As the economy finally bounces back from the recession, companies are now facing another challenge: the loss of some of their most experienced and knowledgeable workers due to Baby Boomer retirements.
With 76 million people having been born between 1946 and 1964, this is a challenge companies knew they would have to face sooner or later. The financial crisis bought them some time, depleting many retirement funds and forcing a number of older Americans to delay retirement. However, Boomers are now starting to feel financially secure enough to take the plunge into retirement. The labor force participation rate for those 55 and over, which rose during the recession, has fallen in the past year, according to FiveThirtyEight Economics. Additionally, the percentage of Baby Boomers who identify themselves as retired has risen from 10% in 2010 to 17% now.
While companies may have been able to see this coming, that doesn’t mean they are prepared. Despite the great number of available workers still on the unemployment lines, older workers have a number of traits that companies are struggling to match:
- Work ethic—In many cases, Baby Boomers didn’t just work to live but lived to work.
- Leadership—The effect of these workers’ presence and the knowledge they can impart on younger workers is immeasurable.
- Perspective—Right, wrong, or indifferent, younger workers take a lot of slack for their preference toward “Immediate Gratification.” Not so with the Boomers. Their ability to put things into a long-term perspective can help balance out your clients’ workplace.
- Experience—We’re talking about years of experience not only within the company, but in the industry, as well.
The last one, of course, is the kicker. It is not something that can be gained overnight, and in some industries and companies, the sudden loss of this experience can be crippling. Staffing Industry Analysts specifically points to high-level technical engineering, an area where skills shortages have already been reported. There are a number of challenges associated with filling these roles. Some of these positions don’t appeal to younger workers. Others take years of hands-on-experience. Companies are working with local schools and employing marketing techniques to try to drum up interest in these careers, but these students will not be available immediately. Companies have to find a way to bridge the gap.
To that end, some are asking their retirement-aged workers to stay longer. Others are bringing back retired workers as consultants on a contract basis in a trend known as Retiree Restaffing. This is truly a win-win for both the company and the retiree. Obviously, the company benefits from the retiree’s knowledge and experience. For their part, retirees are finding they either need to supplement their retirement income or that they are bored in retirement and want to be engaged in the workforce on a limited basis. Retiree Restaffing provides the flexibility to meet those needs. In fact, 33% of “independent workers” (contractors, temps, freelancers, etc.) are Baby Boomers.
The potential problem comes when companies try to re-engage these workers as Independent Contractors. The IRS has strict guidelines regarding who can and can’t be classified as an Independent Contractor. Under these guidelines, the more right the company has to control and direct the worker, the less likely it is that the worker will qualify for Independent Contractor status. Along with the Department of Labor and state agencies, the IRS has been cracking down on companies that misclassify workers who should be W-2 employees as Independent Contractors. A major red flag is if someone who was previously paid as a W-2 employee is now being paid as a 1099 Independent Contractor to do a similar job as is often the case in a Retiree Restaffing situation.
Outsourcing the employment of contractors who are paid on W-2 is a safer way to go. This is where you come in. You can offer to outsource their employment to a contract staffing back-office. If they already have the candidate, great. If not, you can help them find an older worker with experience in the industry to help them bridge their skills/knowledge gap. Contract staffing services are a great way to ease the burden of becoming an employer of record, and focus on recruiting quality candidates.
Retiree Restaffing is so hot right now that we have seen numerous recruiting firms over the past few years concentrate solely on placing these older workers in contract positions. You don’t need to do that to be successful. Simply having Retiree Restaffing in your mind as another solution to offer clients AND building a stable of older workers willing and able to work on contract can help you cash in on this growing recruiting trend.