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[109 Senate Hearings]
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S. Hrg. 109-137
LIVING STRONGER, EARNING LONGER:
REDEFINING RETIREMENT IN THE 21ST CENTURY WORKPLACE
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
APRIL 27, 2005
__________
Serial No. 109-6
Printed for the use of the Special Committee on Aging
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SPECIAL COMMITTEE ON AGING
GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama HERB KOHL, Wisconsin
SUSAN COLLINS, Maine JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina RON WYDEN, Oregon
MEL MARTINEZ, Florida BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana BILL NELSON, Florida
LAMAR ALEXANDER, Tennessee HILLARY RODHAM CLINTON, New York
JIM DEMINT, South Carolina
Catherine Finley, Staff Director
Julie Cohen, Ranking Member Staff Director
(ii)
C O N T E N T S
----------
Page
Opening Statement of Senator Gordon Smith........................ 1
Opening Statement of Senator Herb Kohl........................... 3
Panel I
Frank Robinson, manager, Washington Nationals, Washington, DC.... 4
Barbara D. Bovbjerg, director, Education, Workforce, and Income
Security, U.S. Government Accountability Office, Washington, DC 11
Panel II
Kathlyn Peterson, medical and surgical transcriptionist, SSM
Health Care, Madison, WI....................................... 36
Laurie Barr, assistant director of Human Resources, Oregon Health
& Science University, Portland, OR............................. 40
Douglas Holbrook, vice president and secretary/treasurer, AARP
Board of Directors, Washington, DC............................. 44
Valerie Paganelli, senior retirement consultant, Watson Wyatt
Worldwide, Seattle, WA......................................... 55
APPENDIX
Prepared Statement of Senator Larry Craig........................ 67
Information submitted by AARP.................................... 68
(iii)
LIVING STRONGER, EARNING LONGER: REDEFINING RETIREMENT IN THE 21ST
CENTURY WORKPLACE
---------- --
WEDNESDAY, APRIL 27, 2005
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee convened, pursuant to notice, at 10:05 a.m.,
in room G50, Dirksen Senate Office Building, Hon. Gordon H.
Smith (chairman of the committee) presiding.
Present: Senators Smith, Kohl, Lincoln, and Carper.
OPENING STATEMENT OF SENATOR GORDON H. SMITH, CHAIRMAN
The Chairman. Thank you all for coming today to this very
special hearing of the Aging Committee. The title of it is
``Living Stronger, Earning Longer: Redefining Retirement in the
21st Century Workplace.''
I would like to thank Senator Kohl for arranging today's
hearing on our aging workforce and how retirement may need to
be redesigned to meet the needs of both older workers and their
employers. I can't think of a more important topic.
We have three excellent panels of witnesses today and I
look forward to a productive discussion with them.
As the baby boom generation approaches retirement,
significant changes will occur with respect to the makeup of
the American workforce. According to the Census Bureau, the
portion of the American population that is age 65 and older
will increase from 12.3 percent in 2002 to 18.2 percent in
2025. Furthermore, the number of Americans between the age of
55 and 64 will grow by about 11 million people from 2005 to
2025, while the number of Americans between the ages of 25 and
54, the age group with the highest labor force participation,
will only increase by about five million during the same
period.
These trends may result in future labor shortages, which
could hurt both the competitiveness of many American businesses
and our economic growth as a whole. Furthermore, with the
number of baby boomers that will be retiring shortly, we also
must be concerned with the brain drain that may occur. Our
workforce will be losing some of the most experienced workers,
many of whom have skills that simply are not replaceable.
The effects of these trends can be lessened if older
workers decide to stay in the workforce longer, and it appears
from recent data that this is occurring. For example, according
to the Census Bureau, from 1995 to 2004, the percentage of 62-
to 64-year-old men employed in March of each year rose from 42
percent to 48 percent. There was even more growth with respect
to women.
In line with this trend of working longer, a 2004 AARP
survey found that 79 percent of baby boomers plan to work in
some capacity during their retirement years. There are a number
of reasons why older workers decide to stay in the workforce
longer. According to a 2005 AARP survey of individuals over age
50 and older, the need for money was a major reason for working
in retirement. As the committee discussed earlier this month
during its hearing on savings in the context of employer-
sponsored retirement plans, the personal savings rate in the
United States has declined dramatically over the last two
decades. Unfortunately, many Americans have not saved enough to
retire without continuing to work.
Beyond financial reasons, the AARP survey also found that
the desire to stay mentally active and the desire to stay
physically active were also major reasons for working in
retirement. As Americans are generally living longer and
healthier lives, many are simply just not ready to fully retire
at the traditional retirement age.
In response to these trends, many employers have already
implemented some of the best practices. For example, many
employers offer elder care benefits and provide flexible work
arrangements. One retail employer allows employees to work at
their Florida stores during the winter and their stores in
other areas of the country during the summer.
Another solution that some employers have explored is
phased retirement. Instead of fully retiring at a particular
age, an individual phases into retirement or simply leaves the
workforce gradually. For example, an employee may transition
from a full-time to a part-time position.
According to the 2005 AARP survey of all the working
respondents, 38 percent indicated that they would be interested
in participating in phased retirement. Of those workers who
expressed interest in phased retirement, 78 percent expect that
the availability of such a plan would encourage them to work
past their expected retirement age. Therefore, implementing a
phased retirement program may assist some employers in
retaining their older workers.
I want to thank all of our witnesses here today for coming
to discuss this important issue and I look forward to their
testimony. It is a particular honor for me as the chairman to
welcome Frank Robinson. I told him earlier that as a boy in
this town, I was an avid Senators fan and used to watch he and
Brooks Robinson put away the Senators in seemingly just a few
innings because he could hit and field like few who have ever
taken the baseball diamond, and it is a great privilege to meet
him here today.
Before we hear his testimony, I will turn the microphone
over to my colleague, Senator Herb Kohl from the State of
Wisconsin.
OPENING STATEMENT OF SENATOR HERB KOHL
Senator Kohl. I thank you very much, Senator Smith, and we
welcome everyone to this hearing on the subject of the
increasing number of older Americans who are working longer.
We also want to thank all of our witnesses here today. Mr.
Robinson, we especially want to thank you for coming today
because we know you have a game this afternoon, and I would
imagine that the Phillies manager, Charlie Manuel, who you are
playing this afternoon, probably wishes you would just go ahead
and retire. [Laughter.]
During the next few decades, the number of Americans over
age 65 will increase from 12 percent of our population to
almost 20 percent. This demographic wave will require all of us
to adjust our perceptions of what retirement means in the 21st
century.
Fortunately, today's generation of seniors are living
longer, are healthier, and are staying active and productive in
their communities. They share an astonishing history, building
our economy into the strongest in the world, fighting for the
freedoms we enjoy today, raising their families, and fostering
their communities. Seniors are indeed a treasure trove of
knowledge, experience, and wisdom. They are an invaluable
resource that we would be foolish not to make the most of.
Today, older Americans not only have the ability to work
longer, but many also have the desire. Health has been on a
steady incline. Jobs are less physically demanding. According
to a recent survey by AARP, 80 percent of baby boomers today
expect to work into their retirement years. Today, only 13
percent of people over 65 are in the workforce, so this is a
remarkable demographic shift.
Older Americans are choosing to work for many reasons. For
example, 74-year-old Eugene Schuliss from Milwaukee is working
part-time because he says it keeps his mind sharp and gives him
a good balance of work and free time. Arlene Roos, an 85-year-
old factory worker from Oconomowoc, WI shows up early and works
overtime because it keeps her active every day. Ella Clark
Nuite of Georgia, who is 100 years old and was recently honored
by Experience Works as America's Outstanding Older Worker,
still runs her small business and believes that work keeps her
healthier.
Whatever the reason people decide to stay in a job, it is
time to change the way we think about retirement. A one-size-
fits-all approach will no longer match the very different plans
that seniors and baby boomers have for their later years.
Rethinking retirement is also vital to our nation's
economic future. With more Americans retiring and fewer young
workers to replace them, companies face a labor shortage. We
could face a gap of about 18 million workers by 2020. In the
future, our economy will increasingly depend on keeping
experienced employees in the workforce. Some businesses have
already begun to recognize the talent of our nation's seniors.
We need to encourage their efforts and take a close look at
laws that make it difficult for them to attract and keep older
workers.
For example, we could reexamine pension laws to find ways
to encourage what is called phased retirement, a gradual
transition from full-time work to full retirement. We could
also make job assistance and training programs more widely
available to older workers. A recent study found that companies
offering elder care programs helped keep people in the
workforce.
We look forward to learning more about these options today
and working with our colleagues in the coming months to
consider ideas that would help.
Today, we have two examples of seniors who continue to
contribute in their mature years. Frank Robinson brings 50-plus
years of work experience to his profession and he continues to
have a positive impact on the players he works with. Kathlyn
Peterson still uses her lifelong experience in the medical
profession to benefit hundreds of patients. They are just two
examples of how the meaning of growing older is changing in our
country.
Older workers have a lot to offer to businesses, their
communities, and their country. Today, older Americans are
healthier, more active, and many are willing and able to
continue to make contributions to the workplace and to their
community, so we must incorporate this new mindset into our
national culture and develop policies that reflect this
reality. Our seniors deserve it and our economic future may
well depend upon it.
So we will go now to our first panelist, Frank Robinson,
and we are all pleased to welcome you here, Mr. Robinson.
For most of us, Frank Robinson needs no introduction. Frank
Robinson was one of our country's most beloved and renowned
major league baseball players. After earning the honor of
Rookie of the Year in 1956, he went on to an incredible 20-year
playing career. He was first to be named Most Valuable Player
in both leagues, and in 1982, he was elected to the Baseball
Hall of Fame. In 1975, he became the major leagues' first
African American manager, and today, he is still a force to be
reckoned with. He is today the manager of Washington's new
hometown baseball team, the Nationals.
So, Mr. Robinson, we thank you for taking the time to join
us today and we invite you to speak as you wish. Mr. Robinson.
STATEMENT OF FRANK ROBINSON, MANAGER, WASHINGTON NATIONALS,
WASHINGTON, DC
Mr. Robinson. Mr. Chairman, Senator Kohl, I didn't come
here, and I didn't want to make any corrections, but I have to
correct you. It was 21 years. [Laughter.]
Accepted.
The Chairman. Without objection, it is accepted.
[Laughter.]
Mr. Robinson. Thank you for having me here today. It is a
pleasure to be here and speak on this subject. I think it is a
very important subject that should be taken into consideration
and seriously by people out here in the workplace.
I will just give you a little background on my life and
then I will answer questions afterwards. I was born in Texas
and I was raised in Oakland, CA. I was brought up in a single
home. My mother was the only adult in the house. As a young man
growing up, she gave me values that I live by today. I work
hard, don't expect anything for nothing, anything worth having
is worth working for, and those are the values that I live by
today.
I grew up in a neighborhood that I could have gone either
way. I could have had a 20-year sentence in San Quentin or
someplace like that, or I could have a 21-year career in
baseball, and I chose baseball. It was a very easy choice for
me as a young man because I didn't want to ever do anything to
embarrass my mother or bring embarrassment to my family, so I
did that. She lived by values and she never laid a hand on me
as a kid. But the looks that I got, I knew what it was.
Early on in my young adult life, my young life, I knew I
wanted to be a baseball player. As a matter of fact, I told my
counselor in high school that I was going to sign a major
league contract for $75,000. I eventually signed a minor league
contract for $3,500. But a love of baseball just was in my
blood from the beginning. I played other sports in high school
and sandlot baseball, basketball, football, but baseball was my
love.
I was in the minor leagues for 2\1/2\ years in the South
and my job was to work as quickly as I could to get to the
major leagues. I made it in 2\1/2\ years. I had the opportunity
to make it in a year-and-a-half, but I had a very bad injury to
my shoulder that set me back. That bothered me my entire
career, but I overcame that to make it to Cincinnati in 1956.
My goal at the beginning was to play five years. I didn't
think anything would last for much longer than that in the
major leagues. The average at that time was, like, three to
four years. Then when I made five years, I said, why not ten?
Ten, why not 15? Fifteen, why not 20? I made 21.
As I was closing in on the end of my career, I decided that
I wanted to go into management. But something was brought to my
mind very strongly in 1965, the winter of 1965, when I was
traded from Cincinnati to Baltimore, and the reason given by
the owner and general manager of the Cincinnati Reds, Bill
DeWitt, was I was an old 30, so I had to move on. My career was
coming to an end. Well, I played, I think, 11 more years after
that and had some production.
But I knew that I was winding down and I wanted to stay in
baseball, so I started going to winter ball as I was playing to
manage down there to gain experience. The one thing that
African Americans heard the most when it came to not being able
to manage in the major leagues was that you didn't have the
experience, so I wanted to take that out of play. So I went
down to Puerto Rico for six straight winters. My family made
the adjustment because my wife said to me, ``Frank, whatever
you have to do to be successful and continue your career, the
family will adjust to you,'' so that made it much easier for me
to put that time in down there, and it was well spent, because
when I became a manager in 1975, it really helped me as far as
my managing.
The first year, I made a lot of mistakes. I thought I was
ready, but it takes a while. You learn on the job. You make
adjustments. I spent 2\1/2\ years at Cleveland and I was out of
a job, and the most devastating thing in baseball is to be
traded or released or fired the first time. I didn't leave the
house for a week. But then after that, I said, hey, what is
going on? Get your life back together. You want to stay in
baseball, make a couple of calls.
But my career has continued because I want to stay in
baseball. I enjoy being in baseball. I feel like I have
something to give to baseball, and as long as my health is
good, my energy level is up, and someone feels like I can
contribute to the game of baseball, I will be in baseball.
When the day comes and I am not in baseball, I don't feel
like I have the health or the energy to play, I will move on to
something else. People say, how do you feel at 40? How did you
feel at 40? How did you feel at 50? How do you feel when you
turn 60? I said, I don't know. I feel the same as I have always
felt. I feel good. I want to do things.
My mind is nowhere near retiring. I don't think retiring is
good for individuals. It is not for me. I am a doer. I am a
goer. I enjoy being involved in things, and I think if a
country has a mindset--we have been taught, I think, learned to
work toward retiring at a certain age. You work to that age,
then you retire and collect your benefits.
Well, times have changed. Individuals have changed. I don't
think you can throw a blanket over the entire society and say
you should retire at 50, or 60, or 70, or whatever because
there are individuals out there that have a lot of things and a
lot of knowledge to give even beyond retirement age.
As long as--I have changed as a manager, for instance.
People have said I have become soft. Well, I haven't become
soft. What I have been able to do over the years is make
adjustments in this game to continue to be successful and to
keep up with the youngsters, the crowd. I draw my energy from
my players, and the players that I have here and have had in
Montreal for three years and here now are the reason why I am
really still managing in baseball today, because 11 years
before I got back into the game, when I retired at Baltimore, I
was through with managing. I felt like I had my due. I had my
say. I had my chances. It was time for others to have their
opportunity.
But when Commissioner Selig asked me if I would manage the
Montreal Expos for one year, because remember, the contraction
thing was in vogue then, I said, for one year, I could do it.
My energy level is up. I feel good. I am healthy. I am the man
for the job. One year is turning into four and I still feel
like I am the man for the job. The energy level is up. The
health is good.
Managing is a lot of stress. It is a lot of stress. But I
feel like if you are allowed to just leave that stress at the
ballpark and you go home to your family, you can relax and go
to bed and get a certain amount of hours of sleep, you can
overcome that stress and the strain. You have to let it out.
You can't let it buildup. I learned that when I was a player,
when I went oh-for-four or we lost a ballgame, I struck out in
the ninth inning with the bases loaded, my team lost. I left
that ballgame and left that stress and strain and that failure
at the ballpark and I came back each day feeling like I was
going to be successful.
I was very fortunate to be successful, I think a little bit
more than I failed, and I have a lot of people to thank for
that because I had people that gave me good values at the
beginning, a coach in Oakland, CA, gave me my foundation as a
player and my knowledge as a manager that I draw from today and
I thank them every day that I have been in this game of
baseball. He is no longer living now, but I still thank him.
Jackie Robinson, he said, he hoped he would see an African
American in the dugouts before he passed away. That didn't
happen, but I was very proud on the day that I did become the
first African American manager.
I don't know if I will retire at any time. I have told
people, as long as someone wants me to be in baseball and my
energy level is up, they are probably going to have to come get
me and put me in that pine box and say, ``Goodbye, Frank. It is
time to go.'' But until that day comes, and I enjoy this game
and have something to give--I don't want to be given anything.
I feel like if I have something to give, if someone wants to
draw from my knowledge of the years and the experience and the
know-how and the bumps and the hills you have to climb and
overcome over the course of time, I will be there to do that. I
try to pass that on to younger constituents.
I try to pass that on to young players, that age is just a
number. What you do and how you feel and how you conduct and
carry on your life is the most important thing, and don't let
anyone ever tell you you can't do something because the will to
do something is stronger than the physical ability to be able
to do it.
I was not a great player coming out of high school. As a
matter of fact, my mother wanted me to go to college and the
money was there. She had saved it. She had worked hard to save
the money for me to go to college. When I graduated from high
school, I said, ``Mom, it would be a waste of your money for me
to go to college because I don't think I would be a good
student. I want to play baseball.'' She said, ``Frank, if that
is what you want to do, go do it.'' She was always very
supportive of me and I will never, never forget what she did
for me as a young man to set me up to where I am today, and I
believe that is why I am where I am today.
Doing things in this game today and outside of this game is
very important to me, and I think with this committee, I think
this is one of the nicest things or nicest committees, because
you know, I have sat at home and watched the other committees
and it wasn't as much fun watching those committees, real
people here. I am sitting here and even being grilled.
[Laughter.]
But I think that this committee could just convey and get
across to the workplace out there, the people that hire and
fire, that a number doesn't mean someone cannot be productive.
In this age, we are living longer and in better health because
of all the advanced medicine today, operations today. For
instance, I had a knee operation in 1967 and I was out for
about six months. They have that operation now and you are
playing in three days, so that is how much the medicine kind of
has advanced. Also, when I had my bad shoulder, operations were
taboo because we felt if you had an operation, in those days,
your career was over. But nowadays, they go in and fix it and
you are even stronger.
What I am trying to say, I think it is very, very important
for this committee to get behind a workforce in the world today
and get the people that are hiring to understand that senior
citizens still can be of value in the workplace and they can
still contribute to our society. Don't look at them being 65,
70 years old or younger.
I would say to our constituents and the public, don't give
in to age. Don't look for something to be given to you. If you
feel like you want to work beyond retirement, do it. Do it.
Don't take no for an answer. It is like when you come out of
high school or college and you go to be interviewed for a job
and they say, ``How much experience do you have?'' You say,
``None.'' They say, ``Well, when you have some experience, come
back.'' Well, if someone never hires you, how are you going to
gain experience? So why not take advantage of the experience
that people gain over the years?
I think that baseball fell into that rut of youth, computer
age, see you later, you old senior citizens. You can't work a
computer, so you can't keep up with these young people. You
don't know what is going on in baseball. You can't maneuver the
numbers around and that computer says so and so is 10 for 20
against this pitcher. You don't know what that means.
But I do know one thing. I don't have to look at that
computer. I know if a hitter can have success against certain
pitchers and pitchers against certain hitters. I don't have to
be able to work that computer. But I know I have gained a lot
of experience, a lot of knowledge that I have been able to
bridge the gap from 1975, 1956 to now, by adjusting to the
players, adjusting to the lifestyle and understanding what you
have to do today to be successful. That is what I have done
over the years, and I hope that we can get that as this
committee goes on out into the workplace and get people to
understand age is only a number.
Thank you for having me here today.
Senator Kohl. That was a great, great statement, Mr.
Robinson. As prominent as you are, you are a great testimonial
to the qualities and excellence that people who are older and
experienced can bring to the workforce. It is just great to
have you here and touching on all these points that are so
relevant and so important as we confront our situation in
America of people getting older and wanting to be productive
and how important it is that we allow them to do that. You are
a living example of it all at its very best.
I am not going to grill you. [Laughter.]
Senator Kohl. What you said, you said it so well and you
say it all and you say it so correctly. It is just a pleasure
and a privilege to have you here today.
Senator Smith.
The Chairman. Thank you, Senator Kohl. Coach, I was very
gratified you expressed that you felt at home here at the
Senate and we want you to feel at home here because you are
performing by your presence and with your words a great service
to an America that is aging. You are a living embodiment that
age is a number. How old you are is how you feel.
I was also very touched by your many references to your
mother. As we approach Mother's Day in the coming weeks, your
words cause me to reflect upon my own youth in this town. When
I was a teenager, I would set an alarm every morning and my
mother, I am sure, would hear it go off. But if she didn't hear
me get up, she would call down to the basement, where my room
was, ``Get up, Gordy, or you won't amount to a hill of beans.''
When I was elected to the U.S. Senate, my mother was then
still alive and I moved in with her before I could move my
family back to Washington after the school year, so I spent 9
months living with her. One morning my alarm went off and she
apparently didn't hear me up and she opened the door and said,
``Gordy, get up or you won't amount to a hill of beans.''
[Laughter.]
So I am still working on it, and obviously you are showing
an example of how we can all amount to more than a hill of
beans. I just can't thank you enough for your life, your
service, and the great example.
I suppose the only question I would have is do the players,
the young players, most of whom I assume are in their 20's, do
you think it is of value to them to have an adult in the
dugout? [Laughter.]
Mr. Robinson. Yes, it is.
The Chairman. Do they look at you with some authority, I
suppose, that really does come with time in the batter's box
and in the dugout of managing?
Mr. Robinson. I think a lot of them are awed by it and they
stand off and they are afraid to approach me at times. But
others draw from it and take advantage of it. I am very happy
when they do that because I can talk baseball all night long. I
can talk about baseball. I don't force myself or my knowledge
and what I know on anyone, but if you reach out to me, I am
very happy to share it with you. There comes a time sometimes,
though, I have to, as a manager, kind of force my will on
certain players, but not too often. I am just happy to be able
to pass on what I have learned, and I try to tell them to this
extent.
I had bumps and I had falls and I had setbacks in my life
and my career and I am just trying to give you this knowledge
and this understanding of the game and life itself so you can
maybe not have some of those bumps and some of those falls and
setbacks, and maybe you will have a little smoother career and
a little longer career, and this is what I pass on, not because
I am trying to show you how smart I am or anything like that.
The Chairman. As the manager of the Nationals, do you hire
other coaches that are your contemporaries or who have the
wisdom of years and do you encourage them to stay in the employ
of the Nationals past retirement?
Mr. Robinson. Yes, I do. As a matter of fact, one of my
players said, ``You know, Frank, you have a senior citizens'
coaching staff here.'' I said, ``No, I don't. I have one down
under 40.'' [Laughter.]
But I try to do that for a reason, because of the
experience and the knowledge that the individuals have, and I
try to bring that on board because I think it is important over
a 162-game schedule. No matter how many times you have to tell
an individual something, sooner or later, it will click,
believe me. It may not be this year. It may not be next year.
But maybe five years down the road, it may click.
For instance, I had a young man, 20 years old, Dennis
Eckersley, I brought him up to the major leagues with me. I had
to fight to get him on the staff, on the ball club my first
year. It was about September, he had a shutout, eight-to-
nothing in Milwaukee against the Brewers, and I went out and
took him out of the ballgame after eight innings and he was
livid. He was livid. So the next day, I talked to him about it
because a very good friend of mine said, don't make any
decision, don't have any discussions when someone is upset or
mad, and that's very good advice. So I talked to him the next
day and I explained it to him. I said, you're going to have a
long, long career. You're going to be around playing when I'm
gone. Well, I'm still around and he's retired, though----
[Laughter.]
But, I said, you only have one of those things on your
shoulder right there, that right arm, one of them, and I am not
going to misuse you or abuse you now. I said, ``You will know
what I did for you later down the road sometime.''
Five years later, he is with the Boston Red Sox and he came
up to me one day and said, ``Frank, thank you.'' I said,
``Thank me for what?'' He said, ``For what you did for me when
I was a youngster back in Cleveland, taking care of me,
watching out for my career. I appreciate that now.'' So it
comes about. It gets through sooner or later.
The Chairman. That is a terrific story.
I know Senator Kohl employs many people in the other part
of his life, and so do I in a food processing plant out in
Oregon, and many of my managers have gray hair and they still
perform past retirement. I particularly value that. I wonder if
you have seen, like I have, that often when people do retire at
the traditional age and get the gold watch, they go home and
they quickly pass away because--maybe it is some correlation,
maybe not, but it does seem that having a reason to get out of
bed and a purpose to go to work often extends life. Have you
had that experience?
Mr. Robinson. Oh, yes, I do. I have had it, and this is the
reason why I keep going, because friends of mine are all the
time after me, why don't you retire? You have done almost
everything there is to do and accomplish in the game of
baseball. I said, I am not the retiring kind because I don't
feel like I will have the quality of life sitting around the
house, going to play golf on occasions, and just trying to find
things to do.
For instance, it was kind of really brought home to me in a
real strong way. A very good friend of mine that I grew up
with, Avada Pinson, played for about 18 years in the major
leagues and he coached after that for a number of years. He was
out of baseball at 57 and he was working with the young people
in Oakland, CA, and he had come from a little league ballpark
from working with the kids on a very nice afternoon. He went
home and sat in his La-Z-Boy chair, and that is where they
found him three days later and he had passed away, at 57.
The Chairman. Wow.
Mr. Robinson. That drove it home to me, that to stay active
is the best way, and the quality of life. I am not a big buff
of working out and running and doing things like that because I
did that for 20-some years. Now I will look at the treadmill
and I will get my energy from that---- [Laughter.]
But I do at least now watch what I eat and I watch my
weight. People say to me now, boy, you look good. You look
great for your age. I say, what does that mean? I say, I look
great and feel great no matter what age I am because I do watch
that and I know when I am getting a little heavy. Then that is
when I exercise a little bit. But other than that, I try to
just eat healthy and stay active and hopefully I will have a
long life.
The Chairman. Coach, let me just simply say that while we
are a small committee up here, the Aging Committee is not the
Finance Committee or the Appropriations Committee, and it is
probably a small committee in terms of the U.S. Senate, it is a
large committee in terms of the audience that it enjoys from
senior citizens in this country, and so we hope today through
C-SPAN there is a very large audience looking at you and
learning from your example. We profoundly thank you for your
service to our nation by your presence here today.
Mr. Robinson. Well, Mr. Chairman, Senator Kohl, thank you
for having me here today. It was my pleasure.
Senator Kohl. Thank you, Mr. Robinson. Good luck this
afternoon.
Mr. Robinson. Thank you.
Senator Kohl. Our second panelist is Ms. Barbara Bovbjerg,
who is the director of Education, Workforce, and Income
Security Issues for the Government Accountability Office.
There, she oversees GAO's work on retirement income policy
issues. Ms. Bovbjerg previously served as Assistant Director
for Budget Issues at GAO and also worked for the District of
Columbia's Budget Office and at the Urban Institute.
Ms. Bovbjerg, we welcome you here today and we look forward
to your testimony.
STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE, WASHINGTON, DC
Ms. Bovbjerg. Thank you, Mr. Chairman, Senator Kohl. I am
really thrilled to be here. It is an honor to be asked to speak
on this topic, and it is a tremendous honor to be sitting at
the same table just occupied by Mr. Robinson, who now I have
learned is not only a towering figure in sport, but also very
eloquent and a difficult act for me to follow.
I am here to discuss the importance of helping older
workers earn longer. Demographic trends pose serious fiscal and
economic challenges to America in the 21st century and
Americans who choose to work rather than fully retire may form
part of the answer to ensuring a healthy economy in the future.
Today, I would like to discuss the broad demographic and
economic trends that underlie our concerns about the future,
essentially why it may be important to encourage those who want
to work to continue to do so. I also plan to provide an
overview of the factors affecting older Americans' decision to
work or to fully retire. My statement is based on prior GAO
work on this topic, much of it carried out for this committee.
First, the importance of earning longer. Older Americans
are becoming a growing segment of the population. Today, the
oldest members of the baby boom generation are nearing
retirement age, and as this relatively large generation ages,
they will create an increasingly gray America. At the same
time, life expectancy is increasing. Whereas in 1940, men at
age 65 could expect to live another 12 years, today, men age 65
are living 16 more years, on average. Similarly, women reaching
65 lived about 13 years in 1940. Today, they can expect to live
another 19 years. While living longer is good news, make no
mistake about it, most people are living longer in retirement
rather than extending their working lives.
A falling fertility rate is also a factor in our aging
population. The fertility rate describes the ratio of the
number of children born to the number of women of childbearing
years. In the 1960's, the fertility rate was about three
children per woman. Today, that rate has fallen to a little
more than two children, and by 2030 will fall to 1.95. This
trend is a major factor in the slowing growth of the U.S. labor
force in the last decade and going forward. By 2025, labor
force growth will be about a fifth what it is today.
These trends will help increase the share of the American
population age 65 and older from 12 percent in 2000 to almost
20 percent in 2030. With relatively fewer people of traditional
working age available to produce goods and services, our nation
could experience slower economic growth and ultimately slower
growth in living standards. These negative outcomes could
transpire at the very time that budgetary pressures to finance
Social Security and health care will be at their peak.
There are various policy approaches for the Federal
Government to consider in addressing these challenges. Whatever
policies are to be adopted, acting relatively soon to address
unsustainable growth in Federal health and retirement programs
is important.
Helping older Americans earn longer can also be part of an
approach that could both improve the financial resources of
older individuals and families while helping mitigate the
economic and fiscal impacts on our nation.
Let me turn now to older workers' retirement
decisionmaking. Many factors reportedly influence workers in
deciding whether to work or to retire. For example, a number of
surveys suggest that some workers choose to remain in the labor
force past retirement age simply because they enjoy working and
like staying active, a point Mr. Robinson made so effectively.
An individual may also decide to continue working until his or
her spouse is ready to retire, or retire earlier because his or
her spouse is retiring.
Other factors in the worker retirement decision include an
individual's health status, the availability of health
insurance, and eligibility for early retirement benefits. Even
when early retirement benefits are actuarially neutral, as in
the Social Security program, the mere presence of such benefits
can create an incentive to retire.
Finally, the availability of suitable employment is a
crucial element in deciding whether to continue working.
Although surveys indicate that many older workers would like to
partially retire, we have found that offering such flexible
options is not a widespread employer practice.
We currently have ongoing work that seeks to identify in
more detail the elements of older worker retirement decisions
with an eye to policy implications for the Federal Government.
In conclusion, policies that encourage rather than
discourage older people to continue working would benefit both
the economy and individuals. Such policies might redefine
retirement by encouraging more widespread availability of
flexible employment and partial retirement arrangements and by
removing incentives that induce workers to fully retire when
they are, in fact, willing to work.
This concludes my statement, Mr. Chairman, Senator Kohl,
Senator Lincoln. Alicia Cackley is with me today. She is our
assistant director for Retirement Income Policy Issues, and we
welcome any questions that you and the committee might have. I
would also like to ask that our written statement be submitted
for the record.
Senator Kohl. Without objection.
[The prepared statement of Ms. Bovbjerg follows:]
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Senator Kohl. Ms. Bovbjerg, is there any conceivable
downside to what we are discussing this morning, which is the
advisability of encouraging and promoting policies so that
seniors will remain in the workforce?
Ms. Bovbjerg. It is hard to see a downside to encouraging
people to do something that they want to do. It is hard to see
a downside to encouraging people to work when it will improve
their retirement income prospects, when it will improve our
economic prospects as a nation, and could improve our fiscal
prospects, as well.
I think that it is important in looking at particular
solutions to look at the balance of the approach to assure that
things are done to encourage people to work longer are not in
some way having negative impact on people who cannot work
longer.
Senator Kohl. As you know, only about 13 percent of people
over 65 today are actively participating in the workforce, so
how do we get from here to there as soon as we will need to be
getting there, which is in the next decade or two? Right now,
as you know, the mindset in this country is that pretty much
when you are 65, with exceptions, you are expected and you look
forward, to retirement. What we are suggesting here today is
that that is not really where we need to be heading in this
country. So what kinds of ideas and thoughts and policies do we
need to be pursuing out there to change this mindset, both on
the part of employers and employees?
Ms. Bovbjerg. I would suggest that we should move on a
number of fronts. I do want to bring to your attention a
recommendation that we made several years ago as part of some
work we had done on this issue. In that work, we noticed that
there are a number of Federal agencies that have roles in
encouraging employment and working with employers, as well as
addressing retirement rule issues, and we had recommended that
the Department of Labor create a multi-agency a task force to
consider the barriers to olders workers and the potential
approaches in Federal policy, specifying what things can be
done via regulation and what things would require statutory
change, and to make recommendations.
They have not acted on this recommendation as of yet. I am
still hopeful. Some Federal agencies are responding on their
own. The Internal Revenue Service is considering regulation
that would make it easier for people to partially retire by
taking retirement benefits in part, not in full, so they could
work part-time and continue to get part of their retirement.
These are not yet final.
But I would suggest that because there are interactive
effects, this is a policy area where we need to take a broader
view than just within a single agency or only looking at ERISA
rules, for example.
Senator Kohl. I think it is true and very important that we
need to consider the financial aspects of this whole issue of
retirement at age 65. Until we do, I would guess that we are
going to have a hard time increasing the percentage of people
who stay in the workforce. It has to make sense financially for
them to stay in the workforce, which is what you are
suggesting, and it is very true.
Ms. Bovbjerg. That is true, and I know that there is the
hope that as we move through this demographic change, older
workers will appear more attractive to employers as they begin
to experience labor shortages. But there is, of course, no
guarantee of that and there may be a policy role for the
Federal Government in encouraging more interest on the part of
employers, more flexibility in the way that we ask employers to
manage their retirement programs, and more incentives for
workers.
Senator Kohl. Thank you. Mr. Smith?
The Chairman. Thank you, Senator.
Barbara, obviously, I think the statistics you have from
GAO would say we will have a labor shortage in the future if
everyone retires, and yet I am wondering if you are also seeing
employers beginning to make changes to adjust to seniors
transitioning from full employment perhaps to part-time or
flex-time or are there things that you would recommend us to do
legislatively.
Ms. Bovbjerg. There are employers out there who are being
very creative. I think that you may have one of those employers
speaking to you today in the next panel. When we looked at
employers in our earlier work on this issue however we found
that such creativity is rare, or certainly not widespread.
Employers are reluctant to be more flexible about bringing
people back after they retire because of the concern about some
of the pension rules that might affect tax qualification of
their pension plans.
We found more examples of this creativity among the public
sector employers, where State and local governments,
particularly school districts, were taking actions to try to
bring workers back who had retired. For example, some
government employers offered Defined Retirement Option Plans,
or DROP plans where people can retire and then come back and
work, and their retirement benefit is placed in an individual
investment account for them while they are working. It is a
complicated arrangement and is something that would be
difficult to do within the confines of ERISA, and as you know,
the State and local governments are not subject to ERISA.
I am trying to say that there are models out there and I
think it is important for us to consider how they might fit
into a broader policy for the Federal Government.
The Chairman. It is interesting. I think you have just
identified for me, anyway, something that we may be able to do
legislatively to give plans more flexibility so they don't lose
their tax status, so that they can under defined benefit or
defined contribution plans continue to allow people to work. So
we will start putting something together, and any ideas that
you have, we would certainly welcome those.
Ms. Bovbjerg. I would be happy to work with you on that.
Senator Kohl. Thank you, Senator Smith.
Senator Lincoln.
Senator Lincoln. First of all, I would like to thank my
colleagues, the ranking member, Senator Kohl, and Chairman
Smith, for holding this hearing. I think it is so important for
us to look at ways to bring down the barriers that preclude our
older citizens from being so actively involved in the
workforce.
We know we have such changing demographics. We know that we
will experience a large increase in the number of older
Americans who want to remain in the workforce. With all kinds
of medical technology, we know that people are living longer
and they are living more productive and a better quality of
life as they age.
I know from my own personal experience, my husband's
grandmother, who is 107, and his father, who was a surgeon and
worked pretty much up until he was about 71, I told my husband
the other day, I said, ``I hope your second wife is tall,
skinny, and gorgeous, because with those genes, I know you will
outlive me.'' But he said, ``No, I still want to retire at
55.'' I said, no way. No way.
But we do have an issue here, I think, that has many
aspects that we want to look at. One, and that is the ability
to maintain the quality of life for these individuals, because
without a doubt, I think anyone I know that is in the workforce
over 65 will say that both the challenge and the mental
stimulation is a huge part of maintaining their quality of
life, both physically as well as mentally, in terms of really
having that productive and that great quality of life that they
feel like they have. So I think that is important.
I think the other important aspect for us to explore is
what a tremendous advantage it is for those particularly
younger people who are in the workforce. I know I grew up in a
very small town within walking distance of both sets of my
grandparents and they had a tremendous role to play in my life,
whether it was life skills or life's lessons or helping me with
what I was going through at such a young age.
I watched my children in a small public school here locally
who get the benefit of several of the teachers' aides who are
over 65, a retired head of the physics department who comes in
and supplements the science program in the third grade. I mean,
it is wonderful, not only what these people have to offer, but
the way that they present it after a lifetime of experience in
that field and what they share with the children in terms of
building their confidence, giving them the kind of support that
they need, as well as a background in what they can do with
what they are learning, not that it is just something in a book
that they have to learn, but where can they take that? Who can
they become? What can they do with their lives?
So I think there are so many multiple benefits of looking
into being able to provide the wherewithal for our aging
community to stay in the workforce and to not only benefit
themselves, but to bring a great benefit to those that surround
them.
So I applaud our chairman and ranking member for bringing
us to this point and having this discussion.
I guess I have got a couple of questions. I do represent
quite a rural State, and I think if there is anything that you
can lend to specific issues regarding opportunities for older
workers that is unique to rural areas. I know transportation is
one big challenge that we face in rural America, particularly
for our elderly, in getting them places. But maybe there are
other things that you all know that I am not as fully aware of.
Ms. Bovbjerg. Senator Lincoln, we have not done a rural-
urban--comparison in our work on this topic, but in some
related work that might be of interest, we looked at one-stop
centers operated under the Workforce Investment Act. One-stop
center provide employment and training services to workers,
including older workers, and the big change when WIA became law
was that under the prior law, State funding for older workers
was separate, done completely separately from other workers,
and WIA combines both the services and the funding for workers
of all ages.
When we were looking at this to try to see if that made a
difference in the kinds of services that older workers were
receiving, one of the things we discovered is that the
measurement of performance of these one-stop centers includes
looking among other things, the rate of usage replacement for
those the one-stops serve. If someone comes in unemployed and
they want another job, what is their new wage compared to their
old wage? This approach offers little incentive for one-stop to
help someone who wants to partially retire, and so in our
report we made a recommendation to the Department of Labor that
they review performance measures, as well as other things out
there in the one-stop centers that might disadvantage older
workers who sign up for these services.
But we have also seen that older workers, in fact,
disproportionately receive services at the one-stop centers, so
the one-stops are likely very important to local activity and
helping people work. I am not sure if there is a difference in
rural versus urban however.
Senator Lincoln. Well, there usually is, because we have
less resources oftentimes in rural areas to set up those kind
of systems of one-stop, and sometimes they are harder to access
for people that live out on a county road.
Ms. Bovbjerg. Yes.
Senator Lincoln. That is why I said the transportation, I
know. It is a given. It is an issue and a challenge we face
with everything in rural America. But there may be other
things, and I will continue to try and explore that.
I know for a fact, visiting with so many of our elderly out
in the rural communities, is that oftentimes the work that they
have during their working years is more physical. We know that
from the standpoint of the debates we have been having over the
course of the last several weeks on Social Security. So they
are more likely to get disability, because lots of times, their
jobs are more strenuous, more physical, and there is a great
need.
I heard from several of our groups in Arkansas and the AARP
has a number of senior community service employment programs,
and I know the AARP is going to be on the next panel, I
believe, but just to give you an opportunity to respond,
because you said that you had made several requests to the
Department of Labor. I understand that the rules that govern
the income in the latest Senior Community Service Employment
Program Grants are keeping people who would have been eligible
before from getting those services.
For instance, under prior rules, the Social Security
disability benefits were excluded from their income. I know in
Hot Springs, AR, where we have one of our larger groups of
seniors, the SCSEP office in Hot Springs is prevented in
helping the older Americans from getting the services they need
to return to the workforce. Maybe you can comment on the new
income guidelines. I don't know if your request to the
Department of Labor--I think those guidelines came out in July
2004 from the Department of Labor, which were some pretty
sweeping rule changes, I think that adversely affected a
substantial number of older workers.
Ms. Bovbjerg. We have not done any work on that issue. I do
a lot of GAO's Social Security related work and we are very
concerned about helping disabled beneficiaries who can work
return to work and have been watching how SAA's return to work
initiative are going. We have not done any work on the grants
as of yet.
Senator Lincoln. Well, if you have any input on that, we
would certainly welcome your ideas on what is transpiring and
how we solve that problem or how we mitigate some of the
concerns that we are having in those offices out in our States
of wanting to get some of these older workers back into the
workforce, but seeing that, again, it becomes a disadvantage
because, again, being able to provide the services and the
assistance in rural areas does usually depend on the amount of
resources they can find, whether it is through grants or what
have you, and that is an important tool, particularly in rural
America.
Mr. Chairman, I have used my time, but I am proud to be
here and thank you and thank our panelists for being here.
Senator Kohl. Thank you, Senator Lincoln, and we thank you,
Ms. Bovbjerg, for being with us today. Your testimony and your
comments have been very useful.
Ms. Bovbjerg. Thank you very much.
Senator Kohl. We now turn to our third panel. Our first
witness on this panel will be Ms. Kathlyn Peterson, a medical
and surgical transcriptionist for SSM Health Care's St. Mary's
Hospital and Medical Center in Madison, WI. Ms. Peterson has
been a transcriptionist there for 45 years and currently
participates in SSM's phased retirement program.
We would also like to welcome Mr. Douglas Holbrook, who is
the vice president and secretary/treasurer for the AARP Board
of Directors. He serves as Chair of AARP's Board Audit and
Finance Committee, as well as the Leadership Conference
Planning Committee.
Also testifying on this panel will be Ms. Valerie
Paganelli, a senior retirement consultant from Watson Wyatt
Worldwide. Ms. Paganelli has 17 years' experience working with
both public and private sector clients. She leads Watson
Wyatt's consulting research on the topic of phased retirement
and is a national leader and published author of articles
related to retirement, workforce development, and phased
retirement.
We have one additional panelist, who I will ask Senator
Smith to introduce.
The Chairman. Laurie Barr will be our additional panelist.
Laurie serves as the assistant director of Human Resources for
the Oregon Health & Science University. We welcome you, Laurie.
Oregon Health & Science University is Oregon's only academic
health and science center. Laurie has been with OHSU for 4\1/2\
years. She has over 12 years of experience in a variety of
human resources positions, including senior-level experience in
several health care organizations. She holds a Bachelor's
degree in business with an emphasis on human resources
management, a Master's degree in organizational management, has
been awarded a Senior Professional in Human Resources
certification by the Society for Human Resources Management.
Thank you all for being here.
Senator Kohl. Ms. Peterson, would you like to make your
statement, please?
STATEMENT OF KATHLYN PETERSON, MEDICAL AND SURGICAL
TRANSCRIPTIONIST, SSM HEALTH CARE, MADISON, WI
Ms. Peterson. Yes. Mr. Chairman and Senator Kohl, I am
happy to be here today to share my insight on phased
retirement. Good morning. My name is Kathlyn Peterson and I am
excited to be here today to share my story of phased
retirement.
When I was 50 years old, my husband and I moved to Madison,
WI. Our children were grown, but I wasn't thinking about
retirement. I had 30 years of experience as a medical and
surgical transcriptionist and I wanted to work. So I
interviewed with a hospital and a local clinic. But then I
interviewed with St. Marys Hospital Medical Center, a member of
SSM Health Care. St. Marys really impressed me with what they
had to offer. They seemed to be excited to have me and wanted
me to start right away.
Fifteen years later, I am 65 years old and still enjoy
working for St. Marys. I have a permanent part-time position in
medical records as a medical/surgical transcriptionist. I work
on Monday, Tuesday, and every other Saturday morning. Often,
the hospital is extremely busy, so I also volunteer to work
additional days to help out.
I will be 66 in June, and my children often ask me, ``Mom,
when are you going to retire?'' I don't really know. Maybe in a
few years, maybe not. I am not in a hurry. I love where I work
and I love what I do.
I know that there are other things that I could be doing at
my age. I could volunteer, do things at home, act more,
``retire.'' But working part-time keeps me active and healthy
and I get to continue working in the job that I love.
At St. Marys, I can choose to work part-time and still
receive my pension. This is very important to me. My father-in-
law died unexpectedly of a heart attack when he was 58 without
enjoying any of his retirement benefits. My mother died at 65
and didn't enjoy any of her retirement, either. Because St.
Marys allows me to work part-time and still collect my pension,
I am enjoying what I have worked so hard for right now.
So is my husband. He works part-time at St. Marys as a lab
courier. He will be 70 in the fall and also collects his
pension while working. As of this week, he is officially
retired, but planned to start working on an as-needed basis.
But that will have to be postponed until next week, because he
is with me here today in Washington, sitting right over there.
In addition to the benefit of collecting my pension, I also
enjoy full health insurance benefits at St. Marys. Employees
only need to work 16 hours a week in order to receive full
health benefits. Other facilities require at least 24, 32, even
40 hours per week. This benefit is especially valuable to me
because I survived kidney cancer 13 years ago. My medical
history would make it extremely expensive for me to purchase
insurance independently. Because of my insurance coverage
through the hospital, I do not need supplemental insurance.
In addition to pension and health benefits, I have found
the hospital to be very flexible in their scheduling. If I
can't work one of my regular days, I can switch to a day later
in the week. Not all of my friends can say that. My friend,
Jan, is a 66-year-old R.N. with a local physician group. It is
hard for her to switch her days. Not only is her job not as
flexible, she cannot draw her pension until she fully retires.
But perhaps the most important benefit is the personal
satisfaction of knowing that I am making a difference.
Experienced transcriptionists are hard to find and there are
always new things to learn--names of new drugs, new
terminology. It takes a while to become established. So I know
that my contribution of 45 years of experience really helps the
hospital.
But that is what older workers bring to the table. They
bring experience. They are also dependable, reliable, and
loyal.
St. Marys and SSM Health Care want the best employees,
regardless of their age, so they bend over backwards to work
with us. As older employees, we are given choices about our
pension, hours, and medical benefits. It is a great
environment. We feel valued and appreciated.
But it is not just the employees and the hospital who
benefit from this relationship. Most importantly, it is the
patients who benefit. Patients have the happiest, most
experienced staff caring for them. That is why we are here,
because our patients deserve the best.
I am proud of the exceptional care that we provide and the
honors we have received, including becoming the first health
care system to be recognized with the Malcolm Baldridge
National Quality Award.
Thank you for allowing me to be here today to share my
insight.
[The prepared statement of Kathlyn Peterson follows:]
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Senator Kohl. Thank you, Ms. Peterson.
Ms. Barr.
STATEMENT OF LAURIE BARR, ASSISTANT DIRECTOR OF HUMAN
RESOURCES, OREGON HEALTH AND SCIENCE UNIVERSITY, PORTLAND, OR
Ms. Barr. Good morning, Chairman Smith, Senator Kohl, and
Senator Lincoln. My name is Laurie Barr and I am the assistant
director of Human Resources for Oregon Health & Science
University. Thank you for the opportunity to be here before
this committee to discuss OHSU's best practices for employing
older workers.
Oregon Health & Science University is the State's only
health and research university and only academic health center.
We have four distinct missions of patient care, teaching,
research, and community outreach. As one of the State's largest
employers, our workforce is comprised of more than 11,000
employees.
OHSU is proud of its commitment to a diversified workforce,
including diversity in age. We recognize that the wisdom and
experience older generation workers bring to our organization
is invaluable. As an institution of learning, we rely on our
long-term employees to provide historical insight and
information to many other workers at OHSU and they benefit
greatly from the wealth of experience our older workers
possess.
There are three best practices that I would like to
highlight for you today. The first is flexible work
arrangements. The size of our workforce combined with a wide
variety of jobs and required skill sets allows for flexible
work arrangements that many smaller organizations may not be
able to accommodate. There are many job opportunities at OHSU
that are part-time or on-call, allowing for a variety of work
schedules that meet individual needs.
In addition, some older OHSU workers ready to move into the
retirement stage of their lives may have the opportunity to
ease into it. We have quite a few long-term employees that have
gradually cut back schedules over the course of several years.
This slow transition benefits both the employee and the
employer by keeping experienced workers on staff and allowing
them to move toward retirement more gradually than in many
organizations.
As you know, our country is experiencing a shortage in many
health care occupations, and OHSU is no exception to that.
Therefore, it is critical that we retain our health care
workers. Many health care jobs are very physically demanding,
which for an older worker can be problematic. At OHSU, there
are other options in those situations. An older nurse, for
example, who may not be able to continue to keep up with the
physical demands of inpatient nursing may have other full- or
part-time opportunities at OHSU to continue to use his or her
nursing skills. That could mean moving to a slightly less
demanding outpatient nursing position or something in nursing
education, telephone triage, case management, or quality
review, for example.
As an employer, allowing for flexible work arrangements
means better retention of older workers.
The second is our generous retirement plan. A substantial
benefit for older workers at OHSU is the retirement plan. OHSU
contributes up to 12 percent of an employee's annual income
into a retirement plan upon eligibility. OHSU offers two
retirement plan options, a defined benefit plan and a defined
contribution plan. For the University Pension Plan, which is
our defined contribution plan, once workers reach the age of
50, they become 100 percent vested in their retirement
contributions regardless of their length of service. OHSU also
offers two voluntary savings programs to help employees
supplement their retirement plan and Social Security benefits.
These benefits are not only powerful recruitment tools in
attracting new older workers to OHSU, they serve us in our
retention efforts, as well. A stable, substantial pension
provides these employees with an additional sense of financial
security as they move closer to their retirement years.
The third item is shared knowledge of older workers. Almost
30 percent of OHSU's current workforce is comprised of workers
age 50 or older. I am particularly pleased to report to you
that currently, 11 of our employees are over the age of 80, and
two of those are over 90 years old. Most of these individuals
are working on a part-time basis, although three of them,
believe it or not, are still full-time. This demonstrates a
huge commitment to their work and to OHSU.
Nine of these 11 individuals serve in professor or adjunct
professor positions and several of them continue to do
research. Well past traditional retirement age, these
individuals continue to share their knowledge with future
doctors, nurses, and scientists. OHSU is proud to have them as
continuing productive members of our workforce.
In conclusion, as a society, we must be more creative about
accommodating older workers, especially as the baby boom
generation begins to think about retirement. More employers
need to step forward and take proactive steps to assist older
workers in the workplace. Retirement isn't what it used to be,
and as an employer, OHSU recognizes this. We value the
contributions, experience, and wisdom of our older workers. We
truly hope that in the future, more and more employees will
continue to work past their normal retirement date. It is good
for us and it is good for them.
Thank you for inviting us to testify today.
[The prepared statement of Laurie Barr follows:]
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Senator Kohl. Thank you very much. Mr. Holbrook.
STATEMENT OF DOUGLAS HOLBROOK, VICE PRESIDENT AND SECRETARY/
TREASURER, AARP BOARD OF DIRECTORS, WASHINGTON, DC
Mr. Holbrook. Mr. Chairman and Senator Kohl, I am Doug
Holbrook, a member of AARP's Board of Directors. I would like
to thank you for convening this hearing to highlight the issues
facing older workers.
AARP is the largest organization representing the interests
of Americans age 50 and older and their families. About half of
AARP's members are working either full-time or part-time. All
of our working members, as well as those who want to work, have
a vital interest in being able to remain on the job and to
contribute to society without facing age discrimination.
Protecting and expanding the rights and opportunities for
older workers was a founding principle of AARP. We work to
improve employment conditions and policies for all workers
through our legislative and regulatory advocacy. Through AARP's
program initiatives, we collaborate with employers to increase
job opportunities for those age 55 and over and we conduct
research to help answer the need for knowledge about how work
issues affect employees and employers and the workplace.
AARP advocates for improvements in the Workplace Investment
Act of 1998. Specifically, we have urged inclusion of target
training requirements to serve currently employed older
workers, ensure that one-stop centers have adequate staff and
equipment, help employers prepare for an older workforce, and
encourage education and training for older workers.
Other efforts center on phased retirement. Phased
retirement programs could ease the projected labor shortage as
well as expand work options for older workers. Employers could
benefit from programs that help retain experienced workers.
AARP recently commented on proposed IRS regulations that
would allow defined benefit pensions to pay partial retirement
to eligible employees to reduce their work schedules. AARP also
released a survey, ``Attitudes of Individuals 50 and Older
Toward Phased Retirement'' in March. The survey gauged
attitudes to phased retirement. Nineteen percent of the
respondents have heard the term ``phased retirement'' and of
those, nearly 38 percent said they would be interested in
participating in such a program. Of interested workers, 78
percent expected that phased retirement would motivate them to
work past their expected retirement. Forty-six percent of
interested workers said they would like to start phased
retirement between the ages of 60 and 64, and 53 percent of
employees would like to work 12 fewer hours, on average, if
offered phased retirement.
AARP believes that barriers to implementing phased
retirement programs should be eliminated. However, these
programs must be designed to protect workers' benefits and
preserve their long-term retirement security while recognizing
the legitimate needs of employers. Businesses will need to do
more to attract and retain older workers and help ease likely
future labor shortages.
Five years ago, AARP established an annual award program to
recognize employers who already had innovative practices,
AARP's ``Best Employers For Workers Over 50''. These employers
have formal and informal arrangements that allow older workers
flexibility, such as job sharing and compressed work weeks.
AARP's ``Best Employers For Workers Over 50'' continues to
increase in visibility. Follow-up activities include reports,
``Staying Ahead of the Curve 2004,'' a compilation of best
practices among 2002-2004 winners; a national conference that
will center on business solutions for an aging society; and a
report that will address the value workers 45 and older bring
to American business.
AARP's Workforce Initiative is a program targeted to both
employer and employees. It grew out of a partnership between
AARP and Home Depot to attract and retain mature workers. The
featured employer portion of the initiative builds on the
partnership by educating businesses on the value of their
existing older workforce and recruiting mature workers.
Last year, AARP released a survey to the 1998 ``Baby
Boomers Envision Their Retirement.'' AARP looked at how this
massive generation has progressed in planning for retirement.
Similar to the 1998 survey's, 80 percent, 79 percent of boomers
plan to work in some capacity during the retirement years.
Thirty percent of the boomers plan to work for enjoyment, while
25 percent plan to work for the income.
In answer to the anticipated growth of the aging population
as well as greater demand for older workers, AARP has taken on
the challenge of helping to create solutions to meet the needs
of the workforce and older employees. What we have seen is that
employers are interested in learning about and implementing
policies that attract older workers. Employers who adapt their
workplace will likely find themselves better positioned to
harvest the benefits of a potential resource.
Congress' challenge is to establish policies that recognize
the innovation of employers who have successfully attracted
older employees to work for them. Legislation to make job
training programs more inclusive and to expand phased
retirement are two good examples. Understanding the needs of
older workers will help Congress develop answers to create a
workplace of choice for them.
Mr. Chairman, I would ask that our written testimony be
included in the record.
Senator Kohl. Without objection. Thank you.
[The prepared statement of Mr. Holbrook follows:]
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Senator Kohl. Ms. Paganelli.
STATEMENT OF VALERIE PAGANELLI, SENIOR RETIREMENT CONSULTANT,
WATSON WYATT WORLDWIDE, SEATTLE, WA
Ms. Paganelli. Good morning, Mr. Chairman and distinguished
committee members. I am happy to be here and pleased that we
were invited to participate in the testimony today.
My name is Valerie Paganelli and I am a senior retirement
consultant with Watson Wyatt Worldwide, a global human capital
consulting firm that is grounded in the most extensive research
in our business, including phased retirement. We believe phased
retirement programs can encourage older workers to remain in
the workforce longer.
Employers face varying levels of urgency around the need to
extend the working years of their older workers. They have a
desire to engage and retain older workers who contribute to
ongoing business success. Many employers are considering
alternate approaches to traditional retirement. However,
implementation of formal phased retirement programs pose
considerable challenges and risks. As a result, phased
retirement is currently primarily shaped by individuals who
retire from one organization and return to work for another
organization, or who rejoin their pension-paying employer on a
consulting or contract basis.
Nearly one-fourth of current phased retirees expect to work
past age 65. Another 20 percent expect to work indefinitely.
One-third of surveyed workers over age 50 are willing to work
longer, and voluntary phased retirees are nearly four times
more likely to continue working with their current employer if
offered informal phased retirement programs and other work life
benefits. Informal programs include flexible work arrangements,
reduced work hours, less job responsibility, and the
opportunity to try something new.
In particular, women may extend their careers by 21 months
when phased retirement arrangements are available, and men may
extend their careers by 8 months when elder care services are
available. Yet only 40 percent of employers currently offer
flexible work arrangements. Only 27 percent offer elder care
services. Only 16 percent offer phased retirement.
Continued wages from active employment will become more and
more important for individual financial security. A modest 28
percent of voluntary phasers are in need of the added income;
but for unplanned phasers, this percentage increases to 50
percent. Thirty-eight percent who voluntarily left their career
employer are receiving a monthly pension.
The Social Security debate, escalating medical care costs,
the reduction of workers covered by defined benefit pension
plans, and the potentially less than adequate savings patterns
in the U.S. make for unstable financial resource for many
individuals.
That said, enjoyment is currently the most common reason
voluntary phasers continue to work today, indicated by 42
percent of those surveyed. Phasers who work primarily for
enjoyment are more likely to experience higher job
satisfaction, enjoy good health, and receive higher pay raises
than their peers.
The availability of more formal phased retirement programs
involving pension and health care benefits is limited. One
significant barrier that has been mentioned today is the
restriction to pay pension benefits to actively working
employees prior to their normal retirement age. The IRS
recently proposed new guidance that would change this rule.
However, as currently drafted, very few employers are likely to
adopt them because they lack flexibility and involve
significant administrative burdens.
Today, the availability of retiree health benefits may have
the most influence on individual retirement decisions. One
study demonstrated that a near 70 percent increase in the
propensity for early retirement when retiree health benefits
were provided. Rising medical benefit expenses have prompted
most employers to scale back or alter the delivery of these
benefits, leaving many individuals burdened with financing
their own health care costs and necessitating continued
employment.
Despite these and other barriers, many employers are
actively exploring phased retirement arrangements. They are
doing so by rehiring their own bona fide retirees as part-time
employees or independent contractors. They are targeting their
recruiting efforts at the retiree ranks in the labor market.
They are reviewing their existing benefit programs to make them
more phased retirement friendly. They are using direct
compensation and incentives, health care subsidies, and work
life benefits. They are diligently quantifying the costs of
retaining retirement-eligible workers as compared to recruiting
a dwindling supply of replacement workers. Deep-rooted in the
organization, they are adapting their organizational culture,
succession planning, and training to support a more broad-based
phased retirement program in the future.
We would like to persuade policymakers such as you to
encourage the ongoing collaboration of appropriate governmental
entities. We would like you to endorse defined benefit plans
and provide for phased retirement distributions. We would like
you to help establish a framework for Americans to understand
and practice successful financial planning and to continue
conversations with employers, employees, and their
representatives.
In closing, Watson Wyatt believes the United States faces
unprecedented retirement policy questions and that it is
imperative for our nation to allow for the flexible unfolding
of alternative profiles of retirement. Watson Wyatt also
welcomes the continued opportunity to contribute to your
discussions.
We thank you for holding this hearing today. I am pleased
to have gotten my mitt signed by Mr. Robinson for future use,
and am happy to address any questions you may have.
Senator Kohl. Thank you for your statement.
[The prepared statement of Ms. Paganelli follows:]
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Senator Kohl. Ms. Peterson, why do you choose to stay in
the workforce rather than become a full-time retiree? In other
words, what do you get out of your arrangement that you would
not get otherwise?
Ms. Peterson. I get personal satisfaction. I enjoy my work.
I have been doing this for 45 years. I have never changed my
career because I love my career. It is nice I can work part-
time, collect my pension, and I get full health benefits, which
I feel is very important for me.
Senator Kohl. Good. You are a medical/surgical
transcriptionist?
Ms. Peterson. Right.
Senator Kohl. Will you explain that?
Ms. Peterson. Well, the doctors dictate and I type what
they say, and to try to figure out sometimes what they say is
sometimes hard. They are mumblers or they are foreigners, but
we try to do our best.
Senator Kohl. Good. Mr. Holbrook, it is our understanding
that there are companies that are reluctant to keep older
workers because they feel that the health care costs may rise.
Is that an issue that needs to be dealt with?
Mr. Holbrook. That is a problem. I would just like to point
out, before I answer your question, Senator Kohl, that I was
listening to the testimony and it became very personal for me.
Starting Monday, at 71, I will begin a full-time job and am
looking forward to it.
We have not compared the health care costs of older workers
with those of workers younger than age 65, and I am not
familiar with other work which has been done. However, it would
seem to me that it could cost more for older workers. But on
the other hand, it would depend on the individual case. It
would certainly be lower in regard to workers with a number of
beneficiaries that would be covered by a policy.
So, therefore, we have not done really a cost analysis of
this, but it would seem to me that the cost would be something
that would have to be considered. I don't think it should be
something that would prevent the hiring of older workers, but I
think it would be something that we should look at for the
future in order to deal with that problem.
Senator Kohl. Thank you. Ms. Paganelli, it is clear that
phased retirement could help older Americans work longer, but
it also seems to me we need to be doing it carefully and making
sure that phased retirement achieves its goal of increasing
work. What pitfalls, or unintended consequences, should we
watch out for as we address that situation?
Ms. Paganelli. The employers that we are in dialog with do
have, as I mentioned, varying levels of urgency. For those
organizations with the most acute urgency, they are looking for
flexibility and the ability to target their phased retirement
arrangements on the critical skill employees that drive the
success of their organization. They would very much prefer not
to cast a broad net that includes all of their retirement-
eligible population if there is not a desirable business need.
I would also say that phased retirement is a very, very
individual conversation within every organization as to the
needs they have due to the underlying demographics of their
organization, and so they are not looking for mandates on a
policy basis, they are looking for flexibility, and are trying
to avoid undue administrative burdens that limit their ability
to offer phased retirement programs.
Senator Kohl. What do you find to be the problems in the
caregiving efforts of people who still want to work? Do we need
to do more, or encourage companies to help employees find
caregiving for their elderly?
Ms. Paganelli. I think there is an enormous amount of
opportunity in this area and that the opportunity will continue
to grow as our workforce and population ages. There are
statistics that show that individuals do retire earlier than
they might otherwise when elder care is required of them as
individuals, and so services that can help support them whether
they be the opportunity for social workers to advise them or
services that help them locate the care that fits their needs,
can only help to balance the opportunity to stay in the
workforce while responding to what I think we all believe is a
higher priority in caring for our loved ones.
Senator Kohl. Thank you. Senator Smith.
The Chairman. Thanks, Senator Kohl.
Ms. Paganelli, with respect to those companies that are
currently providing phased retirement programs, at what ages
are employees starting to ask their employer about phasing down
their hours?
Ms. Paganelli. I would say again it varies depending on the
organization depending on how hard those individuals have been
asked to work, depending upon what underlying benefits are
available and the underlying messages and opportunities.
Some organizations have a working cohort as early as age 55
who have opportunity to receive their pension benefits on a
subsidized basis, have a well-balanced personal savings and
401(k) and have access to medical coverage. So for them, they
are not looking at the income dimension, and so employers are
having to tap into the enjoyment factor to keep those
individuals on their rolls.
I would say other organizations, who maybe only sponsor a
defined contribution plan, don't have a built-in incentive for
their employees to retire, and therefore the decision to retire
becomes very individual on an employee-by-employee basis. These
organizations are trying to get more in touch with the thinking
around retirement and the savings patterns and the underlying
adequacy that individuals have.
So I would say as early as 55 in many organizations and
into the 60's for others.
The Chairman. From your research, what type of phase-down
is most common? Is it part-time, 50 percent work? What are you
finding?
Ms. Paganelli. It is the reduced schedule, and the
availability for flexibility.
The Chairman. Doug Holbrook, many American companies have
best practices with respect to recruiting and retaining older
workers. In fact, I believe AARP recognizes some of these
organizations each year with your Best Employers For Workers
Over 50 awards. Could you describe for us some of the practices
that have been most effective in terms of retaining and
recruiting older workers?
Mr. Holbrook. I think the flexible work hours available to
the workers certainly adds to it. I think the benefits that
they receive are important. I think their desire to work and
the fact that the company is receptive to having an older
workers employed within their facility is also very helpful.
We are very proud of the program that we have in that
category. We have tremendous activity from companies who ask to
be considered for the award, and we are very proud of that. It
is gaining in momentum, by the way, because more and more
companies are saying, we want to be recognized for what we are
doing, and they are doing a fantastic job.
For example, in our partnership with Home Depot, we have
already brought into the workforce of about 3,200 people. That
is a large number of employees in a short period of time.
But it covers a whole range of issues. I think the company
has to be receptive to hiring, and also they have to understand
that they have a need. They are getting a real bargain when
they have an older worker, who certainly brings to the table a
lot of information, a lot of talent, and a lot of ability to do
great work for the company.
The Chairman. This Oregon Senator is very proud that Oregon
Health & Science University received one of those awards.
Mr. Holbrook. Yes.
The Chairman. Laurie, would you encourage other
organizations to adopt the practices that you have helped to
lead?
Ms. Barr. I absolutely would. I mean, it really--it truly
does benefit employers as well as the individual employees, and
it is a win-win.
The Chairman. Well, obviously there is a nursing shortage
in this country and probably necessity created the interest,
but no doubt just the skill of older workers in health care
surely must have also incentivized OHSU to reach out. Has
interest grown among your employees in these kind of incentives
to stay?
Ms. Barr. I think so. To be honest with you, it is
something that we promote as an employer and not specific to
older workers, but just to the fact that we have a large
variety in terms of our workforce demographics and flexibility
and generous benefits benefit not only older workers, but all
kinds of workers, those that are new moms, those that are
single parents, those that are new to the workforce. So we
really try to encourage that within our organization, to
recognize that everyone is at different points in their life
and flexibility benefits everyone.
The Chairman. Have you offered any specific options for
older employees in the past to take advantage of it?
Ms. Barr. Not specific to older employees, yes.
The Chairman. Well, thank you. Kathlyn, I have no questions
for you but a big thanks. We appreciate your being here.
Ms. Peterson. Thank you.
Senator Kohl. We thank you very much for being here. It
seems to me we have learned an awful lot about the new
demographics that we are facing, and the advisability and also
the great potential benefits of encouraging and promoting
policies that will increase the number of people working past
traditional retirement ages not only full-time but also part-
time. This is an issue and a problem that we need to face as a
society, because there will be the need for large increases in
the workforce for which we are not presently prepared.
I think we have also come to understand that we need to
change some of our policies with respect to health care and
pension programs so that it is conducive for people to stay in
the workforce, and as Senator Smith pointed out, this is
something that we can work on legislatively here and that is
what we intend to do. So in that respect, this hearing has been
most beneficial and your participation has advanced the cause,
and we much appreciate your being here.
Senator Smith.
The Chairman. Thank you, Senator Kohl. We are adjourned.
Senator Kohl. Thank you very much.
[Whereupon, at 11:44 a.m., the committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Senator Larry Craig
Mr. Chairman, I'd like to thank the Ranking Member and you
for holding this hearing.
A saying coined in recent years goes, ``Demographics are
destiny.'' In some respects, our destiny will be handed to us
by demographics. To a significant degree, we already know what
that landscape will look like. In other, very important ways,
our destiny will depend on how wisely we plan for and greet the
future, as individuals and as a society.
The destiny of demographics and the destiny of our
determination will intersect at many, different points. One of
the most important areas of intersection is the subject of
today's hearing: The participation of an older population in
the paid work force.
This is a subject that will touch, directly or indirectly,
on the quality of life and prosperity of all Americans. It also
will help shape the future of Social Security, Medicare,
Medicaid, and other society-wide institutions.
We know with certainty what our nation's available, native-
born, work force will look like for the next generation. All
those workers have already been born. Thanks to the science of
demographics, we also predict with relative confidence what the
native-born population available for work will look like over
the next lifetime. That's why the Government Accountability
Office, Congressional Budget Office, Social Security Actuaries,
and others, make 75-year projections.
What we don't know, and need to consider, includes how, for
how long, and in what jobs, that work force will be working.
The good news is, Americans are living longer and healthier
lives. Many older Americans want to continue working. Most
members of the ``baby boom'' generation expect to work
productively well into their ``golden years.''
We need to keep in mind how diverse and differently
situated our population is. We need to keep in mind the needs
and circumstances of those who can and cannot work, those who
want to or have to continue working, and changes in technology
and the economy.
For those who want to work or need to work, we need to
remove impediments. We need to make sure there are appropriate
incentives and rewards.
On both the individual level and the national economic
level, the idea of ``phased retirement'' holds out great
promise of being a positive means of transition. However, in
the tax code, and often in the company culture, there are some
major obstacles to this alternative.
Over the next decade, experts tell us our nation faces a
labor shortage of 10 to 20 million workers. Some of that
shortfall is likely to be met by in-migration. Some,
theoretically, could be relieved by increased productivity.
However, there is no substitute for the valuable contributions
of an experienced, reliable work force of older Americans. For
our economy to meet its maximum potential, more of these
workers will have to be accommodated in the work force.
Almost two years ago, the Aging Committee held a forum on
this very subject, moderated by one of today's witnesses, Ms.
Barbara Bovbjerg of GAO. I'm pleased the Committee maintains
its interest in this important area and join my Chairman and
Ranking Member in welcoming all the witnesses.
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