When executives at Platte River Power Authority, an electric company in Fort Collins, surveyed its employees 18 months ago, they were stunned by a particular finding: Forty percent of the company’s 200 workers said they intended to retire over the next five years.
With little chance of hiring from other stretched power plants – and apprenticeships for technicians typically taking at least four years – executives faced a stark reality.
“We’ve got to be moving right now,” says human-resource manager Dave Green.
He is scrambling to hire trainees and recently created a new job – plant assistant – to fill apprenticeships as soon as they open up.
Across a wide swath of industries, companies are starting to address the impending exodus of baby boomers – the 76 million Americans born from 1946 to 1964. The oldest boomers will begin turning 60 next year. Just two years later, they can start collecting Social Security benefits.
Many company retirement benefits kick in around the same time: Most workers in traditional defined-benefit pension plans become fully vested between the ages of 55 and 62. And those with 401(k)s or other defined-contribution plans can tap them with no restrictions starting at age 59 1/2.
Many baby boomers, of course, may decide to stay on the job longer than previous generations, particularly to shore up savings.
Still, the number of potential retirees is staggering: More than 40 percent of the U.S. labor force will reach the traditional retirement age by the end of this decade, according to a new study by the Conference Board, a New York research organization. In the next seven years, the number of U.S. workers between ages 55 and 64 will grow 51 percent to 25 million, meaning the fastest-growing portion of the workforce is the one at most risk of retiring soon.
At the same time, the number of workers between 35 and 44 is expected to shrink by 7 percent.
Some sectors could be particularly hard-hit. About half the country’s 400,000 electric-utility workers will be eligible to retire in the next five years, says Michael Ashworth, a researcher at Carnegie Mellon University in Pittsburgh.
Half the U.S. government’s civilian workforce also will be eligible to retire in the same time period. And 40 percent of the manufacturing workforce is expected to retire in the next 10 years, the National Association of Manufacturers warns.
Overall, that could leave a shortage of 5 million skilled workers between 2010 and 2012.
“A lot of companies do welcome the chance to have older workers leave, especially those with seniority-based pay systems, because they can be replaced with cheaper workers,” says Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School.
Still, retirements don’t necessarily substitute well for layoffs, Ashworth says.
“You’re no longer targeting who you’re losing, and you’re losing your most experienced people,” he said.
Some experts think the impact won’t be as severe as the numbers suggest. Fully 70 percent to 80 percent of baby boomers expect to continue working in later life, several studies show. And amendments to the federal Age Discrimination in Employment Act outlawed age-based mandatory retirement in most industries in the 1970s.
Still, many companies don’t know how many of their workers plan to retire and when – in part because they fear that asking will open the door to age-discrimination claims, says Jeri Sedlar, co-author of the Conference Board report. There are no federal rules against asking employees retirement questions.
