Who Has a Good Opportunity for Phased Retirement? Robert Hutchens

Phased Retirement means that an older employee reduces hours spent at work without changing employers. In other words, a person moves from being a full-time employee to being a part-time employee at the same firm (or organization).

Phased Retirement Arguably Yields Benefits to -- Workers -- Employers -- Society

Phased Retirements Are Rare Events. In most cases when older workers move from full-time to part-time, they change employers. One estimate is that if you look at people in their late 50s and 60s – people who are in full time jobs that they have been in for 10 years – less than 10% move to part-time with that employer.

Outline I. Introduction II. The Survey Instrument III. The Marginal, the Conditional, and Hypotheses IV. Results I. Simple cross-tabulations II. Ordered probit models V. Conclusions

The Survey A representative sample of 950 establishments drawn from a national list of establishments. (An establishment is defined as a single physical location at which business is conducted or services or industrial operations are performed.) The questions focused on older white collar workers. The sample was restricted to establishments not in agriculture or mining. Eligible establishments had to have twenty or more employees and at least two white-collar employees who are age 55 or more. The survey was conducted by telephone between June 2001 and November 2002.

Question 1. The Establishment’s Policy Toward Phased Retirement Think of a secure full-time white-collar employee who is age 55 or over. One day that person comes to you and says that at some point in the next few years he/she may want to shift to a part-time work schedule at this establishment. Could this person’s request to shift to part-time employment be worked out in a way that would be acceptable to your establishment? ___ Yes ___ No ___ Don’t Know/Not Sure ___ In Some Cases ________________

Key results from Question 1 73% of establishments said “Yes”, something can be worked out. This usually meant an informal arrangement; formal policies are rare. Opportunities for phased retirement are greater in establishments that allow different hours for different workers. Opportunities for phased retirement are greater in establishments that are not part of a larger organization and where white collar workers are not unionized. Opportunities for phased retirement are largely unaffected by defined benefit pensions.

The Individual’s Opportunity for Phased Retirement : Do high performing employees have better opportunities for phased retirement? What matters for phased retirement: the characteristics of the worker or the characteristics of the job?

So far, we have been talking about general policies at your establishment. I’d now like to ask about more specific situations. In order to answer these questions, it is easier to talk about an actual person who does an actual job in your establishment. To begin with, I would like you to give me the first names of three [men/women] age 55 or over who are full-time white- collar employees in your establishment. If it would make your more comfortable, you can give me fictitious names, but please think of specific employees. You should know the work of these employees reasonably well. For example, they may be people you supervise. If possible, it would be best if these three employees have different job titles. The next set of questions refer specifically to (name). The computer has randomly selected (name) from those you just gave me.

Question 2: Earlier you indicated that it might be possible for a full-time employee age 55 or over to shift to a part-time work schedule. On a scale from 1 to 5, where 1 means not at all likely and 5 means very likely, how likely is it that [fill person’s first name] could shift into a part-time position?

Let Y 1i = 1 if person i works in an establishment that permits phased retirement for some or all of its workers, and is otherwise zero, as established by Question 1. Y 2i is a variable that takes values 0, 1, 2, 3, 4, and 5 where 0 indicates that phased retirement is impossible, 1 indicates that phased retirement is not at all likely and 5 means that phased retirement is very likely, as established by Question 2. Clearly Y 2i = 0 if Y 1i = 0.

The probability that Y 2i = k, k = 1, 2, …, 5 can be written as a product of a conditional and a marginal probability, i.e., Pr(Y 2i = k) ≡ Pr(Y 2i = k|Y 1i = 1)Pr(Y 1i = 1), where Pr(Y 2i = k) is the probability that Y 2i equals k with k = 1, 2, …, 5. Pr(Y 2i = k|Y 1i = 1) is the probability that Y 2i equals k conditional on Y 1i equals 1 (the conditional probability”), and Pr(Y 1i = 1) is the probability that Y 1i equals 1 (the “marginal probability”).

The basic approach is to estimate two models: Marginal Model: Pr(Y 1i = 1|X 1i ), where X 1i is a vector of establishment level variables for individual i, and Conditional Model: Pr(Y 2i = k|Y 1i = 1, X 2ai, X 2bi, X 1i ) where X 2ai is a vector of personal characteristics for individual i, X 2bi is a vector of job characteristics for individual i.

What kind of employee is likely to be suitable for phased retirement? Hypotheses: A. Demographic Characteristics. B. Performance Characteristics.

Measuring Demographic Characteristics The survey asked questions about the selected worker’s  Age  Education  Health Status  Gender

Measuring Job Performance To get at overall performance the respondent was asked the following: -- We'd like to know your overall assessment of (name’s) job performance. On a scale from 0 to 10, where 0 means the worst possible employee and 10 means the best possible employee, how would you rate (name’s) job performance?

Measuring Job Performance Other questions probed specific aspects of performance: -- How closely is (name) supervised as she does her work? Would you say (name) has no supervision, a little supervision, some supervision, or a lot of supervision? no supervision a little supervision some supervision a lot of supervision

-- Thinking about (name), please respond to the following statements using a scale from 1 to 5, where 1 indicates that you completely disagree with the statement and 5 indicates that you completely agree with the statement. (a) (name) easily learns new procedures and technologies when they are introduced in the workplace. (b) (name) is creative in solving problems on the job. (c) (name) is willing to put forth extra effort to get the job done. (d) (name) gets along well with coworkers. (e) (name) has the physical stamina or energy level needed to perform well in the job.

What kind of job is likely to be suitable for phased retirement? Hypotheses: A. Job for which part-time is appropriate. B. Job with specific training. C. Job in which older workers are hard to replace.

Conclusion 1. Do high performing employees have better opportunities for phased retirement? Yes 2. What matters for phased retirement: the characteristics of the worker or the characteristics of the job? Worker Characteristics (after controlling for Establishment Characteristics)

3. Why Are Phased Retirements So Rare? IT IS COMPLICATED.

Policy Options? 1. In the U.S., providing health insurance to part-time workers. 2. Encourage firms to move toward flexible hours for all workers (parents with children; providers of elder care). 3. Make other forms of labor force exit less attractive (e.g., early retirement, disability, and unemployment). 4. Partial Pension Programs (e.g., Sweden).