Just as news about the economy is finally starting to take a more positive slant, companies face another challenge: the loss of experienced and knowledgeable workers due to Baby Boomer retirements.
Of course, this is no surprise. Approximately 76 million people were born between 1946 and 1964, placing them in the Baby Boomer generation. The financial crisis delayed the inevitable as many Americans found their retirement funds depleted and were forced to delay retirement. But Boomers are starting to feel more comfortable and are beginning to retire. The labor force participation rate for those 55 and over rose during the recession, but now is on a downward trend, according to FiveThirtyEight Economics. Additionally, 17% of Baby Boomers now identify themselves as retired compared to 10% in 2010
Even with the "advanced notice" and the number of available workers still in the marketplace, Baby Boomers have many traits that make them nearly irreplaceable:
- Work ethic— Many Baby Boomers defined themselves in large part by their work and were known for their "nose to the grindstone" philosophy.
- Leadership—The presence and the knowledge if these workers can be invaluable to an organization and can have a major impact on younger workers.
- Perspective— In contrast to our “Immediate Gratification” modern society, Boomer have the admirable ability to put things into a long-term perspective.
- Experience—Not only are the years they spent at a specific company valuable, but experience in the industry as a whole is a great resource for companies.
The last one, of course, is the big one. Experience cannot be gained overnight. It is so vital in some industries and companies that the sudden loss of certain experienced workers can be crippling. For example, Staffing Industry Analysts points to high-level technical engineering, an area where skills shortages have already been reported. Some of these careers are not being pursued by younger workers. Even when they are, they require years of hands-on-experience. Companies are starting to reach out to youngsters as early as high school to try to drum up interest in these careers, but that does not solve the immediate problem.
Some companies are actually asking their retirement-aged workers to stay longer. In a trend called Retiree Restaffing companies are also bringing back retired workers as consultants on a contract basis. Not only does the company benefit from the retiree’s knowledge and experience, but these arrangements also meet the needs of retirees who need to supplement their retirement income or want to be engaged in the workforce on a limited basis. Working on a contract basis provides them with the income and flexibility they are seeking. Currently, 33% of “independent workers” (contractors, temps, freelancers, etc.) fall into the Baby Boomers generation.
There is a potential problem, though. Companies often try to re-engage these workers as Independent Contractors who are paid on a 1099 rather than W-2. This provides tax advantages to both the company and worker, but often these workers don't meet the IRS' strict guidelines for proper Independent Contractor classification. The more right a company has to control and direct the worker, the less likely it is that the worker can be an Independent Contractor Government agencies on the state and federal level have been cracking down on worker misclassification. Bringing back a retiree who was previously paid on W-2 and suddenly paying them on 1099 could be a major red flag.
You can offer a safer alternative. Offer to make the worker a W-2 contractor and outsource their employment to a contract staffing back-office. If the company has candidate in mind, great. If not, you can recruit an older worker with experience in the industry to help them bridge their skills/knowledge gap.
Numerous recruiting firms are now concentrating solely on placing older workers in contract positions in response to the Retiree Restaffing trend. You don’t need to limit your placements to Boomers in order to be successful, though. All you need to do to cash in on this trend is offer Retiree Restaffing to clients and have retirees in your database who would be willing to return to the workforce on a contract basis.