• Managing People Experienced Workers: Past Practices Put a Premium on Seniority
Despite the fact that most employers were cutting payrolls during the most recent recession, the data revealed that most of the attrition was among younger workers, and that employment levels for workers over 55 years of age actually increased during that time period. Indeed, pay-level data reflected a similar trend. Whereas inflation-adjusted wages for workers in the “25 to 55 age group” dropped on average over 2% in the most recent data, employees in the 55 and older age category experienced wage gains of over 4%. In addition to this, recent data suggest that the labor participation rate for older workers hit a historic high in 2010. Several specific industries seemed to be particularly protective of their older workers, and this can be traced to some of their past practices with respect to managing previous labor surpluses.
For example, in 2009, Boeing cut 10,000 jobs, but almost none of these cuts included their most senior employees. Part of this can be attributed to Boeing’s experience in the 1990s, when similar cuts were obtained by supplying the workforce with voluntary buyout plans. Left to decide on their own, workers with the most experience, and hence best alternative employment opportunities, accepted the buyouts. When the recession ended, however, and the company tried to expand, it was hurt by labor shortages in the jobs that required the most experience. Richard Hartnett, Boeing’s Chief of Global Staffing noted in 2009 that “We don’t ever want to get ourselves stuck in that situation again,” and this time around, when it came to reducing the size of the labor force, few of the cuts were voluntary. Instead, this time Boeing is picking and choosing who stays and who leaves, and more often than not, workers with the higher levels of experience are being kept on.
In the oil industry, past labor surpluses were met with “attrition-related” adjustments. Rather than directly laying workers off, most employers in the industry simply did not hire new workers when older ones retired. The lack of hiring meant that many younger people gave up on that industry as a viable career alternative, and enrollments in undergraduate programs related to the oil industry dropped 85% from 1982 to 2003. With over 40% of their workforce now over the age of 50 and no replacements in sight, employers like Conoco are struggling to keep their most senior employees from retiring with higher pay and more lucrative benefits. As Michael Killalea, Vice President of the International Association of Drilling Contractors notes, “We skipped an entire generation of workers, and we cannot make the transition fast enough without extending the service of our most senior employees.
” Finally, another example of this can be seen in the Federal Aviation Authority, the group that oversees airline safety. The majority of air traffic controllers who currently work for this agency were hired in the mid-1980s after then-President Ronald Reagan fired over 10,000 controllers who were illegally striking. Now, 25 years later, most of these controllers are nearing the age of retirement, and the FAA is desperately trying to retain these workers for as long as possible, in order to help ease the transition to a younger, less-experienced workforce. The problem, however, is that strained labor-management relations has created a situation where job dissatisfaction among current controllers is very high, and a mass exodus is taking place. As one departing controller noted, “it is only a matter of time before an accident occurs, and the pervasive feeling among experienced controllers is that I don’t want to be there when it happens.” This kind of quote strikes fear into the hearts of would-be flyers, and dramatizes the generic need in the economy for all sorts of employers to hold onto their most senior and experienced members.
1. This article suggests some reasons why, on the supply side, the demand for older workers is high. What are some recent short-term phenomena related to the housing market and the recent financial situation that create a higher supply of older workers relative to the past?
2. What are some long-term phenomena that might also contribute to the increased supply of older workers in the workforce?
3. Our “Competing through Sustainability” box in this chapter described the plight of young workers across the globe, and their struggles to gain meaningful employment. To what extent has the change in labor supply among older workers affected the demand for labor among younger workers, and what can employers, workers, unions, and government do to help balance this equation?
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