EUROPEAN PAPERS ON THE NEW WELFARE

Potential Labor Supply and Flexible Work Options for All Workers: An Exploratory Essay

Abstract

To encourage older people to work longer is a worthy goal. But it would not stem the impending worker shortage due to baby boomer retirement. There is a need therefore to draw more workers from among young people, women, persons with disabilities, as well as older workers.
This essay explores the concept of flexible work options for all workers as an additional strategy to increase labor supply; it also discusses some of the arguments for and against such a strategy.

1. Introduction

“Live longer, work longer” is an expression often used to urge older people to keep working, as boomers (those born from 1946 through 1964, commonly known as baby boomers) begin to reach customary ages for retirement in the near future, leading to potential labor shortages in key industries. Keeping older people working would also benefit age-based social insurance programs facing long-term solvency issues in an era of rapid population aging. Moreover, encouraging older people to remain in the workforce would serve to maintain their integration within the community well into older age.
Although there appear good reasons for encouraging older people to extend their working lives, there are also explanations why some older people will not or cannot continue to work. To the extent that older people may remain in the workforce, many would be working part-time. Consequently, the strategy to encourage older workers to remain in the labor force, while useful for reducing the number of fully retiring individuals, would not suffice to forestall impending worker shortages in certain industries due to boomers retiring. It may therefore be necessary to seek more workers from the general population. But where are the potential workers? It may be instructive to seek answers by reviewing labor force developments in the past half century and those projected for the near future.
During the past 50 years, labor force growth was especially rapid due to boomers entering the labor force and women joining the workforce, both in large numbers. Both trends, however, ‘have run their course’, according to a recent study by the Bureau of Labor Statistics (Toossi, 2007). The study reports on labor force projections to the year 2016. Among its major findings are that (1) the growth rate of the labor force will slow significantly, (2) the rate of growth of women in the labor force is expected to decline, (3) the participation of youths (ages 16 to 24) and their share of the labor force are projected to decline, (4) the participation rate of prime-age workers (age 25 to 54) is expected to increase slightly but their share in the labor force will decline, and (5) although the participation rate of older workers (age 55 or older), rising since the end of the 1980s, is projected to continue increasing, the older workers’ rate is still only half the participation rate of the prime-age group. The net result is that there will not be enough workers of younger ages to replace the large proportion of boomers expected to exit the workforce. Some believe the problem could be solved by a combination of strategies including outsourcing, developing new technologies, and immigration reform. Yet, these tactics may not be enough. Population aging is occurring in many parts of the world; there exists a global competition for workers. It appears that the US economy will require additional workers to remain competitive, regardless of immigration, technological advances, and outsourcing.
Even though the labor force grew rapidly during the past 50 years, the last 25 years witnessed declines in participation rates among people under age 55, especially those under age 25, as well as among working-age people with disabilities. As for women, after rapid growth during the preceding several decades, their participation rates slowed somewhat in the last 10 to 15 years, especially among those with higher levels of educational attainment. The impending retirement of boomers would create labor shortages in the next several decades, despite the impressive growth in older workers (age 55 and older) in recent decades (Toossi, 2006). It bears repeating that the labor force participation rate of older workers is still only half the rate of the prime-age group.
Therefore, to replenish the labor shortage resulting from boomers retiring, it would be necessary to encourage greater labor force participation rates by groups such as young people, women, and persons with disabilities, in addition to older workers.
Yet, workers of different ages, gender, physical and mental conditions, and skill sets are not fully substitutable for one another, although some skills are transferable and other work-relevant attributes could be acquired through education, training, and retraining. Moreover, the ability and willingness of these groups of potential workers to enter the labor force are affected by special circumstances unique to them. To induce them to join the workforce, a strategy to create more work options for people regardless of age, gender, or disability status may be needed. To be more specific, a policy of ‘flexible work options for all workers’ may be one possible solution (Chen, 2007). Flexible work options would include such practices as part-time work, flex-time, intermittent leave for childcare or eldercare, phased retirement, and telecommuting, among other arrangements.
This brief essay is intended to (a) introduce the concept of flexible work options for all workers, (b) illustrate the special circumstances affecting specific groups of potential workers and their employers’ responses, (c) point out some of the arguments for and against providing flexible work options, (d) explore a possible policy direction for funding ergonomic initiatives, and (e) conclude with a thought about the receptivity of the idea of flexible work options for all.

2. Flexible Work Options for All Workers: The Concept

The concept of flexible work options for all workers may be likened to the idea of universal design. Basically, universal design refers to the design of products and environments to be user-friendly for all people; it is an approach to designing products and environments that takes into account a large range of abilities and backgrounds among the users (Burgstahler, 2007; Holm, 2006).
One example of universal design is the use of automatic doors in public buildings. While automatic doors were originally intended for persons using wheelchairs, other groups also benefit. Curb cuts are another example. Curb cuts were a modification to increase access to sidewalks by those in wheelchairs. However, curb cuts are also beneficial to cyclists, parents pushing strollers, or persons of any age with mobility impairments, using walkers or canes. More recently, there is increasing attention to the use of universal design features while modifying existing houses or building new ones, features that would make a house safer and more easily accessible as its inhabitants age. Once such features are installed in the house, it will benefit people of all ages (Wasch, 1996).
Thus, it can be seen that many different people may benefit from a solution aimed at a particular group. The concept of flexible work options clearly fits into this paradigm. Not only older workers, but workers of different ages or at various stages in life or career, could benefit from some measure of flexible arrangements in their jobs. As we enter an economy where labor supply in the traditional age groups is becoming relatively scarce due to the retirement of boomers, providing flexibility in jobs could be an important vehicle to enable employers to retain current workers and to attract employees from groups of people heretofore limited or not in the labor pool.

3. Special Circumstances Affecting Labor Force Participation of Potential Workers and Responses by Employers

Older workers, women, persons with disabilities, and youth represent four sources of potential labor supply, but these population subgroups have unique needs that might affect their availability for work. Briefly discussed below are some of the special circumstances that would affect the ability and willingness of potential workers from different groups to enter the labor force, as well as employers’ responses to these circumstances.

3.1 Older Workers

Elder advocacy groups have long publicized the advantages of older workers, mainly their experience, commitment, and reliability, and institutional memory in the case of long-term employees. Yet, there persists a negative side to employing older workers. At the risk of simplification, employment of older people is faced with three broad sets of challenges. One challenge is that many older workers seem to desire to phase down work. Another is the greater cost of employing older workers (both perceived and real) as a barrier to employment, since employers would rather hire a younger person at a lower salary with lower health care costs. Finally, some older workers may need ergonomic adjustments to accommodate their changing abilities and physical conditions.
To accommodate the desire to phase down work, phased retirement would appear an example of an effective strategy for enticing older persons to work beyond the ages at which people customarily retire. However, employers would want to choose which employees should receive this benefit, and the question about the legality of only offering this benefit to certain employees persists (Gegelman, et al., 2007; Masling, 2007). In addition, some positions do not lend themselves to part-time work. Questions remain whether employers would have the right to insist that phased retirees receive assignments to another job function in some cases. Internal Revenue Service guidelines are complicated, leading to increased employer costs in terms of tracking salaries and pension withdrawals (Bartl, 2006). There are also questions about how to deal with health insurance for phased retirees, and whether employers would be required to offer health insurance to all part-timers if this benefit is offered to phased retirees (Carlson-Shepherd, 2007).

3.2 Women Workers

The chief obstacle to the labor force participation by women in younger ages may be succinctly stated as an issue of balancing work and family life. Parental leave and day care are of primary concern to this group of potential workers, as is the need for family leave for eldercare. It should be noted that achieving work-life balance is also important to men. Helping workers (both male and female) balance work and family life could lead to increased worker productivity and would be beneficial to various stakeholders. Family-friendly employers are often cited as the best companies to work for, and would therefore be in a better position to recruit and retain workers (Shellenberger, 2006). Research from Japan suggests that companies offering a high degree of flexibility and equal opportunity also enjoy higher sales and productivity (Wakisaka, 2007; Atsumi, 2007).
Despite the benefits that would accrue, costs remain an important obstacle to strengthening family policy in the United States. it is unlikely that U.S. taxpayers would be willing to pay the tax rates needed to support European-style child care programs, as child care is still viewed as a personal responsibility in this country. Offering parental leave to all employees for longer periods of time would pose some scheduling challenges for employers. Research in Japan, a nation that has recently mandated family leave, has resulted in the troublesome finding that companies with generous parental leave policies are not energetically recruiting women (Kodama, 2007).

3.3 Persons with Disabilities

With respect to persons with disabilities, their labor force participation rates have declined. For example, the employment rate of working-age men with a disability has fallen both absolutely and relative to working-age men without a disability, since the passage of the Americans with Disabilities Act (ADA) in 1990. As a corollary, since the ADA, persons with disabilities are securing a greater percenage of their household income from public benefits (Supplemental Security Income, SSI, and Social Security Disability Insurance, SSDI) as opposed to earnings from work (Burkhauser et al., 2006). Should their potential as workers become reality, persons with disabilities could prevent labor shortages in key industries (US Department of Health & Human Services, 1990). There is also evidence suggesting that employing individuals with disabilities may improve profits. For example, a recent public opinion poll showed that businesses employing people with disabilities enjoyed greater favorability ratings among consumers (Siperstein, Romano, Mohler, & Parker, 2006).
Employing persons with disabilities presents a different set of challenges for employers, however. Some people with disabilities have special needs requiring accommodations at work, and many employers may require financial assistance to provide these accommodations. Although federally funded vocational rehabilitation programs could provide some assistance with reasonable accommodations, these agencies lack the resources to finance accommodations on a broad scale. In addition to these financial issues, some employers might be reluctant to hire people with disabilities for fear of discrimination lawsuits. Finally, people with disabilities have health issues that could result in periodic absences from work or drive up the cost of health insurance.

3.4 Youth Workers

Lastly, employing young workers. As noted, the labor force participation rate of young people has been on the decline over the past 25 years. Strategies to boost their labor force participation could benefit both employees and employers. Students would earn money, learn new skills and develop an early connection to the workforce that would hopefully last a lifetime. Employers would benefit from the partiipation of a labor pool that is under-tapped. It is entirely possible that young people may find work in these fields rewarding and choose to further their careers in these sectors. Offering part-time work opportunities to young people is a possible solution to help businesses fill the gaps left by the full or partial retirement of older workers.
On the other hand, employers must balance the fact that school will likely be the first priority for these employees. Younger employees will require more flexibility in scheduling due to the need to facilitate their studies, especially for exams and other school-related activities. Employers might be unwilling to mentor or otherwise invest in younger workers, knowing that they are likely to seek other types of employment following graduation. It might be difficult to recruit young people because they (and in some cases, their parents) do not see the value of working while in school and would rather participate in sports and other extracurricular activities than work.


Yung-Ping Chen, Ph.D., is the Frank J. Manning Eminent Scholar’s Chair in Gerontology, University of Massachusetts Boston.
Eskil Wadensjo, Ph.D., is professor of labor economics, Swedish Institute of Social Research, Stockholm University, Stockholm, Sweden.
Andrea Tull, M.A., a management analyst in the Massachusetts Rehabilitation Commission in the Commonwealth of Massachusetts, is a Ph.D student in gerontology at the University of Massachusetts Boston.


Pages: 1 2


Tags: , , , , , ,