The Great Recession sent shockwaves throughout the jobs market that still resonate today. Research conducted by the Pew Research Center reveals that 55 percent of American workers have suffered a period of unemployment, a cut in pay, a reduction in hours, or an involuntary period of working part-time.
As 2011 winds down, the outlook continues to be dim for those seeking work. An unusual pattern has emerged as well; older workers are bearing a disproportionate burden as compared to previous economic recoveries. A variety of trends, biases, and economic realities may force many displaced baby boomers to consider an unanticipated path -- the path of entrepreneurship.
The number of displaced older workers is at record levels. Historically, older workers had greater job security than younger workers. Now, however, older workers are more likely than younger workers to lose their employment. The Great Recession left 15 million people unemployed -- 2.1 million of them were 55 years of age or older.
In addition, the barriers to re-entering the job market are higher for workers over 50. The Bureau of Labor Statistics reports that when older workers lose their jobs they will experience greater losses in earnings and endure a significantly longer search than younger workers. Dislocated workers with two decades of experience secure jobs that pay, on average, between 20 percent and 40 percent less than their previous wage as compared to younger workers that typically experience a 4 percent reduction in wages upon re-employment .
Older workers face impediments in the attitudes and perceptions of employers, too. In 2008, nine Federal agencies convened with businesses to create The Task Force on the Aging of the American Workforce. Their report indicated that employers were hesitant to hire older workers because they felt that they were more expensive. Their compensation, the rising cost of health insurance, and perceptions that older workers cost more to train can discourage hiring. The attending employers also expressed concerns that older workers were less productive, produced lower quality work, and were more resistant to change than younger workers. These attitudes are deeply rooted and subtle. The Center for Retirement Research at Boston College reports that workers under 50 years old are 42 percent more likely to be called for an interview than those over 50.
Not surprisingly, workers over 55 have the lowest re-employment rate of any demographic group. In fact, the University of Michigan Retirement Research Center found that only half of older job seekers are successful at attaining employment.
The long-term, financial implications are extreme. According to research conducted by the Heldrich Center for Workforce Development, 82 percent of older workers have less savings than when the recession began. In addition, 62 percent report they have a lot less and 35 percent report seeing their savings diminish by half in the past year alone. Add to this the record drop in property values over the past several years and you can see how the overall asset base for older workers has eroded significantly. In addition, many older workers simply won't have enough time to recoup their losses through traditional employment.
While all of these factors paint a dark picture for older workers, opportunities do exist for those willing to reinvent themselves -- those willing and determined to shift their perspective from employee to entrepreneur.
While we may still feel mired in economic doldrums, demographic shifts are marching on -- shifts that will open up myriad entrepreneurial opportunities for workers who have accumulated a lifetime of professional skills. This is the year that the baby boomers begin to turn 65. In fact, beginning in 2011, more than 10,000 baby boomers will retire per day. This rate of retirement will continue for 19 years!
Demographically, there simply aren't enough trained, experienced and seasoned workers to backfill this rate of retirement. Generally speaking, companies are poorly prepared to address this accelerating issue and at some point will find themselves in the market for these talents.
The emergence of older entrepreneurs already is underway. The most recent Kaufmann Index of Entrepreneurial Activity reported that entrepreneurship rates are rising among older Americans. People between the ages of 55 to 64 represented 14.5 percent of new business starts in 1996. In 2010, this same group represented 22.9 percent of business births. Older Americans are now the second fastest growing demographic for entrepreneurial activity. Another recent report by The Associated Press indicates that more than 14 million baby boomers plan to start a business in retirement.
While older entrepreneurs are often technical experts, their ability to rapidly and efficiently commercialize their technical expertise will be critical to their survival. Anticipating and thoroughly understanding the challenges of launching a startup through the use of a comprehensive strategic planning process is the place to start. This will help the nascent entrepreneur hone their vision on their target market, identify the resources that they will need along the way, and create a step-by-step plan to secure traction and grow their business.
While many of the emerging, older entrepreneurs may not have planned to be where they are today, they can take hold of their lives, careers and earnings by planning on where they want to be tomorrow.
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