Data & Research July 17, 2023

Changing Workforce: Employees Over 55 Will Make Up 25% of US Labor Market by 2031

A Bain & Co. study found that the so-called Great Resignation has become the ‘Great Sabbatical,’ as many return to work.  

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By 2030, the number of jobs shifting to workers older than 55 will reach 150 million worldwide, nearly equal to the entire working population of the U.S. and 10 percentage points higher than in 2011, according to a study from Bain & Co. 

Fewer young people have joined the workforce in the last two decades, and while early retirement has long been the trend, it is now slowly going into reverse, the researchers noted. Among American workers, 41% now expect to work beyond age 65, compared to 12% three decades ago, a trend that will push the percentage of U.S. workers older than 55 to 25% in 2031 from 18% in 2021, according to Bain.  

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This shift will have implications for employers—and the benefits consultants and advisers who work with them—and require them to consider the unique needs of this cohort of employees, Bain stressed in its report. 

“There was an increase in retirements in some countries during the peak-Covid Great Resignation, but that moment is now looking more like the Great Sabbatical as those workers increasingly return to work,” James Root, a partner in Bain and co-chair of the firm’s Bain Futures think tank, said in a statement. “People work longer into their lives, yet we’ve found it rare to see organizations put programs in place to fully integrate older workers into their talent system.” 

As workers approach retirement, they tend to take on more part-time and self-employed positions. However, research shows this does not indicate a lack of commitment. Older workers expressed more loyalty to their companies, as well as higher satisfaction in work and life.  

However, few firms have recognized the evolving needs of experienced workers, according to the researchers. In the U.S., older workers received training less often than their younger counterparts.  

“With the right tool kit, aging workers can help employers get ahead of their talent gaps and create high-quality jobs that turn older workers’ skills and experience into a competitive advantage,” Andrew Schwedel, a Bain partner and co-chair of Bain Futures, said in a statement. “Companies that invest in recruiting, retaining, reskilling, and respecting the strengths of this group will set themselves up for success as the demographics of the workforce continue to shift.” 

The Bain report suggested that to attract and retain older workers, employers should understand their motivations. While workers under the age of 60 are primarily driven by compensation, their older counterparts prioritize having an interesting job that provides autonomy and flexibility. They are more focused on mastering their craft and mentoring others to do the same.  

Reskilling older workers for the next 10 years is also important, the research noted, particularly for the latest technology. For workers between the ages of 55 and 64, almost one-quarter (22%) said they needed more tech skills. 

The research in Bain’s recent study, “Better with Age: The Rising Importance of Older Workers,” surveyed 40,000 workers across 19 countries.  

Compliance July 14, 2023

Congressional Hearings Scrutinize Proxy Voting

Republicans accused proxy firms of prioritizing ‘woke’ political agenda ahead of financial considerations.

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Subcommittees of the House Committee on Financial Services held two hearings on Thursday which examined the proxy voting industry.

The hearings highlighted many of the policy goals outlined by committee Republicans’ ESG Working Group June interim report, which called for requirements that proxy voting firms disclose their data and methods and only consider pecuniary factors when making recommendations.

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PLANADVISER is owned by Institutional Shareholder Services Inc., a provider of proxy voting services.

Capital Markets Hearing

Thursday’s first hearing was held by the subcommittee on capital markets. Representative Bill Huizenga, R-Michigan, said proxy voting firms offer advice that often has political or non-financial motives, “contrary to their fiduciary duty to maximize returns” and that this amounts to an “assault on returns of actual retail investors.”

Republicans on the subcommittee repeatedly appealed to the “duopoly” of proxy services, namely ISS and Glass, Lewis & Co. LLC, and accused them of abusing their market power to steer corporate governance in their preferred political direction. Representative Ann Wagner, R-Missouri, the chair of the subcommittee, said proxy firms have “turned boardrooms into partisan battlegrounds fighting over social agendas.”

Nell Minow, a former president of ISS, was called to testify by the Democrats on the subcommittee. She argued that concerns about proxy voting services are exaggerated. She noted that shareholder resolutions are not binding, even if passed, though a board risks being unseated if it ignores them. Speaking of resolutions that take positions in favor of environmental, social and governance policies, she added that the “fossil fuel industry is against these questions; everyone else is for them.”

Representative Sean Casten, D-Illinois, argued that ESG-informed investing is smart for “long-term profitability” and pointed to recent natural disasters, such as the Canadian wildfires, as an example of the climate risk for which ESG accounts. He added that 97% of investors in the public comments for the SEC’s climate risk and greenhouse gas disclosure proposal supported the proposal and said, “This debate is settled.”

Representative Brad Sherman, D-California, added that the ESG moniker should be expanded to ESGW&C, the ‘W’ standing for “workforce” and the ‘C’ for “China.” He argued that workforce policies and exposure to the Chinese market should also be disclosed.

Oversight and Investigations Hearing

The subcommittee on oversight and investigations held a hearing on the same day and on the same subject. Steven Friedman, the general counsel of ISS, and Eric Shostal, the head of research and engagement at Glass Lewis, both testified.

The themes and talking points were similar; Representative John Rose, R-Tennessee, quipped that proxy service firms should focus on “maximizing returns. Not on identity politics or studying the weather.”

What differed from past hearings on ESG and proxy voting, however, was that representatives of the proxy voting industry were present and offered defense of their practices.

Friedman explained that approximately 80% of voting recommendations made by ISS are based on a client’s custom policy and goals, not on ISS’s benchmark voting policy, which is designed to be something of a catch-all recommendation. When asked why these custom policies are not disclosed, Friedman replied that they belong to the client and describe their specific needs and goals, which ISS then translates into proxy voting advice.

Shostal added that “nobody is required to hire a proxy advisory firm” and that asset managers may do their own research or vote counter to Glass Lewis recommendations. Shostal added that generic or non-custom policies are rather diverse. In addition to a benchmark policy, Glass Lewis maintains others for funds and managers affiliated with the Catholic Church, so that those investors can vote in accordance with their specific interests.

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