As I write this, I'm sitting at a restaurant checking e-mail and doing some other work. Even though my eyes are working perfectly fine, I'm heading to the eye doctor. I'm watching about 30 senior citizens enjoy their morning coffee and cool temperatures before the summer sun becomes unbearable.
It must be nice—for them at least. Obviously, with the high unemployment and a jittery stock market, many older U.S. workers who had planned to retire in the coming years will probably have to postpone those plans. The American Association of Retired People (AARP) reports that 69 percent of employees over 45 are planning to work past the age of 65.
This is actually great news for the manufacturing community. It needs those workers to hang around.
If all the workers left promptly when they qualified for Social Security benefits, manufacturing companies wouldn't have enough workers to fill the jobs. Just look at Ohio, where officials estimate that 30 percent of the state's manufacturing workers could be eligible for retirement by 2016. Imagine if those all those workers walked out the doors at once with their gold watches and gift certificates. The impact would be huge.
The aging work force isn't a problem solely for the Buckeye State. According to the Illinois Manufacturing Extension Center, the number of workers 55 and older will grow to 20 percent in 2020. For the mathematically impaired, that's one in five workers in the U.S.
This potential wave of retirements—and the potential ramifications—has caught the attention of Ithaca College sociologist Stephen Sweet, co-author of the report “Responsive Action Steps for the Manufacturing Sector.” He points out that the loss of manufacturing employees is huge for companies because those employees take years of shop floor wisdom with them and it costs roughly $5,000 to replace each employee, $2,000 more than in other sectors of the economy.
Sweet suggested that manufacturing companies may have to offer enhanced compensation packages to keep key talent, as opportunities may become more prevalent in the future. Considering that wages for the most part have not risen as aggressively as they did in decades past, these workers may have their eyes wide open for better-paying opportunities.
The associate professor also pointed out that companies might be forced to recruit more women. Men represent two out of every three manufacturing employees, according to Sweet, and as those men leave the workplace, companies will be looking for any qualified person—man or woman—to replace them. This may force companies to consider flexible work arrangements, such as work-share programs, to attract talent.
As previously stated, this weak economic recovery likely will force many workers to stay on the company payroll as long as possible. This is good for manufacturing companies that are heavily involved in succession planning or don't have a robust human resources program.
As I read that last sentence, I realize that I'm saying it's good news that people can't retire on time. Maybe I do need my eyes checked.