Working Longer to Make Ends Meet
By Joe Walker, The Paducah Sun, Ky.
Jul. 20–WICKLIFFE, Ky. — Morris Wallace is nearly 66, but he has every intention of working another year of 12-hour shifts at the NewPage paper mill.
"It’s a great place to work, and I’ve been blessed with good health," said Wallace, of Paducah. "I never even considered quitting before I could draw my full retirement."
He is among an increasing number of older people working longer for various reasons — notably soaring health insurance costs and declining 401(k) plans. New Census Bureau data show the percentage of workers 55 and older rose in 111 out of Kentucky’s 120 counties from 2001-2004.
Ballard County led the state with 17.2 percent of its workers age 55-64 and ranked third with 20.1 percent of workers 55 and older. Among the 13 westernmost counties, 10 ranked in the top 30 statewide in both categories.
One reason far western Kentucky has abundant older workers is because of heavy manufacturing, said Ron Crouch, director of the Kentucky State Data Center.
"Manufacturing jobs pay well, so people stay," he said. "And because of union seniority rules, when plants call people back they have to call back the older workers first."
Manufacturing had the most senior workers of any job sector, which concerns the Kentucky Association of Manufacturers.
"It’s the number-one challenge for our industry," said Martin Kish, KAM vice president of marketing and revenue.
"All manufacturers see this coming, and they’re scared to death. They’re really afraid of not having qualified workers to help fill these positions."
KAM is working with community colleges and local school districts to ensure there is enough technical training over the next few years before most baby boomers start retiring, he said.
Health, pension
In Ballard County, from 2001-2004, 27.2 percent of all manufacturing workers were 55 and older. NewPage is by far the county’s leading industry with 530 workers, a third of whom are over 55.
"Health insurance is the number-one reason for not retiring before age 62, and most people look at 62 as the retirement age," said Sandra Wilson, public affairs manager for the paper mill.
Waiting beyond age 65 allows Wallace to draw full Social Security and avoid paying the whole cost of health insurance, much of which NewPage now funds.
When he quits, he can fall back on Medicare and supplemental private coverage.
"That’s much cheaper than paying for the whole coverage," he said. "I’d have considered leaving before now if my insurance was covered after I retire, which it’s not."
An April survey by the American Association of Retired Persons showed that nearly one in five people 55-64 planned to delay retirement because of the economic slump. A third blamed shrinking retirement portfolios.
Wallace said one of his 401(k) accounts lost $7,000 last month, despite having low-risk mutual funds.
"But that’s on paper, and I won’t have to have that to live on for at least the first several years of retirement," he said, referring to having full Social Security benefits. "Long-term gains are what I’m looking for."
To offset shrinking profits, many companies are shedding traditional pension plans and health care coverage. Crouch pointed to General Motors’ announcement last week that it would no longer pay for retiree health coverage.
"That means more out-of-pocket expenses," he said. "People are finding they will run out of money before they run out of life unless they work longer."
Lifespan, age gaps
Crouch, whose organization crunches census data, said at least eight times as many people live beyond 65 now than they did 100 years ago.
With declining markets, more and more people don’t have enough money to span their retirement years, he said.
Wallace, a maintenance worker, said many of his peers started soon out of high school in 1970 when the plant opened. He knows of at least two who have stayed a year or more beyond their announced retirement dates because they like the work and are treated well.
"We’re not getting the same people fresh out of high school as we did then," Wilson said. "Now they need more experience and training."
NewPage’s state-approved, maintenance-apprentice program allows younger union workers to move up through the ranks. The plant recently hired nine people of various ages, Wilson said.
Wallace said he will be replaced by a younger operator training for maintenance work.
The aging work force is also attributable to higher median age and shrinking younger population, Crouch said. The number of Kentucky workers 44 and younger declined by nearly 20,000 from 2002 to 2006, offset by an increase of almost 80,000 among workers 45 and older.
Education led all Kentucky job sectors with 19 percent of employees at least 55. Crouch said the prognosis for replacing all those graying teachers isn’t good.
"When they start retiring we’re going to have a crisis because there are just not young people to replace them," he said.
Joe Walker can be contacted at 575-8656.
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