Will You Still Need Me When I'm 64?

The attitude of some employers towards older workers could be described as cruel, unpleasant, shortsighted, wasteful, and stupid. There is careful demographic reasoning behind this emotional statement.

by Bill Bennett of australia.internet.com [April 8, 2002]

We'll put emotive terms like cruelty and unpleasant aside for one moment because this is an important issue and being dispassionate will help clarify the issues.

Instead, let's concentrate on exactly why discriminating against older workers is shortsighted, wasteful, and stupid. We'll examine why such discrimination is going to be less prevalent in the future and why most knowledge workers reading this story have less reason to worry about reaching their 'use by' date than they might imagine.

Discriminating against older workers is shortsighted because it is unsustainable. There's also a good chance many of the companies happily dumping skilled employees who are now in their 40s will need to hire those same people back later. The reason for this is simple. These days there are not enough young people to fill all the jobs and the problem will get worse.

If the experience of those companies who attempted to woo back employees during the Y2K scare is anything to go by, people who were treated badly by their employers will not willingly go back for more abuse. Many of those who do return will extract their revenge by demanding very favourable terms.

It hasn't dawned on most employers just how serious the demographics of employment will be. In most rich countries around the world the population is rapidly aging. For example, in Australia the ABS reports that the median age, that is the age at which half the population is older and half is younger, has increased by 5.8 years in the last 20 years, from 29.6 years in June 1981 to 35.4 years in June 2001. That figure is still rising and will hit 45 in the middle of this century. New Zealand shows a similar aging pattern; in 1999 the median age had climbed to 34 years.

In the United States the median age climbed from 34.3 in 1995 to 35.9 in 2000. Things are worse in most of Europe, for example in the United Kingdom. "The next century is expected to see a markedly older age distribution with the median age rising from 36.9 years in 1998 to 41.8 years by 2021, eventually stabilising at 44 years in about forty years' time." Europe's youngest population is in the republic of Ireland, yet even there the median age is around 30 years.

You don't need to be a demographer to work out that if the median age of a country's population is rising, the median age of its workforce must also be rising. And how. This is from a US report on economic trends [.pdf]: "In 1985, 28.3 percent of the labor force was over age 45; in 2000, that share is estimated to be 34.4 percent (according to the Current Population Survey). This shift reflects the aging of the baby boomers, who are now between the ages of 36 and 54. The projection for 2005, given current population trends, is that 37.4 percent of the labor force will be over age 45. Things are pretty much the same in Australia, it is more extreme in most of Europe and very much more pronounced in places like Japan, Austria and Switzerland.

Those numbers are across the economy. Some specific employment areas are considerably older than the average. For example, in New South Wales the median age for public sector workers is now 43 years. The median age for Australian nurses is 47 years. The different knowledge industries in different geographic areas vary greatly but on the whole most knowledge industries tend to have workforces with a median age higher than the economy wide level. That's because knowledge jobs require more training and higher education so people enter the workforce later.

Of course there are pockets of knowledge workers in third world nations where the average age of the workforce is younger. However this doesn't make much difference to the big picture. For a start, poorer countries are starting to show signs of having an aging population. Moreover, for the most part the richer countries have more information intensive economies. Therefore we can deduce that in countries where knowledge workers make up a sizable proportion of economic activity, the pool of younger workers is getting smaller while the pool of skilled and experienced workers is getting older.

This all adds up to a situation where the pool of available knowledge workers in the age groups deemed desirable by the more short-sighted and discriminatory employers is shrinking at an ever faster rate. Sooner or later these employers will simply not be able to fill their payrolls with people under 40.

Right now, this demographic time bomb is barely noticeable to many readers. The current, temporary, slump in information technology employment and a similar slowdown in media work are distorting the bigger picture. Short-term local difficulties are obscuring the underlying trend.

The bottom line is that there is still a considerable skills shortage across the broader range of knowledge industries and with each year that passes the median age of the knowledge workforce is climbing. Smart employers with an eye on the longer term have already figured out that dumping older workers is a mug's game. Sooner or later even the dim-witted ones will figure this out.

— End