WASHINGTON -- Congress is brainstorming more ways to help older Americans stay at work as employers complain of labor shortages caused by the humming economy and a huge wave of baby boomers nears retirement age.

"We have to make sure federal laws don't hurt older workers. Our economy will depend on it," said Sen. Charles Grassley, R-Iowa, chairman of the Senate Special Committee on Aging.Already this year, Congress has repealed the Social Security earnings limit, removing the threat of reduced federal retirement benefits for those who continue to work past age 65. President Clinton signed that legislation into law Friday.

Now lawmakers are considering how to break down private-sector barriers for older workers. The aging committee explored options at a hearing last week.

Among the ideas being considered are changing federal tax and pension laws to encourage phased retirement plans that could allow older people to collect partial pensions while continuing to work part time.

That would benefit people like Sherman Sorem of Marshalltown, Iowa, who after 35 years of service took an early retirement buy-out when he was 61 and his company, Fisher Controls International, downsized. He was offered a lower-paying, less-demanding job. But that would have ultimately meant a lower pension since, like most corporate retirement plans, his was based on earnings during final years of service.

"I said no, you're not going to beat me out of that, I'll take early retirement," said Sorem.

Now, because Sorem has needed expertise, the company asks him to come back to work for a few weeks each year. The new earnings law signed by Clinton means he no will longer have to limit that work for fear of losing Social Security benefits.

But Sorem, now 65, and his wife Nancy, 62, wonder why there wasn't a better way to handle the situation, since he's willing to work part time and the company needs him.

"He said if he could work long enough he would put a boat in the backyard," Nancy Sorem said.

Advocates for the elderly say better age discrimination laws also may be needed to ensure that older workers get equal opportunities for training to keep up with changing technology.

"A lot of the time it is a subtle discrimination that occurs," said Joseph Perkins, president of the AARP, the nation's largest organization of older adults.

Like Social Security, many laws and attitudes shaping today's retirement options developed around the time of the Great Depression, when high unemployment made it desirable to encourage older Americans to leave the work force.

Times have changed. Now a thriving economy creating plentiful jobs has many employers scrambling to hold on to workers.

Meanwhile, the huge baby boom generation has reached middle age. Rising life expectancies mean many will live for decades past what has been considered "normal" retirement age, between ages 60 and 65.

Only about 13 percent of Americans currently aged 65 and older work, according to AARP. But a 1998 AARP poll of baby boomers found that eight in 10 intend to keep working at least part time in old age -- because they think they will need extra cash, or for pleasure.

Hy-Vee Inc., a supermarket chain with 210 stores across the Midwest, is an example of a company that is taking steps to attract and keep older workers.

The changing economy and demographics means "recruitment and retention of older workers becomes and imperative as well as a desire and goal," said vice president Steve Meyer.

In help-wanted advertisements, Hy-Vee promises flexible scheduling -- including three-season jobs allowing for winters spent in warmer climes -- to entice older workers. "Your experience and maturity are assets we find valuable to our success," the ads say.

A 1999 survey of more than 500 large corporations by Watson Wyatt Worldwide benefit consultants found that 16 percent are experimenting, like Hy-Vee, with more flexibility for older workers.

However, concern about legal or tax ramifications may be holding more companies back. Traditional pension plans still must follow old laws that often result in penalties against people who work past a certain age.

Some lawmakers plan to offer legislation this year that would make it easier for companies to design phased pensions, by allowing partial collection of benefits by workers at age 591/2.

That's similar to rules governing 401(k) retirement savings accounts, a newer employee benefit that is increasingly popular, but does not have the advantage of guaranteeing a continuous old-age income, as pensions do.

Among proponents of pension changes, Rep. Earl Pomeroy, D-N.D., said, "it would help employers trying to hold some of their most experienced employees who want to draw some retirement benefits, yet stay working." BR