By Adi Gaskell, Professor Zografia Bika, and Dr George Michaelidies

During the Covid pandemic, it was estimated that 300,000 older adults left the workforce in the UK. While the rising cost of living exacerbated by the Russian invasion of Ukraine has prompted many of those people to return to the workforce, labor shortages remain a pressing concern for employers and policymakers alike.

Despite the skills shortage, discrimination in the labor market means that many older workers lack a choice over whether to stay in employment or not. Research from USC Price shows that such discrimination disproportionately tends to force older workers into involuntary retirement.

Informal working

By being forced out of the formal labor market, a growing number of older workers are turning to things like the gig economy. Whereas some find the inherent flexibility of gig work a good option that fits adequately around their lives, for those who would like something more stable, it results in a scenario whereby they have less control over where, when, and how they work as they age.

At Norwich Business School, in our research of people who are out of the labor market in England and France and have participated in training that helps them go back to work or start a business, we found a clear willingness to explore entrepreneurship among older participants. We collected data from 1251 individuals. The mean age of the participants was 42.09 and ranged from 18 to 67. 

Participants were classified as following an enterprise route or employment route based on whether they were motivated to start or improve their own business or whether they were motivated to find a new job. The sample was split into 770 participants on the enterprise route and 346 following the employment route. The remaining sample specified that they were not motivated to do either.

Our analysis showed that overall, there was a preference for the employment route by younger individuals (m = 38.46) and a preference for entrepreneurship by those who are older (m = 43.73). Importantly, using ANOVA statistical tests, we also found that those on the enterprise route scored significantly higher in terms of psychological well-being as measured by the Warwick-Edinburgh Mental Wellbeing Scale but not in terms of job satisfaction. We also found a similar difference for social capital with those following the enterprise route showing significantly stronger networking ability. 

Successful entrepreneurs

It’s easy to assume that entrepreneurship is the preserve of the young. Indeed, Max Planck perhaps summed up society’s thoughts about older innovators by stating that science tends to progress one funeral at a time. His inference was a clear one: as we get older, we begin to hone our craft and specialise to the extent that we can easily get bogged down in the ways we have spent so long specialising and can therefore no longer innovate.

In Organizing Genius, Warren Bennis mined a similar seam and argued that the most creative and innovative teams typically had an average age of just 26. He reached that conclusion after analysing a wide range of teams, including the scientists working on the atomic bomb at Los Alamos and the early Apple team.

Of course, that’s not really the case, as a range of studies have shown recently that the most effective entrepreneurs tend to be in their 40s. For instance, research from Penn State found that older people tend to be great entrepreneurs because they’re more likely to have a wide range of interests and experiences to tap into. A subsequent study, from MIT and Kellogg, found that the most successful entrepreneurs (in terms of funding) averaged 45 years of age.

A third study, from the Rensselaer Polytechnic Institute, further confirmed this, with the authors urging efforts to be made to correct the negative stereotypes that have emerged about older entrepreneurs. They are often more successful than younger entrepreneurs because they bring more of their own capital to their venture and also can capitalise on a better professional network to help their venture grow.

“The United States has an increasing population of older adults that have skills and knowledge valuable to society,” the researchers explain.

Happy entrepreneurs

They also found that older entrepreneurs tend to have higher satisfaction levels, which is a finding shared by research from Aalto University. They analyzed data from the English Longitudinal Study of Ageing across nine editions from 2002 to 2019 to examine how transitioning from employment to entrepreneurship affected the perceived self-realisation in both the short and medium term among workers aged 50 or older. They were also interested to learn whether this transition meant that they prolonged their working careers.

The results show that older workers who transitioned into entrepreneurship not only received a boost to their self-realisation levels, but also kept working for longer. While the data does suggest that this boost is relatively short-lived and wanes after four years of entrepreneurship, the findings are nonetheless sufficient to demonstrate the individual and societal benefits transitioning to entrepreneurship can bring to older workers.

The Rensselaer researchers believe that time is likely to play a role in this, as entrepreneurs in mid-life struggle to juggle the demands of starting a business with raising a family. By contrast, older workers are largely free from childcare responsibilities so they have more time and energy to devote to their new venture.

Data suggests that the number of self-employed people over 65 has doubled in the last five years, but despite this, the support infrastructure for entrepreneurs remains geared more toward younger entrepreneurs who are targeting high-growth ventures. Projects like the Startup School for Seniors aim to improve matters, with the school providing many of the facets often associated with incubators, but targeted specifically at older entrepreneurs.

If older entrepreneurs can be supported, the evidence shows that this not only ensures that older people are happier and more satisfied with their life, but by remaining productive and active for longer, they also help to tackle the demographic crunch that so many countries are grappling with today.