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Encore
A blog about living in and planning for retirement

How Are Older Workers Faring in Today’s Economy?

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Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.”

Although the economy is technically in a recovery, unemployment remains high.  And the Fed’s August 9 decision to keep rates low through mid-2013 suggests that policymakers expect weak growth for the foreseeable future.  What’s happening to older workers in this never-ending malaise?

The answer turns out to be a little complicated.  Two forces are at work.  On the one hand, labor force participation among older workers has risen significantly since the mid-1980s, a reversal of the long-standing trend toward ever-earlier retirement.  The reasons for this reversal include changing incentives in Social Security and employer pensions; better education and health coupled with less strenuous jobs; and the decline in retiree health insurance.  Participation rates among older men even continued to rise during both of the recessions in this decade – a dramatic change from previous experience (click on the figure below).  Most likely the upward trend was reinforced by the financial crises that depleted 401(k) balances.

On the other hand, the edge that older workers used to have relative to younger workers when it comes to layoffs seems to have disappeared.  The conventional wisdom was that when workers are young, they and their employers share the costs of acquiring skills that are particularly useful at the particular firm.  When workers age, employ­ers are reluctant to lay them off because they would lose their investment and be forced to train new younger workers.  Until recently, virtually every study looking at displacement rates concluded that the probabil­ity of being displaced declines with age.  But things are changing.  Data from the Displaced Worker Survey show that the difference in displacement rates between younger and older workers has disappeared.  The key factor explaining this loss of relative job security is a decline in the tenure of older workers as workers increasingly shift jobs in their 50s.  It was long tenure, not age, that had been protecting older workers from being laid off.

Of the two forces, the trend growth in labor force participation appears to dominate the loss of job security.  As a result, the employment rate of older workers – the percent of the population with a job – declined only slightly during the 2007-2009 recession.  This pattern contrasts sharply with the far more typical decline in employment rates for workers under age 55 (click on figure below).

Not all is well, however.  The number of older people who want to work is much greater than the number of available jobs.  As a result, the unemployment rate for older workers has increased more than in any previous post-war recession.  And older workers who lose their jobs have a very hard time finding a new one.

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    • I applaud ratchinson’s initiative and drive. That is the key to his success and some good luck too. For those who are unable to find work in the conventional sense, – by application, interview and formal hire, I have a few suggestions. Welcome the changes that this may present to you. Make this your friend in a productive way. Get active. Get involved in local volunteer work and reduce gaps on your resume by placing projects and other activities in that document, even if it’s getting yourself into better physical condition. Stop smoking, drinking and eating poor nutritional items and don’t be afraid to put that on your resume along with results. Do your own reseach on what’s going on out there and stay current and focused. Avoid despondency by the means above and stay in touch with friends and family even if only by email. Check out problems in your community and depending on where you live, seek remedies by talking to people, maybe accessing government sponsorship (local, state and national) and get those people on your side. If there is a vacant lot, get it going for vegetable gardening, if there’s an empty house, find out what the ownership situation is and maybe get support to convert it to a center for some higher purpose. Mow lawns, trim hedges, sweep a street, shovel snow. There are enough local problems and natural disasters going on that volunteers are always needed. By taking this approach you will improve your quality of life and that is something a “job” may or may not do. Be selfish with yourself and strive for or maintain and enhance your good health. Change your life positively and stay positive. I know it’s hard but during a job search having more than one iron in the fire is a key. Employers want people who are in demand – be and stay “in demand”. Don’t forget to take some time for rest – always get a good night’s sleep, drink lots of water – test it first – shop wisely and fix that old bicycle and ride it. Make “YOU” your first job and all the other stuff will fall into place. Be happy. In the grand scheme of things you are probably having a better day that 4/5ths of the world’s population. The specifics are really irrelevant; the message is Shakespearean – “make a virtue out of a necessity”. I wish you luck and happiness and fulfillment in your new life.

    • Soon to be 70 and gainfully employed. 32 years in professional services and 11 years in pharmaceutical sales. The key to longevity in employment I believe is being in a role that impacts the bottom line and you can prove results. Everybody is concerned about cost reductions but a business won’t grow without increasing revenues. Play on the revenue side and if you want to work, the opportunities will be there

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

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