Human Capital Shortages: Considering Older Workers

The past two years have challenged employers and employees like never before, as the way we work has changed across the country and around the world. Two things have kept businesses alive and functioning through these extraordinary challenges: technology, which helped more people work from home than ever before, and, human capital, the people who get the job done. The intersection between technology and human capital has never been more important.

As we begin to emerge from the pandemic, we are seeing labor shortages in many industries, such as hospitality, food services, and healthcare. Some people say the labor shortage was caused by overly generous pandemic unemployment benefits, but the problem is more complicated than that. Many workers lost jobs, experienced burnout, got sick, or could not risk getting sick, so they exited the workforce. For some the exit was temporary, for others, it was permanent. Today’s workers are demanding higher pay, more benefits, better working conditions, increased flexibility, or they want to work for organizations or companies that have a meaningful purpose, like social justice. Employers are becoming more attuned to addressing equity issues than in the past. Companies are making public commitments toward meeting diversity, equity, and inclusion goals, particularly in the areas of race, ethnicity, and gender.

Despite these efforts, employers continue to have difficulty finding workers. While the U.S. economy is in the midst of recovering from the massive job losses of 2020, a new problem has emerged. Employees are leaving jobs in record numbers and some workers are retiring earlier than expected, a phenomenon now referred to as the “Great Resignation” or “Big Quit.” According to U.S. Bureau of Labor Statistics, the problem is affecting numerous industries, and is causing difficulty for employers. The problem is global, as many countries are now experiencing this as well. In September, 4.4 million workers quit their jobs and 10.4 million jobs were open in the United States–a new record. Workers in accommodation and food services and retail industries accounted for the highest quit rates in July. Currently, the supply of jobs is greater than the supply of willing workers, thus creating competition for talent that we have not seen in recent times. Talent acquisition departments are scrambling to fill jobs and many cannot keep pace with the burgeoning resignations.

Recent research found that globally, employees between the ages of 30 and 45 years old had the highest increase in resignation rates from 2020 to 2021, while resignation rates actually fell for the 60 to 70 year-old age group. This is an interesting finding because hiring older workers is one solution that employers should consider to help address their talent shortage problem. Yet older workers are often overlooked and cut out of consideration.

Despite the commonly repeated stereotypes, older workers bring energy and enthusiasm to the workplace. They are known for loyalty, people skills, and a strong work ethic. And older workers often have higher levels of engagement than younger workers. People are living longer than ever before and many want or need to work longer. Older workers can provide experience and perspective that are sometimes missing in today’s workplaces. Changes in compensation and reward design have created a more age-neutral distribution of labor costs, so the incremental cost of retaining or recruiting older workers is minimal and is likely to be outweighed by their value.

There is more good news for employers. Workers ages 45 and older made up over 44 percent of the U.S. workforce in 2020, but the number of unemployed persons ages 45 and older totaled 2.8 million as of August 2021. So, over a quarter of the 10.9 million existing job openings could be filled if employers hired these workers. What is holding them back?

 


Figure 1 Source: U.S. Bureau of Labor Statistics, Current Population Survey

 

In some cases, age discrimination is the cause. In 2020, 78 percent of older U.S. workers said they had seen or experienced age discrimination in the workplace. Age discrimination can occur in the hiring process during the screening, interviewing, or selection phase. It also occurs when older workers are excluded from training and development and skills-building opportunities, or when they are not considered for promotions.

Another possible cause is technology. Here, I am not talking about older workers’ technology skills—which are often underestimated and is another untrue stereotype. The issue is the technology used in the hiring process. Advances in human capital technology have changed the recruitment process for many companies. Through the use of artificial intelligence (AI) for resume screening, chatbots to collect information from applicants, and automated scheduling for interviews, companies are increasing the speed of hires. Some companies interview people by having candidates record video responses to questions, and then use AI to analyze their answers, word choice, tone, and facial expressions. But the use of this technology comes at a cost and raises issues of accessibility, equity, and bias.

Many job candidates are unaware of how the latest HR technology is utilized. They may not know that AI is being used to screen them for identifiable skills or that they may be filtered out for having too many years of experience or for disclosing graduation dates. These types of filters introduce age bias into the hiring process. While much attention has been paid to de-biasing job descriptions and conducting blind resume reviews that remove names, schools attended, and similar information, filters that serve as proxies for age remain.

Regarding equity and accessibility, some older jobseekers can afford to pay for a resume service that will help them develop an AI-friendly resume or hire a coach who can help as they prepare for a video interview. But others cannot. Those who cannot afford to pay for assistance, and those who are unaware of how AI is being used, are at a competitive disadvantage in the job market. As employers continue to address diversity, equity, and inclusion on a broader scale, they need to think about the processes they are using to find qualified candidates and whether they are providing equal opportunities for everyone.

Employers should examine their hiring process and review the filters used to screen candidates so they can expand the pool of qualified applicants to ensure that workers of all ages are being considered. What tools and websites are used to source job candidates? Another action employers can take is to ensure that their diversity, equity, and inclusion (DEI) strategy includes age. Age can be addressed by training workers and managers about the benefits of a multigenerational workforce as well as training about how to avoid age bias. Hiring managers should be trained to use structured interviews that are designed to help remove bias from the interview process. Training and promotion processes should ensure that opportunities are available to all workers, regardless of age. Resources are available to help companies identify and share age inclusive workforce practices through the Living, Learning and Earning Longer collaborative, a partnership between AARP, the World Economic Forum, and the Organisation for Economic Co-operation and Development. The collaborative consists of global organizations and companies that seek to build, support, and maintain the multigenerational workforce.

With five generations in the workforce, addressing age has never been more important. And with today’s labor shortage, now is the time for employers to ensure that older workers are included in the search for talent.

Lori Trawinski, Ph.D

Lori Trawinski, Ph.D., CCDP/AP is a thought leader on age diversity and inclusion in the workforce. She joined the AARP Public Policy Institute in 2010 where she conducts research on policy issues ranging from age diversity in the workplace, to mortgage foreclosures and consumer debt. She led a multi-year initiative, the Future of Work@50+, that examined employment challenges faced by older Americans. She is often quoted in the media on age diversity, equity, and inclusion (DEI); financial issues; and consumer debt.

Lori authored a groundbreaking report, “Disrupting Aging in the Workplace: Profiles in Intergenerational Diversity Leadership,” which continues to serve as a reference for organizations seeking to address age within their DEI strategies.

Lori is an adjunct faculty member at the New York University School of Professional Studies in the diversity and inclusion certificate program. Lori is also a member of The Conference Board’s Diversity and Inclusion Innovators Council.

Lori holds a Ph.D. in economics and finance, an M.A. in international economics, and a B.A. in financial management from The Catholic University of America in Washington, DC. She earned an executive certificate in financial planning from Georgetown University. Lori holds a certificate in diversity and inclusion from the ILR School of Cornell University and is a Cornell Certified Diversity Professional/Advanced Practitioner. She can be reached at Lori.Trawinski@nyu.edu.

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