Aging workforce: University of Michigan expects nearly one-fifth of employees to retire in next 5 years
Timothy Slottow
"That's a pretty big number," U-M Chief Financial Officer Timothy Slottow told AnnArbor.com in an interview.
University officials expect roughly half of those eligible will actually retire.
"We project that 20 percent of faculty and 18 percent of staff will retire by the end of 2017," Thomas told AnnArbor.com. "However, the actual number of retirees has lagged behind projections in recent years, so we do expect greater numbers of faculty and staff to retire in the coming years."
In fact, the U-M workforce is getting older and older. In 2002, employees older than 50 comprised 39 percent of the workforce. In 2011, that number had risen to 46 percent, according to a July 2011 report.
In 2012, 762 staff will become newly eligible to retire. In 2017, there will be 1,060 newly eligible retirees— an increase of nearly 400.
As the U.S. population ages, the aging of U-M's workforce is also due, in part, to low turnover. Coupled with a recovering economy, officials are predicting a larger than usual wave of retirements.
"The economy has adjusted somewhat. People aren’t quite as concerned about sustaining their incomes through retirement," Thomas said.
To be eligible to retire, faculty must work at the university for a proscribed length of time, depending on age. For example, faculty members who are 55 and wish to retire and receive benefits must have worked for the university for 20 years. Those who are 60 must have worked at U-M for 10 years.
Once university employees retire, they may receive health insurance and other perks, including the use of the university library and computer labs, on-campus parking eligibility and discounted gym memberships and sports tickets.
Slottow said the university is cognizant of encouraging new leaders to step up in order to avoid a leadership void after the impending wave of retirements.
"For staff it’s a real issue with succession planning and leadership development, because when people have been here for twenty years they know a lot about the complex way a university runs," he said. "You have to build that skill base."
In a July 2011 report, the university predicted that 28 percent of administrative staff would retire between 2012 and the end of 2017, or 812 employees.
According to the report, a large number of those predicted to retire were managers. Among projected administration retirees, 36 percent, or 135 employees, are managers.
University-wide, 546 managers were expected to retire between 2012 and 2017.
"The United States is on the cusp of a significant demographic change as baby boomers plan for and retire from their careers," the report stated. "Like many large organizations, the University of Michigan will experience these trends through new retirement patterns that will require flexibility and action planning."
The action planning consists of developing leadership skills in existing employees, offering market-rate benefits and raises to keep faculty and staff in Ann Arbor and ensuring that U-M's work environment remains comfortable enough to attract new talent.
For example, the U-M Health System has a "a whole workforce plan around being attractive" to current and potential employees and "a large number of plans to invest in the development of nurses" and existing staff there, according to Thomas.
U-M has doubled the number of apprentices in skilled trade areas, preparing for 159 workers, or 35 percent of the trade workforce, to retire within the next five years.
The university has also tried to keep raises steady, offering faculty 3 percent raises last year and projected 3 percent raises this year.
"We watch the market," Thomas said. "3 percent is not high for faculty because universities are still investing in recruiting and retaining our faculty because that's our core."
David Canter, director of the North Campus Research Complex, said U-M may be investing in faculty more than other institutions. Recently he's seen faculty come to Ann Arbor from the University of Wisconsin, the University of Pennsylvania and the University of Virginia.
"We do think that many universities have great people who are very vulnerable," Canter said. "The California system is hurting. [Other schools have] decided to hunker down and not hire and maybe even not invest in their own people.
"Michigan has made a very deliberate decision to continue to invest and continue to hire."
Added dean of the Medical School, James Woolliscraft:
"We are able to recruit individuals who, I don't know, five years ago, 10 years ago, I don't think we'd be able to recruit. There's all sorts of reasons for it, not the least of which is the intellectual climate here. ... It's also that other institutions aren't able to provide the resources, intellectually wise and physically wise, that we can."
For both faculty and staff, the university conducts retention interviews to get a sense of an employee's contentment and whether they're contemplating leaving or looking for an opportunity to move up. For those that wish to advance, the university has existing leadership training programs and is in the process of creating more.
The university is expected to release a new staffing report this summer.
Kellie Woodhouse covers higher education for AnnArbor.com. Reach her at kelliewoodhouse@annarbor.com or 734-623-4602 and follow her on twitter.
Comments
rs
Mon, Jul 2, 2012 : 1:21 p.m.
What the story really should focus on is this isn't just a local "UM" phenomena. This is happening nation-wide as a large number of baby boomers are starting to retire. You know all that Social Security doomsday talk that people have been discussing for the last 25 years? Well, its fast approaching. If you think the economy and national deficit are a nightmare now, just wait until all the baby boomers are collecting SS and not paying in anymore. Don't get me wrong, these people worked hard and deserve the SS that they've paid into, but its purely a numbers game. More money going out than will be coming in.
leaguebus
Mon, Jul 2, 2012 : 8:03 p.m.
The way you talk, one would think that SS is bankrupt. Its good to 2035, then 3/4 benefits after that if nothing happens. djacks, the UM is run very well. You talk as if you or this state is totally funding the UM. The UM budget is $1.5B of which about $250M comes from the state. The UM was cut $47M last year by the state. UM has cut its general funds budget recurring expenses by $200M over the last 8 years.
Angry Moderate
Mon, Jul 2, 2012 : 5:31 p.m.
The generation that lived large on credit and is now passing several trillion dollars in debt down to its children and grandchildren hardly "deserves" to take more out of the system than it put in, which is the problem with Social Security.
djacks24
Mon, Jul 2, 2012 : 2:59 p.m.
"A lot of these jobs will go unfilled thru out the country because companies will make those left work harder even if the company is in the black more profits for the wealthy" One thing you are forgetting. UM is far from being run like a company. It's governmental red tape and decentralized excessive spending to the core.
Tom Todd
Mon, Jul 2, 2012 : 1:56 p.m.
A lot of these jobs will go unfilled thru out the country because companies will make those left work harder even if the company is in the black more profits for the wealthy
a2girl
Mon, Jul 2, 2012 : 1:05 p.m.
I would find this article more interesting if the author had looked at potential outcomes of the pending retirements. How many positions will not be replaced? Have surveys been conducted about the future plans of the retirees? Are they planning on staying in A2, for example? Will these retirements influence real estate prices in A2? Just a thought.
Dog Guy
Mon, Jul 2, 2012 : 12:01 a.m.
Will these U. of M. retirements include Professor Hieftje, Wh.D.?
Deb Anderson
Sun, Jul 1, 2012 : 11:05 p.m.
Considering that baby boomers are the majority of the population and getting out while we still can with spiraling health care costs, this is a no-brainer!
rm1
Sun, Jul 1, 2012 : 10:14 p.m.
Fritz Swanson says: "UM is practically private, only getting about 15% of the general fund from the state. The rest is paid for by tuition and the endowment." Possibly a more useful comparison: UM gets from the state only about 5% of its total budget of about $5.5 Billion. As you say, "UM is practically private". The state number is $273.1 million in 2012-2013, down from $323.4 million in 2007-2008. The general fund is about $1.65 Billion. (Figures from a June 21 AnnArbor.com article also by Kellie Woodhouse-- you can search for 'tuition budget changes University". AnnArbor.com seems to delete links included in comments -- I don't know why.) I don't understand why many people compare the funds from the state to the general fund, not to the University's total budget. "The rest is paid for by tuition and the endowment." And by research grants, contributions, ticket sales and other payments to the University.
aggatt
Mon, Jul 2, 2012 : 4:52 p.m.
ticket sales are actually not included in the overall UM budget because the athletic department is completely separate from the university. Two separate and unrelated budgets. I'm sure ticket sales go towards funding coaches retirements, but not regular employees.
rm1
Sun, Jul 1, 2012 : 9:56 p.m.
Michigan Man. You say in your 10:18 AM comment: "Sounds like I hit a nerve or two this AM with my comment? Sounds like the elite, liberal U of M faculty crowd is fussy this AM?" You provoked peoples' irritation with your 7:48 AM comment because you seem indifferent to any obligation to get your facts straight -- not because your comments hit home as you seem to think.. In fact, as noted by others, UM retirees do not get anything from any public pension system. Nothing. And you have a funny idea of "the 1%" if you actually think a significant number of University employees/retirees are in it. U-M employees have been required to contribute a slice of their salaries to a defined contribution plan, which is partly matched year by year by the University -- effectively part of their not particularly generous salaries. They can contribute additional amounts above the required amounts. When they retire, what they have in their accounts is the sum of (1) their own contributions, (2) the partial match, and (3) investment earnings on those amounts. No pension, no burden on the public pension system as you fantasize. That you can carry on with such misplaced assurance while getting this basic matter completely wrong is why you got some blowback.
djacks24
Mon, Jul 2, 2012 : 3:46 a.m.
You know you can "reply" or in your case, "rant" directly to the comment that you referring to...
E. Daniel Ayres
Sun, Jul 1, 2012 : 6:34 p.m.
I'm not retired from U. of M. but if I hadn't had TIAA/CREF to invest in while I was working there, I would not have been able to even consider retirement. Investments I made from age 25 to 36 in TIAA/CREF were the best investments I ever made! Unfortunately, that organization changed itself from a mutual company to a for profit enterprise. Now the ROI of new money going into their funds isn't nearly as good as it was "back in the day" when TIAA/CREF was not being run for the benefit of its employees but rather for the benefit of its investors!
A2centsworth
Sun, Jul 1, 2012 : 5:25 p.m.
So glad to hear of the turnover, out with the old, and in with the new!
Bleeding Michigan
Sun, Jul 1, 2012 : 5:06 p.m.
So the STATE TAXPAYERS are once again on the hook for paying big Dollars for State Employee Health Care. How many PRIVATE SECTOR businesses in this state are contiuing to pay RETIREE HEALTH CARE? Not very many! Even the Detroit Big 3 have vastly modified their Retiree HC programs to shun the excalating cost. Yet Michgan Taxpayers fork over their hard earned dollars for Public sector employees HC bennies in retirement. The Republican dominated legislature and Republican Governor need to 'Get It'
SemperFi
Mon, Jul 2, 2012 : 11:46 a.m.
@BM; You should know what you're talking about before you go on a rant. UM employees Health Benefits and Retirement Benefits are not a part of the public pension system. And in case you haven't been watching, state funding to public universities has been dropping every year for awhile now.
Tom Todd
Sun, Jul 1, 2012 : 5:09 p.m.
cue the violin,please republicans take money from my neighbor he earns more then I, sure, more money for the Rich.
leaguebus
Sun, Jul 1, 2012 : 4:57 p.m.
Faculty and staff benefits are the same. Starting Jan 1, UM is raising retiree contributions to health care by 3% and raising the retirement number (age + years of service) by three years. The retiree percentage toward health care is going to go up in subsequent years, so for a lot of us, this is the year to go. UM is dealing with the same financial pressures on their benefits as all entities with plans and have spent the last 5 years coming up with a plan that, over time, will reduce their financial responsibly to their retirees. At the same time, they are not front loading the changes so they don't hit current retirees or perspective retirees heavily. UM bashing is easy in this discourse, but most bashers have no idea of the facts. the gist of this article is true.
tommy_t
Sun, Jul 1, 2012 : 4:35 p.m.
I have no doubt there is still plenty of time to figure out how to screw the retirees over in some brilliant manner.
snapshot
Wed, Jul 4, 2012 : 8:59 p.m.
Also plenty of opportunity for public employee unions to figure out how to screw the taxpayers over and tie up the courts with their opposition to even the most modest changes.
Tom Todd
Sun, Jul 1, 2012 : 5:05 p.m.
Remember the middle class has to sacrifice for the good feelings of others in the middle class.
Tom Todd
Sun, Jul 1, 2012 : 4:59 p.m.
Don't worry it will happen regardless of a surplus or not.
johnnya2
Sun, Jul 1, 2012 : 2:03 p.m.
As usual the right wing idiots start their bashing. The fact is EVERY organization is dealing with this. It is a product of population swings. The baby boomers are going to retire eventually. It actually is a good thing. The more people who retire, the more people will get jobs. Older people tend to be more solidified in their jobs., so they do not turn over as fast. Part of the problem with unemployment has been due to fewer people retiring when eligible. Many of them want to, but when the stock market and housing values crashed, they needed to stay on longer to be able to survive. There is also the fact that people are living longer.
Michigan Man
Sun, Jul 1, 2012 : 3:58 p.m.
BB - so correct. The older 1% elite U of M faculty crowd cares nothing about those who will follow them. They care even less about U of M staff. Take care of my own, watch out for number one, grab as much as I can is how they operate, thinking, of course, that the 99% owe them what they ask for. When the larger Ann Arbor community expresses little condolences relative to their financial plight, they start to lash out at those here on A2.com.
Basic Bob
Sun, Jul 1, 2012 : 3:40 p.m.
"They needed to stay on longer to be able to survive" Younger folks don't have that option. They will never survive retirement thanks to the greed and short-sightedness of the current generation. I don't know too many people that want to wait until they are 40 to get their first real job, and then be forced to work into their 70's or 80's.
15crown00
Sun, Jul 1, 2012 : 2:02 p.m.
Bets are there WILL NOT be a large reduction in staff after new people get hired.
seldon
Sun, Jul 1, 2012 : 1:38 p.m.
"To be eligible to retire, faculty must work at the university for a proscribed length of time" Kellie, "proscribed" means "forbidden."
xmo
Sun, Jul 1, 2012 : 1:26 p.m.
It must be tough on U of M! I feel sorry for the school and the staff. Too many old people! I like the part of the story when the reporter talked about the recovering economy? That's all that has been reported is "Recovering Economy" for the last 3 years. Last year was the "Recovery Summer", this year, is it the Recovery Summer II"?
leaguebus
Sun, Jul 1, 2012 : 5:18 p.m.
The worse economy since the depression and those that were governing when it crashed immediately blame the new administration for everything. The Republikan idea of austerity budgets was tried by Europe has propelled them into further recession. All the tax cuts, especially for the 1% (job creators LOL) have done nothing but cause massive public sector layoffs which further exacerbates the lack of demand for consumer goods.
djacks24
Sun, Jul 1, 2012 : 3:15 p.m.
"When did Retirement become a bad word in this country.thank the Republicans." About the same time "Recovering Economy" became the liberal buzz word for the economy since collapse of manufacturing and the housing market in this country.
Tom Todd
Sun, Jul 1, 2012 : 1:35 p.m.
When did Retirement become a bad word in this country.thank the Republicans.
Arborcomment
Sun, Jul 1, 2012 : 1:21 p.m.
Slowdown in retirements directly attributable to the recession. Older faculty and staff have seen their accounts drop 20% or more. CDs they may hold now pay less than 1%. It's sit tight and wait. What is interesting is the "investing" in attracting faculty from other institutions (?). Given the reputation always carried by all things Blue (both real and self-imaged), what are the carrots and/or costs of doing so and why do it if Michigan is so highly thought of? Could it be that recent arrivals from UW (we all know of recent events in that State), U of P ( any details on what's going on there?) and especially U-VA (Sullivan) think UM is some kind of last high ground that is safe? If so, they need to look at the tide chart more closely.
Ron Granger
Sun, Jul 1, 2012 : 1:04 p.m.
I understand some people are being pushed out of their careers by new "leadership". A friend has become miserable in his position, after being quite happy a few years ago. She describes people being forced out in her department.
Michigan Man
Sun, Jul 1, 2012 : 3:51 p.m.
RG - Hello to the serenghetti Plain of life - happens all the time - hope your friend can adapt/adjust/understand the realities of most avenues of work.
PersonX
Sun, Jul 1, 2012 : 12:47 p.m.
The ever indignant Michigan Man strikes again! UM faculty do not in any way burden any public pension plan. They have no pension, but only a program to save for retirement (TIAA-CREF, etc.). This is why there is a backlog, because some people who might have retired at 65 or so postponed their decision to do so because their retirement portfolio had gone down a third or so.
arborani
Sun, Jul 1, 2012 : 4:19 p.m.
@ Tom: It's a 403B. Like most non-pension retirement plans, regardless of stock market fluctuations, it does require a reasonable level of intelligent choices and direction from the subscriber.
Michigan Man
Sun, Jul 1, 2012 : 2:18 p.m.
X - Sounds like I hit a nerve or two this AM with my comment? Sounds like the elite, liberal U of M faculty crowd is fussy this AM? My sincere condolences to this hard pressed cohort as they confront an imperfect future.
Carole
Sun, Jul 1, 2012 : 2:02 p.m.
The UM Pension program is great -- employees contribute as does the UM during employment years. A joint effort. Also, health insurance is a joint effort with retirees paying a portion for their insurance. At least that is the way it is for me - don't know what will happen down the road re: insurance.
Tom Todd
Sun, Jul 1, 2012 : 1:32 p.m.
401k's are ranked so what like the lottery in my book, a scam perpetuated by the rich to get away from pensions, also away for stock-market employees to have some gambling money on slow days.
Tom Todd
Sun, Jul 1, 2012 : 12:32 p.m.
AA.com employees are envious that people in Michigan can still retire and enjoy life after working,what is so wrong about that,good for them,this is still America right or is it now china and we have to work until we are ninety and or dead.
Basic Bob
Sun, Jul 1, 2012 : 3:34 p.m.
Yes, it is America. For 90% of us, it is work or die.
David
Sun, Jul 1, 2012 : 12:31 p.m.
This will result in two things: 1) a lot of very high salaries off the books (i.e no pensions to pay out) and 2) new blood coming in/up to get rid of the old/obsolete ways. This is an important story that bodes well for the long term re: cost-effective skills sets in leadership positions.
Sparty
Mon, Jul 2, 2012 : 3:27 a.m.
UM does not have pension plans, they have defined contribution plans for all employees.
Cash
Sun, Jul 1, 2012 : 7:46 p.m.
David, one problem wrong with number 2.......if that was true, wouldn't things have improved decades ago as "new blood" has been coming in for ages? In reality there are a lot of reason for the tired, sluggish thinking in higher ed, but age isn't one of them. Having spent a career in higher ed....trust me age is not what makes higher ed tired and sluggish.
GoNavy
Sun, Jul 1, 2012 : 12:24 p.m.
Whoa, four years? They had better get moving - it takes four years to fill just one coveted, 'gotta know somebody to get it' lifetime-guarantee U of M position. Act now!
GoNavy
Mon, Jul 2, 2012 : 3:17 p.m.
Rod Johnson: open your eyes.
Rod Johnson
Sun, Jul 1, 2012 : 7:50 p.m.
GoNavy: cite please.
djacks24
Sun, Jul 1, 2012 : 3:25 p.m.
Interestingly enough, knowing somebody does not automatically translate into qualified to do the job. UM hiring managers take note of that.
A2comments
Sun, Jul 1, 2012 : 11:48 a.m.
"In 2012, 762 staff will become newly eligible to retire. In 2017, there will be 1,060 newly eligible retirees— an increase of nearly 400.". Or 298... "To be eligible to retire, faculty must work at the university for a proscribed length of time, depending on age.". Proscribed means forbidden, banned, condemned... According to the link you provided, if employees retire after 1/1/2013 they get worse health benefits. It also implies that they might have to work longer, although that info is not displayed. Wouldn't that be impacting retirement rates in 2011 (when the change was announced) and 2012? http://www.provost.umich.edu/faculty/handbook/19/19.C.html Of course faculty have different retirement benefits than staff, right? A main reason that the staff is older than most businesses is that academia is a less volatile environment than the general workplace. Further, tenure greatly impacts the age of the faculty, no?
Sparty
Mon, Jul 2, 2012 : 3:25 a.m.
Staff and faculty retirement benefits are the same.
Michigan Man
Sun, Jul 1, 2012 : 11:48 a.m.
Poorly written article. What is the point of this article. If the reader is to have sympathy and worry about the status of U of M and the welfare of those who will retire in the next five (5) years the story has failed miserably to deliver its intended punch. Everyone knows the average retirement benefits of U of M workers is in the 1% range. Virtually, no one I know worries how about this cohort will survive during retirement. Additionally, faculty members who can retire at 55 (after 20 years of service!) is obscene and contributes heavily to the public pension system nightmare good honest tax paying citizens are confronting.
Lankthy
Mon, Jul 9, 2012 : 1:06 a.m.
Poorly written comment. What is the point of this comment. If the reader is to participate in Mich Man's angry ranting and join in a sense of rage at everything and everyone, then the comment has failed miserably to deliver its intended punch. Everyone knows that the 'facts' represented in this comment are inconsistent with reality.
eagleman
Sun, Jul 1, 2012 : 3:08 p.m.
Michigan man, you are just ranting to ranting. They correct your factual error and you respond in an insulting manner. How very childish of you. I think you need to find an outlet for your rage because it is making you look irrational.
Michigan Man
Sun, Jul 1, 2012 : 2:23 p.m.
Looks like we have some U of M faculty types up early on Sunday AM? I understand that acting/thinking like regular Ann Arborites and other residents of Washtenaw County may bring on a modest amount of cognitive dissonance. Let me say again, the average joe in and around Ann Arbor could care less = nada, zilch, zero about your 1% elite status retirement conundrums. I hope you will be able to rebound from this narcissistic injury in due time.
Fritz Swanson
Sun, Jul 1, 2012 : 1:10 p.m.
UM is practically private, only getting about 15% of the general fund from the state. The rest is paid for by tuition and the endowment.
alan
Sun, Jul 1, 2012 : 12:58 p.m.
UM faculty and staff do not participate in any public pension system. They have a defined contribution plan.
Beth
Sun, Jul 1, 2012 : 12:47 p.m.
Ummm, faculty members are also "good honest taxpayers". You may not like the system, but let's not insult the workers....
Duc d'Escargot
Sun, Jul 1, 2012 : 11:41 a.m.
Faculty and staff must work for a "proscribed" period of time? That is, a prohibited or condemned period of time? I know the U-M Standard Practice Guide can be dense, but I didn't know it was quite so severe. Amateur journalism strikes again!
arborani
Sun, Jul 1, 2012 : 4:07 p.m.
And made "proscribed" a link. Ultimate blind chutzpah.
TMC216
Sun, Jul 1, 2012 : 10:54 a.m.
It must be a slow day in the newsroom? 1/5 of U of M employees will be at retirement age or have 20-25-30 years seniority and aren't thinking of bailing?! Here's another shocker, there are other persons willing to find jobs/careers at U of M. The headline for tomorrow: "The Sky Is Still Blue And The Grass Is Still Green".