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New Business Perspectives on the Older Worker. 
Hearing before the Select Committee on Aging, House 
of Representatives, Ninety-Seventh Congress, First 
Session. 

Congress of the U.S., Washington, D.C. House Select 

Committee on Aging. 

House-Comm-Pub-97-328 

28 Oct 81 

lOOp. 

Legal/Legislative/Regulatory Materials (090) — 
Viewpoints (120) 

MF01/PC04 Plus Postage. 

Adult Education; *Aging (Individuals); ^Business; 
♦Employment Practices; Hearings; *01der Adults; 
♦Personnel Policy; ^Retirement 
Congress 97th; Older Workers 



ABSTRACT 

This document contains testimony from a congressional 
hearing to explore the latest developments in corporate policies 
affecting older workers. Testimony includes statements and prepared 
statements from individuals representing United States corporations, 
such as Mutual of Omaha Companies; The Aerospace Corporation; ACS 
America, Inc.; Grumman Corporation; McDonald's Corporation; Ward 
Howell International, Inc.; and Wm. Wrigley Or. Company. Other 
witnesses represent the Institute for Policy and Program Development, 
Andrus Gerontology Center, University of Southern California; Bureau 
of Business Research, University of Nebraska; and National Farmers 
Union. ( YLB) 



************************************************* 

* Reproductions supplied by EDRS are the best that can be made * 

* from the original document. * 
********************************************************* ******** ****** 



NEW BUSINESS PERSPECTIVES 
ON THE OLDER WORKER 



£ HEARING 

CO 

BEFORB THB 

o SELECT COMMITTEE ON AGING 
lU HOUSE OF REPRESENTATIVES 

NINETY-SEVENTH CONGRESS 

FIRST SESSION 



OCTOBER 28, 1981 



Printed for the use of the Select Committee on Aging 
Comm. Pub. No. 97-328 




II S DEPARTMENT OF EDUCATION 

reproduction quality . 

OERI position or policy. 



U.S. GOVERNMENT PRINTING OFFICE 
91-418 0 WASHINGTON : 1982 

o BEST COPY AVAILABLE 



SELECT COMMITTEE ON AGING 
CLAUDE PEPPER, Florida, Chairman 



EDWARD R. ROYBAL, California 

MARIO BIAGGI, New York 

IKE ANDREWS, North Carolina 

JOHN L. BURTON, California 

DON BONKER, Washington 

THOMAS J. DOWNEY, New York 

JAMES J. FLORIO, New Jersey 

HAROLD E. FORD, Tennessee 

WILLIAM J. HUGHES, New Jersey 

MARILYN LLOYD BOUQUARD, Tennessee 

JIM SANTINI, Nevada 

DAVID W. EVANS, Indiana 

STANLEY N. LUNDINE, New York 

MARY ROSE OAKAR, Ohio 

THOMAS A. LUKEN, Ohio 

GERALDINE A. FERRARO, New York 

BEVERLY B. BYRON, Maryland 

WILLIAM R. RATCHFORD, Connecticut 

DAN MICA, Florida 

HENRY A. WAXMAN, California 

MIKE SYNAR, Oklahoma 

EUGENE V. ATKINSON, Pennsylvania 

BUTLER DL JUCK, South Carolina 

BRUCE F. VENTO, Minnesota 

BARNEY FRANK, Massachusetts 

TOM LANTOS, California 

BOB SHAMANSKY, Ohio 

RON WYDEN, Oregon 

DONALD JOSEPH ALBOSTA, Michigan 

GEO. W. CROCKETT, Jr., Michigan 

WILLIAM HILL BONER, Tennessee 



MATTHEW J. RINALDO, New Jersey, 

Hanking Minority Member 
WILLIAM C. WAMPLER, Virginia 
JOHN PAUL HAMMERSCHMIDT, Arkansas 
MARC L. MARKS, Pennsylvania 
RALPH REGULA, Ohio 
ROBERT K. DORNAN, California 
HAROLD C. HOLLENBECK, New Jersey 
NORMAN D. SHUMWAY. California 
OLYMPIA J. SNOWE, Maine 
DAN LUNGREN, California 
MILLICENT FENWICK, New Jersey 
JAMES M. JEFFORDS, Vermont 
THOMAS J. TAUKE, Iowa 
THOMAS E PETRI. Wisconsin 
JUDD GREGG, New Hampshire 
DAN COATS, Indiana 
GEORGE C. WORTLEY, New York 
HAL DAUB, Nebraska 
LARRY E. CRAIG, Idaho 
PAT ROBERTS, Kansas 
BILL HENDON, North Carolina 
GREGORY W. CARMAN, New York 
COOPER EVANS. Iowa 



Charles H. Edwards III, Chief of Staff 
Yosef J. Riemer, Deputy Chief of Staff 
Val J. Halamandaris, Senior Counsel 
James A. Brennan, Assistant to the Chairman 
Walter A. Guntharp, Ph. D., Minority Staff Director 



(ID 



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3J8A JIAVA YqOO T838 



CONTENTS 



Members' Opening Statements 

Page 

Chairman Claude Pepper 1 

Hal Daub 3 

Mario Biaggi 4 

Larry E. Craig 5 

Edward R. Roybal 6 

Millicent Fenwick 7 

George W. Crockett, Jr 7 

Matthew J. Rinaldo 7 

John Paul Hammerschmidt 8 

Marc L. Marks 9 

Harold C. Hollenbeck 9 

Chronological List of Witnesses 

V. J. Skutt, chairman of the boards and chief executive officer, Mutual of 

Omaha Cos 11 

Eberhardt Rechtin, president and chief executive officer, The Aerospace 

Corp 27 

Eric Knudson, chairman, ACS America, Inc., New York, N.Y 41 

Robert W. Bradshaw, secretary and director of personnel, Grumman Corp., 

Bethpage, N.Y 49 

Robert M. Beavers, senior vice president, McDonald's Corp 56 

Max M. Ulrich, president, Ward Howell International, Inc 67 

Jon Pynoos, director, Institute for Policy and Program Development, Andrus 

Gerontology Center, University of Southern California 70 

Donald E. Pursell, Ph. D., director, Bureau of Business Research, University 

of Nebraska, Lincoln 77 

Appendix 

Additional material received for the record: 

Edgar W. Swanson, Jr., vice presidentrpersonnel, Wm. Wrigley Jr., Co., 
Chicago, 111., prepared statement 87 

Ruth E. Kobell, legislative assistant, National Fanners Union, Washing- 
ton, D.C., prepared statement 89 

(in) 




4 



NEW BUSINESS PERSPECTIVES ON THE OLDER 

WORKER 



THURSDAY, OCTOBER 28, 1981 

U.S. House of Representatives, 

Select Committee on Aging, 

Washington, D.C. 

The committee met, pursuant, to notice, at 10 a.m., in room 2325 
of the Rayburn House Office Building, the Honorable Claude 
Pepper (chairman of the committee), presiding. 

Members present: Representatives Pepper of Florida, Roybal of 
California, Biaggi of New York, Derrick of South Carolina, Vento 
of Minnesota, Shamansky of Ohio, Crockett of Michigan, Boner of 
Tennessee, Rinaldo of New Jersey, Dornan of California, Fenwick 
of New Jersey, Petri of Wisconsin, Daub of Nebraska, Craig of 
Idaho, Hendon of North Carolina, and Carman of New York. 

Also present: Representative Clausen of California. 

Staff present: Charles H. Edwards HI, chief of staff; Stephen 
McConnell, professional staff member; Marie Brown, executive sec- 
retary; Mary Anderson, secretary; and Walter Guntharp, minority 
staff director. 

OPENING STATEMENT OF CHAIRMAN CLAUDE PEPPER 

The Chairman. The committee will come to order, please. 

The age of the older worker has arrived. Older Americans— some 
as old as 80— are being trained right now on the most sophisticated 
technological equipment to be computer programers; retired engi- 
neers are being rehired to help build jet aircraft and design robots; 
fast-food chains, grocery and clothing stores, life insurance, and oil 
companies are redirecting their corporate policies to encourage 
their veteran workers to stay on the job rather than retire. These 
are signs that experience counts in American business. In fact, I 
have often said the greatest unused resource in America today is 
the knowledge and experience of the retired older workers of this 
Nation. 

I said to two of my dear friends who are here today as our distin- 
guished witnesses that life is like riding a bicycle, you don't fall off 
unless you stop peddling. We are fortunate that American industry 
and enterprise are recognizing the worth of our older workers. 

Older Americans have been knocking on the doors of America's 
industries for decades, but until recently these doors have been 
locked tight. For many years it was considered good business prac- 
tice to maintain a "youthful and vigorous" work force: Retirement 
policies encouraged early dismissals; hiring was directed only 

(1) 



ERLC 



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toward the young entry-level worker, and the older worker was 
considered "over-the-hili"— even sometimes as early as age 45. 

Recently, the doors have started to open. Labor shortages are 
forcing employers to turn to older workers and retirees in order to 
maintain economic growth. As we will learn in more detail today, 
the labor shortage problem will only grow worse in years to come. 
The high technology explosion alone is creating a need for many 
more engineers than can be supplied by our colleges and universi- 
ties. Similar shortages are also beginning to appear among other 
occupations, thus making it imperative that older workers be re- 
tained and that retirees be rehired if American industry is to 
remain competitive in the world market. 

Just as the labor shortages are redirecting attention to the older 
worker, profound changes in the makeup of the older population 
are increasing its availability and capacity for work. The elderly 
are healthier and better educated than any older generation in his- 
tory. They have adjusted to a fantastic breadth of experiences in 
their lifetimes, giving them a wider and better developed perspec- 
tive on current business practices. 

Speaking about the experience of the older members of this gen- 
eration, since we have today so many celebrated witnesses here, 
with one in particular identified with the field of aviation, I have 
on my office wall a photograph of the first flight by Orville Wright 
of the Kitty Hawk, autographed to me from him. He came in about 
1939 and asked me to get a little bill through for him, as he called 
it, to make National Aviation Day on his birthday, August 19, and 
I was able to get the bill through, the President signed it and 
issued the proclamation. A couple of days later Mr. Wright came 
back with an envelope in hi* arms. He came in to me and said, "I 
want to show you some applanation for getting the bill through for 
me." He handed me this photograph of him flying the plane and 
his brother, Wilbur, running out in the arm of the wing. 

That was in my lifetime, 1903. Now, two pictures above that, I 
have another photograph of the astronauts walking on the moon. 

In my lifetime, man's ability to get off the ground has proceeded 
from a few feet in a few seconds to going to the moon and back 
many times. 

So, you can see nearly all the things that really are the symbols 
of modern life have either come into being, like television and the 
like, or else they have come into use in this century. That is due to 
people who are, as I am, 81 years old today. So, this generation who 
is up in that category has had a little bit of interesting and mean- 
ingful experience. 

Perhaps this is the reason that among the Fortune 100 compa- 
nies—the largest and most successful business enterprises in this 
country— the average age of chief executive officers is nearly 60 
years, according to a staff study. Experience counts, and in times of 
economic uncertainty, the experience of age is vital. 

The 1978 amendments to the Age Discrimination in Employment 
Act helped to open the doors for older workers, but real progress 
toward nondiscrimination in the workplace will depend heavily on 
the voluntary efforts of American business. There are encouraging 
signs on the horizon. A recent poll reported in the Wall Street 
Journal showed that 84 peramt of business personnel directors felt 



3 



that older workers are as productive as younger workers. This rep- 
resents an encouraging shift in attitudes that can only bode well 
for all older Americans who are now working or seeking work. 

It is a sad thing. I know a man 60 years old who was a pilot for 
one of the major airline companies. He was caught by the age 60 
rule. It is tragic to me to see that man seeking a job with his vital- 
ity, mental and physically, unimpaired, keenly alert to all things, 
and yet because he is 60 years old it is difficult for him to find em- 
ployment. That man has knowledge and skill which in some 
manner ought to be productive in our country. 

The^hearing today will explore the latest developments in corpo- 
rate policies affecting older workers. Our distinguished panel of ex- 
ecutive witnesses represent some of the most prominent corpora- 
tions in the Nation. And among our witnesses today are some of 
the most prominent and patriotic of Americans. These companies 
are all prospering, not by forcibly retiring their older workers, not 
by wasting years of accumulated experience, but by creatively hold- 
ing onto their older work force, offering training programs, and 
even hiring retirees. These companies, along with a growing 
number of others, are at the cutting edge of the future, when older 
workers will ultimately be recognized by all employers as one of 
our Nation's most valuable and precious resources. 

Mr. Daub. 

STATEMENT OF REPRESENTATIVE HAL DAUB 

Mr. Daub. Thank you, Mr. Chairman. I commend you for holding 
this hearing today. I am confident that by providing a forum for 
these business executives and others interested in the merits of em- 
ploying older Americans, we will promote and expand their exem- 
plary performance in this area. 

Private industry, by its very nature, focuses on a worker's abili- 
ty, rather than their age, and many firms have learned that hiring 
older Americans is not an exercise in charity but rather a wise 
business decision that provides them with experienced personnel 
and places them a step ahead of their less enlightened competitors. 

In my judgment, mandatory retirement should be banned com- 
pletely. Contrary to popular myth, study after study has shown 
that older workers are absent from the job no more frequently 
than younger workers; that in jobs where mental ability counts 
more than physical strength, older workers are equal and in some 
instances superior to younger workers; that older workers' health 
benefits claims usually cost a company less than claims of younger 
workers. I could go on and on. 

With the passage of the Age Discrimination in Employment Act, 
brought about by the able and determined leadership of Chairman 
Pepper, the mandatory retirement age was raised from 65 to 70, 
and this act brought the Nation into a new era of respect for older 
workers. We must now work for the healthy economic environment 
that will translate this historic legislation into new jobs for older 
workers in a thriving private sector. 

I look forward to hearing from our witnesses today and thank 
them most sincerely for taking time to be with us this morning. 

The Chairman. Thank you very much, Mr. Daub. 



4 



Mr. Biaggi. 

STATEMENT OF REPRESENTATIVE MARIO BIAGGI 

Mr. Biaggi. Thank you, Mr. Chairman. I won't read my state- 
ment, but I ask unanimous consent to include it in the record in its 
entirety. 

The Chairman. So ordered. 

[The prepared statement of Representative Mario Biaggi follows:] 

Prepared Statement of Representative Mario Biaggi 

As an original member of this committee, I am pleased that wo are continuing 
our crusade of advocacy for America's older workers. Our activities have already 
helped to end mandatory retirement as well as strengthen laws against age discrim- 
ination in employment 

Today we focus on what I might call— the new appreciation of the older worker by 
America's business and industrial community. What is the basis of this new-found 
appreciation? Simply, the growing recognition that American business and industry 
need the older worker. Why? We are in the midst of a dramatic demographic revolu- 
tion. There are 16 percent more people over 65 today than there were just 10 years 
ago. All told, there are more than 35 million people over 60— meaning for the first 
time there are more people over 60 than under 10. 

This replacement of the "baby boom" with the "senior boom" will be felt most 
acutely in terms of America's labor force. Based on current population trends— by 
the year 1995, America's basic workforce could be short by 14 million workers. 
There is little doubt that this will adversely affect our country's ability to function 
competitively in the world market. As a matter of fact, labor shortages already exist 
in high technology, computer sciences and skilled trade industries. 

How do we cope with this problem? We must look to and provide opportunities for 
older workers. We must improve on our record to date— people 60 and over make up 
13 percent of the work force— which is barely above their percentage of the total 
population. Whereas several years ago the trend was in the direction of early retire- 
ment—in recen* ears the American rush to retirement is beginning to subside. The 
number of peoj.. Maiming social security benefits for the first time which has risen 
almost every yea* since 1937 has begun to taper off. Another statistic, the increase 
in the retirement rate has dropped from 8.4 percent in the years 1972 to 1974 to just 
2.7 percent in 1978 to 1980. 

The results of a 1981 Harris poll paint the same type of picture. More than 50 
percent of those retirees they surveyed desire to be employed. Further it is estimat- 
ed that between 3 and 5 million retirees are available to work and are healthy 
enough to work. 

We can view our employment policies for older workers as a veritable waste of a 
valuable natural resource— one of the few in this Nation which is actually increase- 
ing in number. We must improve— older Americans have proven abilities which 
could be invaluable assets to employers. Their maturity, dependability and experi- 
ence will help to bolster productivity in our Nation which has been on a dangerous 
decline over the past two years. 
There are hopeful signs on the horizon. We have before us today a number of 
residents and chief executive officers for some major corporations, come of whom 
ave demonstrated great support for the hiring and rehiring of older workers. It is 
interesting to note that 46 percent of the chief executives for the fortune 100 compa- 
nies are themselves the age of 60 or over. Further, in a recent survey of some 1,200 
chief executive officers of California.based corporations, major utility companies and 
other nonbusiness organizations it was disclosed that more than 75 percent had re- 
called their own retirees for temporary or longer term jobs while 82 percent have 
hired people retired from other organizations. 

It is clear to me not onjy as a member of this committee, but also of the house 
education and labor committee, that government policy ought to permit and encour- 
age greater elderly labor force participation. Increased employment by older work- 
ers would generate additional tax revenues for use at levels of government, and 
based on comments of recent days, it appears as though we are in need of tax rev- 
enues. 

It would help the elderly individual keep pace with inflation and not have to turn 
to government support. It would aid productivity because the older worker through 



ERLC 



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5 

his experience and dependability will give maximum effort and achieve maximum 
output per man hour of work. 

We need a coordinated— elderly employment strategy involving both the public 
and private sector. We must remove all barriers and disincentives for employment 
of our seniors. We must take the private sector more "age conscious" in the develop- , 
ment of their workforce. The testimony we receive today will help us to shape this 
policy now and in the future. 

Mr. Biaggi. I would like to be associated with your remarks. 
Very frankly, I am impressed with what has occurred since we ad- 
dressed the mandatory retirement question. If you will recall, at 
the outset there was anticipated opposition and then somehow as 
the hearings continued the opposition kind of melted away, and we 
found the huge corporations in our country supporting this legisla- 
tion. And it is our suggestion that the seniors would be more reli- 
able and more effective workers. 

In addition to that, we have a moral obligation to see that they 
continue, if they wanted to and were able to continue, their em- 
ployment. Time and events and experience clearly indicate that 
our judgment was right and serves the basis for additional legisla- 
tion to eliminate even the areas which continued to be burdened by 
mandatory retirement. 

I think for the record, I would like to point out two areas. We are 
going through a demographic revolution. There are 16 percent 
more people over 65 today than there were just 10 years ago. All 
told there are 35 million people over 60. Meaning, this is the first 
time there are more people over 60 than under 10, and the baby 
boom will be replaced with the senior boom. 

In addition, I think this reinforces what you say, Mr. Chairman, 
that 46 percent of the chief executives for the Fortune 100 compa- 
nies are themselves over the age of 60. In a recent survey, some 
1,200 chief executive officers of California-based corporations, 
major utility companies and other nonbusiness organizations dis- 
closed that more than 75 percent of their own retirees were from 
longer term jobs while 82' percent of higher level people retired 
from other organizations. 

That is clearly an abundance of evidence to sustain our original 
contention. But, what I think is important, and I am sure this is 
the purpose of our Committee and hopefully Congress and the ad- 
ministration will support it, that we ultimately move and remove 
all barriers and all disincentives for unemployment of our senior 
citizens. 

Thank you, Mr. Chairman. 

The Chairman. Thank you. 

Mr. Craig. 

STATEMENT OF REPRESENTATIVE LARRY E. CRAIG 

Mr. Craig. Thank you very much, Mr. Chairman. I would like to 
commend you for holding these hearings. They are as critical and 
important to the Nation and to a tremendous wealth of talent and 
experience that has somehow very unwisely been shelved. I say 
that because I grew up and I come from a profession of farmers 
and ranchers, in which if you are not in your sixties, you are not 
with it in that industry. 



ERIC 



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6 

It- is always interesting to me when I go home to my ranching 
community to find my neighbors in their early to mid sixties, some 
of them early seventies, still very actively performing in their 
farming and ranching businesses and questioning with some degree 
why everybody thinks they ought to get out of life at age 60 or age 
65. 

They don't do it in that profession for a variety of reasons. Statis- 
tics say that young people can't afford to get into fanning and 
ranching, when the fact of the matter is that old people are unwill- 
ing to get out because of their enthusiasm and their desire to con- 
tinue in that profession. 

So, it is always interesting and unique to me in our area, and in 
the State of Idaho, and I am sure it is true across the Nation, to 
find a good many seniors actively involved in this particular profes- 
sion that I have just described and they say, "We don'i dare quit." 
And my reaction to that over the years has been, "Why?" And 
their response was similar to yours in riding the bicycle, if you quit 
pedaling, you fall off. And they say, "If we quit, we will die, and we 
don't want to die; we want to be active. And as long as we are 
active, we are going to be physically and mentally healthy." 

I think there is a great deal to be said about people with this 
type of attitude. When you look across the country in the demo- 
graphics you have just spoken to, we find those seniors and those 
more elderly citizens in our society who are actively involved in 
meaningful pursuits, using their minds and their bodies in a pro- 
ductive way, live a great deal longer and are less dependent on so- 
ciety and their families and in most cases not dependent at all be- 
cause they are so actively involved. 

I congratulate you on holding these hearings; they are impor- 
tant. 

The Chairman. Thank you very much. 
Mr. Roybal. 

STATEMENT OP REPRESENTATIVE EDWARD R. ROYBAL 
Mr. Roybal. Thank you, Mr. Chairman. May I also join in con- 
gratulating you for this hearing this morning. In order to give the 
witnesses more time to testify, I would ask unanimous consent that 
my opening remarks be included in the record. 
The Chairman. Without objection, so ordered. 
[The prepared statement of Representative Edward R. Roybal fol- 
lows:] 

Prepared statement or Representative Edward R. Roybal 

Mr. Chairman, I would like to commend you for having this timely and important 
hearing. r 

At a time when the labor pool is shrinking, we are now able to see employers of- 
fering premiums to retain, retrain, and reemploy older workers. I believe employers 
are now realizing the positive effects that can be obtained through the commitment 
and experience of the older worker. What interests me about these new programs is 
the criteria used for selection of older workers; more specifically, minority elderly. 

Age discrimination is one thing I vehemently oppose. All too often in the past, 
older workers have been encouraged to retire early, some even as young as 45 years 
of age. 

I see the relationship between the older worker and the company as symbionic. 
The older workers are an economic resource which until now has been ignored. 

o 10 

ERJC 



7 

I am looking forward to hearing from today's panel of executives about the var- 
ious programs which employ older workers. 

The witnesses here today represent companies that have realized that those same 
persons who in their younger days worked to make our nation strong, can, as senior 
citizens, continue to be productive individuals'. 

STATEMENT OP REPRESENTATIVE MILLICENT FENWICK 

Mrs. Fenwick. Thank you very much. I am going to do exactly 
what my colleage Mr. Roybal has done. But I might say, Mr. Chair- 
man, i;hat you and I have more at stake with these hearings than 
these young sprouts who are our colleagues— a more personal un- 
derstanding and interest in this whole field. So, we would like to 
hear from our witness, and I am going to cancel the balance of my 
remarks and my time. We are so glad you were able to come. 
Thank you. 

Ths Chairman. Thank you. 

Mr. Crockett. 

STATEMENT OF REPRESENTATIVE GEORGE W. CROCKETT, JR. 

Mr. Crockett. Thank you, Mr. Chairman. I would like to extend 
my compliments and thanks to the Chairman for his thoughtful- 
ness in holding this hearing. I probably should be appearing as a 
witness more than as a member of the committee. I retired from 
active employment as a judge in Detroit when I reached retirement 
age. I got completely bored sitting around being ignored by every- 
body else and that is when I decided to go back to work. 

I would join those who have indicated that one way to shorten 
one's life is to be forced to become inactive when your health is 
such that you can remain active; and I think that is the message 
that this committee would like to give to the employers of America. 

Thank you, Mr. Chairman. 

The Chairman. Thank you. 

And now the distinguished ranking minority member, Mr. Rin- 
aldo. 

STATEMENT OF REPRESENTATIVE MATTHEW J. RINALDO 

Mr. Rinaldo. Thank you very much, Mr, Chairman. In the inter- 
est of saving time and getting to the witnesses, I would prefer to 
insert my opening statement into the record. 

[The prepared statement of Representative Matthew J. Rinaldo 
follows:] 

Prepared Statement of Representative Matthew J. Rinaldo 

Mr. Chairman, for some years now, we have known about the graying of America. 

As is the case in most great social trends, we have been slow to appreciate the 
effects of this demographic change. 

In the current decade alone, the ranks of those over 65 will increase by 5 million 
persons. During the same ten years there will be a decrease of 4 million persons in 
the 18-24 year old age bracket 

Demographic projections confirm this trend of a graying of America for at least 
the next 5Cf years. Moreover, these projections do not take into account the rapidity 
with which medical science is becoming able to cope with diseases that affect the 
elderly. 

As v result, we should be able to anticipate not only an increase in the number of 
older people, but a higher proportion of older people who enjoy good health and 
physical vigor. 



ii 




8 

Studies indicate that many of these people already want to work and that thia 
trend la likely to increase in coming year*. 

Thia is a gwat boon to industry. What it says is that the poter ial work force is 
not diminishing. Rather, its age composition is changing. We have More us today 
witneajes from research organization and industry who observe this change from a 
positive and imaginative perspective. 

Mr. Chairman, I admire the foresight and the practicality of such an outlook, and 
I look forward to the testimony we shall hear from these outstanding witnesses. 
. I hope and expect that their contribution to this hearing will prove to be benefi- 
cial both to America's elderly and to our national economy. 

Mr. Rinaldo. What we see happening today is a work force po- 
tential that ib not diminishing but increasing. What is really 
taking place is that our country s age composition is changing. We 
have before us today witnesses from research organizations and in- 
dustry who observe this change from a positive and imaginative 
viewpoint perspective. 

Mr. Chairman, I admire the foresight and tha practicality of such 
an outlook. When I walked in I heard Mrs. Fenwick refer to the 
"young sprouts." At a hearing we had not too long ago a gerontolo- 
gist testified that once you r ;ach the age of 46 you are a senior citi- 
zen. So, maybe there are not as many "young sprouts" around as 
she thinks. 

I look forward to the testimony we are going to hear this room- 
ing from these outstanding witnesses. 

The Chairman. Thank you very much, Mr. Rinaldo. 

I have here several prepared statements that members of this 
committee have submitted for today's hearing record, and if there 
are no objections I will submit them for the record at this point. 
Hearing no objections, so ordered. 

(The prepared statements of Representatives John Faul Ham- 
merschmidt, Marc L. Markfr, and Harold C. Hollenbeck follow:] 

Prepared Statement or Representative John Paul H^mmerschmidt 

I am glad, Mr. Chairman, that you have convened this hearing to provide us with 
an opportunity to learn about improvementa in private sector employment practice* 
affecting older workers. 

There is certainly no time to be lost in dealing with very serious problems that 
surround retirement, employment, and benefit issues. There are three issues that 
are foremost in my mind and in the minds of many older people. First, age discrimi- 
nation in employment continues to be a negative factor limiting employment oppor- 
tunities for older workers. Second, the current levels of retirement income support 
could become a significant problem if economic conditions worsen. And third, since 
1978, increased inflation has caused severe financial hardship for a sizable segment 
of retirees. In fact, a recent Harris Poll indicated that over forty percent of resent 
retirees felt that inflation has seriously reduced their standard of living. 

I believe that a joint effort by both the public and private sector is mandatory if 
we are to resolve these problems. I know tha<» we have witnesses with us today who 
have developed innovative ideas and practices that, on a microeconomic level, are 
reversing these negative trends. Our task will be taking these isolated success sto- 
ries and converting them into a coordinated national effort. 

I know that there are many firms that believe ihey can't afford to offer shorter 
hours or part-time employment without increasing cotis such as payroll taxes on 
earnings below a fixed ceiling, fringe benefits, and any fixed costs of hiring extra 
workers. I hope that our witnesses will respond to these concerns in their testimony. 
I firmly believe that industry would change its policies if they could be convinced 
that utilizing older workers would be cost effective. To that end, I look forward to 
the testimony our witnesses will provide, in hopes that we can alter these current 
perceptions. 



12 



Prepared Statement of Representative Marc L. Marks 

Mr. Chairman, I commend you for holding this hearing.^ Today we will hear from 
a number of prominent business executives who are actively recruiting the older 
worker. Obviously, the efforts you and the committee have made to educate the 
American people, and the business community in particular, about the advantages 
of employing older workers are bearing fruit. 

In addition to recruitment, we will hear about retention and retraining policies. 
These are good for the corporation, for America and for the older person. 

The corporation benefits by having individuals who want to work, who know the 
value of work and who are determined to make a contribution. 

The United States benefits by reducing the unemployment roles and by permitr 
ting people to make a contribution to the economic grov*h of the Nation. 

Finally, the individual benefits because his self-ima, is improved, he has the 
money to pay his own way and he continues to be a viable part of the community. 

I commend the business executives who are with us today. They have taken the 
lead. I hope others will follow. 



Prepared Statement of Representative Harold C. Hollenbeck 

Mr. Chairman, I applaud this morning's hearing to learn more about the business 
opportunities available to older workers. 

As a member of this Committee I have long advocated the greater utilization of 
older workers in both full end part-time employment. I feel strongly that increased 
labsr force participation of workers in the later stages of their lives will he*.^ reduce 
increasing burdens on retirement income programs and will also benefit the thou- 
sands of Americans who desire to remain in the work force. 

Mr. Chairman, one of the lesser known stigmas associated with growing older is 
that one is no longer capable of acquiring new skills and areas of expertise. Conse- 
quently, opportunities to participate in new learning experiences and retraining 
programs decline as a person approaches retirement. Yet, as we all know, there still 
exists a large number of older workers who would benefit from such training and 
would as such be more inclined to stay in the work force. Thus, the importance of 
recognizing the important contribution older Americans can make and of allowing 
them the chance to participate in America's revitalization cannot be underestimat- 
ed. I commend this morning's witnesses and all the other businesses across America 
who are joining in this effort. I offer my further assistance. 

Thank you. 

The Chairman. We have a gentleman who honors us with his ap- 
pearance in the hearing room this morning. He is apparently not 
scheduled to be a witness, but he is one of the greats of America, 
one of the true heroes of our time. Who doesn t remember those 
dark days after the dastardly attack upon our country by the Japa- 
nese, when we were losing all around different parts of the world, 
those who were fighting with us were losing and we needed words 
of encouragement, we needed some heroic example to stimulate our 
faith in our eventual victory in which we had final confidence. 
Who doesn't remember that magnificent spectacle of American his- 
tory led by General Doolittle? After training in Eglin Field, in my 
State of Florida, they actually took off from an aircraft carrier in 
the Pacific and bombed Tokyo, letting the Japanese know that our 
hand could be felt, our fist could finally be upon their face, as it 
were, at a time when they were confident in their own position 
with their own buildup and victory. 

So, General Doolittle, you are a great American hero and your 
contemporaries are proud to be a part of your generation. 

Is there anything out of your wisdom of great experience that 
you would like to say? We would welcome anything you would like 
to say today, if you wouldiike to make a statement. 

General Doolittle. I have no words, sir, but it is a delight to be 
here and a delight to see you again. 



10 

* 

Thank you very much. 

The Chairman. We are very greatful to the general for coming 
here. It is an inspiration to see him. 

Our first witness today is Mr. V. J. Skutt, who is the chairman 
and chief executive officer of Mutual of Omaha Insurance Co. I 
couldn't let the occasion go by, Mr. Skutt, v;ithout thanking you 
and your company for a delightful dinner I had with you where we 
all toasted in Omaha to your beautiful new building. We remember 
George Owen, who was your general counsel from Tallahassee, 
Fla., one of the closest friends of my brother, who served in the 
Navy with my brother during the war. 

One of our distinguished members here, Mr. Daub, knows Mr. 
Skutt, and would like to present him. 

Mr. Daub. In this room, in this hearing, age is a virtue. I was 
told an interesting story, Mr. Skutt, and you can correct me later 
on if I am wrong, that General Doolittle, Mr. Chairman, could not 
serve on the board of Mutual of Omaha until after he was manda- 
torily retired from the board of two other national corporations at 
age 65, and he has been on the board for 21 years and has not 
missed a board meeting of Mutual of Omaha. I think that is 
terrific. 

I want to tell you, when I was handed Mr. Skutt's biographical 
sketch, I knew immediately I would be having a problem trying to 
keep the introduction shorter than his testimony. This is a gentle- 
man who both personally and professionally, in literally a thou- 
sand ways, has earned the respect of his local community, as well 
as the national business community. 

His career began by selling insurance in South Dakota for his 
father. Then, he joined the legal department of Mutual of Omaha. 
He served in various capacities with the company and was named 
chairman of the board?in 1953. Presently he serves in this same ca- 
pacity, and also as the chief executive officer of Mutual of Omaha 
Insurance Co., United Benefit Life Insurance Co., and Companion 
Life Insurance Co. of New York. 

Mutual of Omaha's operations are international in scope. It is 
one of the few organizations to be licensed in all 50 States, the Dis- 
trict of Columbia, Puerto Rico, Panama, the Canal Zone, portions 
of the West Indies, all Provinces of Canada and the Netherlands. 

Be it sufficient to say that Mr. Skutt has devoted both his time 
and talents to a number of organizations which are varied in scope 
and range from international to purely local. His accomplishments 
take up this entire page— and I hold that sheet up, and want to 
make it a part of the record. , 

The honors which have been bestowed on him both civic and 
business, are just as lengthy. And I also hold that up and ask it be 
included in the record. 

The Chairman. Without objection, it will be included. 

[The honors of Mr. V. J. Skutt follow:] 

Honors of Mr. V. J. Skutt 

Mr. Skutt has been honored with numerous civic and business awards, among 
. them: 1977 Silver Antelope Award, Boy Scouts of America; 1976 Golden Plate 
; Award, American Academy of Achievement; 1975 National Distinguished Service 
Award, United Negro College Fund; 1972 National Salesman of the Year Award, 




11 



Sales and Marketing Executives International; 1971 Man of the Year Award, Feder- 
ation of Insurance Council; 1971 Man of the Year Award, Mid-America Council, Boy 
Scouts of America; 1968 first recipient "Can Do" Award, Omaha Chamber of Com- 
merce; 1967 Distinguished Nebraskan Award, Nebraska Society of Washington, 
D.C.; 1966 Golden Sword of Hope Award, American Cancer Society; 1964 Interna- 
tional Boss of the Year, National Secretaries Association; 1963 Air Force Exception- 
al Service Medal; 1960 Television Award for Public Service; 1957 B'nai B'rith 
Americanism Citation for Meritorious Service, Henry Monsky Lodge, Omaha; and 
1950 Man of the Year Award in Health Insurance (Harold R. Gordon Memorial 
Award). 

Mr. Skutt has also received honorary degrees from Creighton University, Univer- 
sity of Nebraska College of Medicine, University of Nebraska at Omaha, and the 
University of South Dakota. 

Mr. Daub. Having said all that, it is my distinct honor and privi- 
lege to welcome my friend, V. J. Skutt, to testify before our com- 
mittee this morning. 

I want to ha : /e the record note that he served as chairman of the 
National Alliance for Business, and was recognized by Presidents 
Foid and Carter for that work; served on the 1960 White House 
Conference on Aging; and I want to also say he may have to leave 
this morning before the rest of the panel is concluded because of a 
commitment in New York this morning, so we all understand when 
he chooses the time that he will have to depart. 

The Chairman. Thank you very much, Mr. Daub. 

Mr. Skutt. 

STATEMENT OF V. J. SKUTT, CHAIRMAN OF THE BOARDS AND 
CHIEF EXECUTIVE OFFICER, MUTUAL OF OMAHA COS. 

Mr. Skutt. Thank you very much, Mr. Chairman and members 
of the committee, and thank you, Congressman Daub, for that gra- 
cious introduction. You were very thoughtful, Mr. Chairman, in 
scheduling this particular time because General Doolittle was hon- 
ored last night by the Air Force Association and we came along 
with him. When we received your invitation, that fitted nicely, pro- 
vided we can take care of our other assignments today. 

I must say this, while the general said, in response to you, he 
had nothing to say this morning, that is not typical of his participa- 
tion in our board meetings. He rides pretty close herd on us, and 
we want to take this occasion to thank him for all he has done and 
all he will do. We also have with us here Mr. Jack Dixon, who is 
sitting next to General Doolittle. He is vice president in charge of 
personnel for our organization, and is here just in the event that 
any members of the committee or staff have any questions concern- 
ing our communication here and our statement later on. 

I am going to abbreviate my oral presentation in deference to the 
other participants in the panel of witnesses here, and the time of 
the committee, and I am going to, of course, submit this written 
statement with the three exhibits, which I hope all of you will have 
an opportunity to review in due time. 

The Chairman. It will be received and incorporated in full in the 
record. 

Mr. Skutt. Thank you. 

Now, we of the Mutual of Omaha Corp. have an unusual role, 
Mr. Chairman, because our obligation to senior citizens, as they are 
sometimes called, and, to the whole public, as far as that is con- 



id 

ERIC 



15 



12 



cerned, is threefold, as we view it: First, to our policy owners; 
second, to our associate personnel; and third, to the public. 

And in the first respect, I would like to take a moment to con- 
gratulate this committee for having shown the initiative to help 
eliminate some abuses in the sale of health insurance to supple- 
ment medicare, which has resulted in action by the States and in 
which our organization has cooperated to a great extent. 

Now, I am not going to spend any more time talking about our 
service to policyowners because I know this meeting has been 
called to discuss the employment practices of the company, but I 
hope that portion of our statement will not be ignored because it is 
a great story, if we may say it with modesty, of the building of our 
organization through service by providing additional benefits at 
lower cost. 

The Chairman. It is a subject that our committee is deeply inter- 
ested in. 

Mr. Skutt. On the subject we are discussing here today, I 
would like to merely abbreviate the comments in chis report 
by pointing out that in our associates we have people both 
in the home office and regional offices and people in the field. In 
both areas, perhaps, our single biggest factor in maximizing the 
productivity of our people, young and old, is simply the corporate 
commitment to do that. It goes back to when Dr. Charles Mayo, of 
the Mayo Clinic, was a member of our board. About 30 years ago 
he laid down a rule for us on our position toward people of older 
ages. It was his position that age should be viewed as a biological 
and physiological development and not solely chronological. Thus 



saying we do not believe in a rigid, and inflexible mandatory retire- 
ment program. And that comes from Dr. Mayo's own statement at 
our board meeting on a very cold December day when he was de- 
layed getting there from Rochester, Minn. Before we ended the 
meeting, his long overdue report was asked for by me, as chairman. 
He had been appointed to select two other nonofficer directors to 
advise the board on retirement programs. Our board is very diver- 
sified and most of them are not associated with the company di- 
rectly, such as General Doolittle and others. 

Anyhow, Dr. Mayo, in making his report said, "Some people 
should be retired at 65, some at 75, some at 85, some at 45, some at 
25, and some, I think, should never have been hired in the first 
place." 

Now, we had quite a bit of flexibility from his statement, which 
was incorporated in our practices immediately. So, under our 
system, while we observe for retirement purposes of our general 
personnel in the home office the age 65 with the extension now to 
age 70, resolutions of the board provide that the board may contin- 
ue the services of anyone in our organization for any period of time 
if that person is performing satisfactorily and has some field of ex- 
pertise in which our organization would be particularly interested. 
So we have flexibility there. 

How does it work so far as our rank and file are concerned? Four 
hundred and eight-five of our actively producing sales agents are 
age 65 or over. They are a major factor in our mission of bringing 
affordable health insurance and life coverages to the American 




which is another way of 



16 



ERIC 



13 



people— in the voluntary way. As a matter of fact, we have found 
that our older associates are most effective in assisting older indi- 
viduals in the design of supplementary programs most suitable to 
their needs, probably created by the similarity of age and lifestyle, 
and so forth. 

Among our 248 general managers— I have talked about our sales- 
men, now I am talking about our general managers— we have 248 
throughout the territory which was described by Congressman 
Daub, in which we operate. Twenty-four of them are age 65 or over. 
I think that is pretty close to the percentage of the population of 
those over 65, which is 11 percent. The average age in this general 
managers group of 24 is 71. The oldest is 88. Interestingly enough, 
one-fourth of these managers in this category last year earned the 
highest honor bestowed upon our field managers— a demonstration, 
in our opinion, of the productivity possible at any age— given 
proper incentive, proper motivation and proper climate of accept- 
ance. 

Among our rapidly growing number of women agents we have 
some who immediately come to mind. I will give you a couple of 
examples, I hope you will find the others in the statement. Mattie 
Herrick joined our company in 1934. She served as saleswoman and 
general manager in New Orleans— both with considerable success. 
She is now 83 and still producing business, 

Adele Levy is another who is over 80 years old and I have a 
letter attached here as an exhibit which coincidentally was re- 
ceived this past week when I was preparing this material, so it is 
attached here to show that she is going strong at age 86. 

And we have another coming from the State of Washington, 
Esther Ann Leid— I just had a note from her. She started with us 
at age 54 — she will be 80 years old on November 5 — some 3 days 
before she travels from Walla Walla to Omaha for a weeklong re- 
fresher school on our latest insurance plans. 

I am hurrying along here. I can give you many examples, but 
this is typical of the attitude we have toward our people. As long as 
they can produce, we are not going to let age stop their services. 

I have an addendum attached to this statement which provides 
age groupings of our general managers. It simply illustrates the 
fact that we do not accept age, young or old, as a barrier to per- 
formance, achievement or success. 

In our home office operation we have installed a flex-time pro- 
gram to help those who wish to modify their hours of service, be- 
ginning and quitting time, and have taken other steps in our pre- 
retirement counseling program to design it not just for retirement 
but for transition from a different type, of work as may make their 
lives more productive. 

The average age of our directors is 62, for your information, and 
they range from age 34 to 84, with the median age of 60. We be- 
lieve that our whole approach to this is such that we have a repre- 
sentative age mix and that is good for our organization, and good 
for the people. Such a mix combines the initiative and energy of 
youth with the experience and wisdom of age. And working togeth- 
er we insist upon close communication in our organization between 
them as a vital part of our operating procedures. 



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91-818 0-82- 



! 2 




14 



You already mentioned General Doolittle, but I want to say this 
about him. Not only has he not missed a meeting of the board in 
the 20 years he has been a member— and some much younger have 
missed meetings of the board from time to time— but also he has 
not missed any meetings of the committees he has served on as a 
member or consultant. 

I would like to take a moment to talk to you about our obligation 
to the public, as we see it, going beyond what we did for our own 
personnel and for policyholders, in trying to achieve the objective 
for the aging which is such a concern, properly, for this committee. 

Our organization's record for economy in operation has allowed 
us to extend our corporate-obligation philosophy beyond our policy- 
owners and associates to the public at large. Much of this activity 
is oriented to the involvement and productivity of older Americans. 

Earlier this year, we began sponsorship of a network radio broad- 
cast entitled "The Best Years 5 — featuring that renowned author 
and commentator, Lowell Thomas. The program was designed to 
communicate to the older segment of our population their many 
opportunities for achieving a full and productive life of which 
Lowell Thomas himself was a great example. He died suddenly in- 
August the day after taping some additional shows. And he was 
active until the day of his death at age 89. 

Our organization feels strongly about the example that he and 
other older active people provide for the elderly of our country. For 
this reason, we made the decision to continue the program after 
Ix>well Thomas' death and worked out a program with Helen 
Hayes, the First Lady of the American Theater, who is 81 years of 
age, and she is carrying on Lowell Thomas' program on radio 
throughout the country. 

She and Marian Anderson, that famous First Lady of Song, were 
recipients in 1976 of the Mutual of Omaha Criss Award. We estab- 
lished this award after I became head of Mutual some years ago, 
and its purpose is to recognize individuals who make significant 
contributions to the health, safety and welfare of the American 
public. 

The award was last given in 1979 to Dr. Beiyamin Mays of At- 
lanta, Ga. He climaxed a life of educational service as president of 
the Atlanta, Ga., School Board. He just resigned from that position 
a few weeks ago at age 89. 

Miss Hayes, Miss Anderson, and Dr. Mays joined such other out- 
standing recipients as Dr. Jonas Salk, Bob and Dolores Hope, and 
Dr. Howard Rusk. Dr. Rusk, age 80, is still very active and is a di- 
rector of the Institute of Rehabilitation Medicine in New York 
City, and is an advisor to us on rehabilitation matters. We feel that 
rehabilitation and employment of the so-called elderly go hand in 
hand. 

These award presentations were carried on national television as 
apreemption of our program, "Mutual of Omaha's Wild Kingdom." 
These outstanding individuals were able to serve as an example 
and inspiration— demonstrating to other senior citizens how to add 
life to their years as well as years to their life. 

We have done a pretty good job in this country adding years to 
life, extending the longevity r of our people; we have not done such a 



ERLC 



15 

good job of adding life to years. That is what these opportunities 
are all about that we discussed in our statement. 

I think, also, that we should not overlook, members of the com- 
mittee; the adverse impact on the economy due to premature re- 
tirement. And there are many examples of individuals with serious 
problems, such as cancer, arthritis, and other diseases or injuries, 
who conquered them and became productive citizens. However, 
there is a tendency on the part of some to be discouraged with even 
relatively minor conditions, so we have endeavored to bring before 
them examples of what can be done in that area. 

I think it has an affect, also, on the experience of medicare, the 
social security system, affecting its fiscal status about which we are 
all concerned today. Anything that we can do to improve the activi- 
ties of those in the older ages and the handicapped will contribute 
to their happiness because an active person is more happy than an 
inactive person, regardless of age. 

We have endeavored to employ in our operation the concept of 
rehabilitation that I mentioned, and I don't think you have to look 
any further than Washington, D.C., to see a great example of reha- 
bilitation. I am speaking of the late President Franklin Delano 
Roosevelt. Here was a man paralyzed from the hips down, and in 
normal nomenclature would be considered an invalid, and yet he 
served in this most difficult position for the longest period in histo- 
ry. . 

The reason I emphasize this, is because it is my observation, Mr. 
Chairman, that there isn't nearly as much attention directed to re- 
habilitation as I think there should be in meeting these problems 
that we have discussed. 

Now, the principal of our "Wild Kingdom" show that I men- 
tioned—I am hurrying along in deference to my fellow panelist— is 
Marlin Perkins— and he is pictured in our annual report which 
will be one of our exhibits here, with a little description about 
some of his activities. Marlin is still going strong after 20 years of 
that show which we bring to the American public. He continues to 
lead this active lifestyle that places him in strenuous and hazard- 
ous situations in locations around the world where adventures of 
Wild Kingdom are filmed. He is still another example to senior 
citizens that they can continue to be active, because Marlin Per- 
kins was 76 years old on March 28 when he took an extra dive in 
the ocean after some whales. 

I hope you have an opportunity to read pages 2 and 18 of the 
report attached to this statement. Also the supplement which 
shows our age breakdown of general managers— from 20 to 29 we 
have four; 30 to 39 we have 52; 40 to 49 we have 75; 50 to 59 we 
have 68; 60 to 69 we have 39; 70 to 79 we have 10; and 80 to 89 we 
have 2— which brings about this balance that I referred to earlier, 
this mix which we think is a desirable course of action. 

In our annual report, which was prepared in January of this 
year— so it was before I knew I was going to testify here today- 
there is this statement which sort of summarizes the position of 
our organization on employment of the elderly, "Mutual of Omaha 
offers you a career you can work at no matter how old you become, 
no matter how much money you make. As long as there are people 
who need your help, you have a career." 

ERjC 49 



16 

That is in the material. I thank you, gentlemen. 
[The prepared statement of V. J. Skutts follows:] 

Prepared Statement of V. J. Skutt, Chairman of the Boards and Chief 
Executive Officer, Mutual of Omaha Companies 

Thank you Chairman Pepper and members of the Committee. 
m**" 3 ? vJ' ^ ku & Carman of the Boards and Chief Executive Officer of the 
Mutual of Omaha Companies. 

We were pleased to accept your invitation to appear today and, first, wish to ex- 
press our appreciation for the statement contained in your letter of invitation de- 
scribing our Organization as. "in the forefront" of an enlightened trend to recognize 
and maximize the potential of oldsr workers. It is this potential that we shall ad- 
dress shortly. We unqualifiedly agree with your Committee's intent to identify and 
utilize the vast capabilities and experience of our fellow citizens— regardless of age 
People are our national treasure. And we firmly believe the mental, physical and 
financial well-being of all mature citizens is best served, when individuals can will- 
"W C0 2 tmue to contribute of their talents in a work environment. 

The 72-year history and world-wide scope of our operations have provided ample 
support for this point of view. Mutual of Omaha is the largest individual and family 
health insurance Company in the world. Our Organization has paid more than $12.5 
billion in benefits to policyowners for sickness and injury. Last year we handled 
more than 5.2 million claim related transactions with over 99.8 percent consummat- 
ed without complaint > Currently, we pay out over 22,000 benefit checks each day 
totaling nearly $20 million in benefits each week. 

We preface the following remarks with this background of our Organization to lay 
the foundation for our discussion oriented "to the new corporate attitudes toward 
older workers, managers and executives", as set forth in your letter of invitation to 
participate in this hearing. 

First, our record of service, briefly touched upon, has been built by people of all 
ages for people of all ages. Secondly, it reflects the operating philosophy of our Or- 
ganization. This philosophy simply stated is that the Mutual ofOmaha Organization 
categorizes its obligations— first to its policyowners; secondly, to its associates and 
personnel; and thirdly, to the general public, including, of course, the legislative and 
other branches of these state and federal governments. 

OBLIGATION TO POLICYOWNERS 

Within the context of your interest here today, we have long believed that affor- 
dable and dependable insurance coverages were essential ingredients of a full and 
productive life for older Americans. Our goal is that this large segment of Ameri- 
cans have the same opportunity that those of other ages have as far as health insur- 
ance coverages are concerned. While plans for people age 65 and over have been an 
important part of our portfolio for decades, we were the first company to offer such 
coverages nationally-regardless of the health condition or age of the applicant. We 
have continually improved and updated these coverages to meet the changing needs 

Likewise, our organization was among the first to produce the "easy-to-read" in- 
surance policy—for the primary benefit of older policyowners. Among the compli- 
mentary reactions of regulatory authorities to this innovation was that of the 
Kansas btate Insurance Commissioner who described it as "the moot comprehensive 
effort made by any insurer thus far toward more readable and understandable 
health insurance policies. 

We should mention, as well, that our supplementary coverages for people age 65 
and over are intended to be flexible enough to meet any future modification of 
J^oicare benefits that may be made necessary by federal budgetary problems or 

In this regard, we feel that a program of meaningful tax-credits for the purchase 
of individual plans of insurance would be a significant incentive for people to pro- 
vide for their own protection. Also, the government can do much, in our opinion, to 
emphasize the importance of rehabilitation of disabled people of all ages— but ce*- 
tainly older Americans, in an effort to keep them leading productive lives. 

OBLIGATION TO OUR ASSOCIATES 

Our Organization's obligation to its associates is perhaps the area of discussion 
most pertinent to your hearings here today. We shall approach this category of re- 
sponsibihty f rom two areas of discussion: our associates in the field and in our 
Home Office. 



ERLC 



;<?0 



17 



In both areas; perhaps our single biggest factor in maximizing the productivityof 
our people—young and. older—is simply the corporate commitment to do so! The 
late Dr. Charles Mayo of the Mayo Clinic in Rochester, Minnesota, was a member of 
our Board of Directors when our programs for elderly policyowners and Company 
personnel were defined some 30 years ago. It was his position that age should be 
viewed as a biological and physiological development and not solely chronological. 
Thus we do not believe in statutory senility, which is another term for a rigid, and 
inflexible mandatory retirement program. We have subscribed to Dr. Mayo's princi- 
ple through the years-^and. would suggest its adoption for any organization con- 
cerned with seriously meeting the employment problems of older Americans. 

In respect to our field associates, there is no age restriction whatever on the 
hiring of agents— except for the minimum age limitations imposed by the states. 
There is also no mandatory retirement age. 

485 of our actively producing sales agents are age 65 or over. They are a major 
factor in our mission of bringing affordable coverages to the American people— in 
the voluntary way. As a matter.of fact, we have found our older associates are most 
effective in assisting older individuals in the design of supplementary programs 
most suitable to their needs. Undoubtedly, the relationship created by the similarity 
in age and life conditions facilitates this objective. 

Among our 248 general managers, 24 are age 65 or over. This corresponds rather 
closely with the 11% of the general population of our Country over 65. The average 
age in this general , managers group of 24 is 71. The oldest is 88. Interestingly 
enough, one-fourth of these managers in this category last year earned the highest 
honor bestowed upon our field managers— a most impressive demonstration, in our 
opinion, of the productivity possible at any age— given proper incentive and motiva- 
tion and a climate of acceptance. 

Among our rapidly growing number of women agents are some who come immedi- 
ately to mind . . . and evidence the fact that success is not limited by age or sex. 

For example, Mattie Herrick joined our Companies in 1934. She has served as a 
saleswomen and general manager in New Orleans, Louisiana— both with consider- 
able success. She is now 83— and still producing business. 

Adele Levy joined cur Companies in 1944 and is 8(5 years of age. She has had a 
resplendent career t& a repeated winner of our highest health insurance sales 
achievements and is a Life Member of the prestigious Million Dollar Roundtable in 
the life insurance industry. We have just received a letter from Adele, at the same 
time we received your letter, Chairman Pepper, which is attached to a copy of my 
remar3cs. 

As another example, a fine lady, Esther Ann Leid, hails from the State of Wash- 
ington. She began her insurance career with us when she turned age 54. She will be 
80 years old November 5— some three days before she travels from Walla Walla to 
Omaha for n week-long refresher school on our latest insurance plans! Esther obvi- 
ously meant i to continue her career for quite a while! 

We have im addendum to this statement which provides the age groupings of our 
general managers. It simply illustrates the fact that we do not accept age— either 
young or old— as a barrier to preformance, achievement and success. 

The same principle is applied to our associates who work in our Home Office and 
Regional Offices. And at the present time, we are deeply involved in continuing ef- 
forts to examine how best to enhance the opportunity for further employment for 
retiremenkage associates who wish to continue with the Companies. For example, 
early last year we introduced a flex-time program on a voluntary, optional basis to 
all Home Office personnel. More than 4,000 elected to participate. They can start 
early or late and complete their 7% hours according to a schedule most convenient 
for them. 

Another example of our continuing efforts along this line is our pre-retirement 
counseling program— designed not just to prepare employees for his or her transi- 
tion from work-life to retirement life but rather to make sure that a continuation of 
employment be introduced into this program as a viable option for consideration. 

In recent years, approximately 15% of our retirement age employees have elected 
to continue employment with our Companies. We are proud and happy to have 
them stay with us. Their contribution is most significant. 

We have made provisions that any associate who does choose to work beyond 
normal retirement age will continue to receive all his or her employment benefits- 
including health anal life group insurance. We believe this is a most important in- 
centive. 

It is our feeling that the commitment in this matter must not only come from the 
top levels of an organization. It must be reflected in actual practice in every level of 
the enterprise. 



ERIC 




18 



Our Organization s executive management is just one example of the importance 
we place on an appropriate biend ov ages in guiding the iuture course of our busi- 
ness. 

The average age of the Presidents of Mutual and its eight affiliated companies is 
56. It was 45 at the *ime of their appointments. 

The average age of our Directors is 62. They range .in age from 34 to 84— with the 
median age GO. 

We believe a representative age mix is good for our Organization and its people. 
Such mix combines the initiative and energy of youth with the experience and 
wisdom of age. Communication between them is a vital part of our operating proce- 
dures. 

We are honored to have as a member of our Board that great American, Gen. 
James H. Doolittle. General Doolittle has been with ?is nearly 21 years— and during 
that period of time, has never missed a meeting of the Boards or various committees 
on which he serves. General Doolittle today, as some of you who may know him can 
testify, is mentally and physically able to contribute to virtually any business entity 
in the highest competent manner. 

Your letter, Mr. Chairman, prognosticated a decline in young emoloyees under 
the future demographics of our Country. And certainly this gives a new urgency to 
the concerns you evidence by this hearing. The Committee, however, may be inter- 
ested to know that in addition to providing the special programs of employment for 
the youth to help meet current unemployment problems m that age category, we 
are at the same time devising a more effective way to meet the projected deficiency 
to which you refer in the young age labor market. A very major part of this plan 
will be an expansion in the use of "retirementrage" individuals on both a full- and 
part-time basis. We have absolutely no hesitation to further incorporate these indi- 
viduals into our operations. They will be good for us. And hopefully, we can be good 



We propose to supplement our present program by offering retirees opportunities 
for temporary or on call" types of jobs now given by some companies to individuals 
obtained from employment agencies for peak periods of activity. This, of course, 
must depend on the need for such help. In this connection, the great contribution 
that many of our personnel, who are above normal retirement age, have made is 
demonstrated by the fact that over the past 20 years the benefits paid to our policy- 
owners averages over 16% more than those paid by the next 24 companies in our 
field. That could only be done through efficient, cosksaving devices and efforts for 
the benefit of our policyowners as a whole wid through the efforts of all our person- 



Our organization's record for economy in operation has allowed us to extend our 
corporateK>bligation philosophy beyond our policyowners and associates to the 
public at large. Much of this activity is oriented to involvement and productivity of 
older Americans. 

M Easier this year, we be^an sponsorship of a network radio broadcast entitled 

The Best Years —featuring that renowned author and commentator Lowell 
Thomas. The program was designed to communicate to the older segment of our 
population their many opportunities for achieving a full and productive life of 
which Lowell Thomas himself was a great example. He died suddenly in August the 
day after taping some additional shows. He was active until the day of his death at 
age 89. Our Organization feels strongly about the example that he and other older 
active people provide for the elderly of our Country. For this reason, we made the 
decision to continue the. program— and were fortunate to obtain Helen Hayes, the 
First Lady of the American Theater, as spokeswoman, at age 81. 

Miss Hayes, as well as Marian Anderson, age 79, the First Lady of Song, were 
recipients in 1976 of the Mutual of Omaha Criss Award. The Criss Award was estab- 
lished shortly after I became President of Mutual of Omaha. Its purpose is to recog- 
nize individuals who have made significant contributions to the health, safety and 
welfare of the American public. 

The Award was last given in 1979 to Dr. Benjamin Mays, who, in his eighties, 
climaxed a life of educational service as President of the Atlanta, Georgia, School 
Board. He resigned just a few weeks ago, at age 89. 

Miss Hayes, Miss Anderson and Dr. Mays joined such other outstanding recipients 
as Dr. Jonas Salk, Bob and Dolores Hope and Dr. Howard Rusk. Dr. Rusk, age 80, is 
still very active and is a Director of the Institute of Rehabilitation Medicine in New 
York City. He is also a nominee, this year, for a Nobel Prize. 



for them. 



OBLIGATION TO THE PUBLIC 



ERIC 




19 

These Award presentations were carried on national television as a pre-emption 
of our "Mutual of Omaha's Wild Kingdom". These outstanding individuals were 
able to serve as an example and inspiration — demonstrating to other senior citizens 
how to add life to their years as well as years to their life. 

With improvements in our Country in extending longevity we seem to have done 
a good job in the latter category— that is, adding years to life. General age restric- 
tions, however, have tended to frustrate the objective of adding "life to years". 

In this analysis, we should not overlook the adverse impact on the economy due to 
premature retirement. As to the elderly, minor physical conditions tend sometimes 
to discourage them from productive activity. There are, however, many examples of 
individuals with problems such as cancer, arthritis, and other diseases or injuries. 
Some individuals have conquered these conditions and continue to be productive 
citizens. If more of our mature citizens can be encouraged to carry on productively, 
where possible, despite some afflictions and the aging process, the adverse experi- 
ence of Medicare and the Social Security system affecting its fiscal status in that of 
our Nation, could be improved. It will also contribute to their happiness because an 
active person is more happy than an inactive one, regardless of age. 

Thus we have endeavored to employ in our operations the importance of the con- 
cept of rehabilitation, which frankly seems to be conspicuous by its absence in many 
costly government welfare programs that we have observed. And it is a singular and 
significant fact that no one needs look further than the National Capital in Wash- 
ington, D.C. to see what was probably one of the greatest examples of rehabilitation 
in the history of mankind. We are referring, of course, to Franklin D. Roosevelt, 
who while paralyzed from the hips down— and thus by normal definition an inval- 
id— flUed the most important position of our Nation for the longest peviod in the 
history of that office. 

Actually Mutual's attention to the potential of rehabilitation goes back almost to 
the time of FDR, In fact, for over half of the period since his death we have spon- 
sored a program for the benefit of people of all ages, including the elderly. This pro- 
gram, Mutual of Omaha's Wild Kingdom, has been designed to educate and enter- 
tain—and hopefully inspire— people of all ages, including the elderly. 

The principal of that show, Marlin Perkins, is shown in our 1980 Annual Report, 1 
attached to the copy of my remarks, with the Late Dr. Alton Ochsner of the 
Ochsner Clinic in New Orleans. They are pictured at one of our national Policy- 
owner-Consumer Conferences— an innovation unique in the insurance industry. 

Marlin Perkins, the star of Wild Kingdom for over twenty years, continues to lead 
his active lifestyle that places him in strenuous and hazardous situations in loca- 
tions around the world where the adventures of Wild Kingdom are filmed. He is 
still another example to senior citizens that they can indeed continue to be active, 
because Marlin Perkins was 76 years old on March 28 cf this yean 

Attachment 1 

Age breakdown of general managers, Mutual of Omaha Insurance Co, 
Age: Number 1 

20 to 29 4 

30 to 39 52 

40to49 75 

50 to 59 68 

60 to 69 39 

70 to 79 10 

80 to 89 2 

Totid 250 

1 Total nu Tiber of 250 includes 2 agencies with comanagers. 

Attachment 2 

United op Omaha, 
New Orleans, La., October 19, 1981. 

Dear V. J. : It was such a joy to be at my 29-Seminar— and I hope you will 

continue for me to be invited. 

I learned so much about the changes and how to handle it— with regard to Life 
Insurance. 



1 See pages 2 and 18. 



ERJC U^3 



20 




I am still hoping for good news on the dedication in Dallas this winter. 
My best wishes to your wife— and Good Health also to you. 
Thank you for being you. 



Adele O. Levy, 
Insurance Counselor. 



[Note.— Attachment 3 retained in committee files.] 
The Chairman. That was a splendid statement, Mr. Skutt, and 
you and General Doolittle, if I am not violating any confidence, I 
understand you are 79 and the general, I believe is 84. You are two 
representatives of your company here today that are splendid ex- 
amples of quality and leadership that elderly people are giving to 
your company and, so, we are very grateful. 
What is your time situation, Mr. Skutt? 

Mr. Skutt. If it is permissible, I will stay while you continue and 
if I have to leave, I will slip out. 
The Chairman. Very good. 

I just have two questions, and I would like my colleagues to have 
an opportunity to ask any questions. 

Earlier in this year we were hearing about changes in business 
attitudes toward older executives. As an older executive yourself, 
what special perspective do you bring to your job" that might be lost 
if you were replaced by a younger person? 

Mr. Skutt. Well, you are asking me that question. If you ask 
someone else, they might answer differently. But in keeping with 
our philosophy, I think that what would be lost would be" all the 
years of experience and the opportunity to exchange those experi- 
ences and knowledge with younger executives. 

Now, the presidents of Mutual and our affiliates are in their late 
forties or fifties and we have again this mix. We feel you need 
young people. So, I would say that as long as older people can do 
the job and communicate and are willing to make those sacrifices 
to do it, they should continue. It is not a sacrifice for me because I 
eiyoy it more than I do what some people say is having fun, be- 
cause ft has been my life and I love it. So, to answer your question, 
I think it is mainly a matter of having that mix of experience and 
energy and youth and the older people. 

The Chairman. You know, as I understand it, from my own ex- 
perience, I understand that the mind is generally about the last 
part of the body to diminish in its activity. 

I was on the cross country team when I was in college. I often 
say I don t think I want to undertake one of those 10-mile runs 
that I could do then, but if I need tc go 10 miles, I have a good car. 
And you don t have people to run 10 miles, you have people to 
think, people who have valuable knowledge and experience. Look 
at what General Doolittle has been able to bring to your Board out 
of his enormous experience. 

I hope you noticed— and you mentioned it in your statement- 
many older workers and retirees express a desire to work part time 
or to have a flexible work schedule. Can these types of schedule 
changes be arranged within your company? 

Mr. Skutt. Yes. We have a flex-time program that works very 
well and it provides the flexibility that is necessary to meet special 



ERIC 



•- ; 24 



21 

situations. And the actual performance of our people has improved. 
So there has been no problem in that respect. 

I would just like to add one word to the answer that I made to 
your unexpected question about what would happen if I made a 
change. And that is, I think one of the problems in continuing 
senior executives, so to speak, is the fact that you feel that you are 
keeping junior executives from being promoted. But, as a matter of 
fact, we have six more presidents now in our organization now 
than we had when I started. We have expanded the operations of 
the company. We formed affiliates and we have had more opportu- 
nities. Mr. Barrett here, for instance, has the responsibilities equal 
to the principal officer of a good many companies. So, there is 
plenty of opportunity for both. 

The Chairman. Thank you very much. I don't want to deprive 
my 4 colleagues from asking questions, or I would ask you many 
more. 

Mr. Daub. 

Mr. Daub. I get the chance to ask Mr. Skutt for his good counsel 
and advice whenever I want it because he is a most distinguished 
constituent in my district. I would want a couple of things to be 
known for the record. 

The company now employs a total of how many people, Mr. 
Skutt? 

Mr. Skutt. In Omaha we have between 5,200 and 5,500, and 
around the country another 12,G00. 

Mr. Daub. So approximately 17 to 18,000 individuals work within 
the affiliated organizations of United Mutual. When he was speak- 
ing about the balance of that curve of age, I think that is signifi- 
cant. 

Second, can you. tell me,' was your company called upon to pro- 
vide guidance m the most recent difficulties that our Government 
has had with respect to reform coverage for aged care? 

Mr. Skutt. Yes. Our policy was taken as an example of the type 
of policy that senior citizens, so-called, should have. 

For example, in the State of Arizona— you probably are familiar 
with what tne insurance department did there — they set up an ar- 
rangement where they invited salesmen to come inland they tried 
to uncover some of the abuses that you pointed out in this commit- 
tee. They used our policy as an example of the kind of policy that 
people should have. It has big print and the Kansas Insurance De- 
partment made a statement about it in which they pointed out that 
the Kansas Insurance Commissioner described it as, "The most 
comprehensive effort made by any insurer thus far toward a more 
readable and understandable health insurance policy.' 1 The terms 
themselves are broad enough to provide proper coverage for the 
premium paid. 

Mr. Daub. Thank you very much. 

The Chairman. Thank you, Mr. Daub. 

Before I call on another colleague, I would like to acknowledge 
the presence of the distinguished member of the House who is not 
a member of this committee but he is a very able Member of the 
House, Mr. Don Clausen of California. 

Mr. Clausen. Thank you very much. 

The Chairman. Mr. Biaggi. 



22 



Mr. Biaggi. Apparently your company has an enlightened policy 
in connection with employing senior citizens. In your experience, 
are other insurance companies and other large corporations adopt- 
ing a similar policy and practice? 

Mr* Skutt. I think they are coming to that more, Mr. Congress- 
man. Of course, we may have mentioned earlier that the only 
reason we were able to have General Doolittle on our board is be- 
cause the other boards on which he served had mandatory retire- 
ment. So I am sort of in favor of mandatory retirement in other 
companies if we can keep getting people like General Doolittle. 

Seriously, I think it varies some. It would be safe to say that 
there is a trend toward liberalizing the program. 

Mr. Biaggi. Thank you. 

The Chairman. Mr. Craig. 

Mr. Craig. I have no questions. Thank you. 

The Chairman. Mr. Roybal. 

Mr. Roybal. Thank you, Mr. Chairman. 

I have one question. What kind of qualifications must a person 
have to become an employee of your company? And second, after 
the company is satisfied with the candidates' ability, what kind of 
training do they get? 

Mr. Skutt. Well, we have an equal employment opportunity pro- 
gram which has been employed, including affirmative action. Dr. 
Gloria Scott, vice president of Clark College in Atlanta is consul- 
tant to our personnel department and the usual tests are applied. I 
suppose, if you want to get into detail and take the time, Mr. 
Dixon, who is head of our personnel department, is here. 

Would you answer that question, Jack? 

Mr. Dixon. As far as the kind of training that we offer, generally 
when we are looking at the employees, applicants for employment, 
we are looking at the person's potential and we have a number of 
formal kinds of training programs, skill-buildmg, that kind of 
thing. 

In addition to that, just about every one of our departmental op- 
erations has a type of on-the-job training that is open to new em- 
ployees and to anyone who needs to be trained for the specific re- 
quirements of a particular job. 

Mr. Roybal. That doesn't qr ite answer the question, particularly 
with regard to qualifications of the individual that goes to work for 
you. 

Mr. Dixon. As far as the particular qualifications are concerned, 
we are talking about probably around 1,500 different jobs. Each 
one of those jobs is fully described and the qualifications are stated 
in writing so that when we are considering applicants, we are look- 
ing at the background and experience the particular applicant has 
and weighing that against the particular requirements of those 
openings that we might have at any given t'me. So it will vary, de- 
pending upon the individual person that we are looking at and the 
jobs that we have available. 

Mr. Roybal. So the openings, then, are not all in the sales field? 

Mr. Dixon* No. We are talking about openings in our sales area 
and in the field throughout the country. 



ERIC 



' 26 



23 



Mr. Roybal. And you are not necessarily looking for former col- 
lege professors or college graduates, but people who have had some 
kind of experience related to the particular position that is opened. 

Mr. Ddcon. Yes. 

Mr. Roybal. Thank you, Mr. Chairman. 

[The following information was subsequently received from Mr. 



Hon. Edward R. p ">ybal, 
House of Ret .-tatives, 
Washington, D.Q 

Dear Conokjwsman Roybal: During the recent opportunity we had to testify 
before the U.S. House of Representatives Select Committee on Aging, we may not 
have fully responded to your question on the qualities we seek in our personnel and 
the types of training available to successful candidates. 

After discussing the question in a general way as it applies to selection and place- 
ment throughout our organization, it occurred to us that the focus of your question 
was directed more toward candidates for sales positions. In the interest of clarifying 
our response, the following may be helpful to you: 

In seeking people of all ages who can be successful in marketing and selling our 
products, we are not necessarily looking for long and successful selling experience. 
We offer extensive training for applicants who nave the desire and the potential for 
success. . 

In identifying such qualities, our general managers look for people who desire to 
succeed in business where, in addition to financial success, there is an opportunity 
to gain personal satisfaction from doing the type of work that provides a needed 
service. We term this quality "Mission", which we define as desire to make a contri- 
bution to the lifestream of humanity, making the personality of mankind a little 
better and life a little richer. Our plans of protection are oriented to that objective 
really, of helping people help themselves— particularly in providing for some finan- 
cial security against those inevitable and costly conditions: illness, injury, death. 

Thus, the type of person we're looking for is probably people oriented and dedi- 
cated to the ideal of helping others; He or she has a greater than usual capacity for 
empathy and a high level of sensitivity to the needs of others. Of course, any past 
experience or success that suggests good communication skills, tendency to be a self- 
starter, and ability to organize and manage his/her own time is beneficial. 

The enclosed booklet entitled "Mission" defines these qualities more completely 
and may be of interest to you. Please note on the page labeled "Mission", the state- 
ment, <r Mutuf ' of Omaha offers you a career you can work at no matter how old 
you become, no matter how much money you make. As long as there are people who 
need your help you have a career." 1 

In regard to training, Mutual of Omaha operates National Sales Training centers 
in four locations: Omaha, San Francisco, Pittsburgh, and Miami. All new sales per- 
sonnel have the opportunity to attend four formal seminars or schools in their first 
two years with our organization. This totals 20 to 25 days of formal training at the 
beginning of a career, combined with extensive agency level training working with 
successful professionals. This extensive professional development effort continues 
throughout an individual's association with our Companies as new coverages are in- 
troduced and the need for refresher training occurs. 

As to qualifications for potential associates in our organization, you may find the 
attached press interview with our Chairman, Mr. Skutt, and some other corporation 
executives of interest 1 

We appreciated the opportunity to make our programs known to the Select Com- 
mittee and hope this additional information will be useful to you. Please let us 
know if we can assist you in any other way. 



Dixon:] 



Mutual of Omaha, 
Omaha, Nebr., November 25, 1981. 



Sincerely, 



Jack Dixon, 
Director of Personnel 



The Chairman. Thank you, Mr. Roybal. 
Mrs. Fenwick. 



1 Retained in committee files. 



ERJ.C 




24 

Mrs. Fenwick. Thank you, Mr. Chairman. 

I would like your opinion on social security retirements and how 
th ^y might affect, or depend on, the employment of older people. 

When I came down here I was hoping that we could move to 
eliminate any cuts in social security benefits for those who chose to 
work after the age of 65 and before the age of 72. If they want to 
work and are paying their social security taxes, why they can't go 
on working and get the benefits? 

Also, I would like to hear your opinion of the reduced social secu- 
rity benefits that come with retirement at 62, and the whole ques- 
tion of the retirement age in view of the increase in longevity. 

What is your opinion as to the age of retirement? 

Mr. Skutt. You put your finger on something that is very seri- 
ous—that is why you asked it, I guess. 

First of all, we think it was a desirable move to expand the earn- 
ings allowance to $5,500 recently. I think it was very unfair previ- 
ously to keep it so low. There was no incentive for someone on 
social security, however low their social security might have been, 
to earn more money on the outside. So, I think that is a step in the 
right direction. I assume that might possibly.be extended. 

Beyond that, I think you just have to take a hard look at the 
problem. It is not funded, and you don't have the reserves that 
should be there that we have to have in the insurance business. If 
you read this annual report of ours, you will see we have all these 
reserves. The reserves are held to meet future obligations which 
are aoout to occur because sickness, injury, and death are inevita- 
ble. They are bound to occur. 

I am afraid that in the zeal to do so much with the social secu- 
rity system, it suffered from a lack of professional attention to the 
reserve requirements. 

Other than that, I have nothing to say except to commend those 
who are working on the problem here who realize it is a problem 
and that it may involve some sacrifices here and there to maintain 
the solvency of the system. 

Mrs. Fenwick. Thank you. It is a problem. One wonders how to 
encourage continued activity on the part of those who wish to be 
active and at the same time help those who are retired and want to 
retire. Thank you. 
The Chairman. Thank you, Mrs. Fenwick. 
Mr. Crockett. 

Mr. Crockett. No questions. 
The Chairman. Mr. Hendon. 
Mr. Hendon. No questions. 
The Chairman. Mr. Vento. 

Mr. Vento. I paid close attention to the comments on social secu- 
rity, but obviously that is not the purpose of this hearing. Let me 
get back to another problem. 

Later we are going to hear testimony that will specify problems 
with respect to companies' willingness to hire older executives and 
managers. You point out one problem in your work, involving 
health insurance. In some cases pension plans and social security 
also inhibit hiring older executives because of vested rights. We all 
like to see penalties removed but obviously in terms of social secu- 
rity that increases dramatically what our cost will be and that re- 



25 

luctance to eliminate earnings and we would like to look at un- 
earned income as a solution for social security. 

In the positive vein, have you begun to offer, through Mutual of 
Omaha, a program that would alleviate the pension problem for 
companies? 

Mr. Skutt. The pension problem? 

Mr. Vento. Yes. 

Mr. Skutt. We have expanded our pension program and are con- 
tinuing to do so. We feel that is one way to help meet the social 
security problem. 

We were asked here about, the reduction of benefits at age 62 and 
so forth. We think that the pension programs supplement social se- 
curity and they are integrated with it in most employer programs. 
And I think we have to take a realistic look at that, such as you 
suggested. 

Mr. Vento. Thank you. 

The Chairman. Did you finish? 

Mr. Vento. I realize the gentleman has to go. 

The Chairman. I would like to add that this committee has initi- 
ated proposed legislation to make a better pension provision for re- 
tired workers and also to encourage savings as an adjunct to social 
security. 

Mr. Carman. 

Mr. Carman. Thank you, Mr. Chairman. 

Mr. Skutt, I have long been an admirer of your television pro- 
gram, the "Wild Kingdom" and I never thought I would see an- 
other one, but since I have been here in the Congress I have seen a 
"wild kingdom" of a different sort. 

I certainly applaud the chairman's point about your attendance 
at this committee. Your testimony has been most helpful. I can tell 
you as an individual whose father is 80, and continues to practice 
law, and whose mother is 72, and continues to run a real estate 
agency, we do not allow too much grass to grow in our area. 

Something that would be interesting for me to hear from you is 
specifically in regard to social security. Are there any specific 
changes in the medical pension system or Federal benefit regula- 
tions or other regulations generally that you think might be useful 
in enhancing job opportunities for older workers. Apart from the 
business when obviously the inequities in penalizing people who 
work in losing their social security benefits, do you think there are 
any other areas that you could speak to for enhancing job opportu- 
nities for the elderly? 

Mr. Skutt. Mr. Carman, I thank you for your comment about 
"Wild Kingdom." And you will not get any bad thoughts looking at 
that show. 

Mr. Carman. That is not true of all shows today. 

Mr. Skutt. On how you are addressing the aforementioned prob- 
lem is very complex. I think Mr. Myers— Bob Myers— is one of the 
principal advisors now on your pension and your retirement and 
Social Security studies here in Washington. I can tell you that he is 
very highly regarded in the industry for his knowledge and experi- 
ence. I think the great step was made, as I responded to Mrs. Fen- 
wick, in expanding the earnings limitations, and I don't know of 



26 

any better practical approach to it right now than continuing pur- 
suit of these studies. 

Mr. Carman. Thank you, Mr. Chairman. 

The Chairman. Mr. Derrick. 

Mr. Derrick. I have no questions. 

The Chairman. Thank you very much. 

Mr. Shamansky. 

Mr. Shamansky. No questions. 

The Chairman. Mr. Clausen, would you like to ask any ques- 
tions? 

Mr. Clausen. I don't think so, Mr. Chairman. I found this to be 
very interesting and I want to commend you and all the members 
of the committee, and particularly the witnesses, for what I think 
is a timely and productive hearing. Having been in the insurance 
business myself— I have been a competitor of yours— I know the 
products. In partial response to what was said about the potential 
for employment, it obviously centered around attitude. Fitting the 
individual to a given work slot can best be served if it is done objec- 
tively and with a minimum amount of politics involved. And I 
wanted to make that statement. 

The Chairman. Mr. Skutt, we thank you very much for coming 
with us and bringing your distinguished associate, General Doolit- 
tle. We are very grateful to both of you. 

Mr. Skutt. You have been very nice to both of us. Thank you 
very much. 

[Mr. Skutt's answers to the written questions of Representative 
Mary Rose Oakar follow:] 

Question, What are the percentages of men vs women participants in your retiree 
program? 

Answer. While Mutual of Omaha was founded in 1909, our major growth has oc- 
curred since 1950. Therefore, the number of retirees is not large relative to our ap- 
proximately 18,000 associates. In our Home Office organization, we have 339 retir- 
ees, 57.8 percent women and 42.2 percent men. These retii^es receive pension bene- 
fits based upon salary and length of service through a retirement income plan fully 
funded by the Companies. The typical benefit for an employee with 25 years of serv- 
ice is 60 percent of average salary over the last 5 years cf employment, less 50 per- 
cent of the primary Social Security benefit. Sales associates are covered by a sepa- 
rate plan related to their tenure and personal production. 

Question. In clerical and service sector jobs experience is not highly valued; in a 
progi-am like yours which emphasizes experience are these workers able to partici- 
pate? 

Answer. Clerical and service workers may retire with full benefits under our Re- 
tirement Income Plan. Those who elect to continue working also continue to accrue 
benefits for years worked beyond age 65 on the same basis as years prior to age 65. 
Employees at all levels may continue to work past age 70 with Board approval. 

Question. In 1978 the average income for older men was almost twice that of older 
women; twice as many women as men have no pension coverage; in what may have 
these biases been made more equitable in your retiree program? 

Answer. Our Retirement Income Plan benefits accrue at the same rates regard- 
less of job level or sex. 

Question. Unemployment is 33 percent higher for women over forty, than foremen 
over forty and 80 percent of women who are employed are concentrated in dead-end, 
low-paying jobs. What special hiring practices, policies and corporate attitudes does 
your retiree program have with regard to this reality? 

Answer. We have been very successful in attracting women into the professional 
level jobs having career paths to management in our organization. Almost 40 per- 
cent of our professional level jobs are currently held by women. As a government 
contractor, we are committed to affirmative action planning and all of our policies 
and hiring practices are free of bias related to sex or age. 

O 



27 

Question, The Post Office and Civil Service Committee enacted a policy of part- 
time/flexi-time work for Federal employees. Also, I participated on a panel with a 
member of the Traveler's Insurance Company where a similar initiative was under- 
taken. What results, problems, etc., have you had with such initiatives? 

Answer. We have a fully implemented successful flex-time program in our Home 
Office which permits employees to schedule their daily working hours between 7 
a.m. and 5:30 p.m. The program has been very popular with employees and has pre- 
sented no significant problems for management. We also have an unlimited variety 
of part-time schedules to accommodate the available time of a sizable part-time 
workforce. We currently are studying approaches for providing additional options 
and incentives: for part-time employment for retired employees. 

Question. While parMime work has often been accused of hurting workers by 
keeping their wages and benefits down it clearly holds a great deal of promise for 
the elderly. What steps are you taking to assure that your program doesn't fall 
victim to those accusations? . 

Answer. Our part-time work force is compensated based upon job duties and re- 
sponsibilities at the same rates paid full-time workers for comparable work. 

The Chairman. Our next witness is Dr. Eberhardt Rechtin. Dr. 
Rechtin has been president and chief executive officer of the Aero- 
space Corp. since 1977. He has held posts in the U.S. Department 
of Defense as head of the Advanced Research Projects Agency and 
Assistant Secretary of Defense for Telecommunications. The Aero- 
space Corp. serves the defense and civil agencies of Government by 
applying science and technology to the solution of critical national 
problems. 

Mr. Rechtin, we are grateful to have you here and we welcome 
your statement. 

You all know you can either read your statement or put it in the 
record and summarize your statement. 

STATEMENT OF EBERHARDT RECHTIN, PRESIDENT AND CHIEF 
EXECUTIVE OFFICER, THE AEROSPACE CORP. 

Mr. Rechtin. Thank you, Mr. Chairman. With your permission, I 
would like to put my prepared testimony in the record. 
The Chairman. Without objection. 

Mr. Rechtin. Mr. Chairman and members of the Committee, 
thank you for your most complimentary invitation to appear before 
you and describe what we are doing about increasing the productiv- 
ity of our work force. 

But, before I begin, I would like to make a comment. Gen. Jimmy 
Doolittle, as you have just heard, for years was a member of the 
Aerospace Board of Trustees, was its vice chairman and is a joint 
hero of the Air Force, Navy, and Aerospace as well as to all the 
rest of us. He continues to consult Aerospace, not on the problems 
of aging but what to do in the future. 

The Chairman. That is good. 

Mr. Rechtin. Our company is a California nonprofit corporation, 
a federally funded Research and Development Center, engaged in 
engineering for national security programs. Our product is general 
systems engineering and integration, largely for the U.S. Air Force, 
and concerned primarily with the satellites and the launch vehicles 
this country uses for defense purposes. Our primary responsibility 
is the certification of readiness for launch of these vehicles and 
spacecraft. 

High on the customers' list of capabilities for which they pay 
Aerospace is "corporate memory," the cumulative experience of 

EMC 



28 

many hundreds of experts over more than 20 years and over 600 
satellite launches and operations. It is the long suit of our most ex- 
perienced people, those over about 50, who began in this space busi- 
ness 20 to 25 years ago. 

About 4 years ago we did away with a de facto mandatory retire- 
ment age. Lsay de facto because, although there was no formal re- 
quirement that employees leave at 65, there were policies, prac- 
tices, and incentives built into our retiring at age 65 or sooner. We 
now have a variety of options presented at regular and popular re- 
tirement planning discussion sessions. We hire at any age and pen- 
sion benefits vest in part after 4 years and completely at 7 years, 
and for the older people vestment can start as soon as 1 year. Re- 
tirees can receive their benefits and work as casuals on a reduced 
work week as well Retirees and their spouses are also covered by 
our health insurance plan— a msy'or financial benefit to them. 

As a result, , some 2 percent of our entire work force is now made 
up of people who might otherwise have left the company under 
previous policies and practices,, and there are examples attached. 
These people have "corporate memory," they have it in spades. 

Now, due to the ups and downs in the aerospace industry during 
the past two decades, and exacerbated by the anti technology wave 
between about 1967 and 1977, there are strange anomalies in the 
distribution of the work force available to the aerospace industry. 
There are people available from ages 25 to 30, there is a reduced 
availability between 30 and 40 and then normal numbers from 40 
to 50. Worse yet, national projections indicate a serious gap be- 
tween the supply and demand of graduating engineers in the late 
1980's. That means that there is going to be a serious loss of pro- 
ductivity in the aerospace industry in the 1980s. To deal with this 
projection, Aerospace intends to further develop employment poli- 
cies which will more fully utilize the experience and knowledge of 
our older workers. 

We have some perceptions about the older workforce which I 
would like to share with you: 

First of all to us, retirement is "not having to work." Retirement 
does not necessarily mean withdrawing from the work force. Those 
are two different things. 

Second, retirement comes to everyone and it is best for both the 
individual and the company to plan ahead; an unplanned retire- 
ment is a mistake. 

Third, the idea that a career consists of a steadily increasing 
work load, a steady increase in responsibility load and compensa- 
tion, followed by an abrupt termination is illogical. After all, why 
should someone have a career ended at its peak? A more rational 
pattern, we think, is that that peak should be rounded off. This 
rounding off is probably different for every individual and every 
job. As has been, remarked before, some careers should be rounded 
off at 25, 45, 65; it is different for everyone. What are needed are 
options mutually acceptable to employee and the company. 

There seems to be good reason not to keep top managers in the 
same position too long. Management needs refreshing, especially in 
these times of accelerating changes in both technological and socio- 
logical environments. So, we make a practice of reviewing the ca- 
reers of managers in our company who have been doing the same 



• .■■32 



29 

job for ten or more years and of considering changes in responsibil- 
ity and position to improve productivity, but that practice is inde- 
pendent of age. 

At the risk of going beyond my area of expertise, I would like to 
suggest some legislative actions that might improve the situation 
for older workers. These suggestions come from my own experience 
as well as that of the Aerospace Corp. 

First, the maximum vesting period permitted under qualified 
pension plans be gradually reduced over a statutorily mandated 
period to 5 or fewer years. I agreed with the consultant's report to 
you that said that portable pensions were probably not in the 
cards, since we tried that in other companies in the aerospace busi- 
ness and it didn't work out, but 90 percent of the problem was vest- 
ing. Requiring a long period of service before vesting clearly works 
against the older retiree-worker on a second career. I note that uni- 
versities, through the TIAA/CREF plan have essentially solved 
that problem and employees can move freely from university to 
university without having to meet new service requirements before 
vesting. 

The Chairman. My memory is that about 50 percent of the re- 
tired workers today are covered under a pension plan while they 
are working and only about 20 percent actually receive any pen- 
sion when they retire under the present picture. 

Mr. Rechtin. My experience in the engineering community, Mr. 
Chairman, is essentially the same as that. I would certainly en- 
dorse the proposals before the Select Committee along these lines 
and I know some of them are already in the works. 

I think we need to recognize that "rounding off the peak" of a 
career is biologically, psychologically, and financially sound. One of 
the better ways of accommodating this rounding off of the peak is 
by part-time work and consulting. But present practices and laws 
do not serve as an incentive for such productive work. For exam- 
ple, social security benefits are decreased if the individual has 
earnings. Pension benefits in most plans are not paid if the individ- 
ual works part time, so the individual is forced to consult with 
other companies than his original employer. Government workers 
and military people, when retired, are penalized for working else- 
where in the government, it has been called "double dipping." In 
short, we have all been treating retirement as an abrupt stop to an 
increasingly compensated career. I believe we could retain years of 
productive effort if we — the government, the industry, and the indi- 
viduals—made better provisions for "rounding off the peak." 

Thank you again for your invitation. Our company was honored 
by it. 

[The prepared statement of Mr. Rechtin follows:] 

Prepared Statement of Eberhardt Rechtin, President and Chief Executive * 
Officer, The Aerospace Corp., El Segundo, Calif. 

Mr. Chairman and members of the Committee, thank you for your most compli- 
mentary invitation to appear before you to describe what our Corporation is doing 
about increasing the productivity of our work force, particularly the older part of it. 

Our company is a California nonprofit corporation, a Federally Funded Research 
and Development Center (FFRDC), engaged in engineering for national security pro- 
grams. The total staff is about 4,500 people, half of whom are degreed scientists and 
engineers. We do no manufacturing. Our product is general systems engineering 



30 

and integration, largely for the U.S. Air Force, and concerned primarily with the 
satellites and the launch vehicles this country uses for defense purposes. Our pri- 
mary responsibility is the certification of readiness for launch of these vehicles and 
spacecraft. To accomplish that purpose we engage in research, conceptual design, 
technical support to national security agencies, technical monitoring of the major 
associate contractors who build the vehicles and satellites, and analysis of the flight 
results. 

These facts about Aerospace have a direct bearing on how we manage our only 
real asset— the people of Aerospace. It is the knowledge, experience, imagination, 
initiative, wisdom and enthusiasm of all of us at Aerospace that each year convinces 
our customers to continue to rely upon us. High on the customers' list of capabilities 
for which they pay Aerospace is "corporate memory," the cumulative experience of 
many hundreds of experts over more than twenty years and over 600 satellite 
launches and operations. It is the long suit of our most experienced people, those 
over about 50, who began in this space business 20 to 25 years ago. 

It- should be no surprise that we have innovative personnel policies and are 
known in the industry as a "people-oriented company." To do our job well we must 
be people oriented. In addition to the policies affecting the older part of our worfc 
force, which I will address in more detail in a minute, we have compensation gener* 
ally competitive with industry, exceptional Affirmative Action programs, company- 
sponsored educational programs, firstrof-a-kind transportation programs and cele- 
brations of Heritage Weeks— all aimed at making Aerospace attractive to the people 
who are our most important asset. 

Turning now to the older members of our work force: about four years ago we did 
away with a de facto mandatory retirement age. I say de facto because, although 
there was no formal requirement that employees leave at 65, there were policies, 
practices and incentives built into our employment culture that resulted in employ- 
ees customarily retiring at age 65 or sooner. We now have a variety of options de- 
scribed in more detail in the attachments. These options are presented at regular 
and popular retirement planning discusson sessions. We hire at any age and pension 
benefits vest in part after four years and completely at seven years. Pension bene- 
fits are credited as long as the employee is with us. Retirees can receive their bene- 
fits and work as casuals on a reduced work week as well. Retirees and their spouses 
are also covered by our health insurance plan— a major financial benefit to them. 

As a result, some 2 percent of our entire work force is now made up of people who 
might otherwise have left the Company under previous policies and practices. We 
anticipate the percentage will increase for demographic reasons. More importantly, 
the older worker-retirees have contributed engineering achievements that far ex- 
ceeded in value to the company the cost of their salaries. They have "corporate 
memory" in spades! 

Due to the ups and downs in the aerospace industry during the past two decades, 
and exacerbated by the anti-technology wave between about 1967 and 1977, there 
are strange anomalies in the distribution of the work force, available to the aero- 
space industry. There are people available from ages 25 to 30, a reduced availability 
between 30 and 40 and then normal numbers from 40 to 50. Worse yet, national 
projections indicate a serious gap between the supply and demand of graduating en- 
gineers in the late 1980's. To deal with this projection. Aerospace intends to further 
develop employment policies which will more fully utilize the experience and knowl- 
edge of our older workers. 

Being an R&D organization, it is natural for us to do R&D on this problem. To 
that end, we are currently engaged in designing a research project in cooperation 
with^ the Andrus Gerontology Center of the University of Southern California. It 
will investigate the levels of various job-related skills of 200 older and younger Aero- 
space employees (prinarily engineers and scientists) and will research how those 
skills affect company performance. The results should help us with training pro- 
grams, job assignments, transfers within the company and changes in job responsi- 
bilities in accordance with the strengths of employees, and training programs. We 
expect this research to improve the effectiveness of the company by enhancing pro- 
ductivity and employee satisfaction. 

Another characteristic of our company, generated by the kind of work we do, is 
the ability to look at tough problems with the kind of emotional detachment. We 
call it "objectivity," but it is almost a culture with us. So, we have few hesitations in 
accepting some of the following premises: 

Retirement is "not having to work." Retirement does not necessarily mean with- 
drawing from the work force. 

Retirement comes to everyone and it is best for both the individual and the com- 
pany to plan ahead. 



31 



The idea that a career consists of a steadily increasing work load, responsibility 
load, and compensation, followed by an abrupt termination is illogical. After all, 
why should someone have a career ended at its peak? A more rational pattern 
would recognize that the "peak" should be rounded off. This rounding off is prob- 
ably different for every individual and every job. What are needed are options mu- 
tually acceptable to employees and the company. 

There seems to be good reason not to keep top managers in the same positions too 
long. Management needs refreshing, especially in these times of accelerating 
changes in both technological and sociological environments. So, we make a practice 
of reviewing the careers of managers in our company who have been doing the same 
job for 10 or more years and considering changes in responsibility or position to im- 
prove productivity. This practice is independent of age. 

At the risk of going beyond my area of expertise, I would like to suggest some 
legislative actions that might improve the situation for older workers. These sugges- 
tions come from my own experience as well as that of the Aerospace Corporation. 

Further increase the upper limit of IRA and Keogh Plans. At Aerospace as in 
other nonprofits and universities we are eligible for Section 403(b) for the Internal 
Revenue Code which allows our employees to have the Company put aside, before 
tax, part of their income for retirement. It works very well across a broad range of 
salaries and, as a matter of fact, is a strong attraction for engineers and scientists to 
Aerospace. 

The maximum vesting period permitted under "qualified" pension plans be gradu- 
ally reduced over a statutorily mandated period to (e.g.) five or fewer years. I was 
personally disturbed by the Department of Labor report to your Committee that 
concluded that a 7 percent per year turnover implied that there was no problem in 
our defense business. 7 percent per year and a 10-year service requirement before 
vesting means that at least 50 percent of the people in such plans would have no 
accrued retirement for 10 years of work and a significant fraction will have no 
useful accrual after a whole career. I agreed with a consultant's report 1 to you that 
said that portable pensions were probably not in the cards and 90 percent of the 
problem was vesting. It is true that shorter vesting periods would cost money. 
Indeed, a principal objection by many companies is the perceived "high costs." If 
that perception is true, it implies that a major fraction of employees must now be 
being denied future retirement benefits simply because their careers call for mobil- 
ity. If the perception is false and the added costs are minimal, then snorter vesting 
should not be difficult. Requiring a long period of service before vesting clearly 
works against the older retiree-worker on a second career. I note that universities, 
through the TIAA/CREF plan, have essentially solved that problem and employees 
can move freely from university to university without having to meet new service 
requirements before vesting. 

W* need to recognize that "rounding off the peak" of a career is biologically, psy- 
chologically, and financially sound. One of the better ways of accommodating this 
rounding off of the peak is by part-time work and consulting. But present practices 
and laws do not serve as an incentive for such productive work. Social Security 
benefits are decreased if the individual has earnings. Pension benefits in most plans 
are not paid if the individual works part time, so the individual is forced to consult 
with other companies than his original employer. Government workers and military 
people, when retired, are penalized for working elsewhere in the government 
("double dipping"). In short, we have all been treating retirement as an abrupt stop 
to an increasingly compensated career. I believe we could retain years of productive 
effort if we— the Government, the industry and the individuals made better provi- 
sions for "rounding off the peak." 

Thank you again for your invitation. Our company was honored by it 

ATTACHMENTS 

L Importance of Retention of Senior Engineers and Scientists. 

2. Older Worker Options at the Aerospace Corporation. 

3. Aerospace Retirement Plan Provisions that Contribute to the Retention of 
Older Workers. 

4. Joint Research Project with the USC Andrus Gerontology Center. 



1 Paper by Frank Cummings presented Apr. 6, 1978, to the Retirement Income and Employ- 
ment Subcommittee. 



35 




32 

ATTACHMENT 1.— IMPORTANCE OF RETENTION OF SENIOR ENGINEERS AND SCIENTISTS 

Due to several upe and downs in the Aerospace Industry during the past two dec- 
ades, there are strange anomalies in the distribution of the present work force. 
Aerospace is hiring engineers and scientists at all ages, from 23 to 68, but the distri- 
bution of the new-hires shows a remarkable division with most new employees being 
concentrated in age groups from 25 to 30 and 40 to 50. Thus, in the decade ahead, a 
greater number of experienced workers will reach normal retirement age. There 
will be a gap in the experienced population from whom the successors would be nor- 
mally recruited. Furthermore, national projections indicate a serious gap between 
the supply and demand of graduating engineers in the late 1980's. To deal with this 
projection, Aerospace feels it is most important that the Company further develop 
employment policies which will fully utilize the experience and knowledge of our 
older workers. 



36 



A-8583 

A bigger crunch in the near future 



PROJECTED SUPPLY & DEMAND OF ENGINEERING GRADUATES 



70.000 



65.000 



60.000 



55,000 



50.000 



45.000 



















N PROJ 
DEM/ 


:CTED 
NO 
















-A 




/ 
/ 






PROJECTED 
SUPPLY 

















1975 



The chart at the left already reflects 
the Imminent antf of the baby-boom. 

And, the National Center for 
Educational Statlstlcshas calcu- 
lated that if the current 1.5 percent 
ofthepopulallonalage22contlnues 
to earn Bachelor Degrees In Engl- 
neerfng.the number of graduates 
available In the years 1 987-2000 
will fall far short of the nation's 
needs. 

This demand, as shown, will 
reach 70,000 annually by the year 
2000, with the projected graduates 
available at that time not reaching 
the 55,000 level. 



I960 



1985 



1S90 



1995 



2000 



37 



Engineering Huws Record 
April 30. 1981 



A 6542 



MTS Age Distribution as Percehfage of All Hires - Oct 80 -May 81 




AVERAGE ACE (MEAN) - 41.0 YEARS AVERAGE AGE, ALL MTS: FEB '81 - 45.4 YEARS 

FED 75 - 44.0 YEARS 



36 



ATTACHMENT 2.— OLDEt WORKXR OPTIONS AT THI AXUOSrACI CORPORATION 

Aerospace, in conformance with California State law, hat no mandatory retire- 
ment age. ThU Policy went into effect January 1978. Even though the Company's 
experience may be considered to be limited (our total population is 4,300 and only 
four years have passed since the passage of the Federal and State legislation dealing 
with mandatory retirement am), we are pleased that now more than 2 percent of 
our entire workforce are people who might otherwise have left the Company under 
previous policy limitations. The details are as follows: 

7. 47 full time regular employ** are 65 and older.— The 47 full-time employees 
over age 65 are at all levels, from office workers, shop and service workers, to engi- 
neers and scientists. The oldest employee in the Company is 70. He is an excellent 
engineer and we are proud to say that he was hired by Aerospace when he was 68 
year old. 

II. 33 Aerospace retirees continue to serve the Company as consultant*— The 83 re- 
tirees who continue to serve the Company as consultants are former executives, 
members of management, administrators, and the Company's technical staff. Their 
services are used in many ways. A few examples are as follows: 

A. Solving technical and engineering problems: In 1980, Aerospace was requested 
by the Air Force to establish a technical review team for the Atlas E and F boosters 
currently used for space launches to satellite systems. These boosters were declared 
surplus by SAC in 1964 a* * have been used subsequently for flight tests of new re- 
entry systems (ABRES Program) and orbit satellites. Although the boosters have 
performed quite reitetty, with 90 percent success in 70 flights since January 1967, 
two successive failures during 1980 caused understandable concern about possible 
aging-out of the equipment For this reason the Review Team was established. 

Much of the work of the Team has been accomplished by three members who are 
retired former employees. During their employment with Aerospace all three had 
applicable experience, one responsible for light test operations of the Atlas boosters, 
another responsible for engine evaluation and refurbishment during the ABRES 
launches in the 1960s, and the third responsible for booster propulsion on space 
launches. The latter had also participated in the rocket engine development fo*- 
Atlas during the late 1950's. 

In addition to the technical experience and valuable historical data that these 
men provide, they also have an unusual objectivity toward the job. Their only con- 
cern is with the technical aspects of the program, and they have none of the pres- 
sures to iuatify past history that can sometimes interfere with a dispassionate evalu- 
ation of booster failures. 

To date, as a result of Team recommendations the Air Force has undertaken an 
overhaul program of the rocket engines for the final 20 boosters in the inventory. 
This program is expected to improve reliability of the engines, which were last 
tested m a hot firing 13 to 17 years ago. With other booster improvements to en- 
hance reh£bility we expect to maintain cn acceptable flight performance. If this is 
successful, »ie Air Force will save some $15 million per launch. 

B. Training* programs: In 1980, the C>mpany hsd an extensive recruiting program 
which requires that managers interview unprecedented numbers of job applicants. 
To deal with this problem, a special Employment Interviewing Training Program 
was designed and implemented by a t**m of retired managers. These retirees 
brought to their task their knowledge &* the Company's employment policies and 
practices, years of successful experience a. former managers and credibility as com- 
petent trainers. Their program improved the selection and interviewing skills of 
do2ei ML of nianagers, thereby contributing to the Company's on-going productivity 
and effectiveness. 

In the field of technical training, a retired senior executive is designing and devel- 
oping a course in aerospace systems engineering which will be followed up with 
other sophisticated training programs, such as spacecraft engineering. The use of 
the experience and the expertise of a retiree in this manner not only contributes to 
the Company s effectiveness, but saves the efforts that vould have been required to 
divert full-time employees from their normal line responsibilities in order to develop 
and implement this kind of program. 

A retiree is also assisting in the development of an Affirmative Action Programs 
management handbook which will be distributed to all line managers and vnll en- 
hance the overall effectiveness of management in dealing with Affirmative Action 
and Equal Opportunity issues. 

M 6 retirees continue to work as casual employees while drawing their pension 
benefits,— The six retirees who are continuing to work in Casual status are taking 
advantage of the pension plan improvement which was adopted at the beginning of 



ERIC 




37 

1981. They are primarily office shop and service workers and are performing impor- 
tant and meaningful tasks in locations throughout the Company. 

IV. 2 retirement age employees are now working on a scheduled part-time basis.— 
The two part-time employees are retirement age professionals who are reducing 
their workload in gradual approach to retirement. 

ATTACHMENT 3. — AEROSPACE RETIREMENT PLAN PROVISIONS THAT CONTRIBUTE TO THE 
RETENTION OF OLDER WORKERS 

The Aerospace Employees' Retirement Plan is a qualified noncontributory defined 
benefit plan. Benefits are accrued for each year of service as a percentage of annual 
earnings and so the benefits in total are based on a career average salary. Under 
normal employment conditions employees become partially vested after five years of 
service and fully vested after seven years. However, special vesting provisions are in 
effect for older workers. Any worker terminated due to. a reduction-in-force after 
age 50 is eligible for an accelerated vesting schedule which is related to both the 
employee's age and length of service. Partial vesting is available with as little as 
one year of service and full vesting is given to any employee who is laid off between 
the ages of 55 and 65. Finally, all employees become fully vested in their retirement 
benefits at age 65 even though they may not have met the normal service require- 
ments. 

As a further accommodation to older workers, the retirement plan does not pro- 
hibit participation to employees who are hired at any age. Under ERISA, employers 
may deny retirement plan participation to employees hired within five years of 
reaching their retirement plan's stated normal retirement age. In most other com- 
panies this means that workers hired after the age of 60 are not permitted to 
become participants in company-sponsored pension programs. We at Aerospace 
admit new employees to our plan at all ages. 

Another step beyond ERISA's minimum requirements is the Aerospace plan's pro- 
vision that employees working beyond age 65 may continue to accrue retirement 
benefits. Many pension plans cease crediting benefits to employees after age 65. We 
feel that such a practice is unfair and that our older workers should be entitled to 
continue to earn retirement benefits as long as they remain in the company work 
force. This permits those who had not accrued reasonable retirement incomes in 
their lifetime to gain a bit more toward more financial security in their retirement 
years and it also serves to help us retain the capable older worker on our staff. 

Finally, the most recent adopted improvement to the Aerospace Retirement Plan 
makes it possible for retirees to work on a reduced workweek while continuing to 
receive their retirement benefits. Starting this year these retirees may be reclassi- 
fied as Casual employees, which means that their workweek must be less than 20 
hours (1,000 hours per year). If employed in that category, they may continue to re- 
ceive their full pension benefits, while effecting a gradual transition into retire- 
ment. 

All of these plan revisions have been deigned and implemented over the years to 
give older workers all feasible options for continuing employment as well as a fair 
share of the employment benefit package As part of this commitment, the corpora- 
tion s Retirement Plan Committee includes one member who is a retired employee. 

ATTACHMENT 4.— JOINT RESEARCH PROJECT WITH THE USC ANDRUS GERONTOLOGY 

CENTER 

We are highly concerned that we identify and utilize the skills of our employees, 
whatever their ages, to the best possible advantage. To that end, we are currently 
engaged in a research project in cooperation with the Andrus Gerontology Center of 
the University of Southern California. This project is under the direction of Dr. Iseli 
Krauss at USC and fundev by the National Institute of Aging. It will investigate the 
levels of various job related skills of 200 older and younger Aerospace employees 
(primarily ^ngirsers and scientists) and will research how those skills may impact 
performance. It is anticipated that from this investigation we will learn more about 
the relationship of these skills to high levels of performance, perhaps as a function 
of aging. This should improve our ability to more effectively assign those retirement 
age employees with good, skills who wish to continue working whether or not those 
skills ore oneu from previous work. In addition, we hope to be able to better utilize 
skills of pre-retirement employees by suggesting relevant changes in job responsibil- 
ities in accordance with the strengths ,of employees. Furthermore, training pro- 
grams can be developed based the research results which could help close any 
gap that might be identified between skills and company needs. It is expected that 



38 

this research will improve the overall effectiveness of the company by enhancing 
productivity arid employee job satisfaction. 

[Mr. Rechtin's answers to the written questions of Representative 
Mary Rose Oakar follow:] 

Question. What are the percentages of men vs. women participants in your retiree 
programs? 

Answer. All employees participate in our retiree program on an equal basis. All 
employees become participants in the Plan after one year of employment and vest 
on the same vesting schedule. All employees and their spouses are invited to partici- 
pate in our Preretirement Planning Workshops. Attendance indicates that there is 
no difference between the percentage of women employees participating and the 
percentage of male employees participating. 

The percentages of men vs women participants in our retirement plan may be 
summarized as follows: 



Men Wcmen 



Number Percent Number Percent 



Retirees from active service 1 


326 


66 


166 


34 


AH retirees 1 


473 


67 


229 


33 


AH employees participants in the Aerospace Retirement Plan 1 


2,420 


71 


995 " 


29 


MI employees (October 1981) 


2,806 


69 


1,269 


31 


AH employees age 65 and over. „ 


32 


73 


12 


27 



x Asof January 1. 1981. 



The foregoing indicates that the ratio among male and female retirees (partici- 
pants in the retiree program) is essentially identical to the respective percentages of 
men and women in the active work force. The ratio of men and women employees 
over age 65 is also essentially identical with the corresponding ratio in the work 
force under age 65. 

Question. In clerical and service sector jobs experience is not highly valued; in a 
program like yours which emphasizes experience are these workers able to partici- 
pate? 

Answer. Aerospace does vnlue the skills of its clerical and service employees. Em- 
ployees in all occupational groups participate in the retirement program, and on the 
same basis, regardless of whether they are employed in clerical and service sector 
jobs or in others. The proportion of service and clerical work to others. among retir- 
ees is essentially identical to their respective ratios in the active work force. 

The provisions for participation in the Aerospace Employees' Retirement Plan are 
the same for all employee occupational groups. All employees start to participate in 
the Plan after completing one year of service, i.e., if 1000 hours of service have ac- 
crued during the 12 consecutive month period beginning with the employee's date of 
hire and ending with the first anniversary of that date of hire. The vesting provi- 
sions are the same for all employees: 

Percentage of accrued retirement income payble 



Completed years of service: Amount 

First 4 years , 0 

First 5 years 33% 

First 6 years 66% 

First 7 years 100 



In the history of the Aerospace employees retirement plan, the proportion of cleri- 
cal and service workers receiving pension benefits under the plan is, in fact, greater 
than the percentage of other workers receiving such benefits. 

In adddition to regular employees over age 65, some employees continue to work 
after retirement on a casual basis which permits them to continue to receive their 
pension beneifts. Although there are fewer than 10 retirees now in that status, the 
majority of them are women office workers whoee experience and competence is 
valued by the company. Because of their knowledge and skill, they are able to pro- 
vide necessary occasional services to the Company on a part-time basis after retire- 
ment. 




39 

Question. In 1978 the average income for older men was almost twice that of older 
women; twice as many women as men have no pension coverage; in what way have 
these biases been made more equitable in your retiree program? 

Answer. As noted above in response to questions 1 and 2, all employees, men and 
women, are participating under, the Aerospace retirement plan ana vest in its bene- 
fits on the same basis; the proportion of men to women retirees is the same as their 
representation in the active work force. 

The pension benefit formula of the ^Aerospace Employees' Retirement Plan has a 
very low oflset integration amount with Social Security benefits; therefore, the pen- 
sion benefits of lower paid employees are normally a higher percentage of their 
final salary (and a higher percentage of their preretirement disposable income) than 
are the benefits of higher paid employees. Also, the Aerospace retirement plan has 
an earlier vesting schedule than most retirement plans; this is advantageous to 
women who, historically, have entered, left and reentered the work force more fre- 
quently than men. 

Question. Unemployment is 33 percent higher for women over forty than for men 
over forty and 80 Percent of women who are employed are concentrated in dead-end, 
low-paying jobs. What special hiring practices, policies and corporate attitudes does 
your retiree program have with regard to this reality? 

Answer. Aerospace has adopted equal employment opportunity practices pursuant 
to which individuals arc hired without regard to race, color, religion, age, sex, na- 
tional origin, or handicap. Special affirmative action outreach programs are con- 
ducted in the form of women's recruitment symposia, special advertising, etc. As the 
results are felt within the employee population, the effects of these efforts will be 
increasingly reflected in our retiree program- 

Within Aerospace there are promotional opportunities, job family progressions 
and procedures for upward movement in all employee categories, men and women 
participating on an equal basis. During the Affirmative Action report year, July 1, 
1980 through June 30, 1981, 1,172 female employees received 275 promotions for a 
promotional increase rate of 23.5 percent During the same period, 2,677 males re- 
ceived 309 promotions for a promotional increase rate of 11.5 percent The popula- 
tion of women in our engineering work force has increased as follows: 

In 1975 there were, 35 women engineers and scientists at Aerospace representing 
2.1 percent of the total technical staff. By 1981, the number had risen to 159 women 
comprising 7.1 percent of this year's technical staff. Attached is a listing of special 
recruiting efforts made to recruit women engineers and scientists during the past 
two years, and a partial listing of the CY 1932 efforts. 

Women comprise the majority of the individuals whose graduate engineering edu- 
cation for Master of Science degrees is sponsored and paid for by the Company. 

Question. The Post Office & Civil Service Committee enacted a policy of part- 
time/flexi-time work for Federal employees. Also, I participated on a panel with a 
member of the Traveler's Insurance Co. where. a similar initiative was undertaken. 
What results, problems, etc., have you had with such initiatives? 

Answer. Aerospace has always had a program of utilizing part-time employees 
and has adopted a modified flexi-time program this year. Part-time employees who 
have retired from Aerospace, working less than the ERISA 1,000 hour rule, continue 
to accrue benefits under the Plan. Retired former employees who continue to work, 
but more than the ERISA 1,000 hour rule, continue to accrue benefits under the 
Plan. We believe the corporate policies reflected in these provisions provide the op- 
portunity for retirees who wish to do so to continue to work, on a full-time or part- 
time basis, with a, combination of appropriate retirement benefits. On the other 
hand, it affords the Company the opportunity to- utilize the valuable services, on a 
flexible basis. 

Of the Company's 124 part-time employees, 48 percent are women and 52 percent 
are men. 

Question. While part-time work has often been accused of hurting workers by 
keeping their wages and benefits down it clearly holds a great deal of promise for 
the elderly. What steps are you taking to. assure that your program doesn't fall 
victim to those accusations? 

Answer. Employees nearing the normal retirement age are requested to advise 
the Company of their plans regarding continued employment In discussing the indi- 
vidual's plans, part-time employment is considered. If the individual's capabilities 
and the Company's needs permit it, part-time employment is arranged. In other 
cases the individual is employed as a casual" employee, that is, working on an oc- 
casional basis for fewer than 20 hours per week. In still other cases, individuals are 
engaged as consultants. 

Attachment 



40 

Women's recruitment events—May 1980 to June 1982 
Activity and date: 

The Aerospace Corporation Women's Symposium May 1980. 

Women's Career Conference— New Orleans, La Aug. 16, 1980 

Purchase University of Texas (El Paso), Society of Sept. 12, 1980. 

Women Engineers Resume Book. 
Purchase Cornell University, Society of Women Engi- Sept. 12, 1980. 

neers Resume Book. 
Purchase University of Hartford, Society of Women En- Oct. 11, 1980. 

gmeers Resume Book. 
Purchase University of California— Berkeley, Society of Oct. 22, 1980. 

Women Engineers Resume Book. 
Purchase Purdue University, Society of Women Engi- Oct. 30, 1980. 

neers Resume Book. 
Massachusetts Institute of Technology, Society of Women Nov. 2, 1980. 

Engineers Career Fair. 
Purchase University of Colorado, Society of Women Engi- Nov. 18, 1980. 

neers Resume Book. 
^Purchase Columbia University, Society of Women Engi- Nov. 18, 1980. 

neers Resume Book. 
Purchase Washington University, Society of Women En- Nov. 18, 1980. 

gmeers Resume Book. 
Purchase University. of Southern California, Society of Nov. 18, 1980. 

Women Engineers Resume Book. 
University of Michigan, Society of Women Engineers Dec. 4, 1980. 

Banquet 

Purchase Utah State University, Society of Women Engi- Dec. 4, 1980. 

neers Resume Book. 
Purchase Northwestern University, Society of Women Dec. 12, 1980. 

Engineers Resume Book. 
Purchase University of Delaware, Society of Women En- Dec. 22, 1980. 

gmeers Resume Book. 
Pv^chase Georgia Institute of Technology, Society of Dec. 30, 1980. 

Women Engineers Resume Book. 
University of California— Berkeley Society of Women Jan. 15, 1981. 

Engineers Banquet 
University of California— Los* Angeles, Society of Women Jan. 28, 1981. 

Engineers "Evening with Industry". 
Columbia University, Society of Women Engineers Feb. 5, 1981. 

Career Dinner. 

Kansas State University, Society of Women Engineers Feb. 5, 1981. 
Banquet. 

Purdue University, Society of Women Engineers Job Fair.. Feb. 14, 1981. 
Three $100 Cash Awards— Women Engineer Students, Feb. 15, 1981. 

Purdue University. 

Women in Science Conference— Los Angeles, Calif. Mar. 21, 1981. 

Purchase University of Texas (Austin), Society of Women Mar. 24, 1981. 

Engineers Resume Book. 
California State University, Society of Women Engineers Apr. 10, 1981. 

"Evening with Industry*. 

Magazine Advertisement, "U.S. Woman Engineer" May 1981. 

Woman s Employment Options Conference, Los Angeles .... May 30, 1981. 
Advertisement for Woman's Employment Options, Con- May 1981 

ference Program Book. 
Advertisement, Society of Women Engineers Program June 1981. 

Book. 

Magazine Advertisement "Scientific American" June 1981. 

Magazine Advertisement "IEEE Spectrum" June 1981. 

Recruiting Handout— "Four Aerospace Corporation June 1981. 

Women Engineers". 
Women's Hispanic Career Conference— Los Angeles, June 4, 1981. 

Calif. 

Society of Women Engineers National Convention, Ana- June 24 to 27, 1981 
heim, Calif. 

University of Illinois— Women's Career Day Oct. 27, 1981 

Massachusetts Institute of Technology, Society of Women Nov. 1, 1981.* 
Engineers Career Day. 



E£yc 44 



41 

* 

University of Michigan, Society of Women Engineers Nov. 12, 1981. 
Banquet 

Advertisement La Luz Magazine (Hispanic Women in Dec. 6, 1981. 
America). 

University of California— Berkeley, Society of Women Jan. 21, 1982. 

Engineers "Evening with Industry". 
Purdue University, Society of Women Engineers Career Feb. 14, 1982. 

Day. 

Three $100 Cash Awards— Women Engineering Students, Feb. 15, 1982. 
Purdue University. 

Society of Women Engineers National Convention, Dear- June 16 to 20, 1982. 
born, Mich. 

The Chairman. Doctor, all of us are deeply touched by what you 
said today. You made a very thorough study of this whole subject 
and I am glad that one of your position has come to the conclusions 
that you have. There is nothing to be gained when you stop some- 
one's career right in its prime and terminate it abruptly. 

I would like to, with agreement of my colleagues, in order to save 
the time of the witnesses here, if we will defer questions until we 
have heard all the members of the panel. 

Our next witness is Mr. Eric Knudson. Mr. Knudson is the chair- 
man and chief executive officer of ACS, America, Inc., a New York 
based company which develops computer software systems for the 
commercial marketplace. Mr. Knudson also directs his company's 
wholly-owned subsidiary, Wave III Corp., which develops computer 
software. 

We are pleased to have you, Mr. Knudson. We welcome your 
statement. 

STATEMENT OF ERIC KNUDSON, CHAIRMAN, ACS AMERICA, 
INC., NEW YORK, N.Y. 

Mr. Knudson. I thank you, Mr. Chairman. I have submitted my 
formal statement. 

The Chairman. Without objection, it will be received and carried 
in full in the record. 

Mr. Knudson. We appreciate the opportunity to be here today, 
although in looking at the rest of the companies involved, we are 
miniscule relative to them and my own qualifications rather pale 
before the balance of the witnesses. 

We are in a little bit different situation than they are^-we are a 
young company in a young industry. We don't have a retirement 
policy, we don't need one because until very recently the oldest 
full-time employee we had was 41. The data processing industry 
itself is extremely young. The first commercial computer was in- 
stalled in this country in 1954 in General Electric. Other than that 
it was strictly Government computers. We have not had that prob- 
lem. We are a small privately held company out of New York with 
operations in Florida and with a new operation just opening up in 
Alexandria, Va., in January. 

Our function is to write computer software for the general mar- 
ketplace and packaged proprietary systems. 

Tne Chairman. What is computer software? 

Mr. Knudson. It is the set of instructions that tell a computer 
what to do. Unfortunately, when a computer comes from a manu- 
al 



42 

facturer, it is probably the most expensive boat anchor that you 
could find. Without this specific set of instructions, it won't do a 
thing. That ia what tells it to either do the payroll or be the guid- 
ance system for the Columbia. And the same piece of hardware can 
do both. 

We have 40 full-time staff We also have 100 retirees either ac- 
tively programing or in training. We did not set th, ; up as a social 
program. We set it up strictly as an answer to a business need. 
There is no altruism here at all. There is such a tremendous short- 
age in the data processing industry of computer software special- 
ists, particularly in the commercial side— we are now looking at be- 
tween 40,000 and 50,000 jobs that are going begging today that 
companies would fill all across the country if someone could invent 
the trained people. 

Computer degrees coming out of universities represent between 
12,000 and 13,000 graduates a year. It is not even coming close to 
filling that need. We as a small company needed to do something 
because with that shortage, all of the data processing industry 
plays "musical" programers. As soon as you have a project, you go 
and steal somebody from somebody else and you pay them an extra 
$3,000 and they move. The average life of a progranier in a compa- 
ny today is less than 3 years, and this is from the Fortune 500 on 
down. We did it strictly to solve an economic problem. 

What we wanted to do was buy brain power. And we looked at 
the retirement community, not from their experience level and not 
for what they knew in their corporations, but as a good, solid work 
force that we could use. We literally have hundreds of applications 
for every 30-man class. We put them through an aptitude test. 
Computer programing specifically does not require any special edu- 
cational background or any special experience; it requires logical, 
deductive thinking; it requires the power of concentration and a 
willingness to work at it. A truck driver as well as an electrical en- 
gineer as well as a former Congressman could program just as well 
as anyone else going through the training, and that is what we are 
doing. We are simply using and buying the brain power. 

The advantages are very simple. Most of these people have set- 
tled down within an area where they are going to live and are not 
still moving all across, the country. They are not trying to do a job 
so that only looks, good on their r6sum6 to keep moving up. They 
want something to do productive now, something that they have a 
feeling of satisfaction for. 

Although anyone who goes through our training course, which is 
free, is free to leave us and go anywhere they want; none of them 
have. We hire all of our own output from our training. We put 
them to work fully^ within 

The Chairman. Do you advertise in the press? How do you get 
access to these people? 

Mr. Knudson. Actually, we have not had to advertise. We have 
had a couple of newspaper articles that appeared in the locals 
down in Florida. Unfortunately, the Christian Science Moniior 
picked it up about 6 months ago and ran an article in the Midwest 
and we now have 

The Chairman. Where is your place in Florida? 



43 

Mr. Knudson. It is in Bradenton, just north of Sarasota. And we 
have had applicants from all over the country, and we have had 
newspapers that have picked it up from all over the country. We 
get calls from individuals in Oregon, "Give me the aptitude test. If 
rpass, I will move/' 

We set up the program so that, the individuals can work as much 
or as little as they want. The classes themselves run for 3 months; 
mandatory attendance from 9 to 12 each morning. We do not pay 
them for the classes. They do not pay us for the classes. Our par- 
ticipants do not ever lay out a cent for this program. Their invest- 
ment is their time in learning computer programing. We have set 
up professional facilities and we dedicated the whole computer 
system down there. In fact, I believe we now have the largest com- 
puter in Manatee County and it is strictly dedicated to this group, 
and the same thing will be in Alexandria; Va. in January. 

Now, we do have about a 25- to 35-percent dropout rate. Not ev- 
eryone is willing to put in the time and effort. But those people 
who remain have been absolutely delighted. 

One of the most interesting things I think we did is that we took 
photographs of the people taking the aptitude test, the original 
group, we then took photographs of them at graduation of the 
course, and you would swear they had lost 5 years in age. Just 
having to get up, go to work every morning andnew social contacts 
are a benefit. That was another elementTWe tried to build it 
around the capability for them to work as much or as little as they 
wanted. The idea was that maybe they could work halftime and 
never miss a morning golf game, travel, or anything else they 
wanted to do. 

We set it up on a piecework basis. They work on a contract. Each 
contract varies from $200 to $500, and it is a relatively short period 
of time, a matter of days. 

Another element that we set up is, we keep the computer run- 
ning 24 hours a day. We put in dial-in telephone lines— about 10 
lines. The individuals, if they want to, can rent a terminal from us, 
strictly at cost, to put in their home and they can program 94 
hours a day, anytime they want to do it. 

Now, when we initially started, about two-thirds of the individ- 
uals indicated that they would want these home terminals. Now, it 
has turned out to be only about 25 percent. What happened is, they 
like the socializing, they are getting back into the social world and 
seeing the other people at the office every day. It is something, a 
kind of a return for them. 

The program is— we have a minimum age of 55. 

Our oldest one to date has been 80 years of age. Average age 
right now is 63 Vz to 64. 

Mr. Daub. That is not discrimination? 

Mr. Knudson. Well 

Mr. Daub. That sounds too good. You are not letting the younger 
people into that program. 

Mr. Knudson. That is true. We are definitely discriminating. We 
set up a wholly-owned subsidiary to do this because it states right 
within the corporate charter tLat its function is to discriminate 
based upon age. You will find in most States that if the Secretary 
of State accepts the charter, it is somewhat? legal under State law. I 



> 44 

know it is not legal under Federal law. And we are counting on the 
good graces of this committee and a few of the other people to 
ignore that fact. 

Mr. Biaggi. You shouldn't have told us. 

Mr. Knudson. He asked. 

The training itself is rather expensive. To do proper data process- 
ing we need a full-blown facility. The type of training they are get- 
ting is available commercially in the marketplace normally be- 
tween anywhere from $2,700 to' $4,000. You can go to any number 
of schools in New York City and there are some in Washington and 
most other mcgdr cities. We- don't charge them for it because the 
way we feel is that in New York City, our average recruitment fee 
for a programmer today is about $5,000. So, our training cost is our 
recruitment fee. By picking up the training cost, we break even 
anyway. 

b Now, we have moved into areas where there is a lower cost of 
living, so that we are getting a benefit from that but we pay scale 
for the area. In other words, if a computer programer in Tampa, 
Fla. is making $18,000 a year, that is the rate that we pay on. We 
pay, as a matter of fact, # $90 a day. We set it up so that by being 
able to do work on a piece-work basis, we can say this program 
should take 4 days. The contract is then worth $360. That has been 
one of pur problems because a lot of the younger workers wanted 
to get in and some of the very experienced programers feel they 
can make a lot more at this than they could on the other. 

The shortage in our industry is so great, that this is not an effort 
to get cheap labor; it is an effort to get good solid, dependable labor 
that we need because of the shortage in the industry itself. 

I am going to keep this fairly brief, but our experience, I think, is 
something that many other industries can do, and ultimately if 
they don t do it, ACS America is going to start doing it in other 
areas. It has worked out very well. If a company is willing to sit 
down and take a look at their work environment— I am not talking 
about changing the work, I am talking about looking at the work 
environment— you can structure a certain areas where you can 
break jobs off either into position sharing or into a piecework basis 
or anything else. I am unhappy that the man from Mutual of 
Omaha left— I am formerly out of the insurance industry myself— 
you take a Metropolitan life insurance company that has got 50 
claim offices all across the country, I am convinced that we could 
go in and actually bid on a turnkey basis to run a claim office for 
them. They have all of the procedures and things are so structured 
that we could train for it and then run it at about 90 percent of 
their current cost and make money on it, using all retirees. 

A tremendous resource is out there. Right now we are kind of 
alone in actually going out and searching for this type of person. 
As a result, we are getting the cream of the crop. And it is really 
unfortunate, we have been almost hiding from publicity. Every 
time an article appears we get a thousand more applications. 

Our future plans call for opening about ten of these units. We 
don't feel we can have more than about 120 participants per unit. 

So, if we are wildly successful, we will end up with about 1,200 
people. We have already had 5,000 or 6,000 applications and we 
dont advertise. We are running ah ad locally because we are 



45 



coming into the area for the first time in Alexandria, but up until 
this point in time we have never paid a cent for advertising. 

One of the elements— that if there is going to be a legislative ap- 
proach to any of this, it has to be directed at the private sector; 
that is where the jobs are. It has got to be made really worthwhile 
to the private sector. I am not talking about tax incentives or any 
other handouts. I think that is the worst possible thing that could 
be done with this program. But there are a number of elements: 
one is the earnings limitation on social security. We are already 
running into serious trouble there. We have already had four of 
our people meet the $5,500 limit this year. We only really got going 
this year. Next year it is going to be a considerably more difficult 
situation. 

An individual who works halftime, seriously halftime, now can 
make between $10,000 and $12,000 a year. That is going to wipe out 
social security, and we have a number of people who just don't 
want to do it. It means these people are stopping at $5,500. What 
that is going to do is double our cost; therefore it means we are 
going to have twice as many people, twice as many courses. The 
output per course and per class is going to be roughly one-half of 
what it is with what we can achieve now. And then it begins to 
make this type of thing questionable, whether we pan do it or not. 

I am a very strong proponent of either eliminating that earning 
limitation altogether, or at least getting it up to at least a $15*000 
or $20,000 category. 

Another one. is the easing of the work-at-home regulations. I 
know this is not particularly the subject for this committee, but it 
is something that is very important. With today's data processing 
capability in communication, teleconferencing, and everything else, 
you are going to find literally thousands and thousands of jobs 
across this country not specifically having anything to do with the 
data processing industry itself that can be done from the home, 
that can be done outside the office. Very recently, I forgot whether 
it was New Hampshire or Vermont, I've heard of a situation with 
women employed to knit ski caps. It took a 2-year court fight to 
ease off those regulations so that the people could do that work in 
their homes. And then they only released the regulation on that 
specific type of knitting, not on anything else. 

Cottage industry is coming. Cottage industry is going to be one of 
the biggest things for putting the retirees back to work. A combina- 
tion of transportation, of inclement or bad weather, a combination 
of certain opportunities that may not be within 5 miles of your 
house but maybe 15 miles from your house, and if you only have to 
go to the actual job once every 2 weeks and you can do the balance 
at home, it is going to become a very, very important element of it. 

Another item for the insurance industry is that I think there 
should be definite distinction between working and nonworking re- 
tirees. I think if someone were to work up the morbidity tables 
within the insurance industry and the health tables, you will find 
that an individual who is working 15 hours a week will have a con- 
siderably better health record than those who don't. 

Those companies that don't want to go out and set up a whole 
subsidiary corporation the way we had to here, with one whole 

O 

ERIC 

91-818 0-82 4 



49 



46 

function in it, get penalized very heavily in health care and the 
cost of adding to group insurance. 

Normally at age 65 medicare takes over and the insurance indus- 
try just coordinates or drops it. Our experience, our entire partici- 
pant staffs average age is between 63 and 64. So, it is not at the 65 
level yet. 

I thank you very much. 

[The prepared statement of Mr. Knudson follows:] 

Prepared Statement or Eric Knudson, ACS America, Inc., New York, N.Y. 

ACS America, with its wholly owned subsidiary, Wave III Corporation, is a com- 
puter software development company that utilizes computer professionals to design 
and market computer software and members of the retirement community to write 
its computer programs. We are a small privately held company with approximately 
40 professional staff and nearly 100 trained (or in training) senior citizen program- 
mers employed on a piece work basis. 

It must be made quite clear from the beginning that this is not a social program. 
There is no altruistic purpose behind the project's formation. We are simply putting 
to good business purposes an economic resource that until now has been primarily 
ignored. The fact that a considerable amount of benefit, both economically and 
thrown selPesteem, accrue to those retirees who actively and successfully partici- 
pate iu the program is a happy circumstance, but not the purpose of the program. 

We are not claiming that retirees in general, or even half of them, are capable or 
willing to do what we specifically require. Without getting overly involved in statis- 
tics, most people would accept that perhaps one in a hundred would be willing, ca- 
pable, and eager to attempt such an undertaking. With roughly 11 percent of our 
population in retiree status, one percent of that figure is roughly 250,000 people. 
The total U.S. data processing work force of programmers, systems analysts, man- 
agement, and specialists has only 600,000 members. 

The second, and probably most important reason to use this resource, is the atti- 
tude of the retirees themselves. Having worked a great portion of their lives, most 
of them had achieved levels of responsibility and competency before they retired 
which provided considerable self-satisfaction. Now, having spent one or more years 
in retirement, the thrill of the freedom and relaxed environment has begun to wear 
on" and that old feeling of satisfaction b sorely missed. This is not just being busy, 
but a sense of achievement and the feeling of being productive. 

We are providing them the opportunity to perform meaningful challenging work 
ana to get paid for it. Many of the participants who pasn our screening procedures 
will not need the money to live, but with today's economy it will provide sufficient 
Additional funding to allow for a much fuller and enjoycile retirement For some, it 
will mean the difference between existing and living. 

Finally, this work force provides a definite advantage over that of today's com- 
mercial computer programmers. There is not the perpetual pressure for career ad- 
vancement or to work only on the latest hardware or techniques because ?r, "looks 
good on a resume". 

The retirement work force should bo steady and cohesive, and, having experience 
with this group, we are now able to make system development estimates with much 
greater accuracy and effectiveness. 

What makes commercial computer programming lend itself to our enterprise is 
that it does not require extensive prior training. In fact, only about one out of four 
of todays commercial programmers had any prior data processing training before 
entering the industry. Success in this field requires basic intelligence, an aptitude 
for logical and deductive reasoning, and an ability to concentrate and to follow 
instructions. These abilities combined with a willingness to work will generally 
bring success in commercial programming, regardless of the individual's prior back- 
ground or education. 

The selection criteria for the participants is rigorous. They have to pass a profes- 
sionally prepared programming and aptitude test. There is some f )rm of medical 
opinion required stating that the participant is capable cf taking part in the pro- 
giam. Once selected for the program, they are enrolled in regularly scheduled train- 
ing classes, run by computer professionals. There is no charge to the participants for 
this training and they are not compensated for it. 

Even with the careful screening process and professional training, we expect a 25 
to 35 percent drop-out rate per participant group. Thus, for each group of thirty 

ERIC ifO 



47 

(the anticipated training class size) we should end up with between 19 and 21 solid 
work participants. Having stated that the participants are treated strictly in a busi- 
nesslike fashion and not as members of a social group, it must also be kept in mind 
that the whole enterprise is dependent upon the success of these participant groups 
learning and performing computer programming to commercial standards. To assist 
them in this effort we provide certain additions! services for them, both during and 
after the training period: 

1. In addition to the primary instructor, we always have a full-time 'super" pro- 
grammer/analyst and additional programmers (at a ratio of about one programmer 
to each ten participants) on staff that are to be available for questions and assist 
ance on a daily basis. 

2. The office is open 10 hours a day to make allowances for most schedules. In 
addition, the computer system itself runs 24 hours a day, seven days a week for 
"dial up" purposes. There are at least 10 dial-in ports on the computer for use with 
remote terminals in the participants' homes. t t # 

3. The company maintains a station wagon for participants with ambulatory prob- 
lems (if any) and- for those who occasionally cannot arrange their own transporta- 
tion. , ... 

4. Working participants are able to "drop in on any subsequent training session 
for a review course on a particular subject # 

5. For those participants who lack manual dexterity or simply cannot become aae- 

?tuately familiar with a computer terminal keyboard, we have clerical staff available 
or direct entry of the program code they have written. This service is to be 
"charged" to the participant by the reduction of the total job price by 5 percent 
AU proprietary project work is supplied by ACS America, Inc. ACS prepares de- 
tailed system and programming specifications and provides estimated completion 
times for each program element, thereby establishing the '"piece work price" for 
each task. The estimated completion times (and the per diem payments) are based 
upon a reasonably trained programmer with about two years work experience. The 
participant "work contract will use a multiplier factor of four as a time limit for 
completion of the task. It is expected that these time limits should easily be met by 
the participants and, in most cases, are cut in half. The time frames established are 
of sufficient length to allow the beginner to complete the task and the more experi- 
enced to complete it leisurely. If participants desire to take some time off or to go 
away on a trip, they simply do not take a contract for that period. 

About a year after commencing operations in Bradenton, the company will begin 
opening several new offices around the country. As with the first, most of these of- 
fices will be located near major retirement communities in states such as Florida, 
Arizona, California, and near die more heavily populated communities in the North. 
The first new center will be located in Alexandria, Virginia and will commence op- 
erations in the first week of January, 1982. , , 

Once the viability of this plan is demonstrated, the po^ntial for its appbnation 
and growth is almost unlimited. Training classes can be held at night to iermit 
those who are about to retire (but don't really wish to) and those who are cunently 
underemployed to join the program without a period of loss of income. Wicows, 
housewives, shut-ins, and the handicapped can further expand the participant rves. 
The functions trained for and performed can be expanded into several areas beyond 
computer programming. . 

Working with and training retirees is not a simple task. It takes patience, plan- 
ning, and a definite willingness to adjust the work environment. It must be stressed 
here, the adjustment is to the work environment, not the work. The prospective em- 
ployer must be willing to review the work, not in the traditional joo sense, but in 
light of the base task elements to be performed. This is necessary to redefine posi- 
tions so that they may effectively be handled on part-time, job sharing, or piece- 
work basis. If this is done carefully and with a little imagination we believe that 
about 75% of all white collar work and about 25% of traditionally blue collar work 
can be arranged into teaks of this nature. 

The experience in working with this group of potential employees that we have 
gained in Wave IE has been primarily at one end of the spectrum. The position of 
computer programmer requires a certain aptitude, fair intelligence, considerable 
training, and rather expensive equipment to work with. Assuming a successful re- 
employment program in this country over the next five years it will probably be 
discovered that computer programming has one of the most expensive and time con- 
suming start-up phases of any of the major occupation categories included in such a 
program— and yet ACS America, a small privately held company, and make money 
at it. We believe that we will be running a profit on the entire program within two 

ERIC 



48 



years its inception. Other industries and other occupations with leaser training 

^ prodl ^ an overaU profitability in a matter of months. 
n JlF?t*}Z" P*?? le *• work in any serious numbers it must be done through the 
E^.te^L*fi d "SlS? P nv *^ " ector ^ do * it must be to their advantag?. I am 
^W^EJ^ f** P^ente, or tax benefits to industry for7urauing 

such employment practices. In general, such programs work only as long as govern- 
8&£££! U legislative is to be take/it should the 

£l? ci 0 *!??? •* environment ^ u conducive to the private sector acting on its 
own. Some of these areas are: 

1. Allow for the coordination of normal company group insurance and Medicare 
ana Medicaid plans. The normal cost of adding a 60+ year old employee to a man* 

^^ffffi^raTS^" 1 "* plan u e. xce " iv ?- ^ .««>«P insurers would review 
t^i^P!^ J? r ^ **■ non-workmg senior citizens, I believe there would 
f** f^to^i* 1 reduction in rates for those who are working, thus reducing the 
penalty to the employer hiring an older worker. 

if ?! . mo TL? e ' FT**?* H?^ 0 ?" on Social Security paymente, or at least raise 
t to a high enough level so ihatit does not discourage thiekge group from working 

&NP3ft!S%£ tffiffiSMr ""^ W0Uld 75 percent 

. 8 - Ui»courage petition plain in both the private and public aecton in which Den- 
T W.S elixninated frthe penaioner works afte? Bni 

4. Eaae the labor regulations against working In the home. Much of the type of 
tofc* n* 1 ™*™ ^™ can be lone at home jurt m wellaaTan 
pfllce. Ability to work at home aolvea many of the problems of the elderly worker 
Slut?? K, wwther *, ll J of ^Portation, and certain ambulatory and medical 
pr^leau. It also permitathem to work for companies not in the immediate areain 

Sm C lf^ ^^Al^ ^JO*** of . 01666 «*ulaUons can be accon^ishedand 
^^ri^^ten?edf TO agamSt 010 abu " 8 f0r which 1)1606 WilaUons 

pmAinvS^f iS^w w one worth pursuing, is the prorating of un- 

employment and other such taxes on employers for jobs that are "shared". This du- 
phcaUon of costs on the employer is a major factor in limiting the spread of "job- 

[Mr. Knudson's answers to the written questions of Representa- 
tive Mary Rose Oakar follow:] 

program?' 1 ' What *** **** Pontages of men vs. women participants in your retiree 
Answer. Our participant population runs 75 to 80 percent male. 

i?ii n J™ i*?T ■«^.»ctor jobs, experience is not highly valued; in a 
program like yours which emphasizes experience, are these workers able to partici- 

ȣi^ e i: 25. the .i 11 ^ 1 flci^ening for aptitude testing we generally look for a prior 
work experience that involved lorical thought processes and/or a power of concen- 

& n V& 6 V™*™*™ 1 ** a P titu *e test scores aVe the finaf deoidmgfactor fof aefeS- 
uon in uie program. 

Question., In 1978 the average income for older men was almost twice that of older 
women; twice as many women as men have no pension coverage: in what way have 
these biases been made more equitable in your retiree program? 
_;™" w f r - Men and women are paid at the same rate. Our program has no pension 
coverage. * 

ove^rtv^^Wfcnfn 1 ? 33 1*™^ higher for women over forty than for men 
pnH u^l'.^li • * of wom t n . who are employed are concentrated in dead- 

S~ vnr^^ J0l !l^l 8pec ^v hiring 5 racti «*. Policies and corporate attitudes 
does your retiree program have with regard to this reality? 
Answer. None. 

Question. The Poet Office and Civil Service Committee enacted a policy of cart- 
^{2!»^ e *°fkfor Federal employees. Also, I participated on apSSd Uh a 

^tSsSta "nSSJSf 5 1 1f urance ^V 1 *" 5 a rfy ^ive was'undertaken 
What results, problems etc. have you had with such initiatives? 

o.miro r :^t en \ re i? ro / tra S!- i8 l >Med u P° n 016 Participants working as much or 
as little as they wish.. Under this plan, we have discoveredtnat they do not, on aver- 
age, put in as much time as we would like. H aver 

Question. While part-time work has often been accused of hurting workers bv 
t k CTpH h v ir ^ a f e8 , and benefite dow - n ' lt clearlv ho1 ^ a g«at de™ of pro^tae for 
yidimtoSoKu^tfonsf y ° U 40 a8SUre that your P"*™ *~nt fall 



9 

ERIC 



52* 



49 

Amwer. We pty the exact tame rate for either full-time or part-time work. 

The Chairman, Mr. Knudson, we thank you. All of us who have 
heard you, all of you gentlemen we have heard already, and I am 
sure the same feeling will relate to the others, should realize that 
we have a new hope for the future of the older people of this coun- 
try when we -see such an expression of understanding and coopera- 
tion as it comes from you and from Dr. Rechtin. And I think all of 
us who heard you, including your business colleagues, will agree 
that if you call yourself small now, you won't stay small very long. 

Thank you very much. 

Now, Mr. Robert Bradshaw, our next witness, serves as secretary 
for the Grumman Corp., the parent company for several subsidiar- 
ies, including Grumman Aerospace. Grumman Corp., and its sub- 
sidiaries manufacture military aircraft, aircraft systems, seacraft 
and spacecraft as well as computer software, solar and wind energy 
systems, and urban transport- systems. One of the meaningful com- 
panies of our country. We are pleased to have you, Mr. Bradshaw. 
We welcome your statement. 

STATEMENT OF ROBERT W. BRADSHAW, SECRETARY AND DIREC- 
TOR OP PERSONNEL, GRUMMAN CORP., BETHPAGE, N.Y. 

Mr. Bradshaw. Thank you very much. I indeed appreciate the 
opportunity to be here and particularly in this room 

The Chairman. Excuse me just a minute. Mr. Shamansky wishes 
to say something. 

Mr. Shamansky. Thank you, Mr. Chairman. I just wanted to 
note that one of the subsidiaries of Grumman Corp. is located in 
Delaware, Ohio; it is Grumman Flexible Corp. I have had direct 
• contact with it. I have been through the plant and it is a very good 
corporate neighbor. We are very lucky to have you in the 12th Con- 
gressional District of Ohio. I welcome you on my own personal 
basis. 

I would like to note one other thing, Mr. Chairman. The Federal 
Trade Commission has just filed a legal action to prevent the take- 
over, the unfriendly takeover, of Grumman Corp. I think that 
makes it especially of interest to me and I think to all of us as to 
how to keep these good corporate citizens alive and independent. 

Mr. Biaggi. Would the gentleman yield? 

Mr. Shamansky. Yes. 

Mr. Biaggi. I am glad you recognize they have an annex of 
Grumman within your State. We are privileged to have them in 
the State of New York, and the entire New York delegation has 
been unified in that score. It is more than a corporation; it is a 
family that has grown into a m^jor corporation. It is that very 
spirit that will be instrumental, I, believe, in the event the LTV 
continues in its efforts to take over. We greatly resist the takeover, 
oppose it because the employees have a considerable- portion of that 
stock. 

I was impressed by your interviews on television, and it is con- 
sistent with my understanding of the relationship between the em- 
ployees and Grumman. 

The Chairman. Thank you, Mr. Shamansky and Mr. Biaggi. 

ERIC 53* 



50 



v ^r. Bradohaw, I don t mear to ask you any secrets of things of 
classified character, is your company working on some means by 
which to intercept missiles as a way of defense as part of our de- 
fense? 

Mr. Bradshaw. Yes, Mr. Chairman.' 

The Chairman. Thank you very much. We welcome your state- 
ment, Mr. Bradshaw. 

Mr. Bradshaw. Thank you and thank you very much, Congress- 
men, for your support. We appreciate it. 

I was about to remark that we are very comfortable here in this 
room with what is perhaps the least attractive transportation vehi- 
cle ever designed prominently displayed above you there. We take 
great pride in that. 

If I may, I would like to have my formal remarks submitted for 
the record. 

The Chairman. They will be received in the record in full 
here BrADSHAW ' Thank you - ni j" 81 touch a C0U P le of high spots 

Like most large companies we feel the need to have a policy in 
this area on something that is fairly clear in its terms. We work 
pretty hard m communicating it and, indeed, implementing it, in 
ways which suggest to people we mean it. 

We prominently feature these attitudes in our training programs 
as we rate our supervisors and managers. We take some pams to 
make it clear to them this is one area where their performance «s 
indeed watched very carefully and it has a profound effect on w. it 
might happen to them in terms of compensation and promotion. 

But beyond that, perhaps reflecting the kind comments of the 
Congressman, we do think of ourselves as a family. We have a long 
tradition of honoring our employees that have been there for a 
while. fcach year we gather about 4,000 of them for a luncheon, 
typically in early December, on which occasion the new members 
ot the ^5-Year Club are inducted and given watches. It is some- 
thing we all look forward to. Indeed, it is sometimes felt if you 
don t have a full 25 years in, you are still on probation in our com- 
pany. 

We try to set a tone. We try as a personnel function to be pro- 
active in this regard. We do, indeed, We free access to the CEO. 
The only problem with that is that he has equally free access to us. 
We accept that as a quid pro quo. 

We try to design an environment which reflects the care we have 
tor virtually all' of our people. I wanted to touch a little bit on the 
business of rehiring retirees, that has been mentioned before here 
this morning. We have been doing it since 1973, witl\ astonishingly 
good results. I can't think of any better labor force in terms of 
their immediate productivity. There is no problem in indoctrinat- 
ing these individuals; they know the score just as well as we do and 
they are immediately productive when they come back. It is awful- 
ly nice, as often happens, when a supervisor of a former employee 
will specifically request that person by name, "I want Joe back, or 
1 want Jane back. That is marvelous for one's self esteem. And 
indeed there is a lot of that going on. 

We also have many retirees who have no interest in returning 
even on a part-time or temporary basis. Our most prominent exam- 



51 

pie of that is the fellow that is currently president of our retiree 
club, some 3,000 members strong. He has been given frequent op- 
portunities to come back on a temporary basis and declines saying 
that he has worked enough, he doesn't want to do any more. That 
is what he says. The truth of the matter is, he is working harder 
than he ever did as president of the retiree club; hard pressed to 
find the time to give to Grumman anymore. 

We experienced the same difficulties described by the distin- 
guished panelist on my left in the area of computer applications. 
Those of us that are in the high technology business face this every 
day. One of the more gratifying efforts we have mounted has to do 
with taking engineers that graduated from school 20 or 30 or 40 
years ago at a time when computers were not even dreamed of, in- 
troducing them through formal training programs to this wonder- 
ful world. It takes a little encouragement. It is a bit intimidating 
for someone who hasn't been around as these things grew up. But 
once over that hurdle, a whole new world opens up for these people 
and you see them come alive at the possibilities or using these mar- 
velous devices. It is something very personal going on inside those 
people that is just marvelous to witness. 

Tliere are several other areas where we have taken people at a 
down point in the aerospace industry and retrained them for other 
careers— environmental engineering being one, electrical power en- 
gineering being another. These are fairly formal programs where 
people's career in midstream were redirected and with very posi- 
tive results. 

We also put a fair anrount of energy and thought into the prob- 
lems of women reentering the work force after some years of 
having raised a family. Typically this individual was employed as a 
secretary, had married, had children, raised a family, now coming 
back into the work force and very often back into a secretarial po- 
sition. Quite frankly, many of these fine women are capable of 
more challenging work. We put them into programs which oroaden 
their horizons and which provide some training opportunities to 
move into positions as administrators, buyers in the purchasing de- 
partment, software programers, and try to open up their futures 
for them in meaningful ways. This is not directly geared at the 
problem of the older worker, but as a practical matter it works out 
that way. And we have been very happy with the results of it. 

We do, indeed, do periodic attitude surveys amongst our employ- 
ees and we are looking for evidence of some discrimination, there 
might be some hint coming in from our younger employees who are 
asking how many decades do you have to be around here before 
you are considered for promotion. So, indeed, we address that as 
well. And we monitor our work force in terms of its age by skill 
category so we can indeed design our training efforts to meet those 
particular needs. 

This is the kind of thing we do thinking of ourselve* i a family. 
We have over 50 years in the making of that family and we like 
most families have a great deal of respect for the older family 
members. We think, and I hope you do, that we are being helpful 
in terms of the growth in employment of older workers and wait 
until we, ourselves, get a little bit older and it will be even better. 

Thank you for the opportunity to make these remarks. 



52 

[The prepared statement of Mr. Bradshaw follows:] 

Prepared Statement of Robert W. Bradshaw, Secretary and Director op 
Personnel, Grumman Corp., Bethpage, N.Y. 

the middle aged and older worker— policy 

If discrimination because of age is to be avoided, a clear policy opposing it must be 
part of the company s overall commitment to equal employment opportunity. This is 
the case at Grumman. Top management fully endorses this policy and supports its 
implementation throughout the company. 

Beyond articulation of a policy, however, it is essential to communicate it to every 
employee. This is done at Grumman through its various employee publications, 
through general employee handbooks as well ae supervisor's manuals. The compa- 
ny s policy of not discriminating because of age is inculcated in management train- 
ing programs and is a criterion in all performance appraisals, particularly for man- 
agers and supervisors. Furthermore, the chief executives of the company personally 
to employees participate in pin presentations where service awards are given 

ATTITUDE 

The position of top management vis-a-vis discrimination for any reason but in par- 
ticular because of age, will set the tone for the rest of the company and is the first 
step to establishing an attitude of openness, acceptance and support for individuals 
in an affected eroup. At Grumman, a healthy attitude is fostered through a verv 
active and ujvolved Personnel Department which has ready access to top manage- 
ment, as well as full acceptance by all employees. ^ 

environment 

When company policy is supported by healthy attitudes on the part of manage- 
ment and employees alike, an environment is created in which discrimination 
™P°} S? un8 ^ The environment at Grumman is one of belonging, of sharing, of 
caring. The pride which pervades the company not only extends to quality products 
»?p«.««2» 1? ? th £P? p,e ftjgn ami produce them. It is this environment 
ditto™ militates against discrimination based on age or any other con- 

PROGRAMS 

Healthy attitudes and a healthy environment can be sustained only if company 
policies are understood and effectively implemented in day-to-day programs. Grura- 
^Laf ^JFi* c01 ? tinues fo have forward looking, versatile and sensitive pro- 
grams designed to assist members of affected groups including the middle aged and 
older worker. In most programs, age is not indicated as a condition for a position or 
?«^J? tMm J U8t 38 "J* and ^ ma , v not be admitted as qualifying or non-qualify- 
ing factors. However, the nature of the programs in many instances may be favora- 
ble to employees at a particular age. 

•ii Th * e f ° 1Io ™ n S inventory of past and present programs is not exhaustive. It merely 
illustrates the type of program Grumman has employed to prevent discrimination 
tor any reason and to promote the growth of its employees regardless of race, creed, 
age, etc. 

REHIRED retirees 

Grumman conducts an effective program to rehire retired Grumman employees 
who are interested in returning to the work force on a paiMime or full-time basis. 
Such employee/) are returned to the payroll as job shoppers. No age limit or qualifi- 
cation is attorned to this program. Generally, these employees are age 55 and up. 
All are on Grumman pensions. Some are over 70 years ofage. 

Retirees are recruited for this program in several ways: 

,U SL m £ ny c ? 8es, r t il e 1181118 t de P artment will request an individual by name. 

(g The Director of Personnel may send a letter (periodically) to all retirees asking 
if they are interested in coming back to work. B 

(3) Information on job opportunities for retired employees is conveyed to. and 
through, Grumman's very active retiree's club. wnvcycu u>, ana 

Work schedules for retirees who return to work are variable and flexible. These 
schedules are determined in collaboration with the using department and are a co- 



53 

ordination of departmental needs and the. retiree's interests and abilities, some re- 
tirees 'return, to full-time-work on a temporary basis, generally not more than a 
year! Some work part time. Often the length of employment in a given year is regu- 
lated by the amount of money r a retiree can earn and still be entitled to an unre- 
duced social security, benefit 9 

A wide range of skills is represented in the retirees who return to work, including 
engineers, inspectors, mechanics, machinists, security guards, buyers, writers and 
editors. Apart from the appeal which this program has for retirees interested in re- 
turning to work, it has many advantages for the company. Returning retirees are 
immedlately.productive; they require no orientation or training period, no break-in 
time. The experience of the retiree is again available to the company at large and, 
in particular, to younger workers. The presence in the work force of experienced, 
enthusiastic and productive older workers (the rehired retiree) is a most effective 
antidote to prejudice or discrimination based on age. 

MID-CAREER TRAINING PROGRAMS - 

The Career Education and Development Department at Grumman conducts many 
courses which are designed to update basic engineering, management and mechani- 
cal skills of the worker whose formal education ended many years in the past These 
courses are especially helpful to older workers who completed their formal educa- 
tion before the age of the computer. They enable engineers and technicians alike to 
catch up and keep up with the state of their art in a rapidly changing and competi- 
tive environment While no age limit or qualification is attached to these courses, 
they are favorable to the middle aged and older worker. 

From time to time, Grumman collaborates with outside agencies and institutions 
in programs established^ to. help -the older worker. In .1972, Grumman Aerospace 
Training Center initiated a program under a contract funded by the New York 
State Education Department to retrain selected, unemployed Aerospace engineers to 
work in the field of environmental engineering. 

In 1973, the Grumman Training Center, in cooperation with Pratt Institute con- 
ducted a career conversion education program in Electrical Power Engineering 
under a contract authorized and funded by the New York State Education Depart 
ment. The program was designed to prepare selected unemployed or underemployed 
engineers to work in the fields of Electrical Power Engineering, an occupational 
area of high demand at that time. Three of the courses included in the program 
carried graduate credit toward a Muster's Degree at Pratt Institute. 

In 1974, the Grumman Aerospace Corporation, working with the State University 
of New York at Stony Brook initiated a three year M.S. program leading to a degree 
of Master of Science in Computer Engineering and Science. This program delivered 
formal graduate education in a rapidly advancing technology to engineers who oth- 
erwise were facing the increasing obsolescence of their skills 

Grumman also provides a great diversity of training programs designed to help 
employees develop within their particular skill or in other functions. Among the 
Management Development Courses which are particulaiiy helpful to middle aged 
workers are two programs for women: the Professional Awareness Workshop and 
the Women's Responsibility Training Center. While no age is specified as a condi- 
tion for participation in these programs, many women who have returned to the 
workforce after raising a family find them especially helpful. They exemplify the 
diversity of the company's efforts and the integrity of its commitment to the preven- 
tion of discrimination and the promotion of people becruse of merit and perform- 
ance, regardless of age. 

The Professional Awareness Workshop is particularly useful for women who are 
trying to redefine career goals and career paths after absence from the workforce 
for some years. The Women's Responsibility Training Center provides an opportuni- 
ty for on-the-job learning through hands-on experience of various functions and in 
various departments. Participants who have a full-time job in a particular depart^ 
ment spend two days each week in ether areas of their responsibility center. They 
learn by doing the other jobs which are available. They become acquainted with 
other workers as well as with other disciplines and skills. Twice a month they par- 
ticipate in seminars designed to help them assess their capability and define their 
career goals. Programs of this type are effective in overcoming prejudice by bringing 
people together in helping situations. 

At Grumman, our survey of employee attitudes indicates that in a company 
where the average age of an employee is 45 plus, the young may perceive discrimi- 
nation as readily as the middle aged or older worker. A New Graduate program is 
helpful in integrating the young employee into the company. A cooperative program 




54 



with the Board of Cooperative Education Services brings together oldor experienced 
aircraft mechanics and young students ; in an apprentice environment waich helps to 
bridge the gap between the generations and lessens the likelihood of. prejudice* or 
dismrnination. People are brought together in a situation where performance and 
skill are important rather than cge, sex, race or any other condition. 

JOB EXCHANGE SERVICE 

Grumman also participates in community programs to help older workers find 
employment In conjunction with the Department of Senior Citizens Affairs of 
Nassau County, the company is actively involved in the Ability is Ageless Job Fair 
conducted to provide free employment services to individuals 55 or over who are 
seeking full or part-time work. 



WORKFORCE ANALYSIS BY AGE 



_ Each year, Grumman conducts an analysis of the workforce by age, following the 
EEO-1 categories. National Workforce Statistics and Department d Labor Employ- 
ment and Earnings Charts are used for comparison purposes. The Workforce Analy- 
sis provides a tool for monitoring the distribution of the workforce by age. Informa- 
tion contained m it is helpful in estimating employee needs fcr training and in de- 
signing programs to prevent discrimination based on age. 

EMPLOYEE ATTITUDE AND BEHAVIOR SURVEY 

The company also conducts from time to time comprehensive survey of employee 
attitudes and behavior. The survey makes available the experience and perceptions 
of the employees themselves on such topics as discrimination, working conditions, 
opportunities for development, etc. These perceptions are analyzed carefully by the 
Personnel Department and become the basis for new programs to foster the develop- 
ment of the workforce regardless of age. 

TRADITION 

When policies which oppose discrimination because of age are effectively imple- 
mented through practical and versatile programs, openness and assistance to others 
regardless of age become a family tradition. For more than fifty years now this has 
been the Grumman way of doing things and of dealing with people. The Personnel 
Department constantly audits company policy and practices to assure equal employ- 
ment opportunity for all. Research into new ways of* helping the older vrorker is ear- 
ned on constantly. Under investigation at the present time is a program of phased 
retirement which would provide more flexiblity for the older worker who may be 
considering retirement. A Pre-Retirement Planning Program is conducted each year 
so that no employee will feel compelled to a premature or uninformed decision to 
leave the workforce. 

[Mr. Bradshaw's answers to the written questions of Representa- 
tive Mary Rose Oakar follow:] 

Question. What are the percentages of men vs. women participants in your retiree 
program: 

Answer. Six percent of the participants are women, which is roughly equivalent 
to their 7 percent representation among our total retiree population. The Grumman 
retiree population in 1981 represented workers who, on the average, began working 
6\) or 40 years ago. At that time there were fewer women in the engineering and 
manufacturing workforce than there are today. 

Question. In clerical and service sector jobs, experience is not highly valued; in a 
pate?*" 11 y ° UrS Whi ° h emphasizes ex Perience, are these workers able to partici- 

Answer. Grumman's program of rehiring retired persons includes the entire 
r ?SP e J . J ob8 av8alable m the company including clerical, service sector and un- 
skilled jobs requiring no special experience. Since the program is designed specifical- 
ly for retired Grumman workers, every applicant has some skill and soma experi- 
ence developed m the course of his or her working life. This experience is valued by 
the company and is put to use in the rehiring of retiree. As a result, clerical and 
service sector workers are able to participate in the program. 

Question. In 1978 the average income fcr older men was almost twice that of older 
women; twice as many women as men have no pension coverage; in what way have 
these biases been made more equitable in your retiree program? 

ERIC 58 



55 

Answer. At Grumman, the salary administration program is designed and imple- 
mented in an objective fashion free from any bias based on race, sex or age. Salary 
ranges are determined based on the specifications and responsibilities of the posi- 
tion and merit raises are accorded in relation to performance. Likewise the Grum- 
man' pension plan is .the same for all employees regardless of sex, age or race. The 
same principle and the same formulas are applied to men and women in this 
regard. In addition, Grumman has many programs (see Testimony before Select 
Committee on Aging) which are designed to help older women who may experience 
disadvantages when returning to the workforce after raising a family. The Women s 
Responsibility Center and the Professional Awareness Workshop in particular, en- 
courage and enable women to do more than "come back" to their original jobs. They 
are given the opportunity to enter new areas and are assisted in assessing positively 
their true potential and worth as persons and as workers. Women are particularly 
encouraged through Grumman's affirmative action programs to aspire to manage- 
ment positions and appropriate courses and workshops are available to equip them 
for these extended responsibilities. „ A _ 

Question. Unemployment is 32 percent higher for women over forty than for men 
over forty, and 80 percent of women who are employed are concentrated in dead- 
end, low-paying jobs. What special hiring practices, policies and corporate attitudes 
does your retiree program have with regard to this reality? 

Answer. Grumman, has various programs in place to promote the development of 
its workers. Several are designed specifically for women. The Professional Aware- 
ness Workshop is an on-going program to help women re-define career goals and 
career paths after absence from the workshop for some years. The Women s Respon- 
sibility Training Center provides on-the-job learning experiences which open up new 
areas of interest to .women. These programs are coordinated with other courses in 
the Training Department which provide women with the additional instruction they 
may require to advance in their chosen field. As a result of these programs, women 
retirees have a richer experience and more diversified skills than in the past. In 
addition, Grumman cooperates with neighboring universities to provide field assign- 
ment and apprentice opportunities for women who are enrolled in business oriented 
courses. ^ , 

Question. The Post Office & Civil Service Committee enacted a policy of part- 
time/flexi-time work-for Federal employees. Also, I participated on a panel with a 
member of the Traveler's Insurance Co. where a similar initiative was undertaken. 
What results, problems, etc., have you had with such initiatives? 

Answer. Part-time work programs at Grumman whether for retirees or workers 
generally are quite successful. They involve the cwrdination of company needs for 
supplementary help and an individual's wish to limit the extent of employment 
Where retired persons are concerned, part-time work is particularly free of prob- 
lems since the retiree is quite familiar with the company and the hiring department 
knows the retiree. Flexibility of schedule and work time are arranged to mesh the 
department's requirements and the retiree's availability. t 

Question. While part-time work- has often been accused of hurting workers by 
keeping their wages and benefits down, it clearly holds a great deal of promise for 
the elderly. What ste^s are you taking to assure that your program doesn t fall 
victim to those accusations? 

Answer. The Grumman program to rehire retirees :is designed to protect the 
worker's earning power and ma or her benefits as a pensioner. Rehired retirees 
return to their jobs at the same or a higher rate than they earned before they re- 
tired. In addition, Grumman is preparing a program of phased retirement to further 
assist the worker who is planning to retire. This program is designed to protect the 
worker's income, benefits and sense of personal worth while the transition to full 
retirement is being made. 

The Chairman. Thank you very much, Mr. Bradshaw, for your 
excellent statement. 

Some months ago I was down in Florida at a reception one eve- 
ning and a very fine looking gentleman walked up to me and said, 
"Mr. Pepper, I don't like something that you have done." I said, "I 
am sure you are riot alone." He said: 

I am with one of the big companies of the country and I am 63 years old, I am the 
president, and they, are going to retire me when I get to be 65 and I don't want to be 
retired. I don't have the protection of your Committee's bill and the Mandatory Re- 
tirement bill that we got through in 1978 because I would get a pension in excess of 

O 

FRir 



56 

$27,000 when I retire and your amendment-that we had to accept-if you had that 
much of a pension, you can be mandatorily retired at 65. 

I said: 

It heartens me immensely that a top executive in your position feels that way 
m °? e^yef wiU B feel the same way, that there will be wa^ 
to retlI ^ 80me ^ to ~ tire - the blooE 

Thenk you very much. 

Now we will hear from Mr. Robert Beavers who is the senior vice 
president of McDonald's Corp., the well-known fast-food chain. Mr 
• TSfvSP manages a 13-State area containing 1,100 stores gross- 
m f u ? l ft b 5 0n m • sales - McDonald's is an international company 
with o.OOO stores m almost 30 countries, annually grossing $6 bil- 
lion in total sales. 

STATEMENT OF ROBERT M. BEAVERS, SENIOR VICE PRESIDENT, 

Mcdonald's corp. 

Mr. Beavers. Mr. Chairman and members of the committee, it is 
a privilege to appear before the committee today to discuss McDon- 
ald s commitment to and experience with older workers. 

I would like to say that I have a formal statement that I have 
submitted. 

The Chakm/n. The statement will be received in its entirety 
and inserted in the record. 

^ A J r ^¥ AVE ¥- 1 would like to deviate a little from the body of 
that statement. J 

McDonald's Corp. licenses and operates a system of 6,500 fast 
food restaurants m 30 countries. More than 5,4Gd of these restau- 
rants are located in the United States and 75 percent of these do- 
mestic units are operated by independent businesspeople: the re- 
maining 25 percent are operated by the corporation. The combina- 
tion ot franchised owner-operators and aggressive McDonald's field 
management has created a dynamic business environment in 
which we can produce a wide range of ideas and innovation in 
many areas, from restaurant operations and new products to the 
effective employment of older workers. 

In 1955, Hay Kroc, our senior chairman, opened the first restau- 
rant in Des Plaines, 111., at the age of 52. 1 am happy to announce 
this month he will celebrate his 78th birthday and he is still very 
much our spiritual and driving force. He is also a very active par- 
ticipant m our decisionmaking process. 

With this heritage, we can't help but have an attitude that is 
very positive toward older workers. 

The average McDonald's restaurant currently employs about 60 
part-time employees. We refer to them as crew workers. They pre- 
pare our products, serve our customers and perform other operat- 
ing functions. Most crew employees "work flexible hours on a part- 
time basis. Thus, students can be scheduled to work after school, 
housewives during the day when- their, own children are in school 
and others to accommodate their personal needs. 

I believe this scheduling flexibility and the part-time nature of 
our crew jobs are particularly important to our older work force 
Employees not only can be scheduled to. work at times most con- 



>57 

venient for themselves, but also during hours when the volume 
pattern best fits their own particular temperament and personal 
characteristics. Some workers— regardless of age— find the busy 
McDonald's lunch hour too physically demanding or unnerving, 
while others thrive on this hectic pace. Also, the shorter workday 
associated with partrtime employment often provides job opportuni- 
ties for those who might not nave the stamina or the desire to 
work a fiill 8-hour day. 

There is also flexibility in the nature of the crew job itself. The 
pace of each crew function requires a different degree of physical 
movement and public contact. Many crew workers master all of 
these stations, while others choose to work only those tasks which 
best meet their personal characteristics. 

On a more intangible level, there is an important sense of team- 
work and camaraderie that takes place in the restaurants with the 
older workers and the young employees. The older workers gain 
self-esteem and recognition. 

On the other hand, McDonald's receives many benefits from 
older workers. Their maturity, sense of responsibility and pride, as 
exemplified by regular attendance, consistent job performance, 
steadiness, provides a role model for our younger crew people. 
Older employees, are usually more stable, and lend to the continu- 
ity and dependability of an often rapidly changing part-time work 
force. They also comfort and reassure our young managers, many 
of whom are supervising others for the first time. 

For many years, we have encouraged franchises and company 
restaurant managers to recruit and fire older workers who meet 
our qualifications. We have done this at both the corporate level, 
and also through direct contributions and other types of support. In 
preparing for the meeting today, I learned of many incidents v/hich 
typify the relationship between McDonald's and older workers. 
And ! can recall many personal experiences, from my days in the 
restaurant, in field management which I wish I could tell you 
about today. 

Back in 1977, we featured a 72-year-old employee in our annual 
report. I would like to say we continue to express the importance of 
older workers in our internal and external communications. Our 
objective is to create a climate to encourage our local owners and 
managers to more effectively reach out to this labor market. In 
1978, a grant from McDonald's to the National Council on the 
Aging helped them prepare "A Job-Seeking Guide for Seniors." 
This guide helpe to prepare older citizens for the job-hunting proc- 
ess and outlines the rignts and responsibilities of both the employ- 
ee and the employer. The nationwide senior community service 
project network of the National Council on the Aging, has already 
distributed 10,000 copies of this. In Florida, local McDonald's res- 
taurants have distributed several thousand copies. 

In Chicago, McDonald's management has developed a program to 
locate employees with Operation ABLE, a local organization which 
identifies job opportunities for older workers. As a result, we were 
able to employ a 73-year-old gentleman by the name of Julius 
Kazban, at our Skokie, HI., restaurant. Mr. Kazban later received 
an achievement award from Operation ABLE and was featured on 
local television. Mr. Chairman, we were privileged to have you visit 



58 

Chicago, and speak, at the luncheon where Mr. Kazban was so 
honored. 

Since *then, we made a grant to Operation ABLE. It was to 
enable them to prepare a kit to help others organize similar senior 
employment. networks in other areas, of the country. We plan to 
distribute this kit through the McDonald's regional personnel of- 
fices aroundihe country. 

Local McDonald's operations and management throughout the 
country are regularly recruiting older workers through advertise- 
ments pf special local publications like the Weekly Review and are 
working with various employment centers and services. Mats and 
artwork for newspaper advertisements picturing older employees 
have been made available to our local offices; I have exhibits sub- 
mitted with my formal statement, and I have just a few. 

The Chairman. Those will be filed along with your original 
manuscript. 

Mr. Beavtbrs. These activities and many others on the record, 
have been, developed to tell older workers that they are welcome 
and can make a contribution at McDonald's. But recruiting such 
workers is a real challenge and we are continuing to strive for new 
and better methods to attract older workers for available openings. 

Before I conclude my remarks, I would like to describe our policy 
toward another important group of able and experienced people 
who help make our McDonald's team— our older owner-operators. 
McDonald s franchise agreement is generally issued for a 20-year 
period. Upon expiration of the initial 20-year term; we will rewrite 
franchises who are qualified for the new agreement. Age is not a 
consideration m this rewrite decision, rather we look at physical 
condition and stamina of the owner-operator. 

In conclusion, Mr. Chairman and committee members, I would 
like to thank you for the opportunity to discuss McDonald's experi- 
ence with older workers. We are a long way from having all the 
answers, but we are certainly going to continue to work toward 
finding better ways to incorporate more of these valuable citizens 
in our workforce. We may be young in terms of our history, but we 
areconvinced of the value of the work of older workers. 

[The prepared statement of Mr. Beavers follows:] 

Prepared Statement of Robert M. Beavers, Senior Vice President, McDonald's 

Corp. 

Mr. (^airman and members of the Committee. My name is Bob Beavers and I am 
a Senior Vice President of McDonald's Corporation of Oak Brook, Illinois. It is a 
privilege to appear before the Committee today to discuss McDonald's commitment 
to ana experience with older workers. 

McDonald's arporation licenses and operates a system of 6,500 fast service res- 

nn£A m f o^ UntneS ; ^ ore than of these restaurants are located in the 
United States and seventy-five percent of these domestic units are operated by inde- 

^JS^ST^ 1 ^ - und £i he tenc8 °f franchise agreements with McDonald's 
Corporation^ The remaining 25% are operated by the Corporation. The combination 
of franchised owner-operators and aggressive McDonald's field management has ere- 
ated a dynamic business environment which has produced a wide range of ideas and 
innovation in manv areas, from restaurant operations and new products to the ef- 
fective employment of older workers. 

Mlr^loM'c^L^' now Senior Chairman, opened the first restaurant in the 
McDonald s System m Des Plaines, Illinois. At the age of 52, when many people are 
contemplating retirement, he was just starting a new business. Mr. K roc's entrepre- 
neurial spirit carried him and McDonald's through the sixties and seventies with 



59 

phenomenal success. In 1980, when McDonald's was celebrating its 25th anniversa- 
ry, Mr. Kroc, its founder, Chairman and driving force, turned 77 years of age. He is 
an active participant in McDonald's decision-making process today. 

With this heritage, McDonald's attitude toward older workers could only be posi- 
tive and forward thinking. The contributions of these workers to our business paint 
a picture of human experience and achievement, rather than one of numbers, facts 
and figures. McDonald s is proud of its history as an equal opportunity employer; a 
provider of valuable first jobs for millions of teenagers; and as an employer of older 
workers. 

The average McDonald's restaurant employs about 60 part-time, hourly employ- 
ees, referred to as "crew" workers, who prepare our products, serve our customers 
and perform other operating functions. Most crew employees work flexible hours on 
a part-time basis. Thus students can be scheduled to work after school, housewives 
during the day when their own children are in school and others to accommodate 
their personal heeds. 

I believe that this scheduling flexibility and the part-time nature of our crew jobs 
are particularly important to McDonald s older work force. Employees not only can 
be scheduled to work at times most convenient for themselves, but also during 
hours when the volume pattern, best fits their own particular, temperament and per- 
sonal characteristics. Some workers— regardless of age— find the. busy McDonalds 
lunch hour too physically demanding or unnerving, while\cthers thrive on this 
hectic pace. Also, the shorter workday associated with part-time employment often 
provides job opportunities for those who might not haw? the stamina or the desire.to 
work a full eight-hour day. 

There is also flexibility in the nature of the crew job itself. The pace of each crew 
function requires a different degree of physical movement and public contact Many 
crew workers master all of these stations, while others choose to work only those 
tasks which best meet their personal characteristics. 

On a more intangible level, there is an important sense of teamwork and camara- 
derie within our restaurants that provides many older workers with needed self- 
esteem and recognition. In many instances, the satisfaction provided may be more 
important to these workers than monetary earnings. 

On the other hand, McDonald's receives many benefits from older workers. Their 
maturity, sense of responsibility and pride as exemplified by regular attendance, 
consistent job performance and steadiness, provides a role model for our younger 
crew members. Older employees are usually more stable, and lend continuity and 
dependability to an often rapidly changing part-time work force. They also comfort 
and reassure our younger managers, many of whom are supervising others for the 
first time in their careers. 

For many years, McDonald's has encouraged franchisees and company restaurant 
managers to recruit and hire older workers who meet our qualifications. We have 
done this at both the corporate level, through direct contributions and other sup- 
port, and on the local level by creating a climate for innovation and action. In pre- 
paring for meeting with your Committee today, I learned about many incidents 
which typify the relationship between McDonald's and those older workers. I also 
recall many personal experiences from my days in restaurant and field manage- 
ment which I wish I had time to tell you about today. 

Back in 1977, McDonald's Corporation Annual Report documented the role of 
older workers by featuring a story about Ben Przybulski, a then 72 year-old employ- 
ee at the McDonald's restaurant in Oak Brook, Illinois. Ben had joined McDonald's 
six years earlier. He had been a milkman for 44 years until the arthritis in his legs 
forced him to retire. After three years of "too much leisure time", Ben decided to 
apply for a crew position at McDonald's. The annual report quoted him as saying, 
"If I d have stayed home, I'd probably be dead now". 

In my opinion, Ben's story, as impressive as it is, is not the story in itself. The 
story is that McDonald's, regarded primarily as an employer of teen-agers, chose a 
72-year-old as one of seven crew employees to feature in its annual report. 

McDonald's continue to stress the importance of older workers in their internal 
and external communications. Our objective is to create a climate to encourage our 
local owners and managers to more effectively reach out to this labor market. In 
1978, a grant from McDonald's to the National Council on the Aging helped them 
prepare, "A Job-Seeking Guide for Seniors". This guide helps to prepare older citi- 
zens for the job-hunting process and outlines the rights ana responsibilities of both 
employee and employer. The nationwide Senior Community Service Project network 
of the National Council on the Aging, has already distributed 10,000 copies of it. In 
Florida, local McDonald's restaurants have also distributed several thousand copies. 



60 

In Chicago, McDonald's management developed a program to locate employees 
with Operation ABLE, a local organization which identifies job opportunities for 
older workers. As a result, we were able to employ 73-year-old Julius Kazban, at our 
SkoJue, Ulinois, restaurant Mr. Kazban later received an achievement award from 
Operation ABLE and was featured on local television. Mr. Chairman, we were privi- 
leged to nave you visit Chicago, and speak at the luncheon where Mr. Kazban was 
so honored. 

Since then, McDonald's has made a grant to Operation ABLE to enable them to 
prepare a kit to help others organize similar senior employment networks in other 
areas of the country. We plan to distribute this kit through McDonald's regional 
personnel offices around the country. 

«J[? ^ An S eles 'J? c ? 1 McSonaW'a management developed another approach called 

The Forgotten Workers Welcome". This program informed the public through 
print media and radio broadcasts ihat we were "cooking-up" new employment op- 
portunities for two groups of people which largely had been overlooked by employ- 
er^housewives and older workers. McDonaJd T s had an excellent ongoing relation- 
ship with both groups in the area and recognized their potential for greater contri- 
butions m the future. This successful recruitment program received widespread atr 
tention m local papers and on radio talk shows. 

McDonald^ has also been a corporate supporter of a Chicago newspaper called the 
Weekly Review. With a circulation of 45,000 it iaf committed to the idea that age 
should not bar a person from being informed and effective. In 1980, our support was 
strengthened by the presence of McDonald's President Ed Schmitt, who served as 
Chairman of the Weekly Review's annual fundraising dinner. 

Local McDonald's operators and management throughout the country are regular- 
ly recruiting older workers through advertisements in specialized local publications 
such as the Weekly Review and by working with various employment centers and 
services. Mats and artwork for newspaper advertisements picturing older employees 
have been made available to our local personnel people„for use in recruiting. 

These activities, . and many others on record, have been developed to tell older 
workers that they are welcome and can make a contribution at McDonald's. But re- 
cruiting such workers is a real challenge and we are continuing to strive for new 
and better methods to attract qualified older workers for available openings. 

Before I conclude my remarks, I would like to describe our policy toward another 
important group of able and experienced people who help make McDonald's work— 
our older owner-operators. McDonald's franchise agreement is generally issued for a 
20-year Denod. Upon expiration of the initial 20-year term, franchisees who qualify 
are considered for a rewrite of a new agreement. Age is not a consideration in the 
rewrite decision, although the physical condition and stamina of the owner-operator 
is among the criteria. ^ 

McDonald's frequently rewrites franchise agreements which extend well into the 
franchisees sixtieth and seventieth years. In fact, 78 year-old Ken Props, McDon- 
ald s Director of Franchising, reminded me that just a few years ago, we entered 
into a new 20-year agreement with a vigorous 77 year-old franchisee. 

In conclusion, Mr. Chairman and Committee members, I would like to thank you 
for the opportunity to discuss McDonald's experience with older workers. We are a 
long way from having all the answers, but are continuing to work toward finding 
better ways to incorporate more of these valuable citizens into our workforce. Al- 
though, McDonald s is young in terms of its own history, we are firmly convinced of 
the value and worth of older workers. 



ERLC 



61 



1? 



Mi Mm 





Crewmember Fhrttxx 
Choqucttt enjoys the best 
o( both world* as a 
McDonald's employee. 
Residing In Florida from 
September through May, 
Florence works at 
McDonald's In laWJand, 
ft. Then she heads north 
to New Hampshire for her 
other McDonald's duties 
from June through August, 
leaving behind the 
scorching Florida sun. 

While In Florida this year, 
Florence constructed a 
gigantic authentic looking 
Kg Mac* sandwich cake 
to help launch that store's 
Build A Big Mac cam- 
paign. However, the 
delicious cake lasted no 
longer In the Crew Room 
than Big Mac sandwiches 
do In th€ bin. 
Keep up the good work 
Florence and the Crews 
Views editorial staff will try 
to get back to work with 
their mouths watering 
after looking at pictures of 
that gorgeous cake. 



MAY/JUNE 1961 




ERLC 



91-818 0-82 5 



65 



62 




Working d>caa long hoort, btifl| ■ at(f* 
atartar, and n oa wa i l nitha 'Initlativa" 
to work ImJapanoVrtfyhova paid off for 
titwparaon, Eilaan Monor. Har itort f 
McOon**<fi of MaohanlcvJIta. NY. 
racor'' / acknowtadatd EiUtn m Craw- 
p -yyn of tha Yaar for 1978. Tna award 
w f baaad on har antira par formanca 
^roOfhout tha post ytw. Working for 
MeDonaJd'a line* har noro opanad In 
Nowmbar of 1977, Eilaan'a outaida 
acUvlttot atto kaap har hopping. Elaran 
ohIWrtn and 26 grandcMldran can ba 
incradibry hard work. Elton takat it all 
In stride 

Manaatr Ron McCormtck axplalnad aoma 
of tha raaaona why EM«an> nam* wm 
aubmltwd for tha award and why aha't 
ona of har atora'a top crawmtmbar*. 
"Eilaan dot* mora tim hor job/' Bon 
aaid *^Sto alwtyt grraa that aoma thing 
txtrt and It willing to Mp out now 
crawmambart. I navar hava to worry 
if that doing hor fob. Raraly don aha 
roojulra auparvWon, and iho takaa tha 
mltlatira to tot that things gat dona 
witfwut baing aakad. If thara happan to 
ba art at of oonctm, Eilaan takat come- 
tfva maaaurtt. Eapadalty with now 
ci awnwrnbar t Shaofftrt Inoantfvato 
aach ona and takat tha tima to work whh 
avaryona, 8ha timpfy doat an outtttndlng 



fob.- 

(Haan works ma grill and thoroua^iry t 
anjoya har raaponalblttTiat. "I hava arwayt 
anjoyad cOCkinax and baing whh tha 
tja}*or crawpaopla it araat " aha aaJd. 
"^waryana hart fuat oaMt ma ^flt* and 
mtt/amtwoylUkaJtr 

H ^ i *t. t 

W^W^ 9 nn phi ■ ivvrmnp 

'ai^parianaa for KHaan* aapaaf dry obatcr* 
ktaj dw aara MaOontaaTt What In tha 
tjutftty of hi p ro du otj, »Thav*ra to 
aarafnC I Va warkod cihar piaoat that 
fcjataWtoara." 

Any plant for radramant? **OartaWy 
not,** aha firmly ttattd* "I Intand to worf * 
untH I can't" 

Aoaordlng to har managtr f EUaan wW ba 
around for at long at aha wantt. 9ha truly 
tnjoyidw faajtthatahahatmanogadto 
aatabflah a good rapport wMi avaryona In 
dw flora, Inciuatng har managar. **ftTa 
raaHy Important to oommuntoott whh 
your managar,** aha aaid. "If I'm doing 
Kin w thing wrong, t want to know about 
It l*N atwayt oontlnua to put forth antra 
af fort I do It baoauaa I anjfoy my Job ao 
much. I know what naada to ba dona to 
utuatty no ona hat to tott ma." 

In har ratwr matwr-of tact mannar, 
Ellaan anfoya what aha doat and oon- 
cantrattt on today, not tomorrow. And 
for today, aha hataamad har nawtrtia 
with pUnty of hard work and da ttoadon. 




66 




ElfhtVYMf-oW John Salby hasn't ml*ad 
• day't work In tha 12 vtar* tlnoa ha 
itartad with McDonald'**. Emy momtof 
tt 0:30 John arrlvn at tha McOofttkTs 
In Wltowkk. OH. GattJnf up aarty for 
work It ttnwthins ban* dona alnot tha 
aaa of 12. Rtllrtna to 1967. ha mvm. 
dtmfy Jo*r*d tht McDonald's forot. 

"I *iJcy work." ho «oid« "It fim mo 
aomttnfrjo. to do; it koto* mo golnf/* 
For hh rtowt birthday, crtwmtmbtrt 
wrpHttd John with a porty and pra- 
wntad him with a ptiquo with a tlfrw 

ipatula. Tha &*qvt ft ad. "Ona 
tmall symbol for a gnr: Job wall 
dona.** 

John could onty ehucfcla whan arfctd 
•boot ratirvmaf it. "Ill wark at tonf at the 
boas will htvt ma.** 



The Chairman. Thank you very much, Mr* Beavers. 
What was the name of the organization that put on the luncheon 
in Chicago? 
Mr. Beavers. Operation ABLE. 

The Chairman. On the occasion when I spoke there, to which 
Mr. Beavers kindly referred, they had found jobs for 2,000 retirees 
in the previous year, if I recall correctly. It was a public service 
group and they found jobs for 2,000 retirees. 

Mr. Shamansky. 

Mr. Shamansky. Mr. Beavers, has McDonald's recently changed 
its advertising agency? 
Mr. Beavers. Yes; we did just recently. 

Mr. Shamansky. With that in mind, is it possible that in your 
future advertising for television perhaps older personnel could be 
featured? As I remember, all of the fast food advertising, the smil- 
ing young faces, that goes into every home in the country. We 
don't see any of the older people that I know that you are trying to 
entice to come to work. The quickest way of getting the message 
out to the public is to show those of us fortunate to have— I call 
them service strips— I used to claim I was prematurely gray, but I 

y& '68 




65 

don't, say that anymore. It is a matter of the quickest way to fea- 
ture older Americans on television as employed by McDonald's. 

Mr. Beavers. I think you can expect to see the use of older em- 
ployees in our future commercials. 

Mr. Shamansky. I think that will be in line with what you are 
saying. 

Mr. Biaggi. Would the gentleman yield? 
Mr. Shamansky. Yes. 

Mr. Biaggi. That is excellent. Until this day, I wasn't aware that 
you employed older people. 
Mr. Beavers. Yes, sir. 

Mr. Biaggi. I understand the nature of your testimony, obviously 
it is an aggressive effort 4 on the corporation's part, but there is a lot 
more to do and it has hot reached America at large. 

Mr. Beavers. We need to do a little-better iob in communicating 
that message. I think the suggestion made by Congressman Sha- 
mansky is excellent. 

The Chairman. In connection with that, we held a hearing in 
Hollywood and we heard from the actors and actresses and authors 
the sad story that it was getting to the point of where an actor over 
35 didn't have much of a chance to get a job. 

Mr. Biaggi. Except Lassie. 

The Chairman. Even the authors were beginning to be discrimi- 
nated against. 

Dr. Rechtin, the shortage of trained engineers is one reason that 
your company is turning to its older workers. How serious is the 
shortage likely to become in the future? 

Mr. Rechtin. The estimate of shortages is on the order of tens of 
thousands of engineers in the aerospace business, toward the end of 
1980, if "one makes a rather conservative estimate, that the total 
demand for engineering services remains about the same. The 
problem is the supply has declined sharply during that particular 
period. It is an easy demographic forecast to make. 

The Chairman. That is very interesting, and it is an encourage- 
ment to the older workers that it will have a chance probably for 
consideration. 

Mr. Knudson, your company seems to be disproving the addage 
that you can't teach an old dog new tricks. Do you find that older 
people are as capable of learning computer programing techniques 
as young people/ 

Mr. Knudson. We have found that they learn just as easily as 
anyone else. They don't think so at first and there is a degree of 
temerity. I almost think we waste our first 2 weeks of the course in 
trying to convince them that computer terminals don't bite and 
you really can't fold, spindle, or mutilate electronic data. But, once 
we get into it— as a matter of fact, our instructors have discovered 
a rather unique situation with these trainees. Because we have a 
group of trainees who really feel they don't know anything— it is a 
very complex subject—but we also have this same group of people 
sitting in that class who have 40 and 50 years experience in old ca- 
reers and rhey have a presence that trainees normally don't have, 
and it takes a fairly good instructor to handle both sides. 

The Chairman. Thank you very much. 

9 



66 

Mr. Bradshaw, Grumman has, been in the press lately because it 
was threatened for takeover by another corporation. If this take- 
over were to occur, what dp you think might happen: to the pro- 
gram you established foryour older workers? 

Mr. Bradshaw. Mr. Chairman, with all due respect, we would 
like to pride ourselves in one of the most family-oriented aerospace 
companies in the industry.. I am, not aware that the LTV Corp. has 
a similar reputation. 

The. Chairman. Thank you very much. 

Mr. Beavers, from a strict business perspective, what is the 
greatest advantage to your company of hiring older workers? 

Mr. Beavers. I think there are several advantages. One intangi- 
ble advantage, the experience that our young managers have in 
working with the older workers. Many of them have had consider- 
able managing experience working for other industries, other com- 

!>anies, and spending time with these young managers on particu- 
ar problems that may crop up during the course of the day I think 
helps to really stabilize their management techniques and I can 
iust recount many instances in my own development where I have 
benefited from.the counsel and advice of older workers. I also think 
that our crew people pick up a lot from the older workers. They 
are always on time, they are very productive, they almost embar- 
rass some of the younger crew people as to how much they can do. 
And they have a great deal of enthusiasm that I think is infectious 
to the^rest of the workforce. 

The Chairman. May I ask each one of you gentlemen one ques- 
tion. What I have said and what you are doing is so heartening to 
this committee. We wish it were the general situation in the coun- 
try. 

Tell us, if vou will, in a brief comment, yes or no, is what you are 
doing an isolated development in the country or do you find indus- 
tiy in our niagor business enterprises are generally beginning to 
fall into the same pattern you are following? 

Mr. Rechttn. Mr. Chairman, Aerospace Corp. is in southern Cali- 
fornia in the midst of a highly competitive industry. As a conse- 
quence, whenever any one of us gets a good idea how to increase 
the productivity of older workers, things get picked up relatively 
quickly by the others. For example, the sorts of things that Aero- 
space is doing now are leading in some others, but there are others, 
TRW, Lockheed, and some others that are not far behind. I think 
in general the aerospace industry is probably ahead of the legisla- 
tion at this point because it is in their competitive interest to be so. 

The Chairman; Mr. Xnv.dson. 

Mr. Knudson. I would say it is a definite trend. We are going to 
see the industry product life cycle and that life cycle has been cut 
in half and cut in half again since we discovered there was such a 
thing as product life cycle. I think it has just been identified here. 
If you are looking within the next 20 years, you are looking at a 
serious possibility of two or more careers in your lifetime as indus- 
try and technology move forward. 

The Chairman. Thank you very much. Mr. Bradshaw. 

Mr. Bradshaw. I think the trend is there and I think it is accel- 
erating. I think it is marvelous. 

The Chairman. Mr. Beavers. 



ERLC 



70 



67 



Mr. Beavers. I would also say that the trend is a very positive 
one in our industry and I think as a leader in the industry we cer- 
tainly encourage our competition to reciprocate. 

The Chairman. Mr. Daub. 

Mr. Daub. I just really want to say that this was a very astutely 
prepared set of witnesses to staff, Mr. Chairman, because I think 
we have all been captivated by the contributions that they made, 
that their management has helped them to articulate to us today, 
and thank each one of you for taking time to come. We very much 
appreciate it. 

There is one particular question, Mr. Knudson, for you with re- 
spect to recommendations in your testimony on pages 6 and 7. 

Mr. Chairman, if I might, I would like to urge you to examine 
that particular set of testimony and perhaps ask staff to prepare a 
set of factual information or investigative types of questions or re- 
ports or recommendations that might include some legislative rec- 
ommendations for our full committee. 

The Chairman. Thank you. The staff will take note of that. . 

Mr. Shamansky. 

Mr. Shamansky. Thank you, Mr. Chairman. 

I note that I had an opportunity to ask questions before. 

The Chairman. Yes. 

Mr. Shamansky. You see how much we appreciate what you 
have done here We hope we can make some use of the information 
you have given us. Thank you very much. 

The Chairman. Now we have three more witnesses, and if you 
will come up to the table: Mr. Ulrich holds the position of president 
and chief executive officer of Ward Howell International, Inc., an 
executive search consulting firm; and the next is Dr. Jon Pynoos 
who directs the Institute for Policy and Program Development in 
the world-renowned Andrus Gerontology Center at the University 
of Southern California. A major portion of the institute's efforts is 
directed toward the study of employment and retirement issues. 
Next is Donald Pursell, director of the bureau of business research 
at the University of Nebraska's College of Business Administration. 
With a Ph. D. in economics fror* Duke University, Dr. Pursell has 
directed and conducted research on manpower issues, taught eco- 
nomics at major universities across the country, and has published 
numerous articles and books on business-related issues. 

Gentlemen, we are delighted to have you here with us today. 

First we will ask Mr. Ulrich to make a statement. You heard me 
say to the other witnesses, you may either read your statement or 
have it inserted in the record or summarize it in your own way, 
whatever your pleasure is. 

STATEMENT OF MAX M. ULRICH, PRESIDENT, WARD HOWELL 
INTERNATIONAL, INC. 

Mr. Ulrich. I have been asked to speak briefly today to offer this 
distinguished committee the perspective of an executive search con- 
sultant on business attitudes toward older executives and, from the 
other side, attitudes as we sea them of individual executives toward 
work and retirement. 



ERLC 



68 

As background, our firm was founded 30 years ago and now has 
some 50 partners operating round the world under the firm's 
banner. Together, we have over 1,000 years of business and execu- 
tive recruiting experience. We conduct hundreds of senior level 
searches each year for clients ranging from some of the largest cor- 
porations in i the world to smaller companies in need of manage- 
ment reinforcement, from nonprofit organizations to Government 
bodies, and from educational institutions to trade associations. I be- 
lieve we have good insights into the attitudes of organizations and 
of individual executives. Since our work involves executives for 
upper management levels, my comments will apply principally to 
this group of people. 

I believe there has been a definite change over the past decade in 
the attitudes of corporations with respect to the age of executives 
they want to bring into their organizations. Whereas 10 years ago 
it was fairly common to hear a client specify, I would like to have 
somebody up to 45 years old, today it is not uncommon for them to 
say, "Well, I will go up to 55 or maybe a little more". The average 
age* of the executives we introduce to corporations is about 45 
years, wMoh I think is what one would expect considering the ex- 
perience level of positions we are recruiting for. However, we are 
noticing a growing willingness on the part of companies to consid- 
er—and hire — managers of 60 or even older in certain situations. 

Generally, the more senior the position or the more stringent the 
technical requirements, the more willing companies are to consider 
older executives. We are ~seing many instances of real departures 
from traditional thinking iout age. For example, we worked with 
a prestigious international bank to find a new chairman for their 
U.S. organization who would bring added wisdom, experience, and 
insights into their business. The successful candidate— a dynamic 
64-year-old who had just retired as chief executive of a multibillion- 
dollar industrial corporation. Another recent example concerns a 
large oil company. We were asked to assist this company in finding 
an individual to advise them on their worldwide shipping oper- 
ations. We found a young 60-year-old with superb qualifications 
who got the job. 

Some companies bring in older executives to help prepare the 
next generation of management. One of our client companies 
sought a leader who could develop its young managers, none of 
whom was ready to succeed the retiring chief executive. The win- 
ning candidate— a 58-year-old former chief executive of a much 
larger company, who nad taken early retirement. Because of his 
age, the younger managers did not feel their futures were blocked. 
The sequel to this is that the 58-year-old held the chief executive 
position for 5 years, carefully groomed several of these managers 
for the top position; he presented three to the board for considera- 
tion, one of whom was selected and is now performing with distinc- 
tion. 

Older executives who have completed their careers are also in- 
creasingly in demand in developing countries for their proven man- 
agement skills. Age of candidates is rarely a factor in these in- 
stances. We recently recruited a retired 61-year-old head of a major 
U.S. airport complex to spearhead the ambitious commercial avi- 
ation development plans of a Middle Eastern country. 

?r -72 



69 

We are also seeing changes in the attitudes of many executives 
toward retirement. People are living longer and are in better 
health than ever before. Actuarial studies show that a man who is 
65 today can expect to live until 80, and a woman of 65 to almost 
85. As retirement looms, many have second thoughts about hang- 
ing their spurs. 

It is not unusual today for the older or retired executive to 
embark on a second career. I need only point to some well publi- 
cized examples like Ian MacGregor. He retired at age 65 and Joined 
Lazard Freres. In 2 or 3 years he was selected to head up British 
Steel, which organization he is heading now. The present Secretary 
of the Treasury and the new head of the World Bank both are in 
second careers after distinguishing themselves as chief executive 
officers of major financial institutions. The former CEO of Pruden- 
tial Insurance Co. retired at age 60 and then became head of a 
large health care firm with splendid results. 

Why are many older executives remaining in the work force? 
From our experience, although inflation might be a factor in some 
instances, the reasons are not usually financial. Rather, the pri- 
mary motivation is a desire to remain a productive and contribut- 
ing member of society. And I think that was borne out by our earli- 
er witnesses today. 

Many executives who have been active in business all their adult 
lives see no reason to stop being productive at an arbitrary age — 
60, 65. Many find the slower pace of retirement unsatisfying after 
an active managerial career. For these, golf and fishing may be 
fine for 2 days a week, but not 7. 

One CEO of a midwestern company who retired to his ranch last 
year at age 60 summed it up recently by saying, "The horses are 
getting tired of seeing me around all the time." And, incidentally, 
we approached this individual about a job and he is very interested 
in pursuing one after his life in the country. 

Many people are surprised when I tell them that executives in 
their sixties often have a greater spirit of adventure and are more 
willing to start over in a new environment than their counterparts. 
They are generally more open, and with good reason, to the profes- 
sional challenge and risk of beginning a new career. In the past 2 
years, we have placed more than a dozen older U.S. executives in 
high-level positions overseas in developing countries. 

I hope these brief comments have been helpful. Let me make one 
final point. The key factors in determining executive competence 
include vitality, experience, flexibility, creativity and openminded- 
ness, and these are not a function of chronological age. We all 
know pe^^le 55 going on 90, and 80-year-oids going on 42. 1 don't 
believe o^e can generalize and $*y every executive should stay in 
his job till age 70 or 75, but conversely, many executives can per- 
form well for years after normal retirement age, and increasingly 
many are doing so. 

I want to thank you, Mr. Chairman, and your committee for this 
opportunity to comment on this important subject. 

The Chairman. We thank you, Mr. Ulrich. You have gr ^n us a 
wonderful perspective looking for people to head up companies. 

Next will be Dr. Jon Pynoos. We are delighted to have you and 
we welcome your statement. 



70 



STATEMENT OF JON PYNOOS, DIRECTOR, INSTITUTE FOR POLICY 
AND PROGRAM DEVELOPMENT, ANDRUS GERONTOLOGY 
CENTER, UNIVERSITY OF SOUTHERN CALIFORNIA 

Mr. Pynoos. As you know, the Andrus Center is the largest mul- 
tidisciplinary institute in the United States devoted to the study of 
aging. In the last several years, we have spent considerable energy 
conducting research and policy analysis in the area of employment 
and retirement of older workers. 

I am here today to report on the study that has examined the 
extent to which corporations view older age as a neutral factor, as 
an asset or a problem in recruiting new executives and upper level 
managers. 

Overall, the study indicates that the corporate world is increas- 
ingly x/illing to recruit executives on the basis of criteria such as 
skills, judgment, and experience. The application of such criteria 
represents a breakthrough in attitudes and opens the door to more 
older executives and managers. * 

This is an important finding because in the early 1960's there 
was the sense that companies only wanted CEO's and managers 
who were younger— by younger, they often meant under 40— the 
whiz kids of that era. They assumed that youthful vigor was the 
key to successful management leadership. Companies were report- 
ed to be putting their older executives out to pasture while recruit- 
ing younger replacements. 

The research I am reporting on today was conducted at the re* 
quest of the House Select Committee on Aging. Its purpose was to 
find out if the attitudes of m^jor corporations are changing such 
that it is easier to replace older executives and managers and 
whether such a trend can be expected to continue. 

The research was conducted through telephone interviews with 
persons on the presidential or partner level of the 15 top consulting 
firms involved in executive searches. Survey respondents included 
such companies as Ward Howell, Korn Ferry, Heidrick & Strug- 
gles, and Russell Reynolds. For purposes of the survey, older execu- 
tives and managers were defined as those over age 55. 

Overall our research co* ;oborates the testimony of Mr. Ulrich, 
the previous speaker, whc was one of the people we interviewed. 

The study indicates the age of candidates being recruited for top 
level positions has been steadily increasing over the past 10 to 15 
years and can be expected to continue. The respondents generally 
indicated that there is now a willingness and even specified re- 
quests in certain situations to hire new executives at least into 
their mid-fifties. 

What accounts for the change and under what conditions can it 
be expected to continue? The respondents indicated five major rea- 
sons for this trend. First, a reduction in age stereotypes; second, 
certain situations in which older executives are actually sought 
out; third, the impact of Government policies; fourth, the proactive 
role of executive search firms; and fifth, the need of corporations 
for specialized skills. 

Let me elaborate briefly on several of these points. One, respond- 
ents indicated that stereotypes associated with aging are beginning 
to erode. There is an increasing Realization that many people 



71 



remain healthy and vigorous into old age;, and business is begin- 
ning to pick up this kind of information. 

Two, older executives' experience can be especially important in 
certain situations. For example, in a weakened or volatile economy, 
younger executives may not have experience to call on. One re- 
spondent stated: "When things started going sour, the whiz kids 
didn't have the experience or resources to address changed circum- 
stances. During a period* of consolidation, experience looms large." 

Another situation in which older executives seemed especially 
appropriate was when companies faced a financial crisis. One ex- 
ecutive recruiter said: "When things are not going well, companies 
need someone to do the job now, not. a younger person with poten- 
tial later." Several reported instances where newly recruited older 
executives were able to turn around company loses. 

Newly recruited older executives also seem to play an important 
role in interim situations where younger executives are not quite 
ready to take over and a company needs an older executive to pro- 
vide a stabilizing force and training. Several people indicated that 
even in the electronics field which tends to have a great number of 
younger executives, older executives have been recruited to provide 
jome balance arid maturity! 

Three, the impact of Government policies such as the Age Dis- 
crimination and Employment Act has made selection less arbitrary 
but even more importantly in terms of older executives, raised the 
awareness of age as an issue. 

Four, executive recruiters can play a catalytic role by advocating 
on the basis of criteria such as skills, judgment and experience. 
One person said, "I persuaded a firm that wanted a younger person 
that my 55-year-old candidate had the experience to do the job, and 
he was hired." 

Finally, T?hen the special skills are needed, age is less of a factor. 
Examples ot special skills are combinations of data processing and 
management skills or scientific and management skills. In an age 
of specialization, those with special skills will be valuable regard- 
less of age. 

While there is a trend to recruit more older executives, as with 
most new developments, there are still several problems to over- 
come. 

First, corporations are presently more willing to hire older execu- 
tives than older managers. They view older managers as presenting 
special problems. For example, corporations often question the 
growth potential of older managers. They are willing to acknowl- 
edge that 20 to 25 years of experience in executive position is valu- 
able, but they are not quite sure that is true at the managerial 
level. In addition, problems of pensions and vesting can complicate 
the hiring of older managers. If a manager is not already vested, 
he may not have the time to earn rights to a pension in a new posi- 
tion. For example, if a manager starts a new job at age 57, and 10 
years is required for vesting and normal retirement age is 65, a 
barrier to employment exists. 

The second problem is that many respondents indicated corpora- 
tions considered older executives as being in their mid-fifties. Given 
the much higher life expectancy these days, such executives could 





72 



have many more productive years, ahead. Corporate definitions of 
older may not yet be old enough. 

In spite of the.problems, however,* the survey -reveals an increas- 
ing tendency among ^businesses to view age as a neutral factor in 
seeking new management and executive personnel. Indeed, the 
trend away from youth toward maturity and experience makes age 
a potential asset in many situations. 

There are three issues for further consideration. One the need to 
rethink promotability and growth potential of managers. Two, 
more education of the business community, with the help of execu- 
tive search firms, on skills of older employees. Three, the resolu- 
tion of complicated issues of pensions and vesting that do enter the 
equation. 

In conclusion, J: want to thank you, Mr. Chairman, and your 
Committee, for the opportunity to share our findings with you. The 
trends do offer some optimism regarding future hiring possibilities 
for older executives and managers. 

[The study submitted by Mr. Pryor follows:] 

Prepared Statement op Jon Pynoos, Ph. D., Director, Institute for Policy and 
Program Development, Andrus Gerontology Center, University op Southern 
California 

Business Attitudes Toward Older Executives and Managers: A Survey of Executive 

Recruitment Firms 



In preparation for a specid hearing on new business attitudes toward older execu- 
tives and managers, the House Select Committee on Aging requested a survey of top 
executives in the nation's leading executive recruiting firms. The survey, conducted 
by the Andrus Gerontology Center, University of Southern California, was designed 
to assess the present climate among business leaders toward hiring older executives 
and managers. The results are summarized below. 

Major findings 

The age of candidates being recruited for top level positions has been steadily in- 
creasing over the past 10-15 years. 

The importance of age as a factor in the selection process is related to the level of 
the position being filled; the highest levels within the company are more likely to be 
filled by older individuals. 

For positions requiring special skills, or when companies face financial crises, ex- 
ecutives and managers are selected without regard to age. Under these circum- 
stances the most qualified individuals are sought, whether they are old or young. 

Some executive recruiting assignments involve specific client requests for an older 
executive. An older executive is brought in both to stabilize the company and to aid 
in the training of up-and-coming executives. 

There are specific problems which still affect a company's willingness to hire 
older executives or managers. In some cases, the pension plan inhibits hiring an 
older executive because he or she may not achieve vested rights to the pension 
before retiring. 

Foreign-owned companies are generally perceived as being more receptive to older 
executives and managers. It was also noted that multi-national corporations seek 
older executives because of the international diplomacy skills required. 

The age of executives and managers being recruited is expected to continue to in- 
crease in the future. 



Reports in the business media indicate that older worker issues are appearing on 
the agendas of business leaders across the nation. During the past few months the 
Wall Street Journal has noted trends in attitude changes by businesses toward 
hiring older workers in general, and older managers and executives in particular. 



executive summary 



INTRODUCTION 



ERIC 




73 

In preparation for a special hearing on business attitudes toward older managers 
and executives, the House Select Committee on Aging commissioned a survey of top 
executives in executive recruiting firms. The survey, conducted by the Andrus Ger- 
ontology Center, University of Southern California, was designed to assess the atti- 
tudes and behavior of business leaders toward hiring older executives and manag- 
ers. As consultants who deal both with a client company's search for high level staff 
and with potential candidates for a given position, these individuals are sensitive to 
trends in the age composition of candidates considered for employment 

The survey focused on the following issues: 

Current trends in corporate .willingness to consider hiring older executives and 
managers, and the factors which affect client attitudes. 

The average age of executives and managers recruited by the firm, as well as the 
age of the oldest person recruited and hired by a client company. 

Projected future trends in corporate willingness to consider hiring older execu- 
tives and managers. 

The firms selected for the telephone interview survey were among the top twenty 
consulting firms in the area of executive search. Information on these firms was 
made available by the Congressional Research Service in consultation with the staff 
of Consultant News. Fifteen of these firms participated in the survey conducted in 
October, 1981 (see attachment). The individuals interviewed were located in the top 
administrative ranks of the firm, often at the Presidential or Partner level or its 
equivalent. Their comments are quoted throughout the remainder of the report 

For purposes of the survey, "older" executives and managers were defined early 
in the interview as those over a$e 55. Executive'level positions focused on the very 
top one, two, or three positions in an organization. Management positions referred 
to the next lower level positions with corresponding lower salary ranges. This dis- 
tinction became important in terms of the influence of age as a factor in hiring deci- 
sions. 

Overall, the results of the survey indicate positive attitude changes toward more 
experienced, older personnel— particularly as part of a trend over the past 10-15 
years. Indeed many of those surveyed gave examples of executive level recruiting 
assignments in which their clients considered, or specifically requested, an older 
candidate. 

'We began the assignment with the assumption that the company was looking for 
someone in their early 50's. The person we found was 60 and just right for the job. 
His experience, combined with his vigor made him the best candidate \ 

As is the cose with many issues, employer attitudes toward hiring older execu- 
tives and managers have changed more dramatically than actual behavior. In the 
future, we are likely to see more widespread hiring of older persons for top level 
posts as the actions of employers begin to catch up with their attitudes. 

MAJOR FINDINGS 

The age of candidates being recruited for top-level positions has been steadily increas- 
ing over the past 10 to 15 years 

Almost all of those surveyed noted the changing age composition of candidates 
being considered and hired by companies—particularly at the executive level. This 
coincides with an ongoing reevaluation of the emphasis on youth prevalent in the 
sixties, together with a recognition of the skills and experience many older person- 
nel can bring to a job. Several of those interviewed noted they could remember a 
time in the 1960's when candidates over 40 were not even considered for top posi- 
tions by client companies. 

Interviewees offered several reasons for this change: 

(1) Many of the stereotypes associated with the aging process have been discredit- 
ed. 

"There is an increasing realization that people remain vigorous and healthy into 
old age." 

The individual nature of the aging process was also pointed out by several of 
those surveyed who observed that "one can be young at 64 or old at 40." 

(2) Related to the more positive attitudes towards older people in general is the 
current importance of some positive attributes specifically associated with age. As 
one informant noted: 

"The economy today puts a premium on experience." 

Another consultant discussed the changes m company attitudes brought .about by 
a recessionary economy in the mid 1970's: 

"Before that period, the 'whiz kid' type was at a premium. When things smarted 
going sour, these younger people didn't nave the experience or resources to address 



ERIC 77 

am 



74 

changed circumstances. During periods of consolidation experience counts." Signifi- 
cantly, ten out of fifteen of the surveyed consultants volunteered this response as a 
pnmary.factor contributing to greater client willingness to consider hiring olH'jr ex- 
ecutives or managers. 

(3) Government policiesseera to have had some effect on corporate willingness to 
hire older executives and managers. Several informants noted that regulations 
under the Age Discrimination in Employment Act specifically, or equal employment 
legislation in general, have made selection processes less arbitrary. 

(4) Two informants noted that private sector policies relating to the hiring and 
management of personnel have also undergone, changes which contribute to a great- 
er receptivity to older workers. One noted the increasing importance and power of 
the human resources function: 

"As it becomes professionalized, the human resources position is being moved up 
to the office of the President where occupants have more impact on strategic plan- 
ning. There, they are also in a position to sell or persuade management to Keep 
their options open in reference to age." 

Another consultant noted the growing tendency of the selection process to become 
based on quantifiable and objective standards versus stereotypes and personal prej- 
udices. 

(6) Finally, several informants noted the proactive role of the consultant in the 
recruiting and selection of top personnel. 

m "Our firm tends to open up the thinking of our clients. We try to stimulate think- 
ing about a broader range of candidates that .might fit the position." 

If a client seems to be looking for a younger man this consultant felt his staff 
should raise the issue of age and ask how the client would react if they found a well 
qualified older candidate— would they consider an interview? Ultimately, the choice 
is up to the client. However, as another informant noted, the consultant might be 
able to persuade a client that a 55 year old has the skills and experience necessary 
to do the job." 

The importance of age as a factor in the selection process is correlated to the level of 
the position being filled 

A second finding volunteered by almost all the informants dealt with the correla- 
tion between age as a factor in selection and the level of the position being filled. 
The higher a position is in the organizational hierarchy, the less age is a problem. 
Conversely, at the more mid-level, primarily managerial positions, older aged candi- 
dates are still viewed as somewhat problematic. 

Informants offered several reasons for this. Generally, top executive level posi- 
tions now require experience in a broad number of field and business functions. This 
type of experience is generally found primarily among candidates who have "20-25" 
years experience as noted by one consultant, and who are usually "over 45." On the 
other hand, a company interested in hiring a mid-level manager seems to be influ- 
enced primarily by the growth potential of candidates. On this issue an older candi- 
date is doubly handicapped as: 1) the company would question that individual's po- 
tential if at age 50, he or she had risen only to a mid-level position and 2) the older 
candidate is perceived as having fewer years to contribute to the organization. 

One informant raised the importance of age as it relates to successful corporate 
succession planning. An example might be that of a controller who is hired with the 
expectation that h* might eventually assume the position of Chief Financial Officer, 
perhaps fifteen years hence. If that controller is older when selected and even more 
so upon attaining the executive level position, "This creates problems for the con- 
tinuity of the company." It was this informant's opinion that, "This is not age dis- 
crimination but rather the important business function of succession planning?' 

The demand for skills, particularly in a turn-around business situation downplays 
the importance of age as a factor in selection 
Almost all of those commenting on current trends and practices noted that in a 
recruiting assignment where special skills are required age is not a factor in selec- 
tion. 

"If you're a geologist 1 1 the far west, age doesn't matter at all." Another men- 
tioned that an individual with both data processing and management skills faces a 
demand market in which age is seldom a factor. 

In an age of specialization those with special expertise will be valued regardless 
of age." . 

A second situation in which age is usually a neutral factor occurs when a compa- 
ny faces a crisis situation and a new leader needs to aaaicss immediate problems to 
turn-around company losses. 

"In this situation, experience and ability count highly over such factors as age." 



75 

Executive recruiting assignments can involve a specific client request for an older ex- 
ecutive 

Specific requests for an older executive, although rare, tend to occur around par- 
ticular situations. Over half those surveyed mentioned that in some companies 
younger executives (or a younger family member in the case of a family controlled 
business) are not yet ready to assume the top position upon retirement of the 
former Chief Executive Officer. As an interim measure, an older executive is 
brought in both to stabilize the company and aid in training the up-and-coming 
younger executive. Sometimes these executives are recruited from the ranks of the 
recently retired. 

Other situations mentioned included the following: 

One informant noted his firm's move into the area of recruitment for members of 
Board of Directors. Here, in his opinion, retired executives are viewed as a valuable 
resource. 

In a current search one consultant was conducting, age is viewed as an asset be- 
cause many of the client company's personnel are longtime employees. 

Another consultant viewed newly emerging high risk companies as potentially in- 
terested in older managers who can offer experience as well as a balance in the age 
composition of top leadership. 

There are specific problems which still affect a company's willingness to hire older 
executive or managers 

f Two tvpes of problems associated with hiring an older executive or manager were 

■0 reported: 

j!> (1) Those dealing with the issue of pension costs and requirements. Simply stated 

older executives and managers may require a greater corporate pension contribu- 
tion over a smaller number of years in order to provide benefits upon retirement A 
vesting requirement of 10 years may prove problematic if a 57 year old candidate is 
presented to a company where retirement at 65 is the norm. As several informants 
noted, this affects tne mobility of older executives and managers as well, by curbing 
their willingness to leave one firm for another if they have not yet vested in a re- 
tirement plan. This problem tends to vary with the level of the position being filled. 
At the senior level the types of candidates appropriate for these positions are more 
likely to be greatly experienced, older and vested in a company's pension plan. This 
tends to downplay the issue of retirement policies in the hiring process and in- 
creases the mobility of the candidate. On the other hand, managerial level candi- 
dates may be viewed as costly and less mobile due to pension considerations. 

Foreign-owned companies are generally perceived as being more receptive to older ex- 
ecutives and managers 

Of the eight informants who commented on this issue, all agreed that age was 
often less a factor in foreign-owned or foreign-based companies than in American- 
owned companies in the United States. Particular regions or countries mentioned in 
this context were Western Europe, South America, Saudi Arabia and Japan. One 
informant noted that older candidates are often valued in a multi-national corpora- 
tion as they are more likely to have the international diplomacy skills required. 

Somewhat qualifying this finding however, was the additional observation that 
foreign-owned companies often adopt the policies, practices and attitudes of their 
American counterparts if located in this country. Subsequently, attitudes toward the 
hiring of older executives and managers may follow the prevailing patterns in this 
country. 

The age of executives and managers being recruited will continue to Increase in the 
future 

Citing the general aging of the workforce, most consultants felt the trend toward 
considering and hiring older managers and executives will continue to increase in 
the future. Individual comments are instructive: 

"As business becomes more complex in the future, experience will become even 
more important" 

"The average age of executives and managers will naturally increase over the 
next 5-10 years. Women currently lower the overall average of those positions but 
as they age, they will add to the increase in age" 

"As retirement becomes more variable, we will probably see a greater number of 
people retiring early from one company and stepping into another 

"60-80 percent of senior management positions are currently filled by those aged 
45-60. In the very near future, a shortage of workers in this age group is projected, 
possibly reaching a low of 11-18 percent This might put a premium on age." 

I ERJC GT 79 



76 

Two informants noted that trends placing a higher value on older executives and 
managers must be balanced by the need to accommodate younger workers. 

One of the most optimistic assessments of the future came from a consultant who 
currently sees little in the way of positive attitude changes toward older executives 
end managers. Given the changing nature of business, pension and retirement poli- 
cies, he concluded, 'Tm optimistic about a future in which older workers will be 
more sought after." 

The approximate ages of the oldest executive or manager recruited and hired by the 
search firms were all 55 and over 

The oldest ages were reported as ranging from 55 to 65. The average age of those 
recruited over the past two years ranged from 40 to 50. 

DISCUSSION 

Overall, the survey of top executive recruiting firms rev^ds an increasing tend- 
ency among businesses to view age as a neutral factor when seeking new manage- 
ment and executive personnel— at least up to a certain s#e. Indeed, the trend away 
from youth toward maturity and experience renders age a potential asset, partial- 
larly at the highest levels of management 

It is difficult to assess the exact year at which a candidate's age becomes a factor 
in the selection process. The survey addressed this issue by Questioning, "Is there a 
particular critical age beyond which it would be extremely difficult to place an older 
executive? An older manager?" Ten out of fifteen of those surveyed felt it was not 
possible to name such an age, as it depended on the needs of an organization and 
the skills of a candidate. Only one respondent felt that age was never a critical 
factor; two respondents mentioned age fifty-five, and two mentioned fifty-eight as 
the enseal age limit. 

In some situations, the survey revealed that age can become a liability, such as 
when a mature candidate without highly specialized skills, not willing to serve in an 
interim position and not fully vested in a retirement plan, seeks a middle manage- 
ment position. 

The results of the survey also raise a number of points for further consideration. 

There is a need to reevaluate management career paths n> many American com- 
panies. The traditional view of a career path beginning with a new, young recruit 
who moves up through the ranks to middle management and then to a very senior 
management position, may no longer reflect reality. The increasing flexibility and 
mobility of individuals today may result in company or career switches at ages tra- 
ditionally associated with career stability. For example, a fifty year old mid-level 
manager may have risen to that position after switching careers at age 35. That in- 
dividual may also desire to work as long as possible, well beyond what is considered 
the normal retirement age. Given those two factors, he or she may represent an ex- 
cellent growth potential." 

A rethinking of corporate career paths may aid in more realistically assessing the 
effect of an upwardly mobile career ladder. "The average length of time a person 
spends at one level of responsibility within a company is 2.6 years" noted one re- 
search consultant Despite this rapid rate of advancement, not everyone can become 
the Chief Executive Officer, regardless of their growth potential. A stronger empha- 
sis on talent and the ability to do the job might be more important than promotabi- 
lity factors. One consultant noted that this change is already occurring: "Companies 
now are looking to hire a person with knowledge and ability to do the job now, 
rather than in the future. 

Second, there is a need for more education of the business communtiy on the 
skills of older employees— particularly those over age 55. It was apparent in the 
survey that a certain amount of aging information was reaching the business com- 
munity. Many were quite sophisticated about the general aging of the population 
and its potential short and long-term effects on the labor force. Translating this 
knowledge into changed attitudes, and subsequently changed com^iany practices 
however, may require a more focused educational campaign aimed at business lead- 
ers. 

Third, the potential proactive role of the executive search consultant was ad- 
dressed by several of the informants in this survey. This suggests another avenue 
for educating employers about the assets of hiring older executives and managers. 
Executive search consultants, armed with information about older executives and 
managers and sensitive to change career paths, may prove to be effective change 
agents, particularly when dealing with mid-management level assignments. 

Finally, the complementary issues of executive retirement ages and pension policy 
are highly complex factors affecting the feasibility of placing mature managers and 

ERIC 80 



77 



executives. Early retirement patterns, and vesting requirements enter into the deci- 
sion equation in the hiring of older managers and executives, whether correctly or 
not, and may increase or detract from the likelihood of a decision to hire. 

In conclusion, the survey seems to indicate a trend toward greater openness in 
considering mature candidates for top level executive positions. These indications 
offer some reason for optimism regarding future hiring practices of older managers 
and executives. 



This survey was conducted by Carol Cronin of the Employment and Retirement 
Division, Andrus Gerontology Center, under the direction of Dr. Pauline Robinson. 



Billington, Fox & Ellis, Inc.; Canny, Bowen Inc.; Coopers and Lybrand; Eastman & 
Beaudin, Inc.; Ernst and Whinney; Richard Fleming Associates; Haley Associates, 
Inc.; Heidrick & Struggles, Inc.; Ward Howell International, Inc.; Korn/Ferry Inter- 
national; MBA/Keating, Grimm & Leeper; Peat, Marwick, Mitchell & Co.; Russell 
Reynolds Associates; Spencer Stuart & Associates; and Arthur Young Executive Re- 
sources. 

The Chairman. If I may draw on something, I have a nephew 
who graduated with honors in engineering from Stanford Universi- 
ty with a Ph. D. lie went into the field of research and was associ- 
ated with GE along with other employees, then he went v/ith GE in 
Schenectady where he worked for 2, 3, 4 years. He had a lovely 
home, a wife, and two children and he was getting along well, but 
wasn't going up the ladder administratively. So he made a study 
and concluded that very few engineers progressed administratively 
in the larger companies. And so, with a kind and cooperative wife, 
he sold his home, resigned from his job and now, at 34 years of age, 
is half way through with honors at Harvard Business School. 

Would you say ne increased his likelihood of growing administra- 
tively? 

Mr. Ul^ich. I have a son who did exactly the same thing, except 
he didn't wait as long. I will comment on that, though. If you lock 
at the Fortune 100 companies, I think you will find 40 to 50 per- 
cent of them have engineering degrees. Engineering is a fine disci- 
pline for moving into the top management ranks, however, I think 
what can happen to engineers is that they get so specialized and 
valuable h; what they are doing that many tend not to move up in 
the administrative ranks. Your nephew made a very strong, tough 
career ''.ciMon to give up an excellent job and go back to school for 
2 yea? it is costly and time consuming. But, after graduation from 
business school, your nephew will be viewed in a different light by 
whoever is going to be looking at him. I can guarantee he is going 
to have many interesting job offers when he gets out of Harvard 
Business School. 

The Chairman. Go right ahead, Dr. PurselL 

STATEMENT OF DONALD E. PURSELL, PH. D., DIRECTOR, BUREAU 
OF BUSINESS RESEARCH, UNIVERSITY OF NEBRASKA-LINCOLN 

The Chairman. We are pleased to have your statement. 
Would you like to put your statement in the record? 
Mr. Pursell. Yes, if you would, please. 
The Chairman. Without objection, it will be received. 
Mr. Daub. Mr. Chairman, if I might interrupt. I am going to go 
make that quorum call, if you will forgive me. I want to say that I 



ACKNOWLEDGEMENTS 



EXECUTIVE RECRUITING FIRMS PARTICIPATING IN THE SURVEY 




1-818 0-82' 



•6 



78 

rticularly appreciate the staffs arrangements for Dr. Puraell to 
here who is, of course, from Big Red Country, University of Ne- 
braska, and part of the State which I am proud to represent. 

We are dolighted that you are here. I do have to vote. I will try 
to get back directly. 
The Chairman. Very good. Thank you very much. 
Go right ahead, Doctor. 

Mr. Purs ell. As a member of a business school faculty, I can rec- 
ommend the MBA highly. I know there was some discussion about 
it this morning. 

I want to underscore what has been said here today from the 
perspective of demographic trends which are developing and are oc- 
curring in our country, and there is little we are going to do to 
change this over the next 15 or 20 years, short of a massive immi- 
gration policy, which I doubt we will undertake. But wc are going 
to experience a slowdown in the rate of growth of our labor force. 
We have been used to absorbing 2, 2%, and 2% percent increase in 
the number of people in the labor force during the I970's, and that 
is going to change substantially in the 1980*8 and 1990's, but it is 
going to change almost imperceptibly at a slow pace to the point 
where come the 1990's we will be experiencing increases of about 1 
percent a year. 

Now, I want to emphasize, I am not saying that the United 
States will experience absolute decreases in its Tabor force, we are 
still going to grow in terms of the number of people in the labor 
force. The labor force simply will not grow as fast in the 1980's and 
1990's as in the 1970's. 

The demographic factors behind it are two. One, of course, is the 
birth rate. The total number of births peaked in this country in 
about 1960-61, roughly 4 million. It went down from there until 
about 1973, small changes for 2 to 3 years, and then again in- 
creased very slowly. Today we are at the peak ot those entering the 
labor force, so we can expect a diminishing crop of 20-year-olds 
year after year. And this will occur right through until 1996, refer- 
ring to the most recent projections made by the Bureau of the 
Census. 

This is one important demographic ft '"tor. The other factor 
which I believe most experts agree is going to play a large role in 
our labor force growth, it will he the slowdown in the increase of 
the female participation. We have gone from one-third of the fe- 
males over 16 in the labor force in the early 1960's to more than 
one-half in a very^ short time; a substantial change. The female par- 
ticipation rate will continue to increase in the 1980's and 193G's, 
but not at the same rate as in the 1970's. 

During the 1970's the number of females entering the labor force 
increased at times as much as 4 percent a year— -4 percent com- 
pounded. This rate will diminish in the 1980's and 1990's. It means 
we- are going to have a lower unemployment rate, larger wage in- 
creases, and in some places a shortage of workers. Some calcula- 
tions indicate we will have a negative unemployment rate. I don't 
think that is likely to happen because of various substitutions that 
will take place, but nevertheless, it is going to be a vastly different 
labor market in the 1980's and 1990's vhan rvhat we experienced in 
the 1970's. 



ERLC 



8? 



79 



I think there are some very definite policy recommendations 
which I would like the committee to examine which can affect all 
segments of the labor force in the next two decades. 

The Chairman. Excusp me, Doctor. I heard the other day from 
someone knowledgeable m respect to social security to say that 
around 1990 he thought would be a more favorable situation for 
social security. 

Are some of these elements that you are talking about in that 
picture, as you see it? 

Mr. Pursell. That is possible, if we are successful in getting 
more of our senior workers, our older workers to work, and if we 
get them to work longer. That is one of the policy areas which I 
think needs some attention. 

I suggest that with these tighter labor markets, it will be intoler- 
able to use labor inefficiently, the waste will be considered one of 
the most undesirable things corporations can do. We heard testimo- 
ny here this morning that corporations are now beginning to dis- 
cover the advantage of the older worker. I think it is going to be to 
their profit to do so. Using senior workers will be in business* best 
interests and profit never hurts. 

We have already heard testimony this morning— and I certainly 
would support this point of view from my work, that retirement 
laws should be abolished. 

I think there are certain other factors we should examine. We 
have a public employment and training program in this country. It 
has been focused primarily upon youth because of the problems in 
absorbing the babyboom. Now the United States will experience a 
decrease in the number of 16- to 24-year olds in the next few years 
while there will be an increase in the number of persons over 65. 1 
think we should redirect the resources of our publrc employment 
training policies toward such areas as second and third careers. 

V r e had a program in our part of the country — I suppose it has 
been in effect elsewhere too— where job fairs have been arranged. 
Corporations send their personnel directors and meet with prospec- 
tive employees to explain what their firm has to offer. 

The job fair concept was applied to the senior workers, and it 
was very well received by both groups. Employers were encouraged 
y/fth what they found at fairs for senior workers. I would say this 
is another area in which we need to focus more attention. We need 
counseling for senior workers. We need counseling on how do you 
go about getting a second and a third career or retain employment. 
Job fairs help in this regard. 

We have already heard testimony this morning about the impor- 
tance of job sharing and flex time and I think you will see more 
and more of that. I just want to underscore in the next 15, 16 years 
this population age 16 to 24 is goirg to decrease by approximately 4 
million. While the population over 65 it is going to increase about 3 
million. These are the latest projection that I have been able to 
obtain from the Bureau of Labor Statistics. They indicate that 
these new trends are v 11 in place and they are going to continue. 

I like to tell studer ■ that the trends in any one year are really 
not all that significant in a labor force of 100 plus million. But 
when you add 5 year3 together, 10 years together, then you get the 



80 

compounding effect, and by the time you get to 1985 or 1990 the 
situation has changed substantially. 

I would simply like to conclude here with one observation. The 
United States is in some sort of recession and probably has been 
since 1980. It has been an off and on affair. The previous recession 
of the midseventies, produced an unemployment peak of 9.2 per- 
cent of the labor force. The 1981 labor force is changed, it is differ- 
ent, it is larger. The unemployment rate today is 7.5 percent. This 
is an indication of labor force change and indicates that we are 

Sping to have different labor markets in the eighties and nineties, 
t means there will be many opportunities for older workers and 
we must do all we can to insure that they receive adequate atten- 
tion, especially under the public policy programs. 
Thank you. 

[The prepared statement of Mr. Pursell follows:] 

Prepared Statement of Donald E. Pursell, Ph.D., Director, Bureau of Business 
Research, University of Nebraska-Lincoln 

labor supply: the challenge of the 1980's and 1990*s 

Approximately one year ago I published a paper which examined the labor force 
in the next two decades. 1 This paper suggested that by the year 1995 conditions 
were judged good that the United States would face the prospects of a serious labor 
deficiency or "shortage." According to calculations made in 1980, this deficiency 
could range as high as 19 million in 1995—31 million in 2J0O, depending upon as- 
sumptions about population and labor force participation rate changes. 

Since publishing that paper, the Bureau of Labor Statistics has revised its labor 
force participation rates. 2 The revised participation rates boost the size of the labor 
force as much as 4 million, according to some assumptions, by the year 1995. The 
lower participation rate series has been revised upwards more dramatically than 
the higher projection series. 

Despite the upward revision in expected labor force participation rates by the 
Bureau of Labor Statistics, demographic and other factors are strongly suggesting 
that the United States faces a serious labor deficiency which will develop at some 
point before the year 2000. 

Birth rates 

The rea3ons for this anticipated "shortage" of labor are primarily associated with 
demographic factors. Oscillations in the birth rate over the past 50 years are respon- 
sible for a most peculiar age structure. Rather substantial increases in the number 
of annual births were recorded following World War II. Annual births peaked at 
over 4 million in the early 1960's and declined through 1S73 before stabilizing and 
then slowly increasing during the latter years of the 1970s. Most of those born in 
the so-called post-World War II ''baby boom" have now been or are about to be ab- 
sorbed into the labor force. Consequently, the rate of increase in labor force partici- 
pation will drop dramatically during the 1980s and 1990s. This decrease in the rate 
of increase is cumulative and works much as compound interest works, only in this 
situation it operates in reverse. A single year's decrease by itself is relatively insig- 
nificant in an overall labor force of more than 105 million, but the total effect of 
five years of decrease will be substantial. 

Slowdown in the number of females entering the labor force 

A second factor which will contribute to a slowdown in the expansion of the 
United States labor force is the female participation rate. Labor force participation 
rates for females have increased dramatically since 1962. Of females 16 years and 
over, approximately 51 percent are now in the labor force, leaving fewer and fewer 
in school, retired, or out of the labor force. The rate of increase in the female par- 
ticipation rate is expected to slow dunng the 1980s and 1990s. It is a matter of un- 



1 Donald E. Pursell, "The Beginning of e. New Era: The Transition from a Labor Surplus to a 
Labor Short Economy," Thrust, Journal of Employment and Training, Summer-Fall 1980. 

2 Howard N. Fullerton, Jr., "The 19S5 Labor Force: A First Look," Monthly Lab™- Review. 
December 1980, pp. 11-21. 



ERLC 



84 



81 

certainty as to when this rate will begin to slow and to what extend the rate of 
increase will drop, but there is general agreement that the female labor force par- 
ticipation rate will not expand during the 1980s and the 1990s as it did during the 
1960s and 1970s. 3 

The impact of demographic factors and the slowdown of the female participation 
rate is well illustrated by the new labor force data developed by the Bureau of 
Labor Statistics. According to Fullerton, labor force participation rates for both 
sexes increased an average of 2.67 percent over the period 1975-79. They were pro- 
jected to increase at the annual rate of 1.8 percent over the interval 1979-85, declin- 
ing further to an annualized average rate of 1.25 percent 1985-90, and finally falling 
to as low as 0.83 percent increase per year over the interval 1990-95. These projec- 
tions represent the middle growth pattern charted by Fullerton and are summarized 
in Table I. 4 

TABLE 1.-WB0R FORCE PARTICIPATION RATES, AGE 16 AND OVER ANNUAL AVERAGE 



[In percent] 









Projected 




Percefltwe 
dunge 1975- 
79 b 1990- 
95 




Actual 1975-79 


1979-S5 


1985-90 


1990-95 


Total 


2.67 


1.86 


1.25 


0.83 


-68.9 


Mate 

Femafe _ 


1.70 

4.06 


1.11 
2.85 


.70 
1.91 


.52 
1.18 


-69.4 
-70.9 



Source: Howard K FuOerton, Jr. Hk 1995 labor Force: A First Look." Monthly labor Review. December 1980. p. 13. 



Slower labor force growth 

It is important to note that the female labor force will continue to grow during 
the 1980s and 1990s, but at a substantially reduced rate. In the 1990s, for instance, 
this rate of increase will be 70 percent below the rate recorded over the interval 
1975-79. 

The rapid and continual expansion of the labor force typical of the 1970s is 
ending. The rate of labor force expansion in the 1980s and 1990s will diminish to a 
crawl compared to the 1970s. 

Compared with the 1970s, labor force growth is going to be very meager. When 
the annual rate of growth over the interval 1990-95 is compared with the period 
1975-79, there is a 68.9 percent decrease iu the annual rate of labor force growth. 
Growth industries requiring large numbers of new individuals will likely look to the 
1970s as representing a "golden period" in which the number of new labor force 
participants increased rapidly. I note less enthusiasm in 1981 than in previous years 
for a teenage minimum wage among large users of such labor. 

If the date for females are examined separately, the increase in their labor force 

Particips ton rates could drop as much as 70.9 percent over the interval 1975-95. 
emale participation rates increased at an annual rate of 4.6 percent over the 
period 1975-7S, an incredible rate of expansion year in and year out. New projec- 
tions (again using the middle projections) indicate that female participation rates 
will increase at 2.85 percent over the interval 1979-85, 1.91 percent per year over 
the interval 1985-90, and decline further to 1.18 percent ovf r the period 1990-95. 

Assuming that the economy continues to prow in the 1980s and 1990s as it did in 
the 1970s, employment will expand. The eco'iomy recorded solid economic growth in 
the 1970s, although total decade growth was below that recorded in the 1960s. An 
expansion of employment conditions similar to that experienced in the 1970s into 
the 1980s and 1990s does not seem unreasonable. 

Labor deficiencies 

Using lb'j revised (1980) Bureau of Labor Statistics participation rates, the United 
States should experience full employment or more than full employment by 1995. If 
the most optimistic labor force participation rate is attained, and if employment 
continues to expand as it did in the 1970s, simply projections suggest that unem- 



3 Howard N. Fullerton, Jr., "The 1995 Labor Force: A First Look," Monthy Labor Review, 
Dec. 1980, p. 13. 

4 Paul O. FJaim and Howard N. Fullerton, Jr., "Labor Force Projections to 1930: Three Possi- 
ble Paths," Monthly Labor Review, Dec. 1978, pp. 25-35. 



85 



82 



ployment will be virtually nonexistent by the year 1995. If labor force expansion is 
slower, there could beasmaiyas7tol4 million jobs for which workers are un- 
available. These various assumptions are shown in Table 2. 

The mechanical projections outlined above suggest negative unemployment rates 
by 1995 or sooner. Conditions could develop to produce sharply lower unemployment 
rates by as soon as 1985. There will always be some positive unemployment in a 
growing dynamic economy, so-called frictional unemployment, but it seems quite 
likely that unemployment rates in the 1980s and 1990s will be substantially lower 
than those recorded in the 1970s. 

TABLE 2.— PROJECTED LABOR DEFICIENCY 1995 



Poptfatwi series 
I II til 



Participation rate (millions): 



High — ..... 


03 


-0.7 


>-1.6 


Intermetfate 


1 -7.1 


'-8.1 


'-8.1 


Low 


1 — 12.4 


'-13.4 


»-14.4 


Unemployment rate (percent): 








High.... 


.. .2 


2 -.5 


2 -1.2 


Intermafote. 


— 2 -5.3 


2 -6.2 


2-6.2 


Low ... 


2 -9.8 


2 -10.7 


2-11.6 



1 Negative unemployment (in mfflons). it. more jobs thin wcrtere. 
* Negative ^employment rate. 



Results ofthz transition to a labor-short economy 

The labor-abort markets of the 1980s and 1990s will produce lower unemployment 
rates and generate faster wage increases. Employers will be forced to use labor 
more efficiently. Some firms operating in labor markets where unemployment rates 
are as low as 3 and 4 percent have already adapted to a tight labor market by using 
sources of labor supply previously neglected. Such groups include the aged, the 
handicapped, and mentally retarded workers who can be trained to function effec- 
tively. During the 1980s and 1990s as the rate of unemployment declines, firms will 
not only use nontraditional sources of labor to augment their labor supply but they 
will also take steps to substitute capital for labor. This will help ease th<* situation 
as will a more liberal immigration policy. 

Use of different labor sources and capital substitution will help in making the 
transition toward tighter labor markets, but there are a number of other steps that 
can and should be taken to ensure our continued economic prosperity during the 
next two decades. In my opinion, employers should review all retirement and child 
labor laws and pobries with the view of easing these restrictions where safety and 
efficiency permit. Mandatory retirement laws should be abolishd in most cases. 
Firms should realize as some are beginning to, that older workers are an important 
labor supply asset. Older workers are experienced and more reliable in terms of get- 
ting to work each day. Some firms recognizing this have established job fairs where 
employers actively explain their programs to older workers. 

In some cases, older workers and younger workers would like to work, but not 
necessarily 40 hour* per week. The introduction of flex time and job sharing can 
enhance labor supply. 

In some occupations it may be considered wise to fo*oe retirement at, say, age 70. 
My occupation— college instruction— may be such an occupation, where some turn- 
over is considered necessary for the infusion of new ideas. There may be o;her occu- 
pations where retirement will be er'-ouraged. For persons encouraged to retire, 
second careers should be actively , promoted. There is no reason why college profes- 
sors should not be able to find some rewarding or satisfactory second careers. 

Public employment and training policy should focus upon the changing demo- 
graphic nature of the labor force. Past policy has centered on unemployed young 
persons, and while this will likely remain a persistent problem for years to come, 
the development of second careers and guiding older workers into theae careers 
should become an important dimension of employment and training policy. 

Demographic trends imply that the 16-24 age segment of the population will de- 
cline by nearly 4 million in 1979-1995, while the population 65 and over will in- 



ERIC 



86 



83 



crease by more than 3 million. 3 Public policy should devote an increasing propor- 
tion of its resources towaid aiding and assisting the older worker. We must also 
rethink what age groups do certain jobs. Reserving traditional jobs for young per- 
sons or older workers will be obsolete in the 1980s and 1990s. Why not have senior 
paper carriers? Service might improve. 

Summary and conclusion 

The transition from a labor surplus high unemployment to a labor deficient low 
unemployment economy will be gradual and unsensational. The projections anr* con- 
ditions developed here are presented only as a guide to what likely will h&\ en. 
While conditions suggest that there may be more jobs than workers, remember aiat 
markets adjust to shortage conditions very effectively and efficiently. My projections 
are not presented as absolute predictions but as a guide to understanding what is 
happening to our labor force. Substitutions and increased immigration will reduce 
the pressure, but despite these changes and adaptations by the labor market, a 
number of experts agree that unemployment rates will decline during the 1980s and 
1990s and employers will have to scramble for labor supplies. 8 

Perhaps one of the best indications of the trend developing toward lower unem- 
ployment rates and tighter labor markets is the current unemployment rate. During 
the 1974-75 recession, unemployment was 9.2 percent of the labor force. During the 
current economic recession extending from 1980 through 1981, unemployment has 
yet to exceed 7.5 percent. The labor force is larger by approximately 10 million 
workers yet the rate of unemployment is more than IVz percentage points lower 
than it was during the last recession. This is a rather convincing indication that the 
transition from a period of labor surplus to one of labor deficiency has already 
started. 

The Chairman. Thank you very much, Doctor. 

Mr. Ulrich, there used to be an emphasis made on the youthful 
management among American corporations. Is that changed? And 
if so, why? 

Mr. Ulrich. I think youthful management as such is not as im- 
portant today as it might have been in some people's minds 10 or 
15 years ago. In other words, as I understood the question, the cor- 
porations used to pride themselves and say, our average manage- 
ment is 36 years old. I happen to remember an article in one of the 
major business magazines about one of these wonder companies 
that had management of with an average age of 36 and this was in 
the late 1960's. Subsequently, they went down the tube very fast in 
the early 19?0's. That type of experience changed a lot of people's 
minds about youthful management. I think some of the bloom is off 
the rose. 

But, make no mistake, there is still strong demand for good, ag- 
gressive, bright young managers, and that will continue, and well 
it should, because it will prov?d» the added vigor and vitality 
needed to move this country ahead. " 

On the other hand, I think if there is a corporate management 
that one would pick today as the more desirable, it would be one 
which has seasoned, strong, aggressive management rather than 
one which is young and dynamic. 

The Chairman. I recall the Smith Barney advertisement used an 
older man, the idea of stability, wisdom, that sort of thing. In other 
words, you mentioned that occasionally you encourage your clients 
to consider hiring an older executive, when do you most likely do 
this? When are you most likely to do this? 



5 Howard N. Fullerton, Jr., "The 1995 Labor Force/' Monthly Labor Review, Dec. 1980, p. 14. 
* Richard Easterlin, "Birth and Fortune" (Basic Books), 1980; and Chase Econometrics, 'long 
Term Economic Forecasts" (various issues). 



87 



84 



Mr. Ulrich. Mr. Chairman, it is really a function of each individ- 
ual situation. I mentioned in my statement that che more stringent 
the technology or the more sophisticated the technological require- 
ments are for the job, or the more senior the position, the more apt 
they are to go with an older person. 

When we perform a search, we may contact as many as 200 
pjeople in our efforts to find individuals with the desired qualifica- 
tions. Some may not want to move; others ma]' not be interested. 
We narrow this group down by our own judgment as to who best 
meets the specifications. If we come up with someone 59 years old 
who meets these qualifications, we will go to our client and say, 
"one of the best persons we have identified is this individual" 
More often than not the client will say "I'll see them." I can't 
name any one situation. We do, interestingly, get clients who tell 
us they want an older individual. We have been working for one of 
the top 10 corporations in the United States who wanted a very 
senior executive brought in. Thoy specified age 59 to 62 as being 
most desirable. So, sometimes it is the client who is specifying the 
age. 

The Chairman. Thank you very much. 

Dr. Pursell, should businesses begin to alter their hiring and re- 
tiring policy now to avoid shortages of workers in the ftiture or 
should they wait until those shortages appear? 

Mr. Pursell. I don't think there is any other way. I think we 
need to move ahead on the problem right now. I believe the prob- 
lem will be very obvious in a matter of 2 or 3 years. Don't delay. 

The Chairman. By the way, let me go back just a minute. You 
heard me tell about the president of the company that said they 
were going to retire him at 65 and he was 63 and he didn't want to 
retire. Do you find more chief executives of companies disposed to 
stay on longer if they can do so? 

Mr. Ulrich. I think that is true. Arm and Hammer developed a 
huge corporation— Occidental Petroleum— and I believe he started 
when he was in his early 60's with a very small corporation. D. L. 
Ludwig is in his 80's and he runs a huge empire. 

By and large, I think many corporate executives would like to 
stay on after 65, but each individual corporation's board of direc- 
tors has it policy on retirement which may or may not provide for 
this. 

One can't determine when the most productive years of a given 
individual will end. By having an arbitrary or fixed retirement age 
for senior executives, the flow of managers moving up through the 
company can continue. If you fix the top job and, say, somebody 
stays 25 years as chief executive, a lot of young managers who are 
needed for the future are going to conclude they are boxed in, and 
will move somewhere else. 

Each corporation has their reasons and their plans, for fixing re- 
tirement ages for executives and a number of corporations do keep 
their chief executives on longer. 

The Chairman. Would you suggest that we reconsider the 
amendment that we accepted that our added mandatory retirement 
bill does not apply if you have a pension of ove r $27,000 a year? 

Mr. Ulrich. l personally think there is merit to that amend- 
ment, Mr. Chairman, in the sense that the top executives of corpo- 



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85 



rations have the responsibility for the success of their respective 
organizations. If their organization doesn't succeed, and we some- 
times see what happens when it doesn't, thousands of people can 
lose their jobs. The point is that organizations must have flexibility 
in determining who is going to direct their affairs. I think there is 
good reason for the amendment that you accepted, in my own per- 
sonal judgment. 

The Chairman. Dr. Pynoos, as a researcher in the field of geron- 
tology, is there any reason why an older person would not be capa- 
ble of holding the top executive position in a firm? 

Mr. Pynoos. On the basis of the evidence, it depends on individu- 
al qualifications. The research has shown that older managers have 
decisionmaking skills as good if not bei£sr than young workers. So, 
I would say that older executives are certainly equal in terms of 
intellectual skills and decisionmaking abilities as their younger 
counterparts. Also, in terms of health, older p^^ple of the next gen- 
eration are going to be in much better health man even the previ- 
ous generation. This will allow them to choose to work longer in 
executive positions. 

The Chairman. We have a very distinguished member of our 
statf,' Dr. Stephen McConnell, and he has been of great help to us. 
Ke has done a marvelous job. He is sitting here behind me. He car- 
ried the weight of the organization of this hearing toriay, which I 
think everyone agrees has been a very excellent hearing. And we 
are fortunate to have someone of the excellence of the Andrus 
Center here. 

Mr. Walter Guntharp is the chief counsel for the minority of our 
committee who has indicated he had some questions he would like 
to ask. 

Mr. Guntharp. Mr. Daub would like to know if he can ask Dr. 
Pynoos some questions to be entered into the record following the 
hearing. 

The Chairman. Would that be agreeable? 

Mr. Pynoos. I will be pleased to answer the questions. 

The Chairman. Well, gentlemen, we can hardly thank you 
enough for the excellent contribution that you made here this 
morning. It makes the country and the prospect of the future very 
much brighter for the older people in the years ahead, instead of 
being shunted aside and neglected and ignored and unwanted. 
There is a need for them and that is exactly what they want, to 
feel wanted, feel needed. If someone were to drag me out by my 
toes and not allow me to do the things that I think may be helpful 
to my country and family, I would be a very unhappy man. 

Thank you all very much. 

[Whereupon, at 12:55 p.m., the hearing was adjourned.] 



89 



Appendix 

Wm. Wrigley, Jr., Co., 
Chicago, III, October 20, 1981. 

Mr. Steve McConnbll, 

Professional Staff, U.S. House of Representatives, Select Committee on Aging, Wash- 
ington, D.C 

Dear Mr. McConnell: As we discussed yesterday, enclosed is a copy of the state- 
ment Mr. William Wriglr /ould make to the Select Committee if he were to testify 
on October 28. Mr. Wrife A ey regrets that his schedule makes it difficult for him to 
appear personally to deliver this message. 

If you and the chairman believe it is appropriate and informative, you may wish 
to enter Mr. Wrigley's statement into the Record of the Hearing of the Selected 
Committee on Aging. 

Thank you for taking the time to talk with me on the telephone. If I can help in 
some other way, please let me know. 
Sincerely, 

Edgar W. Swanson, Jr., 
Vice President-Personnel 



Statement by William Wrigley 

My name is William Wrigley. I am president and chief executive officer of the 
Wm. Wrigley Jr. Company headquartered in Chicago, Illinois. The Wrigley Compa- 
ny manufactures and markets brands of chewing gum in the United States and 
most countries of the free world. Although the Wrigley Company is classified as a 
Fortune 500 company, it is relative small when measured in terms of employment. 
Out of a total of 6,300 employees worldwide, 3,700 work for the parent, organization 
and associated companies in the United States, while there are 2,600 employees of 
associated companies in other lands. Wrigley's is a stable employer with a relative 
small turnover. The average years of service is 9, and 34% have been employed for 
10 or more years. 

Chewing gum is a little prodrrt which sells at a modest consumer price in a 
highly competitive marketplace. In order to be successful, the Wrigley Company 
must produce and market a large volume of chewing gum efficiently with a highly 
productive workforce. Because the Wrigley employment population is small and 
quality performance is essential, the company has devoted attention to policies 
which help to insure teamwork, personal dedication and identification with the gen- 
eral objectives of the company. For instance, in 1964 I issued the following state- 
ment: 

"The government wishes to insure thaf the best talents and abilities of the na- 
tion s manpower resources are utilized most advantageously. Basically this is just 
exactly how your company feels, and has alwa>s felt, as any business must if it ex- 
pects to keep from going broke. Certainly, you can't expect to get very far if you 
don t hire, promote, and in those cases where it is necessary fire, 1 strictly on a busi- 
ness basis, which means on an individual's qualifications, abilities, and performance, 
regardless of any other possible considerations." 

This statement is part of the company's policy with respect to nondiscrimination 
in employment. I mention it because it accurt tely reflects the thinking of the man- 
agement of the Wrigley Company with respect to all employees, including those who 
might be classified as older persons. 

In 1936 the Wrigley Company established a retirement plan for all full-time em- 
ployees as a supplement to the newly enacted social security program. We set the 
normal retirement age at 65 to coincide with social security, but did not institute 
any practice of mandatory retirement. FolJowing the end of World War II the com- 
pany began implementing its plans for expansion in the post«war market, and in 
1950 reviewed its policies and practices with respect to retirement We were cogni- 

(87) 



ERIC 



90 



88 



zant that success depended on a dynamic, industrious workforce, and that chrono- 
logical age was at best an approximate measure of a person's capabilities and 
energy. In keeping with our principle of treating people as individuals, my father, 
Mr. Philip K. wrigley instituted a program which permitted and in fact encouraged 
employees to continue working beyond their normal retirement age. 

If any employee kept on working after reaching age 65, he would take one 
month's leave of absence without pay during the first year, two months' leave of 
absence without pay during the second year and so forth in addition to his regular 
vacation period. At the same time we amended our retirement income plan so that 
an employee's retirement income increased each year that retirement was delayed. 
By handling post-normal retirement cases in the manner we hied to help employ- 
ees get adjusted to living on a little less income each year, and perhaps of greater 
importance, we weaned them away from their work with the hope they would find 
other things of interest to occupy their time. Also, during the progressively longer 
leave of absence periods, younger people had an opportunity to gradually take on 
more responsibilities and the company had a better chance to determine whether 
they could handle them. Last, but not least, the company was able to retain the 
skills, training and experience of the older employees for a period of years on an 
equitable and non-discriminatory basis. 

Those Wrigley employees who wished to take advantage of this plan continued to 
work beyond their normal retirement age. They were able to plan according to their 
needs and continue their careers so long as it was mutually beneficial. Performance 
of employees who chose delayed retirement was monitored on a regular basis, and 
voluntary physical examinations were offered to assure that working was in the 
best interests of both the employees and the company. 

When Congress enacted amendments to the Age Discrimination in Employment 
Act in 1978 the company again reviewed its policies and practices relating to retire- 
ment. To assure that employees included as an affected class under the law were 
treated in a non-discriminatory manner and that the best interests of individual em- 
ployees as well as the company were served, several steps were taken. 

A pre-retirement counseling program supplementing regular performance reviews 
wac established with trained professionals from the company s personnel depart- 
ment to interview all employees aged 54 and above on a periodic basis. The purpose 
of these interviews is to determine at a relatively early date how each individual 
perceives his job, relationship with the company, personal performance, future am- 
bitions and plans for retirement. 

The result of each interview is discussed with concerned supervisors and manag- 
ers to determine if an employee's opinions, attitudes and perception of performance 
correspond with those held by persons accountable for the work of that employee. 
Where there is no difference, the company incorporates each employee's wishes in 
its overall manpower planning program. 

In some instances an employee may be planning early retirement, and his skills 
are needed by the company. The employee s supervisor is encouraged to meet with 
the employee and outline the company's needs in hopes that plans for early, or even 
normal retirement may be modified. 

In some instances an employee's skills, abilities or energy may have decreased to 
a marginal or unacceptable level. When this occurs, the company medical director is 
consulted to determine if there are objective medical reasons for the deficient per- 
formance. If the problem is not medically related, that employee's supervisor, with 
the support of the personnel department, meets with the employee to frankly dis- 
cuss the shortcomings and determine what, if anything, can be done to improve per- 
formance. 

The year before retirement occurs the company conducts day long meetings with 
employees and their families to help prepare them for the. change in their lifestyle. 
This meeting is devoted primarily to understanding the purpose and value of Wrig- 
ley benefits, social security benefits and financial planning. 

Finally, the Wrigley Retirement Plan was amended to give employees a choice 
when they reach their normal retirement age. An employee may voluntarily elect 
time off without pay under the same conditions as the plan established in 1950. If 
an employee chooses not to take time off, he may continue to work as long as per- 
formance is satisfactory, but pension benefits are frozen at normal retirement age. 

I believe it is essential for our nation to better learn how to use the efforts and 
skills of older citizens. If current birthrates are maintained, and we hope to contin- 
ue to increase the nation's Gross National Product as well as our standard of living, 
there will be a shortage of skilled workers in this country. The largest body of 
unused talent in the country today is comprised of those who ura retired from active 
employment. As life expectancy increases this group will grow at a disproportionate 



ERIC 




89 



rate to the rest of society. By only permitting this group to consume but not contrib- 
ute to the production of goods and services for our economy is wasteful and expen- 
sive. 

On the other hand, the government, business and society in general for the past 
45 years has been encouraging the elderly to retire to make room in the economy 
for the unemployed and for new entrants into the workforce. As a result, we know 
very little about how and where older people can be most effectively employed. The 
aging process, with the debilitating diseases coincident with aging is not well under- 
stood. These special characteristics of older people will require innovative employ- 
ment arrangements which will depend on maximum flexibility and freedom to act. 

Most business people make decisions based on self-interest. If older people with 
needed skills and ability can be induced to stay in or rejoin the labor market they 
will be employed at work to match those skills. The three principal deterrents to 
achieving this objective are: 

1. The unwillingness of older people to seek employment, or perhaps more accu- 
rately, uncertainty by this group that they are welcome as employees. 

2. Ignorance about the most effective ways to employ older people. 

3. Rigid regulations concerning the terms and conditions under which older 
people may be employed. 

You will recall that at one time there were many state laws and some federal 
regulations limiting the employment of women. These had the net effect of restrict 
ing employment opportunities for this portion of our workforce. Today many regula- 
tions have been issued by the Department of Labor and the Equal Employment Op- 
portunity Commission restricting the terms and conditions under which older people 
may be employed. Congress should take care to assure that these regulations are 
not increased, and preferably decreased. 

In recent years the Wrigley Company has successfully employed persons who 
have retired from other companies and sought part-time, temporary employment to 
supplement pension and social security income. These persons have worked as re- 
ceptionists in our corporate headquarters, and as merchandisers with our field orga- 
nization where they maintain the display of our products in retail outlets. As other 
employment opportunities develop we hope to consider retired people, if a mutually 
beneficial employment arrangement can be established. 

I am certainly no expert on this subject, but I hope this expression of the Wrigley 
Company's basic philosophy and general experience in this area has been of some 
assistance to your committee. Thank you for giving me this opportunity to express 
my views. 



Prepared Statement op Ruth E. Kobell, Legislative Assistant, National Farm- 
ers Union Presented to Select Committee on Aging, U.S. House of Repre- 
sentatives 

Mr. Chairman and members of the Select Committee on Aging, The National 
Farmers Union appreciates the opportunity to present this statement on "Employ- 
ment Policies and Choices for Older Workers." 

At the outset, we wish to commend you for focusing on this important subject. 
These hearings take on added significance because they can provide a blueprint for 
comprehensive action for the 1981 White House Conference on Aging. Next month, 
approximately 2,000 delegates will meet to develop policies affecting the elderly of 
today and tomorrow. One of the cornerstones of that strategy is a clear-cut and ef- 
fective policy to maximize employment opportunitied for older Americans. 

Other nations are also feeling the pressures of a larger share of their citizens 
living longer and moving out of productive employment into a retirement status. I 
2 m arching copies of articles from the New York Journal of Commerce of August 
28, 1981 outlining some of the problems developing in Britain, China and Japan 
which I believe will be useful to this hearing. 

The policy statement of National Farmers Union adopted by delegates meeting in 
convention in March 1981 stresses that our government must take vigorous steps to 
reach full employment, to dampen inflation rates, and to encourage higher produc- 
tivity. This is basic tp attainment of a balanced federal budget, strengthening of the 
dollar, and to a healthy national economic recovery. Following is an excerpt from 
that policy statement. 

"Our nation cannot afford to continue along an economic course which results in 
both high unemployment and high inflation at a time when much work needs to be 
done in meeting community and environmental needs in both rural and urban 
areas. The high costs of unemployment are substantial in lost income and tax reve- 



ERIC 




90 



nue, lower productivity, and higher expenditures for welfare, food stamps, and un- 
employment compensation. We can no longer afford the social costs of denying indi- 
vidual citizens a productive place in society." 

The National Farmers Union fully recognizes that any national employment 
policy for older workers will involve several components: 

Encouraging the private sector to hire more older workers; 
Expanding employment opportunities through community service activities; 
Effective enforcement of the Age Discrimination in Employment Act; 
Developing and expanding a whole menu of innovative employment options, 
including flexi-time, increased opportunities for part-time employment, phased 
retirement, trial retirement, job snaring, and iob redesign; 

Educating and informing private and public employers that it makes good 
sense economically and othewise to hire older workers; and 

Overcoming barriers that may deter or discourage older Americans from 
working. 

These are all important elements and must be considered in their totality in fash- 
ioning a comprehensive national employment policy for older workers. The National 
Fanners Union plans to concentrate our testimony on one major aspect because of 
our experience with the Green Thumb program: The need for community service 
employment, especially in rural areas where job opportunities are oftentimes nonex- 
istent or severely limited. 



This is crucial, we strongly believe, because many older Americuis simply do not 
have a realistic prospect for employment, at least initially, in the private sector be- 
cause they have limited education and unrecognized or outmoded skills. In addition, 
millions of older women have no substantial experience in the paid work force or 
have not worked for numerous years. 

The Senior Community Service Employment Pr^am^SCSEPJ^has enabled these 
individuals to move into the mainstream of American life by becoming productive 
taxpaving citizens. We are proud that Green Thumb has been a trailblazer in 
launchingthis important employment demonstration. 

Green Thumb started out modestly in 1965 with 280 participants in four states: 
Oregon, Arkansas* Minnesota, and New Jersey. From this small beginning, Green 
Thumb has expanded to 45 states, the District of Columbia, and Puerto Rico. Today 
about 22,000 low-income older rural Americans perform essential services in their 
communities, including weatherizing homes, and country schools, restoring histori- 
cal sites, and beautifying the countryside. Green Thumb workers are prodding staff 
support for oil recycling programs, gasohol production, and resource conservation. 
They are building greenhouses, and ruling community gardens to increase local 
food production. We have significantly more enrollees than our authorized level be- 
cause: 

Our administrative costs have been kept at a minimum; and 

Many older workers have been able to find unsubsidized jobs because of their 
training and work experience with Green Thumb. 

The value and worth of the SCSEP has been amply demonstrated time and time 
again for older Americans and the communities being served. Clear and convincing 
evidence exists that there are many older persons who are ready, willing, and able 
to serve in their communities if given the opportunity. Many projects have eight or 
nine applicants for each available position. The ratio would be even higher, but proj- 
ect directors do not want to raise the hopes of older persons by advertising the pro- 
gram more— only to have their expectations dashed because a job does not exist. 

The need for community service employment is great and growing. Hundreds of 
thousands of older Americans have been forced on to the poverty rolls in recent 
years, reversing a long-standing downward trend in the incidence of poverty. This 
point was made forcefully and emphatically in the advance income report by the 
Census Bureau, which was issued recently. 

More than 5.9 million persons 55 or older were poor in 1980 or nearly 400,000 
above the 1979 level. During the past two years, poverty has increased by more than 
800,000 for individuals 55 or older, from 5.1 million in 1979 to 5.9 million in 1980. 
This represents the sharpest jump over a two-year period since poverty statistics 
were first tabulated. 

In July, more than 0.5 million individuals 55 or older were unemployed. This 
figure, however, probably understates the dimensions of the problems because there 
is a substantial amount of hidden unemployment among older workers. For exam- 



NEED FOR COMMUNITY SERVICE EMPLOYMENT 



ERIC 




91 

pie, 11.1 million men 55 or older and 19.7 million older women were not in the labor 
force in July. Assuming that just 10 percent of these men and 5 percent of these 
women wanted and needed employment— and this would probably be a very 
conservative estimate— this would increase the "statistical" unemployment for per- 
sons 55 or older by almost 2.1 million, from 0.5 million to 2.6 million. 

SPECIAL UNEMPLOYMENT PROBLEMS AMONG OLDER WOMEN 

Much of the statistical and hidden unemployment for persons in the 55-plus age f 
group is concentrated among older homemakers. Many are discovering that they are / 
Ul prepared to adjust to their new roles after the loss of their husbands through 
death or divorce. 

These "displaced homemakers" are oftentimes thrust into the job market when 
they have little or no recognized marketable skills. Yet, they are frequently too 
young to retire, and lack adequate retirement income or pension coverage. 

Most of these women have developed a wealth of undocumented skills which in- 
clude management, project organization, budgeting, accounting, public relations, 
communication, and commitment to an assignment in the process of raising a 
family, and managing a home on a limited income. Farm women have also often 
carried on a full range of farm management and production work. Yet neither they 
or a potential employer or placement officer may know how to fit these skills into a 
standard employment application. The opportunity to work in a program such as 
Green Thumb helps to build their self confident and to identify and sharpen their 
skills. 

The harsh reality is that most married women today can expect to be widowed at 
some time in their lives. On the average they will survive their deceased husbands 
by 18 years. In 1979, almost 80 percent of all women 45 to 54 were married; 4 per- 
cent were single; 8 percent were widowed; and 8 percent were divorced. Widowhood 
increases sharply with advancing age— to 19 percent for those 55 to 64 years old, 41 
percent of women 65 to 74, and almost 70 percent for females 75 or older. Marriage 
is the exception for older women, rather than the rule. Only 22 percent of all 
women 75 or older were married in 1979. More than 7 million v;omcn 65 cr older 
were widowed, or 52 percent of all older females. 

Economic deprivation is more prevalent among older women than aged men. 
Aged women account for almost 72 percent of all poor persons 65 or older, even 
though they constitute 59 percent of the elderly population. About one out of every 
five older women (19 percent) lives in poverty, in contrast to one out of nine aged 
men (10.9 percent). 

THE CHALLENGE FOR THE 1980's 

Title V is needed now more than ever because of the rapid changes in our society 
and the present depressed state of our economy. President Reagan has acknowl- 
edged that our economy has now moved into recession. This will almost assuredly 
produce significantly higher unemployment. 

Our population has also shifted dramatical!/ in recent decades from farms and 
rural areas to cities and suburbs. Only 1 out of Wery 35 persons in the U.S. lived on 
a farm in 1979. The farm population nas declined sharply during the past 60 years, 
from 30.1 percent in 1920, to 15.3 percent in 1950, to 2.8 percent in 1979. 

The rapid industrialization in our society has produced significant benefits for so- 
ciety, but it has also caused massive upheaval. Small family farmers have been 
forced from their land in large numbers since the turn of the century. Many of 
those left behind were older persons with limited education and obsolete job skills 
for technologically advanced and fast changing urban society. Some people describe 
them as the 'invisible poor" because they are located in the rural pockets of poverty 
off the long dusty roads. 

The seeds of Green Thumb were planted in the mid-1960's to respond to these se- 
rious problems. There were skeptics then who doubted whether older persons would 
participate in a community service employment program. But 16 years of experi- 
ence provide clear and convincing that the SCSEP and its predecessor pilot projects 
have been a smashing success by any standard one would choose to use. 

Green Thumb has shattered the myths and misconceptions about older workers. 
Green Thumb participants have demonstrated beyond any doubt that older Ameri- 
cans can be productive and contributing members in our society. 

The concept underlying the SCSEP is very simple. Low-income older Americans 
help themselves while helping others in their communities at the same time. 

Green Thumb workers provide essential community services Ln rural America, in 
hospitals, schools, public safety, transportation, energy conservation, food produc- 



94 



92 



tion, and numerous other ways. Our enrollees have winterized homes, repaired 
leaky roofs, rehabilitated tarpaper shacks and made them livable for human beings. 

Today, we are focusing greater attention on energy«related services. Green Thumb 
workers, for example, have replaced rag-stufie4 cracks around windows with total 
new casings and windows. They have installed insulation in homes where there was 
none. A high priority has been placed on encouraging alternative energy sources, 
such as solar units and other renewable energy sources. 

And Green Thumb workers are learning to use a blow torch and othe - tools to 
build the solar collectors as well as install them on the roofs of low-income rural 
residents, thus improving their employability. 

This not only benefits rural homeowners who are faced with rising energy costs 
but our Nation as well. Most Americans realize that energy prices have risen at 
record-breaking levels since the oil embargo, but the magnitude of these increases 
can be shocking. Home heating fuel oil, for example, has jumped by 408 percent 
from October 1973 to July 1981. Residential heating gas has increased by 226 per- 
cent and electricity by 142 percent during this same period. The overall inflation 
rate, however, has increased by 101 percent during this same period. 



Our Nation has made significant gains in removing the arbitrary stop sign sug- 
gesting that advancing age is the end of the road for employment opportunities. But 
we still have a long way to go before overcoming negative stereotypes about the de- 
sirability and feasibility of hiring older workers. 

We believe that all our citizens, regardless of age, should have the right to a job, 
the right to contribute to their community and to thereby add to the gross national 
product and to support their government by paying taxes as a paid worker. Present 
employment patterns tend to discriminate in the employment of older workers and 
the Age Discrimination in Employment Act has not been effectively enforced to cor- 
rect these inequities. The Senior Community Service Employment Program is an on- 
going demonstration that senior citizens want to work and have the skills and expe- 
rience to be valued producers of goods and services, whether they live in rural 
areas, the central cities or the outlying suburbs. 

These senior workers have proved that the SCSEP works well for our Nation and 
older workers. What is needed is a determined effort to build upon the success of 
Title V— even during this austere period-— to enable more low-income older Ameri- 
cans to become gainfully employed and productive citizens. 

Title V has been a well-administered program, free of fraud and abuse. Adminis- 
trative costs have been kept at a minimum because the program is operated effi- 
ciently. Wages, fringe benefits, supportive services and related program costs for 
older workers account for about 9 out of every 10 dollars (88 percent) for the SCSEP. 
The savings in administrative costs and other areas has enabled program sponsors 
to employ an additional 6,000 older workers each year. 

Finally, Title V is a cost-effective program. A study conducted by Thomas Borzil- 
leri, an economic consultant, found that the program saves $1.15 in public assist- 
ance costs for each $1.00 spent. The SCSEP has been evaluated from time to time 
during the past several years and has always received high marks. The latest exam- 
ple is the staff report of the Federal Council on the Aging which said: 

"The Council's study found that Tit.e V is effective. It provides public service em- 
ployment for many truly needy older persons. The program operates in an efficient 
manner and its administrative expenses are kept low. The services preformed by the 
enrollees are valuable contributions to the general community and to the elderly 
community. The program provides income to many persons who would otherwise re- 
quire public assistance." 

For these reasons, the National Farm ;rs Union urges the Committee to reaffirm 
its support for the Title V SCSEP. This Committee has provided invaluable support 
in converting the Mainstream pilot project— such as Green Thumb and others— into 
permanent, ongoing national programs. The SCSEP has grown from 280 enrollees in 
the rnid-1960'8 to 54,200 positions today, in large part because of the Committee's 
leadership. 

Mr. Chairman, I have also attached a copy of Green Thumb's latejt quarterly 
report to be included in the hearing record. Thank you again for the opportunity to 
present this statement 



CONCLUSION 




ERIC 



93 



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94 



[From the New York Journal of Commerce, Aug. 26, 1981] 



Europeans Begin To Count Cost of Lifetime Welfare Provisions 

London.— Will the young be able to afford to keep the old at a time when more 
and more people are living longer? 

The problem is not so acute in Western Europe, as in the United States, which 
faces bankruptcy of its social security system. Most Europeans are cushioned by 
womb-to-womD welfare provisions. But many of them are starting to question the 
size of the slice that welfare takes out of a diminishing economic pie. 

"Our society has locked itself into providing benefits without having made the 
economic adjustments necessary to sustain them," British Chancellor of the Exche- 
quer Sir Goeffrey Howe warned in a recent speech. 

The aging of America is paralleled in Europe where both demographic shifts and 
increasing unemployment are reducing the ratio between those working and those 
receiving oenefits from the state. 

Given pressure to lower the retirement age as a way of soaking up unemploy- 
ment, people born in the post-war baby boom may well be preparing to collect their 
pensions at the turn of the century. If present trends hold true, retired people will 
by then form between a fifth and a quarter of the population— double the present- 
day proportion. 

In the United States, President Reagan is following the same kind of monetarist 
policies adopted by Prime Minister Margaret Thatcher of Britain, where there have 
been hints that the value of pensions may no longer be sacrosanct after a decade in 
which .they have been kept abreast of both price and wage indexes. 

Britain already lags economically behind other developed European countries, has 
lower state retirement and welfare benefits (although it pays less for them) and is 
trying to climb back to prosperity by making cuts in public spending that are creat- 
ing hardships and uncertainties for the elderly and the needy. 

Mr. Howe said public expenditure on pensions had risen in real terms by over 60 
percent in the last 10 years. He warned that "serious tensions" might be provoked 
by a continuation of this trend. 

Amid howls from the Labor Party opposition, Mrs. Thatcher's Conservative gov- 
ernment this vear is planning to abandon the wage indexing of pension. 

"Real falls in the standard of living are sometimes inevitable," Mr. Howe said. 

The feeling that the welfare state has reached its upper limits is growing in other 
parts of Europe, too, as the economic squeeze becomes tighter in reaction to high 
interest rates in the United States. 

The only way that many countries are going to keep on increasing pensions and 
other benefits is to increase taxation and compulsory insurance contributions, and 
run the risk that productivity— and with it the wealth needed to sustain the welfare 
state — will decline. 

"Our welfare society and political stability are in danger and we have to accept 
decline— otherwise we'll not be able to pay back the money we've borrowed," the 
governor of the Danish national bank, Erik Hoffmeyer, warned last year. 

In few places is the decline of the ratio between working members of the popula- 
tion and welfare recipients, including pensioners, more clearly illustrated than Bel- 
gium. 

In 1950 there were 4.2 people holding jobs to every person receiving state benefits. 

That ratio has now dropped to 1.7 to one, partly because of the 10.6 percent unem- 
ployment rate, partly because c f the increasing number of people reaching retire- 
ment age and partly because of schemes to open up jobs to young people by persuad- 
ing older workers to retire early. 

Four years ago, Belgium's bewildering complexity of 223 state-supported retire- 
ment funds were in the black to the tune of $3.4 billion with enough reserves to last 
them nearly six months. 

The funds are likely to be exhausted by the end of this year, leaving them no 
other choice than to try their luck on national or international capital markets, 
which already are being extensively skimmed by the deficit-ridden Belgian govern- 
ment. 

For all the financial problems looming ahead, welfare provisions in Europe prob- 
ably give pensioners here more economic peace of mind than that of most Ameri- 
cans of retirement age. The latest figures available show that in 1977 there were 
29.6 million pensioners out of the 47.8 million people over 60 in the then nine na- 
tions of the European Economic Community. 

State pensions range from barely adequate to generous. They are reinforced by 
free health care and other concessions ranging from free rides on the London 




95 

subway to a "pensioner's passport" in Holland that allows holders to attend theater 
performances at greatly reduced prices. 

In the industrially less-developed countries of southern Europe, extended families 
and private charity assume some of the responsibility for the elderly, since govern- 
ments cannot guarantee basic social services for all. 

In most European societies, however, where families are increasingly nuclear, a 
pension check tends to replace old-fashioned family care. Yet the state is not always 
a good substitute for caring relatives or a cohesive social group. A common com- 
plaint among old people — particularuly in the big cities— is that they are lonely and 
-sometimes prey to criminals. 

Although many Germans, Scandinavian, British and French pensioners settle in 
coastal parts of Spain, the American idea where the elderly often gravitate to vast 
retirement colonies in temperate climates has not caught on in European. 

Still, social workers say, there is a tendency to consign elderly people to a kind of 
spiritual "ghetto." There is a widespread feeling that the state can take care of ev- 
erything. Correspondingly, the individual sense of responsibility for the old seems to 
be on the wane. 

This is something that Mrs. Thatcher's government wishes to reverse. In "Grow- 
ing Older," a White Paper published this year, the government said the primary 
sources of support and care for the elderly should be informal and voluntary, with 
the role of public authorities being to sustain and develop such private support. 

Pensions for the 17.5 percent of the population of retirement age cost the state 
more than £11 billion ($522 billion) a year, or more than 17 percent of public ex- 
penditure. 

The White Paper said public authorities will not be able to provide for all the 
needs of the elderly in future. 'The responsibility is one for the whole community," 
it said. 

The meager weekly old age pension of £27.15 (approximately $54) for a single 
person and £43.45 ($87) for a married couple is paid out of a national insurance fund 
to which both employers and employees contribute. Pensioners with no other means 
can get supplementary welfare benefits and tax concessions. 

About 11 million Britons— about half the work force— are in private pension 
schemes. Those working for the civil service can look forward to fully inflation- 
proofed pensions on top of ironclad job security— a source of irritation for the major- 
ity of people who have no such benefit and who face a steady decline in their stand- 
ard of living as they get older. 

The £60 oillion ($120 billion) pension industry is the nation's biggest, controlling 
four out of 10 quoted companies. Pension funds invest in everything from old master 
paintings to real estate in America. A fund for coal miners even toyed with the idea 
of investing in a racehorse. 

What the funds tend not to do, however, is to risk investment in the kind of high 
technology industries that are seen as vital to the country's future economic health. 

The private system works well for people who stay in one job throughout their 
careers. But people who change jobs fare badly. Their pension entitlement is frozen 
at the same level from the day they leave until they reach the legal retirement age 
of 65 for men, 60 for women. Over the course of 20 or 30 years, inflation can whittle 
that entitlement to a pittance. Yet the money remains in the fund, benefiting mem- 
bers who stay put. 

This is a source of embarrassment for a government that wants to encourage 
people to upgrade their skills and move into high technology industries. 



Social Security System Facing Trouble in Japan 

Tokyo.— Increasing lifespans— the second highest in the world— and a decreasing 
labor force spell trouble for Japan's social security system. 

The latest figures show the Japanese man lives to an average 73.32 years, second 
only to an Icelander, and the figure is expected to increase in the future. Women 
have an average life span of 78.83 years, but count for little in the work force. 

Surveys show that more than half of Japan's businesses have a compulsory retire- 
ment age of 55, when an employee usually geto a "golden handshake" of two or 
three years salary as a company's lump sum pension. He has to stretch it until age 
60 when he becomes eligible for social security. 

That leaves an average of 13 years to collect social security, no problem now be- 
cause there are more than 25 million people kicking in to the employees' pension 
insurance plan— the main one covering large private firms and their workers— and 
fewer than 2 million beneficiaries. 

ERJC (> 38 



96 



But Nagahisa Hiraishi of the Social Development Research Institute, who has 
studied the future of social security, finds it bleak. 

"The aged population and the beneficiaries of the old age pension will continue to 
grow, whereas die ratio of working population to the nation's total population is ex* 
pec ted to decline," Mr. Hiraishi said. 

He warned that the deductions from the worker's paycheck to finance social secu- 
rity will have to keep growing, and— to avoid pushing an impossible burden onto 
today's young— "action and effective measures are needed and must be taken now." 

The Government this year raised salary deductions for pensions to 10.6 percent, 
split evenly by employer and employee, up to a maximum of 4.7 million yen 
($20,608) earnings annually. 

That's an increase from 9.1 percent up to a maximum of 3.8 million yen ($16,695) 
per year, a hike designed to get more money into the reserve fund for the expected 
onslaught in coming years. 

But the amount of deductions is expected to rise steadily to keep up with rising 
benefits tied to inflation and to the increasing numbers of retirees, expected in the 
most recent forecasts to double every five years. 

Where the health and welfare ministry had figured that by the year 2010 premi- 
ums would have to amount to 20.7 percent of salaries, it now figures that reduced 
birthrates and longer life expectancies will boost the premiums to 30.6 percent of 
salary. 

The government is trying to get firms to raise their retirement ages at least to 60, 
and if possible to 65. It hopes eventually to bar retirees from collecting social secu- 
rity before 65, but to do so it must get the retirement age hiked, through law or 
persuasion. 

The Japan Federation of Employers' Association is adamantly opposed to any law 
increasing the retirement age, but a special committee admitted in March that com- 
panies will have to voluntarily keep people past 55. There won't be enough workers 
to fill jobs in the years ahead. 

The committee contended that "physical impairment with the advancement of 
age may limit employment opportunities for older workers in a wide range of 
fields." It also warned workers to start saving money now for their retirement and 
not to expect the workers of the future to support them. 

Surveys show that most pople who are forced to retire at 55 keep working, but 
three-quarters of them earn 70 percent or less than their preretirement salaries. 

Savings and help from children have long been the main form of social security in 
Japan. 

The Health and Welfare Ministry said in January that in households of men over 
65 and-or women over 60 the average income in 1980 was 1.8 million yen ($7,826), 
with annuities and pensions accounting for only 37.3 percent of that total. 



PEKiNG.-MDhina is worried its centuries-old tradition of care for the elderly is 
showing signs of strain. 

One of the most popular Chinese movies this year, "Happiness Knocks at the 
Door," is part of an official effort to remind the Chinese that care for the elderly is 
a primary duty. 

The film is about an aging couple who live with two sons and their families in 
rural China. 

One daughter-in-law agitates to throw the old people out because they are a nui- 
sance and a financial drain. The other daughter-in-law, who eventually triumphs, 
wants the old folks to stay. 

The reason the film is so popular is that it reflects a debate taking place in mil- 
lions of Chinese households: what to do with the old folks? 

China does not have the kind of staggering retirement problem that Western 
countries, have, however. 

Less than 5 percent of its population of 1 billion people is over the age of 6. r , com* 
pared with 10 to 15 percent in Western countries. 

China respects people over the age of 60 or 65, placing the word "Lao," or old, 
before their names. It is a term of affection rather than derision. 

The concept of retirement does not exist for 80 percent of the population living in 
the countryside. In such rural settings, people never completely retire unless their 
health breaks down. If they are unable to do field work, they cook or take care of 
their grandchildren. They are rarely idle. 



Problems With Elderly Cause Concern in China 





97 



But there are occasional shocking abuses. Cui Xingang, 80, and his 76-year-old 
wife lived in rural Shandong province and were dependent on their five sons and 
two daughters. 

The children preoccupied with improving the quality of their own lives, refused to 
support the old couple, who committed suicide together in March 1980. Three of the 
children, including a daugher who refused to provide food, were given prison terms. 

The central problems, according to one Chinese official, is that China is attempt- 
ing to transform itself into a modern industrial power, which is introducing new 
social pressures into Chinese life. 

The Chinese people are now being urged to aspire to better lives and to look for- 
ward to material progress. Parents may become viewed as dead wood. 

"The problem is to maintain traditional Chinese values at a time when our soci- 
ety is undergoing such fundamental change," the official said. 

The pressure on old people are perhaps greater in China's cities, which feel the 
effects cf modernization more directly. 

Unlike their rural counterparts, retirement ages are stipulated for urban workers: 
50 and 55 for women and men in industry and 55 and 60 for office workers. 

Because of the increasingly mad scramble to get ahead, young people often per- 
suade their parents to retire before those ages so that the job can be handed down 
to them. This forces thousands of Chinese into early retirement. 

In most cases, the children who take their parents' jobs continue supporting them 
and live in the same quarters. The grandparents take care of the children while the 
breadwinners are at work and pursue their interests in chess, cards, tai chi or other 
hobbies. 

But the cramped living conditions of Shanghai, for example, have resulted in 
some older people being expelled from their homes. For the first time in decades, 
old people can be found begging in Shanghai's streets. 

China's constitution requires that old people receive material assistance. The 
state already is stepping into the breach. 

The Ministry of Civil Affairs said in June, for example, that it has built 1,044 
rural-age homes in the last two years, an obvious sign that some families refusing to 
care for their aged at home. The Ministry said Chinese communes and production 
brigades now have established a total of 8,262 such homes for more than 100,000 
elderly persons. 



o 




ERIC