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Business Journal
The Price of Age Discrimination
Business Journal

The Price of Age Discrimination

by David C. Wilson

When you hear the words "discrimination in the workplace," what comes to mind? Depending on who you are -- your race, sex, religion, or national origin, or whether you have a disability -- you might first think of racial or gender discrimination, or discrimination based on nationality or against the disabled.

QUOTE: Businesses will have to change to accommodate the different needs of a graying workforce.

There's one more form of discrimination, though, that workers may face -- and the longer you work, the more likely it is you may encounter it -- and that's discrimination based on age. Although age discrimination is sometimes overshadowed by media focus on other forms of discrimination, recent Gallup research indicates that American workers think it's a big problem.

This finding is based on research conducted by Gallup, with support from Kaiser Permanente, the Society for Human Resource Management, and United Parcel Service. Full results of this research were released in a report on "Employee Discrimination in the Workplace" in December 2005. Gallup surveyed Americans who were currently employed, had been employed in the last two years, or were actively seeking employment. (See "When Equal Opportunity Knocks" in the "See Also" area on this page.)

A major problem

Working Americans are more likely to say discrimination is a major problem among older workers (aged 40 and older) than they are to say it is a problem among racial and ethnic groups or among men and women. In fact, the only group in which respondents perceive discrimination to be more of a problem is among the disabled.

Three in four employed Americans perceive discrimination among the disabled as a problem, including 47% who said it is a major problem. Two-thirds of respondents perceive discrimination to be a problem among older workers, including 36% who said it is a major problem. Significantly fewer employed adults perceive discrimination to be a problem among African Americans, Hispanics, or Asians, or among women and men.

CHART: Age Discrimination is a Problem

In addition, 45% of respondents "strongly agree" that "older workers are forced to retire before they may be ready to retire." Taken together, these numbers illustrate an important age-related problem, though it's often overshadowed by race and gender issues.

Going gray

Age discrimination is a moral issue as well as a personal one for everyone who expects more birthdays -- but it's also a serious issue for businesses. As noted in a previous article, workplaces that are perceived as diverse have higher levels of employee engagement, and engagement is crucial to the financial health of any organization. Gallup research shows that engaged employees are more productive, profitable, safer, create stronger customer relationships, and stay longer with their company than less engaged employees. In contrast, employees who aren't engaged cost businesses in lost productivity, worker's compensation claims, and wasted time. (See "When Equal Opportunity Knocks" in the "See Also" area on this page.) In fact, according to Gallup research, in a 10,000- person company, disengagement represents 5,000 unexcused days absent, and about $600,000 in lost salary alone.

The Age Discrimination in Employment Act of 1967 protects workers aged 40 and older from employment discrimination based on age. As the baby boom generation ages in coming decades, the percentage of workers in the over-40 category is expected to make up an increasingly larger share of the U.S. workforce. For example, according to the Bureau of Labor Statistics, workers 55 and older made up 13% of the U.S. working population in 2000; by 2020, their numbers will increase to 20%.

As this demographic shift occurs, businesses will need to change to accommodate the different needs of a graying workforce. Experts in staffing, recruiting, and human resources are beginning to examine what changes are needed -- and how to make them happen. According to Dr. Steve Hunt, chief scientist at UNICRU, "Staffing directors need to plan for the fact that employing older workers is not the same as employing younger workers. Future staffing strategies must pay greater attention to the interests, motives, abilities, and constraints typically found in older workers."

Age discrimination is not without irony. The boomers are aging, the workforce is graying, and many American workers feel that older workers are particularly vulnerable to discrimination. Yet it is older rather than younger workers who tend to make the connection between diversity and workplace satisfaction and loyalty. According to the Gallup study, older workers are the most likely to be loyal to their companies if they perceive their workplace cares about diversity.

CHART: Workplace Diversity is Most Important to Older Workers

Gallup's research on attitudes about discrimination and diversity included seven questions that, taken together, indicated respondents' perceptions of their workplaces' diversity focus (WDF). (See sidebar "Workplace Diversity Focus Items.") Workforce diversity focus is highly correlated with important workplace attitudes, including overall satisfaction with their companies, intent to stay, and willingness to recommend their company to others. According to the survey results, employees whose companies have higher WDF scores are more likely to feel satisfied with or loyal to their company, and they're also more likely to intend to stay with their employer than employees whose companies have lower WDF scores.

Employed adults aged 50 and older who feel their companies have a high WDF are the likeliest age group to say they intend to stay with their workplace, recommend their companies, and have the highest levels of overall satisfaction. (See graphic "The Impact of Workplace Diversity Focus on Workplace Attitudes: the Age Effect.")

As the graphic illustrates, WDF accounts for more of the differences in workplace attitudes for older workers (aged 50 and older) than it does for younger workers. For workers aged 50 and older, for example, their perceptions of WDF account for 40% of the differences in their response to their "intent to stay" with their current employer. In contrast, WDF accounts for only 19% of the differences in "intent to stay" for the youngest group of workers (aged 18 to 29).

These relationships signal that perceptions of diversity are important to older workers' workplace satisfaction and loyalty. They also should send a clear signal that the working public's concerns about age discrimination are not imaginary. As workers move closer to "retirement age" (whatever that now means), they clearly worry about being given a fair shot to both gain and keep good jobs.

Workplace Diversity Focus Items

These seven questions, taken together, indicate respondents' perceptions of their workplaces' diversity focus (WDF), which correlates highly with important workplace attitudes. Employees whose companies have lower WDF scores are less likely to feel satisfied with or loyal to their company -- and they're also less likely to stay with their employer than are employees whose companies have higher WDF scores.

  • I am aware of my company's efforts to create diversity in the world
  • I believe that my company is adequately striving for diversity in the workplace
  • I value my company's diversity efforts in making a welcome and tolerant work environment for all employees
  • I believe that my company's workforce diversity contributes to our competitiveness in the marketplace
  • I trust senior management of my company or organization to deal with issues concerning equal treatment at my workplace
  • The head of my company or organization is committed to diversity at my workplace
  • If I experienced discrimination at my workplace, I am confident that my employer would be able to resolve it in a fair and just manner, once I raised the issue

Diversity dividend

The best way for businesses to reap the benefits of diversity is to create a corporate culture that openly values it. Employees will not feel their company truly values diversity unless it takes an active approach to communicating that it values all workers regardless of background, gender, experiences, talents, and age. Every employee should know that management, from the CEO on down, believes equitable treatment to be an absolute necessity. When employees trust management to be fair, they're more likely to be engaged at work. And when an employee, no matter how old, feels engaged, the organization benefits in higher performance, profit, and retention.

Gallup contacted 1,252 adults, aged 18 and older, between April-June 2005, who were either currently employed, had been employed within the past two years, or were actively seeking employment. A disproportionate random sampling plan was used to permit breakouts of racial/ethnic minorities. Included in the final analysis were 302 African-American respondents, 310 Hispanics, 104 Asians, 492 whites, and 44 individuals in the "Other" category. For results based on the entire sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±3 percentage points. For results based on smaller sample sizes, the maximum error attributable to sampling and other random effects would be higher. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.


David C. Wilson was a Senior Consultant with Gallup.

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