It’s a myth that older workers cost significantly more than younger workers, says AARP. And while such a conclusion might be expected from an advocacy group whose members fall into that demographic, it’s based on an empirical review of a variety of metrics for employee productivity and cost, including employee benefits.

“Just as today’s 50+ population is disrupting aging and eroding negative stereotypes, today’s 50+ workforce is adding value by exhibiting traits that are highly sought after in today’s economy,” says AARP CEO Jo Ann Jenkins.

Diverging health cost trends

Data in the AARP report make it clear that average health costs do, as expected, rise with age. For example, the average employer-paid claim for employees in the 30-34 age bracket was $5,926, vs. $10,273 for those in the 50-59 bracket. The report used data from 2011.

Also see: AARP policy chief forecasts health care reform future

Interestingly, however, the study also found that the health cost trend rate is lower for the older age group. The analysis “demonstrates a weakening of the correlation between age and health care costs,” according to the report.

Specifically, “claims data from 2011 show that actual company-paid claims for employees age 50 to 65 were 1.1 to 1.8 times the dollar value of claims for workers in their 30s and 40s. In contrast, in 2003, company-paid claims for employees age 50 to 65 were 1.2 to 2.4 times the dollar value of claims for workers in their 30s and 40s.

“So while the absolute level of cost for workers age 50+ is higher than for younger workers, the difference in health care costs for older vs. younger employees is shrinking,” the study found. One reason offered is improvements in the treatment of heart disease, a condition more prevalent among older employees.

Also see: Award-winning organizations show the benefit of hiring older workers

Impact of DC plan shift

The report also noted the fact that most employees are covered by defined contribution plans means that retirement plan costs do not jump when older workers are brought on board.

Yet another trend that appears to be keeping the cost of hiring employees 50 and above in check is the ongoing shift in cash compensation to performance-based versus tenure-based. “This trend toward variable pay tends to level the playing field for workers across all ages,” the report states.

Along similar lines, the study examined the 50+ group from a job performance perspective. “Nearly two-thirds (65%) of workers age 55+ are considered ‘engaged,’ based on survey data, while younger employee engagement averages 58 to 60 percent,” according to the report.

Also see: Wells Fargo: 401(k) loans jump 28% as older workers tap savings

According to the study, in 2002, workers age 50+ made up 24.6% of the workforce. By 2012, they were 32.3% and by 2022, they are projected to represent 35.4% of the total workforce.

Richard Stolz is a freelance writer based in Rockville, Maryland.

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