The Bureau of Labor Statistics (BLS) today reported a 2.9% unemployment rate for workers age 55 and older in December, which represents no change from November.
Despite the low headline unemployment rate, changes in job tenure over the last 30 years have reduced older workers’ bargaining power, especially older men. In 1987, the median number of years older prime-aged men (45-54) were with one employer was 12.7 years. In 2018, their median job tenure fell 36% to 8.1 years. For older workers age 55-64, men’s job tenure fell 16% during the same time period (16.8 years to 14.1 years), a drop that likely reflects older male workers leaving the labor market.
Economists Alicia Munnell and Steven Sass report that older men’s decreased job tenure reduces salaries and access to benefits such as retirement coverage. An older worker who changes jobs will likely have to take savings out of their 401(k) plan before retirement and find a new job that pays 25% less.
Due to an inadequate retirement savings system, older workers are less likely to be able to bargain for better wages, hours, working conditions, and benefits. This broken system results in a growing number of indigent elderly. If workers currently ages 50-60 retire at age 62, 8.5 million people are projected to fall into poverty.
To reinstate bargaining power, we need to ensure older workers can afford to retire through the expansion of Social Security and creation of Guaranteed Retirement Accounts (GRAs). GRAs provide all workers with universal, secure retirement accounts funded by employer and employee contributions throughout a worker’s career, paired with a refundable tax credit.
Why Focus on Older Workers?
With 10,000 baby boomers turning 65 every day, the American labor force is transforming. Out of the 11.4 million jobs expected to be added to the U.S. economy by 2026, 6.4 million will be filled by workers over 55. Moreover, all of the net increase in employment since 2000-about 17 million jobs-was among workers aged 55 and older. The aging American workforce and these workers’ lack of retirement readiness will shape employment patterns, the direction of public policy, and the strength of workers’ bargaining power for all American workers, old and young.
SCEPA’s Retirement Equity Lab (ReLab), led by economist and retirement expert Teresa Ghilarducci, researches the retirement crisis that exposes millions of American workers to downward mobility in retirement.