Academic journal article Generations

Retirement Insecurity and the Rise of the Grey Labor Force

Academic journal article Generations

Retirement Insecurity and the Rise of the Grey Labor Force

Article excerpt

Seventy years ago, Americans typically ventured into the labor market in their teens, ked for one or two companies until they hit age 60, and then headed for the door. Retirement was not a very comfortable existence for elders: many were poor and often dependent upon the generosity of their adult children. Older women took their place in extended households, helping their sons and daughters with chores and childcare. Older men didn't live very long beyond their last day of work. Their average life expectancy in I960-just 60 years ago-was 66.7 years (Centers for Disease Control and Prevention, 2010).

Today's demographics are fundamentally different. Sixty is the new fifty. The Baby Boom Generation is reluctant to leave the workplace, in large part because we are living much longer and enjoying better health into the mature years. Most of us no longer have back-breaking jobs; if anything, many of us have to watch our waistlines because we exert our fingers on keyboards for fifty years at work, and that's not much in the way of exercise. Overall, though, we are healthier for a longer period of time.

That's the good news. The bad news is that our retirement systems were not built for the new demography of aging (Muir and Turner, 2007). Alicia Munnell of the Boston College Center for Research on Retirement reminds us that the "replacement rate"-the percentage of working years' retirement returned by Social Security payments-is dropping precipitously (Ellis, Munnell, and Eschtruth, 2014). One in five baby boomers will receive less than 50 percent of replacement income when they retire (Van de Water and Ruffing, 2011). And for many people, that percentage often is significantly lower because they are offsetting their pension losses by turning to Social Security at the earliest possible moment, when the value of that federal benefit is less than 60 percent of what it would be if they could wait to age 70 (Munnell and Chen, 2015).

In response, millions of Americans are joining the "grey labor force" (Munnell, 2015). The easiest way to measure this change is to look at the labor force participation rate of the age group that has long been considered retirement territory: the population that is between ages 64 and 75 (Bureau of Labor Statistics, 2017).

After three decades of decline, the percentage of older workers began to rise sharply in the 1980s, a period marked by pronounced unemployment and rising inequality (DeSilver, 2016). In 2000, 12.8 percent of people older than age 65 were working. Fourteen years later, it was up to 26 percent (Bureau of Labor Statistics, 2015). And these elders are not just dabbling in work: by 2007, the majority of the grey labor force was on the job full time. That represents a doubling of the proportion that were full-time employees in the span of a decade (DeSilver, 2016).

A Growing Grey Labor Force

What factors are propelling the growth of the grey labor force? At least four drivers are in play (for more drivers, see Munnell, 2015).

We are living longer. "In 2014, Americans at age 65 could expect to live an additional 19.3 years, according to the Centers for Disease Control and Prevention, or until about age 84. That's up about three years since 1980" (Morisi, 2016).

The demise of the defined benefit (DB) pension system. As recently as 1980, some 38 percent of Americans working in the private sector had pensions that were often pegged to their years of service and their final salary (Butrica et al., 2009). By 2015, only 8 percent were lucky enough to be covered in a "DB plan" (Morisi, 2016). Everyone else was either absorbed into the dubious world of 401(k) plans, or had nothing.

The rising age threshold for Social Security benefits. "The full Social Security benefit was raised in 1983, grows higher according to year of birth, and is currently 67 years of age for those born in 1960 or after" (Morisi, 2016). Those who can wait to the age of 70 will receive 132 percent of the maximum benefit for the rest of their lives. …

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