Why Business Love Retirees!

I was sitting in the McDonald’s writing. McDonald’s isn’t my favorite place to write in the world, that honor goes to Panera Bread. Unfortunately Panera is a little bit of a haul for me so sometimes when I get a bit lazy I’ll just go to McDonalds.  It has two of the four things that I desire for a work restaurant which are unlimited soda bar and free WiFi.  I like Panera better because in addition to unlimited soda, and Wifi, it also offers unlimited hot tea and really good salads, so unless someone can top that,  it will remain my favorite place to work when away from home.  But like I said, in a pinch I’ll park my keister at the local McDonald’s, try and drown out the squealing kids, and other noise and concentrate on getting some work done.

This last visit was interesting in that I wound up sitting next to a couple of guys. They were both obviously seasoned professionals and one was interviewing the other for a job.  This isn’t as rare as you would think as I have found that these types of restaurants that offer WiFi tend to host many interview sessions.  As our Workforce becomes more mobile and home-based, restaurants like McDonald’s, Panera, and Starbucks become popular meeting spots for the recruiting needs of the modern employer.

I sat and quietly listened to the spiel.  The interviewer was pretty good.  He went through all of the typical selling points of a straight commission insurance sales job.  The talking points are fairly standard:  Make your own hours,  The company treats its people really good, there are great income opportunities for high producers, no territory or income limitations, and it’s a great company with lots of bonuses including trips and gifts. Of course he lightly touched on the negatives like you have to ‘invest’ in your own insurance license and training.

I felt kinda bad for the guy interviewing because he clearly didn’t know what the real questions he should have asked: A more seasoned sales rep would have asked things like what is the ratio of pitches to closed sales?  What does the sales cycle look like, i.e. the  amount of time from first contact to close? How many people who are recruited washout and how many stick around for the long term? What is the average income for a new rep?  What are the personality traits of the more successful new reps?  Is there any possibility to become full-time with benefits or will I always have to pay for them myself?

The person being interviewed seemed genuinely interested in the opportunity. Now if you recall I said both the interviewer and the interviewee were seasoned. You could tell this by the salt and pepper hair. Once they got through the formal pitch they started on the small talk and that’s when it all clicked. The person being interviewed was a recent retiree who had spent the last six months at home doing all those little project that he intended to do during his working years.  Now he was starting to get bored. He wanted to try something new and this looked as good as anything else.

In an analogous situation from the business and technology class that I teach, I had my students reflect and provide an analysis of Thomas Friedman’s Seminal work: “The World is Flat”.  It’s  about how distance and barriers can become meaningless as technology adoption grows.  In his presentation Friedman specifically points out how retirees are recruited to work for a major discount Airline.  They enjoy the same flexibility as the insurance company offered but with a more regular paycheck.

These examples and a many others originating from the rise of the gig economy  got me thinking about retirement again.  It’s a topic that is interwoven into my core subject of the collision between business and life.   Specifically about how retirement age employees can be a highly desired asset to a growing segment of the employer base.  

I realised that one of the reasons why this interview was a success, and why the airline customer service workforce structure is successful was because the retirees had all of the things that they needed to give themselves a foundation in life.  The jobs, although supposedly full-time, were really just additive.  I came to the conclusion that for these companies and probably many many others this person is the perfect employee.

Why?  

The next question you have to ask yourself is why are retirees so desirable? There definitely are some negatives associated with the population.  Retirees are generally, by definition, older and have greater health issues and family commitments. They also are generally are not very tech-savvy although that is changing as time goes on. Retirees also aren’t ideal for physically demanding jobs. No 70 year old will want to work in 120 degree heat in an assembly plant that is not climate controlled. But even with these negatives there are some positives that make the retiree invaluable to the employer.

one major benefit most retirees bring is that they can work on demand. If there is work to be done they can do it and if there’s not work to be done it’s okay they will figure out something else to do.   Another major benefit of a retiree workforce is that for the most part they are beyond the high financial need time in their life. Most don’t have children at home.  If they do they are in the process of launching those children into the world and the bulk of expenses of raising those children have already been taken care of.  It’s the same story with their housing.  Most retirees are at the end of their mortgage where payments are low or non-existent. In many instances the retirees have an alternative income.  It could be Social Security or an annuity or even a pension. between their income, and limited financial needs  the employer can get away with paying the retiree less than they would a typical mid-career professional.

If the retiree is of a certain age then they qualify for Medicare which means the employer doesn’t even have to enter into the conversation about medical benefits. They become meaningless to the retiree and that suits employer’s just fine. There’s one additional strength that the retiree brings that may not be unique to the mid-career workforce but absolutely is head-and-shoulders beyond what most new entrants to the workforce can offer.  What I’m alluding to is the fact that most retirees have developed a strong work ethic over the course of their career. They learned long ago that they need to get up and get to work if they have committed to the job. Most have figured out that the drama of youth is better left at that period of their life and so they tend to be more stable.  Is it any wonder then, with all of these strengths, that retirees are targeted and recruited wherever they can potentially do the job?

Could you then turn whole workforce into retirees?  

The next question that comes to my mind would be if a retiree exhibits all of these benefits, can’t we take some of those strengths and bring them to the rest of the workforce? Wouldn’t employers prefer that scenario? There are a few ways to go about doing this.

The first way is pure socialism. we can socialize Healthcare and eliminate all current social programs in favor of the guaranteed minimum income.  You could also provide free childcare to all those parents who have school age kids. In this case everybody has a foundation very similar to today’s retiree. They don’t have to work if they don’t want to but if they want some of the nicer things in life they have to work. The employers would, in theory, treat their employees much better knowing if they don’t the employee can easily walk. Sounds great? Unfortunately the cold bucket of ice water that can be splashed in our face is that socialism hasn’t worked anywhere it’s ever really been tried.  When economies are great or there is some systematic positive imbalance, i.e. some massive natural resource enjoyed by a small country, it does seem to work.  But looking at the big picture it never works for the long haul. All you have to do is to look at the European recovery versus the American recovery from the last major economic downturn to see which model works better.  Socialism has always been a really awesome concept… if it could actually work. The bottom line is that socialism has always been economically unfeasible and I don’t really see that changing with any of the current tweaks to that philosophy.

This doesn’t mean that there aren’t ways to get a little bit closer to the employer nirvana of an on-demand Workforce  where little has to be done on the part of the employer to meet the non-working needs of the employees.  The best option is probably to get people to a retirement like status as quickly as possible. There are different ways to do this.  

Housing:  A major reason people pay their house off over 30 years is because they buy a larger house because the entire system is built around approving 30-year mortgages. what if that rule was changed? What if you slowly lowered the mortgage interest deduction and the accepted mortgages to a 10 or 15 year time frame?  You would have to tweak the rules that say you’re going to be subsidized with your first house or a smaller house but if you want to go big and expensive you got to use cash. Of course a big negative of this is the economic ramifications. Housing, as we all have seen in the last downturn, is a major component of the economy and screwing with it screws with the world.

Income:  When it comes to actual retirement income you could allow people to retire a little bit earlier and receive smaller benefits.  Another option is to combine the portability of the 401K system with the shared risk of the old pension systems where people don’t have retirement accounts they have a retirement annuity they take with them wherever they go. The system could be designed to have entrants into the workforce auto-enrolled at the highest possible level of contribution.  After about 20 years they could be in a situation where they get that lower income annuity.  The best part here is that if there is an economic downturn the whole system doesn’t break down.   If you haven’t earned and saved for it, you don’t get it.  

Healthcare:  Healthcare is not easy to figure out. With housing and income it’s a fairly simple equation. You simply live in less house until you can pay cash for upsizing.  With income all you have to do is require people save more in a shared risk retirement account and start collecting as soon as their contribution equals payouts for their life expectancy.  Health Care is very different because it’s an emotional and tremendously high-cost proposition. I won’t go into all the details of why Healthcare is so expensive.  For the purpose of this article I will just accept that it is, and there’s no magic bullet to driving costs out of a system that makes up nearly 20% of our economy.  Basic economic rules do apply and if all the smart people fighting over health care policy could implement a myriad collection of solutions to drive supply up, and demand down you could definitely wrestle in the insanity of healthcare costs.

If these Solutions could somehow be put in place I feel confident that the majority of employers across the world would find this newer more dynamic workforce environment much more to their liking than the current system with rules and regulations structured around  long-term regular employment.  It’s an outdated model developed for the Industrial Age whose time is long over.  I have to admit that I also think most employees would prefer this situation as well. those who want nicer things in life will be more aggressive about working to get them and have more flexibility to do so.  Those who maybe aren’t as effective in the workforce would still be able to have their basic needs met.

There is one solid piece of advice I can absolutely offer.   If an older insurance salesman pitches you on a policy that comes in a folder with a picture of a duck on it, you should ask for a discount.  He probably will be willing to give you one because he doesn’t need that big of a commission anyway.