Aging Workforce

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Impacts of Aging Workforce

An aging workforce can have a number of impacts on companies which include reduced productivity and economic growth, increased insurance premiums and costs to employers, increased recovery times from injuries in the workplace and the need to implement age-friendly programs and policies.

A significant number of the negative impacts of an aging workforce on companies arise from deteriorating health which can lead to reduced strength, flexibility, reaction time and hearing.

Reduced productivity

Generally, those states with an older workforce were less productive than those states with a younger workforce. The productivity of the U.S. labor force has only increased by 0.6% annually over the past five years, compared to 2.5% annually between World War 1 and the mid-2000s, a trend which is considered to be due to an aging workforce.

Such reduced productivity is considered to be due to two main reasons. Firstly, as the workforce ages, their cognitive function reduces leading to reduced productivity. Secondly, when the workforce is populated with older individuals, younger workers do not have the opportunity to develop and advance to take on new positions through which they can increase a company's productivity.

reduced economic growth

General economic growth is slowed by an aging workforce. In the U.S., a workforce which has reduced productivity reduces overall economic growth. Studies have shown that when the proportion of a workforce aged over 60 increases by 10% there is a decrease in GDP growth rate of 5.5%. Such declines arise from both reduced productivity of the workforce and a reduced development of the workforce by limiting the number of young people entering the workforce. Such a problem is only expected to increase with fewer children being born at present.

higher insurance premiums

Due to the presence of preexisting or chronic illnesses associated with increasing age, older employees can lead to massively increased health insurance premiums for employers. In 2017, the average monthly health insurance cost for a 60-year-old was $871, a cost which is double that for a 30-year-old.

increased costs for employers

Employers experience higher costs with an aging workforce. On average, an employee who doesn't retire costs an employer an extra $50,000 annually based on the difference in salary between an older and a younger employee. When this is extrapolated across the whole of the U.S.'s workforce, this leads to increased costs of 1%-1.5% annually for employers.

injuries in the workplace

While a U.S. Bureau of Labor Statistics study showed that there is no difference between the number of injuries in the workplace incurred by older and younger workforces, older workforces take longer to recover from such injuries compared to younger workforces. Older workers tend to sustain more severe injuries in the workplace and their recovery time is often significantly longer than a younger worker.

In general, older workforces have reduced health, flexibility, reaction time and hearing. All of which can increase the risk of serious, non-fatal workplace injuries.

need for age-friendly policies

An aging workforce generates the need for company programs and policies which are age-friendly. Such policies include the creation of workplace flexibility including flexible work schedules and locations, which can accommodate those workers with chronic or preexisting medical conditions. There is also a need to increase the amount of adaptive technology in workplaces to meet the physical needs of older workers, including the provision of ergonomic workstations which allow older workers with reduced flexibility and strength to be more comfortable in the workplace.

Employers may need to invest in health promotions for the elderly, alongside skill development programs for older employers to allow them to continue working. In addition to this, supervisors and managers may require training in accommodating and addressing the needs of older workers.


In summary, an aging workforce can have a number of negative impacts on companies. Such impacts, which include reduced productivity and increase health insurance costs, arise from overall reduced health in an aging workforce.