America’s elderly are working at levels not seen in decades. Is that a good thing, or a bad thing?
This year, the participation rate in the labor force of retirement-age workers — that is, workers aged 65 and older — has cracked the 20 percent mark. That’s the highest participation rate in 57 years, and twice as high as the low mark participation rate in 1985. Since 1985, the rate of participation has steadily moved upward, with a significant increase in recent years.
The Bloomberg article linked above suggests that many of these working elderly are doing so because they have no choice: “Rickety social safety nets, inadequate retirement savings plans and sky high health-care costs are all conspiring to make the concept of leaving the workforce something to be more feared than desired.” But the statistics indicate that at least some of the people who are working longer are doing so by choice, rather than by desperate need. The share of all employees age 65 or older with at least an undergraduate degree is now 53 percent, up from 25 percent in 1985, and the inflation-adjusted income of those workers has increased to an average of $78,000, 63 percent higher than the $48,000 older folks brought home in 1985. The increase in wages of the working elderly is better than the increase for workers below 65 during that same time period.
So why are people working longer than they used to? To be sure, some may be doing so because they’ve got no choice — America’s retirement savings statistics are dismal. But if that is the root cause for some significant percentage of the working elderly, why is that a bad thing? If people haven’t saved, working longer in order to build up your retirement nest egg, and cut down on the number of years in which you’ll be living on that nest egg, is just the responsible thing to do. We shouldn’t feel sorry for them, we should be applauding them for recognizing that, when it comes to retirement planning and saving, it’s better late than never.
The more interesting and deeper trend is that the economy is welcoming these older workers and rewarding them with increasing salaries. In short, it’s not like all of these older workers are serving as friendly, red-vested greeters at Wal-Mart. The salary statistics indicate that the job creation in the current economy is strong, and that companies are holding on to experienced older workers rather than incentivizing them to retire. They are recognizing that older workers have value, and still have something to contribute. If you are an older person who likes working and wants to continue to work, that’s a very encouraging trend.