Advice to banks: Don't dump aging workers

Age is just a number — except in the workplace. Ageism is one of the few “isms” that’s still openly tolerated within corporate America — to the detriment of employees and companies alike.

A study by AARP and the Economist Intelligence Unit estimated that age discrimination cost the U.S. economy $850 billion in 2018, roughly equivalent to the economic output of the state of Pennsylvania. The lost productivity was due to involuntary retirement, longer periods of unemployment, settling for part-time work and lack of promotions.

As with all biases, it’s damaging and shortsighted to stereotype professionals based on chronological age. While the Age Discrimination in Employment Act has made mandatory retirement illegal, with few exceptions, that hasn’t stopped employers from circumventing the rules — usually by eliminating the positions of older workers through general layoffs and reorganizations, and then reassigning their responsibilities to younger employees.

Based on data from a national study, the Urban Institute and ProPublica concluded that 56% of workers over age 50 were pushed out before they were ready to retire. And it’s even worse for women. According to AARP, 64% of women have experienced age discrimination, versus 59% of men.

Lee Iacocca once said: “I’ve always been against automated chronological dates to farm people out. I had people at Chrysler who were 40 but acted 80, and I had 80-year-olds who could do anything a 40-year-old could do.”

Looking at the financial services industry, Jamie Dimon, CEO of the venerable JPMorgan Chase, is 65. Stephen Schwarzman, CEO of Blackstone, a world leader in alternative investments, is 74. In fact, the average age of the CEOs running the biggest financial institutions in the U.S. is 62, and that doesn’t count the 90-year-old Warren Buffett. Across all industries, the average age of corporate CEOs is 58, up from 46 in 2005. With life spans getting longer, they’ve got years — if not decades — of high-octane fuel in the tank.

The point is that, unlike your favorite blueberry yogurt, talent doesn’t come with an expiration date.

During the pandemic, about 2.5 million Americans retired, both voluntarily and involuntarily, roughly double the number in 2019, based on data from Oxford Economics. It’s true that many people want to retire — to travel, write a first novel or just kick back and enjoy life. But numerous studies, including a 2019 survey by Hiscox Insurance, show that most professionals plan to remain in the workforce, at least part time.

In August, Skadden, Arps, one of the nation’s leading law firms, lost its first female mergers-and-acquisitions lawyer. At 70, Martha McGarry had hit Skadden’s mandatory retirement age, and she decided to move her practice to another law firm. “They are part of the fabric of my daily life,” she said of her clients, in an interview with Bloomberg Law. “And the more I contemplated that ending, I just decided: No. My energy level is incredibly high.”

As far back as 2004, a Harvard Business Review article made the point that retirement as traditionally practiced — a one-time event that permanently divides work life from leisure — no longer makes sense. When introduced near the end of the 19th century, the designated retirement age of 65 exceeded average life expectancy. Yet most companies still use 65 as the cutoff point, leaving much of the population with 20 to 30 years of potentially unwanted leisure, financial insecurity, or both.

People 60 and over already outnumber children under the age of 5, and by 2025 it’s projected that 25% of workers in the U.S. will be over the age of 55, compared with only 10% in 1985.

There are no easy answers. Companies must reduce costs and open the pipeline to rising talent. At the same time, they need to hold onto the experience and client relationships of their most knowledgeable executives.

On the cost front, CEOs shouldn’t assume that retirement-age professionals, who are still at the peak of productivity, won’t be amenable to substantial pay cuts — especially if offered part-time or consulting options. At a certain point, a sense of purpose trumps the paycheck.

Investment banking powerhouses have long recognized the value of retaining their revenue-producing “rainmakers” — often giving them vice chairman roles in later years. Vice chairs are removed from day-to-day management to focus on key clients and to mentor the next generation as they rise through the ranks.

CEOs should create a multigenerational culture that views valuable older professionals as an untapped asset rather than a management liability. Extensive empirical research by BMW and others has shown that multigenerational teams excel at everything from innovation to complex problem-solving. Barclays and Aviva, for example, currently have initiatives underway to retain and hire older workers and increase their representation by 12% above 2017 levels by next year.

In his book "2030: How Today’s Biggest Trends Will Collide and Reshape the Future of Everything" Mauro Guillén notes that in less than a decade, the largest generation will be the over-60 population. With spending power in excess of $15 trillion a year, their needs and wants will transform the business landscape. Yet, most technology, marketing and sales departments are populated by young people who have a blind spot when it comes to opportunities in the massive “gray market.” Boomer employees can best represent boomer consumers.

At the same time, the war for talent is in full swing across corporate America. Knowledge workers are quitting in record numbers as the post-pandemic job market heats up — the so-called Great Resignation. Korn Ferry predicts that the talent crunch will be particularly acute within the financial services industry. In fact, they estimate that by 2030 labor deficits in U.S. financial services will result in $436 billion unrealized economic output, equivalent to 1.5% of the projected 2030 U.S. economy.

Boomers are an excellent untapped resource to help close the labor gap. What’s more, they’re fully vaccinated, fully engaged and fully on board with working in the office.

Diane Schumaker-Krieg is a former finance executive with over 30 years in leadership roles on Wall Street. She had also been part of the Most Powerful Women in Finance rankings for many years.