Baby Boomers Reshape Corporate America for a Second Time
by Keith Laing, Atlanta Tribune: The Magazine
December 2007/January 2008
Next year, Vickie Gordon will leave the job she has had for two decades. At age 60, she believes that now is the time for her to move on. Gordon, who serves as Intercontinental Hotels and Resort’s senior vice president for corporate affairs and works out of the corporation’s Atlanta office, plans to step down in June 2008. But she is not heading for a life of shuffle-boarding yet. Instead of taking a post-retirement cruise, Gordon will go into business for herself and open a public affairs firm.
“This seems like a good time in my life to do something a little different and follow my passion and do the things that most interest me on a full-time basis,” she says. “I’ve been fortunate enough to work for a really great company for a long time. I feel so great about the direction the company is heading in that I feel like now is a good time.”
Gordon’s company will work with corporations on their social responsibility issues, which is a part of her job with Intercontinental. She wants to help them make doing well in the community as much a part of their strategic plan as doing well in the marketplace.
“I’ve been working in that area for a long time,” she says. “I’ve done some good things to achieve that within our region.”
Gordon is sure that her work experience will give her a leg up as she ventures out independently.
“The very fact that I’ve been doing this for several years for a very large multi-national corporation gives me good insight into the ways I can do this,” she says. “[My experience] is going to be very valuable to me in my next venture.”
Gordon is not alone in semi-retiring. She says she knows plenty of fellow baby boomers – the term used to describe the products of the World War II population spike – doing the same thing. Baby boomers are typically considered those born from 1946 to 1964.
“Most of us are retiring from corporate life earlier than the typical age to draw Social Security,” she says. “We’re doing that because we feel like we’re ready to take on new challenges. I think of myself as middle aged. I certainly don’t think of myself as a senior citizen. A lot of us feel that way. We’re at the top of game and we want to go out and blaze new trails.”
Ken Mitchell, director of the American Association of Retired Persons’ Georgia office, says stories like Gordon’s are becoming the rule instead of being the exception. So much so, he says, that his office has begun offering semi-retirees assistance.
“A lot of older workers in their forties and fifties want to re-career, so we highlight fields where they can go and continue to have health care and benefits; fields that are going to continue to grow,” Mitchell says.
According to Mitchell, the cause of baby boomers’ semi-retirement is a simple matter of supply and demand. Employers are finding that they can ill afford to lose so much of the workforce and older employees are loath to leave. For instance, in the next five years, over 50 percent of the city of Atlanta’s employees will be over 50 years old.
“When boomers came along, laws were passed to prevent workers from working part time while drawing retirement, but then they realized there would be a shortage,” says Mitchell. “Baby boomers have re-written everything. They built schools for [boomers] when they were first born, expanded colleges and changed the workforce…And now [they're changing] retirement. [Boomers] are changing aging because you are going to have a lot of healthy people who want to work. [Boomers] are going to be the transitional workforce young people have traditionally been.”
That’s because in the next 20 years, the proportion of state’s population that is age 65 and older will grow significantly while the percentage under 24 years old will shrink, according to a recent study conducted by the Georgia AARP. This will happen as the state’s economy continues to expand, leaving a demand for workers. Employers will have no choice but to turn to older workers to meet the demand.
Mitchell cites Home Depot and Georgia Power as examples of this. Home Depot worked with the AARP to hire people who worked in trades and were thus familiar with its products and Georgia Power pairs retirees with new line men for training. “People say older workers are more dependable, more conscientious and don’t take as many sick days,” says Mitchell.
Another factor driving retirees back to work is financial. Many have not planned for retirement as well as they should have.
“We’re finding that 50 percent of families of any age have any money saved for retirement,” Mitchell says. “The average amount is $35,000, so when it comes to retirement, those people are going to have to work to make ends meet. They may have a small pension, but that’s not going to be enough.”
Apparently, there are both individual and societal reasons for that.
“People are making more income, so they have more discretionary income to save, but people in the middle and lower class, because of increased costs for health care and flat wages, don’t have as much to save,” says Mitchell.
He hopes the pending retirement boom serves as a lesson to baby boomers’ children.
“We have to help future generations get started saving early, even if it’s just a small amount, because if we don’t, they’re going to be worse off than boomers are,” he says.
One reason why post-boomers should begin to worry about their retirements now is the impact that the next wave of retirees will have on the national security blanket – Social Security. Popular doomsday scenarios have the system spiralling toward bankruptcy as people retire earlier and live -and thus draw benefits – longer. According to Leon Rhodes, deputy regional commissioner for the Social Security Administration’s Atlanta region, the earliest born baby boomers will be eligible for early retirement benefits next January. And that is only the beginning. Over the next 20 years, 80 million of their cohorts will become eligible too.
The system has worked in the past because there always been more workers paying into it than retirees receiving benefits. But the gap is shrinking. Rhodes says in 1960, there were five workers for every eligible retiree; now there are three. By 2032, when the boomers have finished retiring, the ratio will be two to one.
“With that number of individuals coming, it’s going to have an impact on the trust fund,” Rhodes says. “The American public has to decide what kind of Social Security system they want to have. If we’re going to continue payments at current levels, we’re going to have to make adjustments. There are proposals out there that are designed to address these issues and we’re very confident that Congress and the President will work together to decide what to do.”
However, if that does not happen, Rhodes says that by the year 2017, the Social Security Administration will be paying out more in benefits than it takes in taxes and will have to begin using the trust fund it was built on to continue funding at current levels. Rhodes says that stopgap will last only until 2041, at which point the Administration would have to pay benefits solely from its revenue collection, which only generates enough to cover 75 percent of the current funding.
“People are living longer, healthier lives,” he says. “People having that kind of longevity really makes a difference.”
Boomers who retire could make a difference for everyone else as well. Georgia Department of Labor workforce analyst John Lawrence says the state could face labor shortages and increased demand for public services if more baby boomers opt to stop working.
“There are many ways in which the aging of the population will affect all industries in Georgia,” he says. “Some, like education and utilities, will be affected because many of the industry’s current workers will retire, leaving these industries with labor shortages and experience gaps. Some industries, like health care, will be hit with a double whammy, so to speak, as its workforce will be left with gaps from retirements and an ever increasing demand for medical services that will be required as the population ages. The government, due to favorable retirement plans, will also experience problems as workers leave while at the same time competition for workers throughout all industries increases.”
And replacing workers who clock out on their careers could take awhile, especially those in white-collar jobs, Lawrence adds.
“The biggest problem exists in industries where entry to employment is more complicated due to higher educational and skill requirements and/or certification and licensing,” he says. “Preparation of a competent workforce in these skilled fields takes time.”
Even the state’s consumers could feel the pinch.
“Salaries tend to increase during labor shortages and that could well be passed along to the final consumer,” he says.
The effects of the baby boomer retirement party for will obviously be felt for generations.
