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Continued from previous page
The Home Depot and CVS pharmacies: Actively courted
older workers through partnerships with AARP, the National
Council on Aging, city agencies and community organizations.
Deere & Company: Created a self nomination process for
job openings and career movement. Managers are encouraged
to seek out new opportunities with employees as a
part of their annual performance review process, and the
company has many team and special assignments that are
provided for development, along with task forces, presentations
and steering committees. For older workers, the
programs and culture of new opportunities provide skill
building and mobility.
Scripps Health of San Diego CA: Addressed the issue of
workplace flexibility in two complementary ways: flexible
work options and job sharing. Job sharing is available to
all employees; two employees in the same job position can
share the same job, work fewer hours, and still keep their
skills current. This is in addition to a menu of flexible work
options available, such as compressed work weeks and telecommuting,
for employees phasing into retirement.
Volkswagon of America Inc.: Created flexible spending accounts
for elder care, allowing employees to allocate $5,000
in pretax earnings for this purpose. By choosing to steer
funds into a mature worker-focused benefits program, the
company sends a message that they are valued and wanted,
experts say.
Sources: AARP 2004 Employer Best Practices executive
summary; Public Policy & Aging Report
Benefits for Older Workers?
Don’t Count on Them
When Professor Olivia Mitchell told the audience at the
November 10, 2004 conference on older workers, "Just don’t
get old, don’t get sick, don’t retire...and you’ll be fine,"
she had everyone’s attention. Mitchell is the executive director
of Wharton’s Pension Research Council and director of
the school’s Boettner Center for Pensions and Retirement
Research. At the conference, sponsored by the Boettner
Center, Wharton’s Center for Human Resources and AARP’s
Global Aging Program, Mitchell talked about benefit plans
for older employees and the restrictions in store for these
plans as the workforce ages.
Changing Universe of Benefits
Once known as "fringe benefits," employer-provided benefits
include health insurance, life and disability insurance,
paid time off, and pensions and medical benefits for retired
former employees. As Mitchell explained, however, these
benefits are now far from "fringe." "In the U.S. and other
countries, employers are the nexus for the whole insurance
picture—healthcare and pensions, specifically." In the U.S.,
according to Mitchell, the cost of providing these benefits
to employees now amounts to nearly 30% of companies’
labor costs.
Some of this cost is due to legally required benefits,
including the taxes paid by corporations to cover workers’
compensation and unemployment insurance as well
as Social Security and Medicare taxes. But the lion’s share
of the tab is filled by voluntarily-provided benefits, which
come to 20% of total payroll costs, said Mitchell. As of now,
and despite dramatic cost increases, nearly all companies
continue to offer these voluntary benefits: 76% of employees
were offered health insurance by their employers in
1987; 74% were provided coverage in 2001. As the workforce
ages, the cost of providing health coverage in particular
is expected to rise sharply.
Since these benefits are "voluntarily-provided," companies
are under no legal pressure to continue offering them,
but they have certainly become a social expectation, said
Mitchell. In fact, because providing health insurance to
groups of people (which spreads the risk for the insurer)
is so much less expensive than providing coverage to individuals,
it is often very difficult for individuals to obtain
insurance coverage if it is not through their employers.
As a result, rather than discontinue benefits as costs rise,
companies are instead passing more of these costs along to
their employees.
Why Provide Benefits, Anyway?
As Mitchell pointed out, 100 years ago the American economy
was primarily agricultural, with most workers self-employed
or working in family-run farms or businesses. There
were few wage-based jobs and therefore, few ‘benefits’ in
the sense that we know them now. This employment picture
began to change following World War II with the "golden
age" of benefits emerging from the 1950s through the mid-
1980s as the economy shifted to industrial and urban wage-
based jobs. "Initially, the effort focused mainly on protecting
workers against income loss in the event of workplace
accident and illness—which led to insurance coverage for
disability and premature death," Mitchell explained. Later,
pension programs were added.
Companies were able to provide these benefits at a relatively
low cost; they received significant tax breaks for doing
so, and economies of scale allowed them to receive a cost
break for pooling their employees into a lower-risk group for
insurance coverage. "It was also a big part of attracting top
candidates, part of an overall attract-retain-motivate strategy,"
Mitchell said. "Then, on the other end, defined benefit
pensions were retirement-inducing. They were in place to get
you to leave when you were past your prime."
A lot has happened since the corporate benefits system
first emerged, and the changes continue to advance more
rapidly now than ever. First, few people today stay at one
job for anywhere near as long as they did in the previous
generation. "There are no 20, 30 or 40-year careers anymore,"
Mitchell said, which means that traditional pension
benefits do not carry the same incentive value as in years
past. Instead, "employees want benefits that can be tailored
to their needs and their lifestyles at the particular point in
time that they are with a company."
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