relative productivity of older workers. Respondents who were themselves 55 or older are also more likely to express positive views. Conversely, younger respondents or those in “young” organizations are less positive about older worker productivity, the authors say.

As well, the survey report says ratings of older workers given by some employers distinguish between white-collar workers and rank-and-file workers. For example, more than one-quarter of small firms characterize older rank-and-file workers as less productive. The study also found employers with defined-benefit pension plans tend to place a lower value on the productivity of older workers. “This is not surprising,” the report says, “as these plans are often used to induce older workers to retire.”

The “not so good” news, the report says, is that while employers tend to see older workers as equally or more productive than younger workers, they also see them as expensive. More than 40% of employers surveyed say older workers are more expensive than younger workers; twice as many say younger workers cost less. The pattern is similar for white-collar and rank-and-file workers.

Large employers are more likely to see older workers — both white-collar and rank-and-file — as costly. So are employers in goods-prod-uction industries and those with defined-benefit pension plans.

All told, the survey suggested white-collar workers have better prospects than rank-and-file workers for extending their careers. Almost one in four employers said older managers or professionals are “more attractive” than younger candidates, and very few say they are “less attractive.” By contrast, the authors say, as many employers said older rank-and-file workers are “less attractive” as those who said they were “more attractive.”

The authors maintain it is especially encouraging that employers value the productivity of older workers. The authors believe this means older workers could potentially accept lower compensation, if they had to, to secure employment. As well, they add: “An aging workforce should produce more older decision-makers and more organizations with older workforces and, therefore, a more receptive environment for older workers.”

But the survey raised some red flags, the authors say. Small employers — those with 100 or fewer employees — are generally less fond of older workers. These employers account for 38% of total employment. On the other hand, mid-sized employers, at which the employment prospects of older workers seem best, account for just 25% of total employment.

@page_break@The authors say the survey shows that older managers and professionals have better employment prospects than rank-and-file workers. About one in four workers in the U.S. currently holds a white-collar job. But, the authors note: “The rising educational attainment of the U.S. labour force and the trend toward more white-collar jobs should be higher going forward.”

Older rank-and-file workers may have weaker employment prospects than older white-collar workers, and rank-and-file workers also face a greater retirement income challenge. “They generally depend more on social security for retirement income and have few other assets — pensions, 401(k)s or home equity — to offset the coming cuts in benefits,” the authors say. “To achieve retirement income security, continued employment is important for rank-and-file workers.”

The authors are cautious about connecting employer attitudes and actual hiring decisions. Most employer surveys have found positive evaluations of the productivity of older workers. “But do such evaluations translate into employment opportunities?” they ask.

The authors note that other surveys have reported that recruitment, training and promotion decisions are based on narrower considerations, especially forward-looking considerations such as “trainability” and potential length of service. That, they say, is dependent on the socially determined “normal” age of retirement.

When it comes down to it, the report says, it’s a “chicken-and-egg” situation: “It will be easier for individual workers to extend their careers if all workers extend their
careers.” IE