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Why America's Silver Workforce Still Stuck in the Trenches

Policy changes and less demanding work have led to workers in their 50s and older from retiring.

by Jeanna Smialek

The share of people working or looking for work is well below 2000 levels for prime-age Americans. But move up the age range and the story changes.

Workers older than 55, and especially those over 65, have become more and more likely to work in recent years, bucking the trend seen among their younger counterparts. That may owe partly to public policy, as Wellesley College’s Courtney Coile points out in a new National Bureau of Economic Research working paper.

Changes to the Social Security program have made it easier for older Americans to work without incurring financial penalties. First, 1983 amendments to the Social Security Act created an incentive for working later in life by increasing payouts for people who delayed retirement and by lifting the official retirement age. Then came the Senior Citizens’ Freedom to Work Act of 2000, which changed the Social Security earnings test, eliminating it for those who retired late.

All together, changes to Social Security reduced the implicit tax on work between the ages of 65 and 69 by about 15, Coile writes.

Those shifts didn’t happen in a vacuum: just as policy was becoming more permissive of late-in-life work, employers were switching from defined-benefit pension plans to defined-contribution plans. What’s more, work became less physically demanding, allowing employees to stay on the job longer.

Given those structural drivers, older Americans should continue working in greater numbers -- and while that’s partly a symptom of economic insecurity, in other ways it’s a good-news story. It gives employers a larger pool of available and experienced people. What’s more, a recent paper from the Center for Retirement Research at Boston College has shown that working longer may increase longevity, especially for men.

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