"As the labor pool shrinks, and as baby boomers age, we'll see more creative ways to keep older employees than ever before," Grassley said. "Customized retirement arrangements and flexible scheduling will be the norm. Congress has to respond in kind. We have to make sure federal laws don't hurt older workers. Our economy will depend on it."
Grassley's comments came after a hearing, "Now Hiring: the Rising Demand for Older Workers." Employers described their creative programs for retaining older workers. Hy-Vee, Inc., a grocery chain based in West Des Moines, Iowa, offers attractive policies, such as flexible scheduling, to keep older employees.
The Iowa Lakes Rural Electric Cooperative in Estherville, Iowa, offers "phased retirement," which allows employees to work part-time and collect partial retirement benefits.
Experts described the expected growth in such policies as the nation ages. In 30 years, 20 percent of the nation's population will be age 65 or older; today, 12 percent is 65 or older, according to the Committee for Economic Development. In 2025, 39 states will have the same or larger share of older residents as Florida has today.
Employment rates of older Americans have risen since the mid-1980s, for the first time since World War II, according to the AARP. Despite older workers' keen interest in phased retirement, too few employers offer such programs, the AARP said.
Grassley said Congress must look at any federally created impediments to phased retirement or other policies that appeal to older workers. The federal tax code and pension laws may discourage employers from offering such programs, he said.
Grassley said federal pension laws are so complicated that they discourage many employers from offering pensions at all, much less creative options. He and Sen. Bob Graham (D-Fla.) are the sponsors of pension reform legislation, The Pension Coverage and Portability Act, S. 741.
Grassley said he will examine whether his legislation would encourage employers to offer phased retirement, and if not, whether it should be amended to do so.
"Americans don't save enough money for retirement," Grassley said. "That's one reason why some people work until older ages. With that in mind, Congress should pass laws that encourage retirement savings. Repealing the earnings limit was a good start. Next, we have to help employers accommodate the needs of older workers."
President Clinton is scheduled to sign the bill repealing the Social Security earnings limit into law this Friday.