Employers Avoid Axing Oldies but Goodies

Hard-pressed companies forced to make layoffs tend to cut younger workers while retaining those over 55

By Joseph Weber

Last fall, drugstore chain CVS Caremark (CVS) cut some 800 jobs in Northern California after acquiring Longs Drugs, a Walnut Creek (Calif.) pharmacy rival. Despite those cuts, the company continues to recruit baby boomers and other older workers to staff stores across the country. "We need their expertise," says Stephen Wing, director of workforce initiatives at CVS Caremark in Woonsocket, R.I. "When you're in your 50s and 60s, you're in your prime."

Companies nationwide are laying off workers by the tens of thousands. But many are trying to spare the post-55 set from the ax, a reversal of the top-down trends in past waves of layoffs. They're being driven by legal concerns—since boomers are in a protected age group—and by a need to keep experienced hands in place to keep the companies running and positioned for an upturn. "Seniority matters," says Marcie Pitt-Catsouphes, director of the Sloan Center on Aging & Work at Boston College.

All age groups are being hit by cuts now coursing through Corporate America, but government statistics so far suggest that the burden is falling far more heavily on younger workers. The unemployment rate among workers 55 and over is not only lower than for the younger set, but it has risen less sharply. Joblessness for those 55 and older jumped to 4.9% in December 2008, a rise of 1.8 percentage points from the 3.1% level of December 2007. By contrast, for their younger colleagues, those aged 25-54, the rate climbed to 6.3% in December, compared with 4% a year before, a sharper rise. The different impact comes into even more stark relief with the government's measures of employment. The number of people employed in the younger set has fallen from 100.5 million in December 2007 to 97.7 million as of last December—a 2.9% slide. By contrast, the number of those working among the 55 and older set has actually risen by 878,000, climbing to nearly 29.1 million.

Fewer Buyout Offers

Some companies have taken deliberate steps to hang on to veterans. Many, for instance, are shunning voluntary buyout offers, which tend to encourage older workers near retirement to jump ship, and instead are targeting cuts to keep the most productive workers. When Charles Schwab (SCHW) recently eliminated about 100 positions, it identified the positions it no longer needed rather than letting workers opt out wholesale. The company's most conspicuous old hand, Chairman Charles Schwab, 72, wasn't among those urged out the door.

Similarly, involuntary cuts are planned at a broad range of companies. Among them are Alcoa (AA), which is cutting some 13,500 jobs, Advanced Micro Devices (AMD) (900 jobs, plus some 200 cut in a divestiture or through attrition), and WellPoint (WLP) (some 1,500 jobs, including 900 unfilled positions). Typically, says outplacement expert John Challenger of Challenger, Gray & Christmas, companies move to such involuntary cuts "as a recession wears on" and they find they remain in trouble. He expects to see the numbers of involuntary cuts climb.

Even when they offer voluntary buyouts, companies typically reserve the right to say no. Walgreen (WAG), for instance, is now offering a voluntary program as it tries to cut 1,000 jobs from its 11,000-person corporate and field manager workforce—but a spokesman pointedly says management will decide which of those who apply for the buyout will get it. If Walgreen doesn't generate 1,000 departures, it will move into a targeted involuntary program. Often, adds outplacement expert Challenger, "companies will go to their best people and say: 'We don't want you to go.'"