America’s companies have a design flaw, not a labor shortage

A few months ago, I climbed into an Uber on my way to a business meeting. The driver was about my age, so I asked why he was driving for Uber and he told me he retired after 40 years as a senior project manager for one of the country's largest engineering, procurement, and construction firms. He said he was pushed into retirement.

"You can only play so much golf," he joked.

The exchange illustrated one of the greatest - and least discussed - human capital failures in American industry. At a time when companies complain about shortages of engineers, project managers, operators, technicians, skilled tradespeople, and experienced leaders, they continue to usher millions of highly capable professionals out the door simply because they have reached a traditional retirement age.

We lament a shortage of expertise while systematically discarding it. That is not a labor shortage. It is a design flaw. Many retirees would rather not retire.

The Great Knowledge Drain

The American nonfarm, civilian workforce numbers approximately 163 million people. Nearly 38 million - almost a quarter - are age 55 or older. Over the next decade, most of these workers will retire by mandate or desire, taking with them decades of accumulated judgment, technical expertise, customer relationships, leadership experience, and institutional memory.

These are not simply employees. They are repositories of knowledge that cannot be replaced by software, documented in a manual, or transferred during a two-week transition period. They are the experienced refinery operator who lived through a rare plant upset, the pipeline controller who managed emergency shutdowns, and the construction superintendent who instinctively recognizes problems before they become disasters. Each represents decades of accumulated human capital, and when they retire, much of that knowledge goes with them.

At the end of World War II, the United States possessed the largest shipbuilding industry in the world. After the war, demand collapsed and institutional knowledge gradually disappeared - master welders, pipefitters, marine electricians, and engineers who understand how ships are actually assembled retired or left the industry. Supreme Court Justice Sandra Day O'Connor, on a different topic but similar theme, put it well when she said, "The practice of democracy is not passed down through the gene pool. It must be taught and learned anew by each generation of citizens." Similarly, expertise driven by practical experience should be preserved and taught to meet current industry demands and nurture the future.

My annual surveys of midstream energy executives reveal a common concern. Companies worry about the "graying" of their workforce while simultaneously struggling to recruit enough younger workers with the education and interest necessary to replace them. Ironically, the solution may already exist.

An Extraordinary Pool of Untapped Talent

America's retired population is often viewed through the lens of healthcare costs, Social Security, and pension obligations. Rarely are retirees discussed as one of the nation's largest strategic assets.

Among Americans ages 65-74, approximately 34 million people entered retirement over the past decade. About 12 million remain employed or are actively seeking work, while approximately 22 million are outside the labor force. Collectively, they possess well over a billion years of work experience.

Within that group are:

• Engineers and scientists
• Pipeline controllers and refinery operators
• Plant managers and skilled tradespeople
• Physicians and healthcare executives
• Financial executives and accountants
• Lawyers and compliance specialists
• Military officers
• Construction superintendents
• Sales executives who spent decades building customer relationships

Many possess knowledge that was never written down because it never needed to be. It exists only through experience. That experience has extraordinary value.

The Wrong Employment Model

The problem is not that older Americans are unwilling to work, nor is it that employers lack work requiring experience. The mismatch lies in how work is structured. Corporate employment remains largely built around an industrial-era assumption that employees work full time until one day they just stop.

Many retire not because they want to exit the industry but because they no longer want 60-hour workweeks, constant travel, office politics, or rigid schedules. They're interested in meaningful work though perhaps at reduced intensity.

That work may involve:

• mentoring younger professionals
• reviewing engineering designs
• leading incident investigations
• advising management
• training new employees
• documenting institutional knowledge
• evaluating vendors
• serving customers
• coaching first-time supervisors
• solving difficult technical problems

These are activities where judgment matters more than speed.

Experience Is Becoming More Valuable - Not Less

Artificial intelligence may actually increase the value of experienced retirees. Much discussion surrounding AI assumes technology will replace human expertise, but in industrial environments, the opposite may be true. AI systems require expert judgment to identify meaningful use cases, validate model outputs, interpret abnormal operating conditions, explain historical failures, distinguish theory from practical reality, and convert decades of tacit knowledge into documented organizational knowledge.

Without experienced practitioners, companies risk teaching AI the wrong lessons. An algorithm may recognize patterns, but only an experienced operator understands why those patterns matter.

The organizations that successfully combine AI with experienced human judgment will almost certainly outperform those attempting to automate expertise that has already walked out the door.

The Barriers Are Mostly Self-Imposed

Employers may assume retirees are technologically outdated, overqualified, too expensive, or unlikely to remain long enough to justify hiring. Many recruiting systems automatically penalize applicants with exceptionally long careers. Managers may hesitate to supervise someone older than themselves and human resource systems often accommodate only permanent full-time positions. These are not failures of older workers but are failures of organizational design.

Imagine maintaining networks of retired engineers, operators, executives, and specialists available for 5-20 hours each week or even a full-time schedule. Imagine calling upon them to troubleshoot unusual equipment failures, mentor young engineers, conduct safety reviews, preserve institutional knowledge, evaluate acquisitions, train new supervisors, or support major customer relationships. The ability to coordinate such talent exists, but the system is too often unsupportive.

A New View of Retirement

None of this discussion suggests older Americans should postpone retirement indefinitely. The goal is not to replace or eliminate the need for younger employees but rather to enhance their effectiveness. Experienced professionals accelerate learning, shorten development time, prevent costly mistakes, preserve institutional memory, strengthen customer relationships, and help organizations navigate the unexpected.

In nearly every knowledge-intensive industry, experience compounds. Yet our employment systems frequently treat retirement as though it marks an expiration date on a person's economic usefulness. That assumption no longer fits either demographic reality or business necessity. People are living longer and remaining healthier.

Many have no financial need to return to traditional careers but would gladly contribute meaningful expertise under flexible arrangements. That is an opportunity most organizations overlook.

America's Largest Untapped Strategic Asset

Every executive I speak with worries about recruiting talent, succession planning, and losing institutional knowledge. Yet few wonder what happened to the people who already know how to identify, avoid, or solve problems. Leaders should know that many are filling their time driving Uber or fishing or volunteering or consulting.

Many are waiting for someone to recognize that 40 years of accumulated expertise did not become obsolete on the 65^th birthday. America is not running out of talent. It is allowing an extraordinary reservoir of talent to sit idle because our employment model has failed to evolve.

Perhaps the most effective solution to the skilled labor shortage is not recruiting harder. It is finally recognizing the immense value of the workforce we have already created.

Looping back to the shipbuilding industry for a moment - the exodus of skills and knowledge has exacted an enduring cost. America has struggled for decades to rebuild its shipbuilding capacity and still lags behind international competitors. Rather than waiting for a knowledge crisis, midstream would be wise to systematically retain the knowledge, skills, and experience of their older employees.