Retirement trends could create a U.S. labor shortage of 4.8 million workers in 10 years
Although many of today’s senior citizens find it is tough to find employment it may get a little easier is a new Senate bill passes. The bi-partisan bill has been introduced in the Senate to prevent projected dramatic declines in the workforce following the retirement of the baby boomers. It will provide incentives and eliminate barriers for older Americans wishing to stay in the workforce longer, and encourage employers to recruit and retain older workers.
The “Incentives for Older Workers Act” (Senate Bill 2933) was introduced in April by Senators Gordon H. Smith (R-OR), Herb Kohl (D-WI), and Kent Conrad (D-ND). Smith is Ranking Member of the U.S. Senate Special Committee on Aging and Kohl is Chairman.
“A colossal demographic shift is on the horizon,” said Senator Smith. “Retiring baby boomers will cause significant gaps in our workforce if we do not incentivize them to work longer. We need to ensure the door stays open for those willing and able to remain an active part of the workforce during their golden years.”
“With the retirement wave upon us, we must encourage employers to adopt policies now to attract and retain older workers,” said Senator Kohl.
“Our commonsense policy creates a win-win situation for both older workers and the companies that employ them.”
“This legislation confronts the changing face of retirement. The divide between working and retirement is no longer the bright line it once was. Many workers stay on the job longer, not just because they have to but also because their employers want them to stay,” Senator Conrad said. “What we offer in the Incentives for Older Workers Act would make sure older employees who want to cut back their work schedules won’t lose pension benefits as a result.”
A 2007 Conference Board study reports that current retirement trends could create a U.S. labor shortage of 4.8 million workers in 10 years.
The “Incentives for Older Workers Act” works to reduce this decline by:
- Removing penalties in certain pension plans for workers who phase into retirement by receiving a lower salary while working reduced hours.
- Allowing seniors to earn delayed retirement credits for Social Security purposes for an additional two years until age 72, instead of age 70.
- Reducing the amount of Social Security benefits lost to seniors who claim benefits before reaching normal retirement age and while they continue working.
- Forming a National Resource Center on Aging and the Workforce within the Department of Labor to collect, organize and disseminate older worker information;
- Changing how Civil Service Retirement System (CSRS) annuities are calculated by correcting a glitch that results in a disproportionate reduction in benefits for certain employees who phase into retirement by working part-time.
- Requiring states to include older worker representatives on the state and local workforce investment boards and set aside five percent of the Workforce Investment Act (WIA) funds to assist older individuals.
- Expanding eligibility of the Work Opportunity Tax Credit (WOTC) to include older workers.
- Clarifying that certain defined benefit pension plans can define normal retirement age under their plans as the earlier of (1) the attainment of a specified age, or (2) attainment of 30 or more years of service.
For additional details on CMS’ Work Opportunity Tax Credit Program please click here.