Talent Management and The Growing Need to Provide Eldercare Benefits for Employees
Something Has to Give
At a March, 2010 talent management conference, the presenter shared results from a survey of corporate leaders. For more than 80% of respondents, the statistics told a story of ineffectiveness and struggle in recruiting and retaining top talent. Even worse, one out of ten respondents feels that their talent management struggles are leading to the actual demise of their companies. [i]
Fast forward to 2017 and it would appear that the narrative is continuing. Directionally, achieving talent management goals has become more and more difficult, rather than staying steady or abating in some way. According to the 2016 National Study of Employers, companies have reported increasing difficulty in recruiting candidates for highly-skilled jobs, from 2005 to 2016 (see Chart I below).[ii]
Percent Reporting Difficulty in Recruiting for Highly-Skilled Jobs
(Source: 2016 National Study of Employers)
Corporate leaders stress that they are having trouble finding the talent they need. The exit of the baby boomers and their replacement by Generation Xers and millennials is subtracting highly-skilled workers from today’s talent pool. This is one important dynamic at work, but it is not the only factor.
Forty-six percent of employers in 2016 stated that their job postings required more skills than they did five years ago. The skill requirements that are increasing include: technical skills (36%); skills in managing work (28%); skills in working with others (27%); years of experience (23%); formal education or vocational or technical training (both 20%); and certification or licensure (19%).[iii] These in-demand skills generally correlate with education and time on the job, attributes we are losing as boomers continue to retire.
The situation is being made even more difficult by the growing demand for caregiving. The pace at which baby boomers are retiring and the sheer size of the population over 65 today is at fault. Highly-skilled and scarce talent in the form of middle-aged employees are being pulled out of the workforce to meet this demand.
The perfect storm of retiring baby boomers, increasing skill requirements and the competing priorities of work and caregiving is forcing change. In 2017, vanishing unemployment is adding even more stress to the situation. Offering flexible work arrangements to accommodate caregiving and extending specific eldercare benefits is a strategy that can produce results in the recruiting, retention and development of employees. The power of this approach is greater than many think it is. The following is an attempt to explain why.
On January 1, 2011, the oldest members of the baby boomers celebrated their 65th birthday. On that day and each and every day since, 10,000 baby boomers will reach the age of 65. This production or volume will last for 19 straight years.[iv] The aging of this huge cohort of Americans (26% of the total U.S. population) is having a significant impact on companies based or operating in the U.S.
The sheer numbers of the elderly aren’t just growing from baby boomers retiring, though; American are also living longer than ever. From 1980 to 2013, a woman’s average life expectancy increased from 78 to 81 and for men it increased from 70 to 77. This trend is continuing. In 2010, there were more than 40 million people over age 65 and 5.5 million over 85 in the United States. These numbers are expected to grow to over 54.5 million and 8.5 million, respectively, by 2030.[v]
The “Sandwiched” Generation
At any given point, about 17% of the workforce is acting as a caregiver for an elderly person. This percent will grow as more and more baby boomers retire. These caregivers generally can’t afford to stop working.[vi]
Middle-aged workers who are reaching the peak of their careers and earning power appear to be under the most pressure. With a growing elderly population and their children struggling to achieve financial independence, they are caught in the middle. Nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a child or financially supporting a grown one. One in seven middle-aged adults is providing financial support to both an aging parent and a child.[vii]
Welcome to the sandwich generation. Being “sandwiched” between simultaneous responsibilities while also trying to do the best work of your career has changed today’s reality for many people. In this situation, juggling the increasingly difficult demands of workplace and home can overwhelm employees.
FMLA to the Rescue
According to the United States Department of Labor, “The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 workweeks of unpaid, job-protected leave a year, and requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave. A covered employer must grant an eligible employee up to a total of 12 workweeks of unpaid leave in a 12 month period for one or more of the following reasons: for the birth of a son or daughter, and to care for the newborn child; for the placement with the employee of a child for adoption or foster care, and to care for the newly placed child; to care for an immediate family member (spouse, child, or parent — but not a parent “in-law”) with a serious health condition; and when the employee is unable to work because of a serious health condition.”[viii]
The FMLA is a critical benefit for those caring for children, the elderly or both. Its general availability and legislative support make it the brand standard for providing support to those caring for others.
To be eligible for FMLA leave, an employee must work for a participating employer and have been employed at the same company for at least 12 months. The individual must have worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave, too. Additionally, the employee must work at a location where at least 50 employees are employed or within 75 miles of such a location. Nearly 60% of employees in the U.S. meet all eligibility criteria under the FMLA.[ix]
Family and Medical Leave Act Effective Coverage
(Source: United States Department of Labor)
It is important to note that most see the FMLA as paving the way for eldercare support and other voluntary benefits, because of the precedent it sets. Nevertheless, the FMLA leaves 40% of workers not covered, according to Department of Labor statistics. The gap in coverage is further enlarged by the fact that half of the employees who were eligible for it and had a need for it did not take family leave because they could not afford it.[x] That leaves us with closer to 30% of workers actually able to take advantage of FMLA.
The Role of Employer Discretion
Employers have significant discretion in offering and approving the use of benefits. Beyond mandated benefits, most employers offer significant additional benefits. Utilizing benefits, however, can be a different story. Forty-two percent of employers indicate that their supervisors generally ask employees why they are requesting paid time off, such as vacation or sick leave. Thirty-eight percent of employers report that supervisors consider employees’ reasons for requesting paid time off when deciding if they will be allowed to take it.[xi]
The 2016 National Study of Employers shows there is wide acceptance for using leave time to care for members of the traditional family structure, including parents. However, less direct relationships outside of immediate family are often not included. With the number of aging Americans who don’t have a parent, child or spouse to care for them increasing each year[xii], the importance of this gap is growing quickly.
Table I below illustrates the sharp divide between the treatment of family members and those outside the immediate family circle, in regard to taking leave due to illness or serious health issues. Outside of one’s own parents or that of a spouse, there is little support for providing assistance.[xiii]
Different Treatment of Family/Non-Family Members
(Source: 2016 National Study of Employers)
Several states are ahead of the others in taking additional measures to support more distant family members as well as overcome other limitations. California, Connecticut, Massachusetts, New Jersey, Oregon and Rhode Island are leading the way. State-led initiatives include: guaranteeing four to six weeks of partially paid family leave, adding care for grandparents, parents-in-law, siblings and other relatives to current leave provisions and up to five days of paid sick leave each year.[xiv] These changes are a move in the right direction but by no means do they close the gap Americans face today or prepare us for what is coming in the future, as baby boomers continue to retire.
The disparities in Table I indicate a growing gap in coverage that presents an opportunity for employers competing for top talent. Allowing employees to use their paid and unpaid time off to care for those outside of immediate family members, for example, is a differentiator.
Employer Provided Eldercare Benefits
While flexibility in using time off is an obvious opportunity, so is providing specific eldercare benefits to employees. The 2016 National Study of Employers tracks three main eldercare benefits and what percent of companies provide them to employees. Forty-two percent provide information and referrals, 38% provide Dependent Care Assistance Programs (DCAP) and 6% provide respite care. Going back as far as 2005, there has been a significant increase in the percent of firms offering DCAPs (+14%) as well as information and referrals (+13%), but not with respite care (See Table II below). Since 2012, however, there has been almost no change.[xv]
Percent of Companies Offering Select Eldercare Benefits
(Source: 2016 National Study of Employers)
Table II’s data is quite limited. Companies began offering additional solutions long ago. Previously, companies relied more on a single vendor to provide a comprehensive solution. Since then, there has been a proliferation of individual service providers offering different subsets. As employers started to use multiple vendors, the benefits they offered became much more diverse. This evolution in part reflects the many different sets of circumstances faced by families today.
Table III below is a list of eldercare benefits that have been offered by various companies. These benefits represent a wide range of corporate investment, from zero to many thousands of dollars, depending on the size of the company. This range of alternatives has helped eldercare benefits to become more widely available, as there many ways a company can help without incurring significant expense, if they are motivated to do so.
List of Eldercare Benefits
Despite best efforts, utilization of existing family eldercare benefits has been poor. Thirteen percent of all employees reported taking leave for an FMLA reason in the past 12 months. Employee surveys and related discussion highlight employees’ concerns about revealing their family issues at work. They are most worried about any backlash from co-workers or executives.[xvi]
Recruiting & Retention
Employers have noted that the main benefits for companies offering workplace-eldercare programs are: reduced absenteeism, employee retention, productivity, lower stress levels, better overall employee health and an advantage in recruiting. Most companies see an opportunity to reduce healthcare costs for caregivers, too.[xvii]
The reasons why employers have put employee and family assistance initiatives in place in the past is the same reason to implement eldercare benefits now or in the future. Survey responses tend to compile myriad reasons, but most benefit a company’s employee recruiting and retention, with productivity and employee engagement initiatives also showing up frequently. See Table IV below from the 2016 National Study of Employers.
Reasons for Offering Employee and Family Assistance
(Source: 2016 National Study of Employers)
Caregiving’s Effect on Employees
The average U.S. caregiver is a 49- year-old adult who works outside the home and spends nearly 20 hours per week—the equivalent of another part time job—providing unpaid care to her mother for almost five years.[xviii] Nearly one in four (22%) middle aged and older workers (ages 45 to 64), typically caring for a parent, report being family caregivers: the largest of any age group in the labor force.[xix]
When it becomes stressful to juggle caregiving activities with work, or if work requirements conflict with caregiving tasks, some caregivers make changes in their work life, especially if they cannot pay for outside help. In a recent national survey, one in five (19%) retirees left the workforce earlier than planned because of having to care for an ill spouse or other family member. Nearly seven in ten (68%) caregivers report making work accommodations because of caregiving. These adjustments include arriving late/leaving early or taking time off, cutting back on work hours, changing jobs, or stopping work entirely (see Table V).[xx]
The Effect of Caregiving on Employees
(Source: National Alliance for Caregiving / AARP)
Family caregivers with the most intense level of caregiving (those who provide 21+ hours of care each week) or those who live with their care recipient are especially likely to report having to make workplace accommodations.[xxi]
The point of this article is: there is a need for caregiving assistance amongst employees, the need is not being met (at least for the majority), the issue is widespread and affects a large number of workers, there are affordable ways for companies to help meet this need, and, when this need goes un-met employees are being harmed. Supporting employees by offering eldercare benefits is a way for companies to differentiate themselves and to better succeed in recruiting and retaining employees.
The aging of America suggests that companies are headed for a bumpy road. Multiple strategies can be employed for the challenges ahead. Employee training and development, aggressive relocation policies, and moving office locations, especially out of high cost areas, are some of the options available. But offering flexible work arrangements and eldercare benefits may be more powerful in the end.
[i] Anders, G. (2010). Today’s Biggest Talent-Management Challenges. Harvard Business Review.
[ii] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[iii] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[iv] Cohn, D. & Taylor, P. [Pew Research Center] (2010). Baby Boomers Approach 65 – Glumly.
[v] American Association of Retired Persons (AARP) & Respect a Caregiver’s Time (ReACT) (2016). Determining the Return on Investment: Supportive Policies for Employee Caregivers.
[vi] American Association of Retired Persons (AARP) & Respect a Caregiver’s Time (ReACT) (2016). Determining the Return on Investment: Supportive Policies for Employee Caregivers.
[vii] Motel, S., Patten, E., Parker, K. & Taylor, P. [Pew Research Center] (2013). The Sandwich Generation, Rising Financial Burdens for Middle-Aged Americans.
[viii] United States Department of Labor. https://www.dol.gov/whd/regs/statutes/fmla.htm.
[ix] United States Department of Labor. https://www.dol.gov/whd/regs/statutes/fmla.htm.
[x] United States Department of Labor. https://www.dol.gov/whd/regs/statutes/fmla.htm.
[xi] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[xii] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[xiii] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[xiv] American Association of Retired Persons (AARP) & Respect a Caregiver’s Time (ReACT) (2016). Determining the Return on Investment: Supportive Policies for Employee Caregivers.
[xv] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[xvi] United States Department of Labor. https://www.dol.gov/whd/regs/statutes/fmla.htm.
[xvii] Bond, J. T., Galinsky, E. & Matos, K. [SHRM/FWI] (2016). When Work Works. National Study of Employers.
[xviii] American Association for Retired Persons (AARP) & National Alliance for Caregiving (2009). Caregiving in the U.S. 2009.
[xix] Gallup, Inc. (2011). More than One in Six American Workers Also Act as Caregivers. http://www.gallup.com/poll/148640/one-six-american-workers-act-caregivers.aspx
[xx] American Association for Retired Persons (AARP) & National Alliance for Caregiving (2009). Caregiving in the U.S. 2009.
[xxi] American Association for Retired Persons (AARP) & National Alliance for Caregiving (2009). Caregiving in the U.S. 2009.