- The American population is aging, and businesses will need to adapt to an older workforce.
- An AARP study suggests that age discrimination could cost the US economy nearly $4 trillion by 2050.
- However, building an age-inclusive workplace can bring benefits to businesses.
- This article is part of a series called “The Cost of Inequity,” examining the hurdles that marginalized and disenfranchised groups face across a range of sectors.
Americans are getting older, and we’re not making enough room for them at work.
A study from AARP found that the lost economic activity from those older Americans not being able to find work, change careers, or earn promotions because of age discrimination cost the US economy $850 billion in lost gross domestic product in 2018.
What’s more, by making it harder for older workers to reach their full potential, the research suggests ageism and age discrimination could add up to trillions of dollars in lost value in the coming decades.
“When you have an age-inclusive workforce, productivity tends to be much higher,” said Jean Accius, senior vice president of AARP Global Thought Leadership. “You have creativity and innovation at a much higher rate. You have lower turnover, and you also have greater revenue.”
America’s getting older
One of the core current demographic trends is the aging of the US population, as people live and work longer and birth rates decline. The Census Bureau estimated there were about 118 million Americans over age 50 in 2020, and the Bureau projects that number to rise to 157 million by 2050.
The population of older Americans is projected to grow more quickly than the population as a whole. The Census Bureau estimated that about 36% of the US population was 50 or older in 2020, and that share is projected to grow to about 40% by 2050.
Older Americans are also working in larger numbers than ever before. According to the Bureau of Labor Statistics, the number of Americans 55 and older either working or actively looking for work has more than doubled since the 1990s, with about 37 million older Americans in the workforce as of March 2021.
The big increase in older workers presents challenges and opportunities to businesses.
Ageism is costing us trillions
Age discrimination leads to older workers being laid off, not hired, or not promoted in disproportionate numbers. The 2020 study, a joint project from AARP and The Economist Intelligence Unit, found that pushing older Americans out of the workforce costs the economy billions each year and that those losses could rise to the trillions within the next few decades.
The effects of age discrimination are evident in older Americans’ outcomes in the job market.
The AARP study included an analysis of prepandemic unemployment data, which found that men over 50 who lost their jobs spent about five more weeks unemployed than men under 50, on average. Women over 50 had unemployment stints on average a whopping 13 weeks longer than women under 50. That suggests that it’s harder for older workers to find new jobs than their younger peers.
Age discrimination is costly. The AARP study estimated that the US lost out on $850 billion in 2018 because of the lost economic activity from older workers being stymied in their careers. The group projects that this could increase to nearly $4 trillion in lost GDP by 2050.
The above chart is based on modeling what US GDP would look like under present conditions – older workers leaving the workforce, being unable to switch jobs, or being denied promotions due to age discrimination – and comparing it to a counterfactual model in which those workers are able to reach their full potential. The chart shows the additional gains the economy would have if those barriers were removed.
In addition to the direct costs of that lost worker productivity, the AARP report also notes that fewer jobs and lower income from age discrimination could also hit consumer spending from those older workers. The study estimated that the healthcare sector could miss out on about $674 billion in spending by 2050, while leisure and hospitality spending would be $468 billion lower than it would be without age discrimination.
Businesses need to adapt to an older workforce
As America gets older, businesses will need to adapt to an aging workforce. Fortunately, there are advantages to building an age-inclusive workplace.
Accius said that AARP’s research shows “there is a tremendous amount of value and intergenerational learning when you have mixed-age teams working together” and that the most important thing a company can do is foster a culture of inclusion for older workers.
Indeed, separate research has shown that diverse teams are not just smarter – in producing more effective and creative solutions – but also yield greater financial returns than more homogenous teams.
Together, the findings suggest America is long overdue in welcoming older employees back into its offices, warehouses, and factories. But it’s also not too late to capture the enormous value they bring.