Just as businesses are patting themselves on the back for having gotten their Y2K computer problems under control, a new challenge is on the horizon.
In 2001, the first of the 76 million-member baby-boom generation will reach the early retirement age of 55. Employers could face a huge talent drain as the new century begins and the work force ages.
"This is going to be one of the primary influences on the economy over the next decade," said Dennis Coleman, a human resources consultant for PricewaterhouseCoopers in New Jersey. "There are not enough baby busters following in the footsteps of too many baby boomers who are going to want to retire."
Robert Ryan, of benefits consultant Watson Wyatt Worldwide, agreed. "Demographers have known about this phenomenon for years, but it's just now getting some employers' attention," he said.
The problem is aggravated, Ryan said, because "you have the aging demographics combined with a robust economy."
No one knows how the huge boomer generation will behave as it ages. This is the group, after all, that is credited with making blue jeans a fashion statement and spurring the growth of the fast-food industry. How it will reshape retirement is anyone's guess.
The statistics are compelling. In 2005, the median age of the U.S. work force will reach 40.6 years, the highest since 1970, according to federal Bureau of Labor Statistics projections quoted in American Demographics.
And in the 10 years ending in 2006, the number of workers ages 45 to 54 will increase by more than 50 percent while those ages 25 to 34 will decline by 9 percent.
Numbers such as those led the Committee for Economic Development, a New York-based public policy association of academic and business leaders, to issue a report in October calling on business people and lawmakers to launch a "pro-work agenda" for older workers.
The policy group urged the federal government to eliminate rules that discourage Social Security recipients from working. It advised employers to rethink pension plans that encourage early retirement and called on employers to make it more attractive for older workers to stay on the job.
Employers are just starting to become concerned, experts say. Paul Van Katwyk of Personnel Decisions Inc. in Minneapolis, who advises companies on succession planning for executives, said he's working with a few corporate clients who are "starting to feel the impact." Still, he said, "A lot of organizations aren't feeling the pain enough to really change at this point."
For those who are making changes, one popular concept is "job sculpting," Van Katwyk said. Simply put, that means recognizing that a 55-year-old engineer may not want to work in the same way he did when he was 40 or have the same goals. "Some organizations ask top talent what kind of job would make it more attractive for them to stay," he said. "They may work in more of a consulting role in different parts of the company, for instance, and share some of their knowledge."
Another option is "phased-in retirement." Such plans, though not widespread, allow older employees part-time alternatives that permit them to keep their benefits.
A September survey of 586 large employers by Watson Wyatt Worldwide found that 16 percent offered phased-in retirement, and 57 percent of those were public or academic employers.
The Committee for Economic Development also urged employers to eliminate bias against older workers, including more subtle forms that gear training and development toward younger employees.
"Explore innovative ways to avoid career stagnation for long-tenure employees," the report said.
Still, don't expect the baby boomers to act like a monolith, cautioned Mathew Greenwald, whose Washington-based consulting firm specializes in retirement issues. Some will be forced to work beyond the current median retirement age of 62 because they can't afford not to. Others will want to keep going.
"There are cross-pressures," Greenwald said. "Baby boomers are expressing some desire to work longer, and they're also expressing some desire to retire earlier. And, to some extent, the workplace has become less enjoyable in the last decade, more pressure-filled, more demanding."
Employers can take some comfort that demographic changes are more predictable than most, Greenwald said. But they shouldn't get too comfortable.
"The good thing about demographic change is that it happens so glacially," he said. "But it's funny how those glaciers do move."