Aging workforce increases costs for manufacturers
Longer absences, workers’ comp claims and FMLA usage is on the rise.
The average age of the manufacturing industry workforce is increasing.
According to a white paper produced by AonRisk Solutions, “Responding to the Needs of an Aging Workforce,” 50 percent of the manufacturing workforce is 45 or older, with a median age of 44.7.
That median age is likely to increase during the next decade for two reasons: First, employers cannot find younger workers to replace aging employees and, therefore, are trying to entice older employees to delay retirement. Second, many employees have not adequately saved for retirement and have no choice but to stay on the job and continue earning past typical retirement age.
Aon said the consequences of an aging workforce could become costly.
“If you were to identify industries that this aging factor has a more material influence on, manufacturing is in the top three,” said Mike Stankard, managing director of Automotive Practice at Aon.
That’s because with age comes body deterioration, which can lead to more workplace-related injuries. With an aging workforce, companies are likely facing more workers’ compensation claims, short-term and long-term disability, Family Medical Leave Act usage and casual absences.
“They’re more likely to be disabled, in poor health and obese (and therefore) more likely to have daily injuries on the job,” Stankard said. “Absence-related issues and productivity-related issues are significantly impacted as employees get older.”
Absences also tend to be longer for older workers because their bodies heal at a slower rate than younger workers.
Aon has been studying the impact of aging on various industries and analyzing how age impacts workers’ compensation claims. According to Aon’s report, “One of the most concerning trends is the ‘current’ impact of this age group on the cost of workers’ compensation. We studied $2.5 billion in workers’ compensation claims from 2007 through 2012 and found consistently higher average costs for workers’ compensation claims for older claimants across all industry groups.”
Looking specifically at manufacturing, Aon found, “the 45-54 year old claimants in the manufacturing industry group’s average claim cost was 52 percent higher than 25- to 35-year-old claimants.”
“This baby-boom bubble that is moving through has really moved the needle on this issue and costs related to manufacturing employers,” Stankard said.
Aon has highlighted several things manufacturers should be doing to address the risks associated with an aging workforce, under the headings of safety, ergonomics, benefits, wellness and human resource programs.
“One of the big things is adjusting the job,” said Lynn Jekkals, Aon’s resident managing director. “A 20-year-old may be able to lift so much and do so much repetition, but that same job for someone over 50 or into their 60s could be too much.”
Decreased muscle strength is a reality of aging, in particular beginning at age 50, but especially by the age of 60.
“If we know that muscle strength declines with age, organizations need to consider implementing proactive safety, ergonomics and wellness programs to help build individual strength while working to reduce manual lifting that would be fatigue-inducing for the aging worker, which could potentially result in injury or absence,” according to the Aon report.
Stankard said companies should review their training programs, keeping in mind the average age worker for whom those programs are geared and making changes to reflect the average age of their workers.
“Companies have job-function training programs they’ve put together, and they probably put them together 25 years ago and maybe tweaked them here or there, and the training was probably geared toward an average age of a 38-year-old worker,” he said. “Ask a company, if you were to redo your training today, knowing 50 percent of your workforce is 45 or older, would you do it differently, and the answer is, ‘Oh, yeah.’”
The objective should be to develop strategies to optimize the performance of the aging worker. Paying attention to ergonomics for the aging worker is also important. Aon suggests assessing fatigue and work-rest cycles, evaluating signage and work instructions for aging workers and conducting age-specific evaluations as things companies can do to mitigate risks.
A renewed emphasis on health and wellness programs is also a good step manufacturers can take to try to stave off injuries. One of the things Aon suggests companies do is to align wellness programs with injury trends.
“Those are some ways employers can get ahead of this thing, but it’s a trend that is happening,” Stankard said. “There is no stopping the trend.”
Aon has developed a diagnostic tool to help assess employer-specific risks related to aging employees.
“That can help an employer identify what the impacts are and where in their organization this is impacting them,” Stankard said. “Then introducing some best practices — that is part of what we do: help the company prioritize where they ought to be focusing their effort.”
Stankard called the program “ageonomics,” and encouraged employers to start thinking about where age and ergonomics intersect on the job and then create solutions to address their aging workforce.