Trends in Job Demands among Older Workers, 1992-2002

By Johnson, Richard W. | Monthly Labor Review, July 2004 | Go to article overview

Trends in Job Demands among Older Workers, 1992-2002


Johnson, Richard W., Monthly Labor Review


Employment increases among older adults could relieve some of the demographic pressures created by population aging, but only if older workers are physically able to perform their job responsibilities; the share of workers ages 55 to 60 in jobs that never require much physical effort increased 18 percent between 1992 and 2002.

The aging of the population raises concerns about the Nation's ability to support future retirees, whose numbers will soar once members of the "baby-boom" cohort begin reaching old age in coming years. If current employment patterns persist, there will be fewer workers in the future available to produce goods and services, threatening standards of living for Americans of all ages. As long as job demands do not force many older workers into retirement, increasing employment among older adults could relieve these demographic pressures. This article explores the ability of the labor force to accommodate older adults by examining recent trends in job demands among older workers.

Once the oldest baby-boomers reach age 65 in 2011, the population will begin to age rapidly. The U.S. Census Bureau predicts that between 2000 and 2040, the number of Americans ages 65 and older will more than double, to 77 million, while the number of prime working-age adults, between the ages of 25 and 54, will increase by only 12 percent. (1) As a result, the number of prime working-age adults per elderly American will fall over the next 40 years from 3.5 to 1.8. The number of dependent children will also grow relatively rapidly over the next 40 years, compounding the pressures on working adults. In 2040, the number of Americans under 18 and ages 65 and older, who have been less likely to work, will exceed the number of prime working-age adults by 21 percent. In 2000, by contrast, prime working-age adults outnumbered dependent children and elderly adults by 14 percent.

The growing imbalance between working age adults and elderly persons is reducing the number of workers who can finance retirement benefits for older Americans. Both Social Security and Medicare are funded primarily on a pay-as-you-go basis, with payroll taxes on workers financing benefits received by retirees. According to the latest official projections, outlays will begin to exceed revenues for Medicare in 2011 and for Social Security in 2018. (2) More fundamentally, the aging of the population reduces the number of workers available to produce the goods and services that the economy needs. Without dramatic increases in productivity or changes in employment patterns, the looming worker shortage will reduce per-capita output and lower living standards. (3)

Higher employment rates among older adults could relieve these pressures, by increasing the labor force and reducing claims on retirement benefits. The average retirement age has been falling over most of the past century--despite improvements in health and life expectancy that could allow individuals to work until older ages (4)--although the trend seems to have leveled off and even reversed in recent years. (5) Congress has increased the age at which retirees qualify for full Social Security benefits, which could encourage older workers to remain in the labor force. The legislation slowly raises the normal retirement age from 65 to 67 (for workers

born after 1959, who will reach age 67 after 2026). Some experts have proposed that Congress increase the normal retirement age to 67 more quickly, (6) increase it to age 70, (7) or tie the retirement age to changes in life expectancy. (8) Others have advocated removing some of the legal impediments to work at older ages. (9) For example, many older workers prefer to reduce their work hours gradually, but Federal law prohibits employers from paying retirement benefits to active employees, even if they work only part time.

Job demands also encourage early retirement. Studies have found that workers in blue collar jobs tend to retire before workers in white collar jobs, (10) and that workers in physically demanding jobs are less likely to remain in the labor force after the initial receipt of Social Security benefits. …

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