March 17, 1995 in Nation/World

Older Workers Proving Valuable Facing An Aging Work Force, Companies Find That Seniors Can Be Cost-Effective

Charles Strouse Knight-Ridder

Like a roller derby queen, Josie de Vasquez spins, ducks and elbows her way to deliver a steaming plate of blintzes. The 81-year-old waitress, one of four over age 70 on duty at the Rascal House in Sunny Isles, Fla., draws raves from bosses and customers.

“The young ones get flustered when things get hot,” said Mark Vasturo, 33, delicatessen co-owner. “But the older girls like Josie know how to handle the pressure. They don’t waste any moves.”

With the work force across the nation graying fast and an increase in the federal retirement age to 70 on the table, the question is becoming increasingly urgent: Can older workers measure up?

Though researchers long believed that senior employees were more expensive, less flexible and less able to learn new skills, new studies suggest just the opposite.

A chain store in England that hired only workers older than 50 shows higher profits than others. Days Inn of America finds that older reservations agents cost less and sell more. And Ford Motor Co., with a work force almost twice the age of Japanese rivals, credits its financial turnaround largely to the ability of older workers to work in teams.

“We have found the more people have been around, the more they contribute,” said Ernest Savoie, former Ford director of employee development. “We attribute a lot to the older workers.”

Only recently has the graying work force become an issue. For decades after Social Security started in the 1930s, Americans retired earlier and earlier. In the last two decades alone, the age at which people began to collect benefits dropped five years to 63.

But that’s changing. As baby boomers grow older, the median age of the American work force has crept upward - to 38. And experts estimate the number of workers over 55 will grow twice as fast as the rest of the population during the next decade.

With Social Security’s future in doubt when baby boomers start retiring in about 20 years and with life expectancy rising, federal lawmakers are considering proposals to urge people to work longer. Having already agreed to delay benefits to age 67 for people who today are under 36, Congress is considering another increase to 70. And Republicans in Congress would end penalties for working past 65.

Businesses aren’t cooperating, though. As corporations have downsized in the last five years, largely by cutting out the oldest workers, age discrimination claims have skyrocketed by one-third across the nation.

“While the public sector is trying to get people working longer, the private sector is trying to get rid of older workers,” said Sara Rix, a senior policy analyst for the American Association of Retired Persons.

Backed by anxious employers, researchers from Tokyo to Akron recently have tried to gauge the cost and effectiveness of older workers.

Perhaps the most serious problem is health insurance, which costs about three times as much for a male worker over 65 as it does for a 40-year-old - $4,400 compared with $1,500, according to a study published in November by North Carolina State University economist Robert Clark. Among women, the cost is nearly double for older workers, $3,200 compared with $1,700.

And in many cases, older workers are sick more often. She continues working, though, because of the tips - about $70 per night - and because she loves it.”If companies have to pay more for these older workers, they are going to look less favorably on them,” Clark said. “And health care costs have been rising so fast, it is a serious drawback.”

But those costs don’t tell the whole story, said Mike Barth, who led a five-year study of workers over 55 conducted by the Commonwealth Fund in New York.

Barth studied B&Q;, a large British do-it-yourself chain - similar to Home Depot in the United Sates - that had problems with turnover of younger workers. In 1989, the company staffed an entire store in the suburban area of Macclesfield with 57 workers over 50. Many were over 60.

Though the store had higher insurance costs and wages than comparable stores, older workers were absent far less, shoplifting declined and employees left less often for other jobs.

Taking everything into account, the store was about 10 percent more profitable than the company’s average and 20 percent better than the average for other B&Q; stores in similar areas.

“Older workers cost slightly more than younger workers, but they were more productive and learned just as quickly,” Barth said. “There was much lower turnover, too, so recruiting costs were far lower.”

At a hotel reservations center for Days Inns of America in Atlanta, Commonwealth Fund researchers also compared employee costs for 187 workers - 138 under age 50 and 49 who were older, some even over 70. The study found that seniors were more cost-effective.

The older workers cost $11,573 per year compared with $12,253 for the younger ones, data show. That was largely because the company spent less on recruiting older workers because they stayed.

“It belies what had been a popular myth around here,” said Brian Feldman, spokesman for Days Inns. “We are starting to go after the senior, more mature worker now because they have solved our turnover problem.”

Not everyone agrees with the results, though. Many experts contend that older workers have a much harder time with computers than younger employees, that they can’t do heavy manual labor and that they generally aren’t as open to change.

Training is a key problem, said Peter Warr, a professor of psychology at Sheffield University in England. Older workers take about one-third longer to get computer skills, he said. And even after they master those skills, the payoff to employers is less because they have only 10 or 15 years to work.

Professor Marcus Rebick, who teaches at Oxford, suggests that one way to keep older employees working longer may be to follow Japan’s lead. Though 97 percent of firms require retirement at 60, many workers move to lower-paying jobs arranged by their employers.

In fact, twice as many people over 65 continue working in Japan as in the United States - about 36 percent of men in Japan, compared with 16 percent in the United States, Rebick said. Pay levels 30 percent to 60 percent lower are more in line with reduced capabilities of the elderly, Rebick said.

Regardless of the solution, working longer is the key to living longer, said Clara Murray, 81, who has run a health-food store in a rundown Miami neighborhood since 1972.

Murray, who works 40 hours a week at the store next to her home, has been robbed six times recently. Yet she doesn’t plan to retire soon. “Work keeps me from going into a deep depression,” Murray said. “I’ll be working until I fall down dead.”

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