Academic journal article Generations

Bargaining Power Is Falling for America's Older Workers

Academic journal article Generations

Bargaining Power Is Falling for America's Older Workers

Article excerpt

he news is filled with heroic stories of impressive older people working for pay. In a hearttugger of a profile, "Alice Pirnie of Broken Bow, Nebraska, keeps herself pretty busy" (Feldman, 2018), we read about a 90-year-old woman who has worked as a greeter and cashier at McDonald's for 26 years. And, perhaps, around a holiday dinner table, your grandmother's brother-Dr. Derek, age 79-could credibly say he continues to see patients because he likes it: the money does not matter.

These stories pop up not because the idea of older people working is novel-the share of older workers in the labor force has doubled from 10 percent in the early 1980s-but because these people really love their jobs.

A journalist with an economics background would have asked Alice about her fallback position, her situation if she did not work. "If you didn't work at McDonald's, in what state would your finances be?" If Alice answered, "Oh, I don't need the money, I have a large pension and Social Security," it would mean her fallback position wasn't poverty or a meaningful decline in her living standards. Her choice to work was probably a genuine move toward engagement and passion.

But, if Alice answered, "Without my wages from McDonald's, I would skip dinner most nights," we would assume she works for money, not for love. Her fallback position would be grim, which results in low bargaining power.

How many older people are-and will be- working for money rather than love because of eroding retirement income (Ghilarducci, Webb, and Papadopoulos, 2017)? Will older workers have bargaining power if more older people work (and at older ages) because without wages, they face dire economic need and food insecurity?

America's Older Workers: Working Longer, with Less Benefit

Older Americans already work more, and longer, and have less "retirement time" (my terminology for the time between retirement and death) than in most other G7 countries (i.e., Canada, France, Germany, Italy, Japan, and the United Kingdom). And, despite the markedly distinct sacrifice of Older Americans Work More and Have the Highest Poverty Rates in the G7

American older people have less retirement time and face higher poverty rates than older people in any other G7 nation. The retirement time squeeze comes from two sources-slow improvements in longevity and more work.

The Japanese work longer; but they live much longer than Americans, so they have about the same amount of retirement time, 19.7 to 19.9 years. The life expectancy after the effective retirement age-the age the Organisation for Economic Cooperation (OECD) computes for when half of the population has left the labor force-is the lowest in the United States. Death (for those reaching age 65) is predicted at age 84 in the United States; in Japan, death is predicted at age 87 or older (OECD, 2015). The average American works until age 65; the average Japanese works until age 67.6.

Whereas the United States ranks among the bottom in retirement time, working people in Italy and France can expect the most retirement time because of their longer lives and earlier retirement ages. And despite all the work Americans do after age 66, and all the retirement time they give up, the United States still has the highest poverty rates for people older than age 66 of any rich, large nation. Poverty is defined by the OECD as the share of the population with incomes less than 50 percent of median household disposable income, and a high of 21 percent for those older than age 66.

leisure, or retirement time, in old age, Americans face the highest risk of old-age poverty of any other G7 nation. (See further explanation of this in the sidebar above.)

High rates of poverty despite high work effort suggest that many people manage to stay above the poverty line by working. Because poverty is more likely a fallback position in the United States, American older workers are less likely to have leverage to improve their wages, hours, and working conditions than are older workers from other G7 nations. …

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