June 21, 2005

The Aging Workforce - Iceberg, Dead Ahead

The aging of the American workforce is a dynamic that we have been tracking closely. I can personally swear that as one ages the body begins to wear down. Oh, that this truth were not so.

In my father's day, it was common for people (mostly men) to work until age 65 and then retire on the proverbial company pension augmented by social security benefits. That changed dramatically toward the end of the twentieth century.

In the mid to late 90s, the goal became to retire early; age 55 would be nice. The dot-com bubble suckered us all into thinking it could be done. In 1998, a Gallup survey, conducted for USB Financial Services, found that only 36% of respondents planned to wait to retire until age 62 (pdf). But the horror of 9/11, the war on terror, the stock market collapse of 2001 that substantially reduced portfolios and the myriad Enron-type scandals that blew away entire pension funds all hit older workers smack dab in the middle of their futures. And when Gallup conducted the same survey in 2002, the percentage of workers who planned to put off retirement until after age 62 had grown to 47%. In 2004, the number had ballooned to 57%.

So, now we've returned to my father's time, except without the pensions and with significantly delayed and threatened social security. Older workers will continue to get older on the shop floor.

Do you think that the workers' compensation system is prepared for this? Age isn't considered in workers' comp manual rating. (Neither is education, but we'll leave that for another time.)

Rotator cuff sprains and aging
Here's something to think about. The rotator cuff sprain (something I know a great deal about) ranks 28th in terms of injury frequency for all workers, but 3rd for workers age 65 and above. In fact, 3 of the top 4 injuries to older workers are of the soft tissue variety to the shoulder, neck and lower back. To see a dramatic example of how bodies really do break down over time consider the following NCCI chart, which depicts the frequency of rotator cuff sprains by different age groups.

When valued at 18 months, the rotator cuff sprain of an older worker costs about a third more than for any other age group, $28,360 versus $21,910 for all other age groups. Moreover, every one of the top ten injuries to older workers costs substantially more than the same injuries among younger workers. And this situation will get worse as more and more older workers are literally forced by financial circumstances to stay on the job.

We believe that this phenomenon is so serious an issue that it may ultimately impact the way manual rates are calculated.

The impact on employers
As if running an American company weren't hard enough already, what does this mean for employers?

It's a problem. On the one hand, older workers have been doing their jobs for a long time; they're good at them, and they have experience that just can't be found in their younger colleagues. On the other hand, although younger workers have more injuries, those injuries are substantially less costly than their older mentors.

A knee-jerk, and very discriminatory, response might be for employers to try to "weed out" the older population and replace it with its younger version. We can only hope no employer starts the long walk down this painful and litigious road.

We'll continue to think about this issue and report on it in subsequent blog postings. As always, we invite your comments. But for now, we advise employers with aging blue collar workforces to re-double their safety and ergonomic efforts in order to provide as much protection as possible for these very skilled and experienced, but potentially brittle workers.

| 2 Comments

2 Comments

Older workers' claims are generally open longer and have a higher severity, but most of the literature I've seen shows them with a lower claim frequency than younger workers. The frequency difference pretty much makes up for the slower healing and higher salaries that cause the higher per-claim costs.

REGARDING DISCRIMINATORY ACTION;

I truely believe that one paragraph sums up the attitude of a great many large corporations today.
Weeding out the older and injured worker goes way back.
In 1971 I worked for GM in Framingham Mass, and watched many senior executives get forced out the door in an effort to bring in younger employees for a multitude of profit driven reasons.
The attitude in the workplace is similar to that of the health and work comp providers, that they can inflict suffering on working people with no recourse. Industry has the money, the lawyers, writes the laws through lobbyists and knows that even if they lost a case for discriminating or bad faith they'd still be the winners in the big picture.
On most issues I've always maintained a positive outlook, but on the issue of aging employees, social policy, insurance fraud perpatrated by insurers by systematically denying legitimate claims to boost profits, employers who check their conscience at the door,and what the future holds in store for all aging employees, I'm afraid I'm not hopeful at all.

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This page contains a single entry by Tom Lynch published on June 21, 2005 3:02 PM.

Google New Hires! was the previous entry in this blog.

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