Is Working Longer a Real Solution?

Only if you can

Many commentators, myself included, have trumpeted the benefits of working longer as something of a panacea for the challenges of an aging society. For individuals, it helps ensure they have enough funds for retirement and possible elder care needs. In addition, the purpose and social contact work provides help combat loneliness and may delay dementia and improve health. On a societal level, it helps redress the growing imbalance between the size of the workforce and the number of retirees.

In their book, The 100-Year Life: Living and Working in an Age of Longevity, the psychologist Lynda Gratton and economist Andrew J. Scott make the case that longer lifespans mean that people will have to work longer and work more flexibly. The model will no longer be working full-time at one company for 40 years and then retiring full-time. Instead, we will go in and out of the workforce, retraining and trying different jobs and different types of work over time. In fact, this is already more likely to be the career path of women who take time off to raise families. Gratton and Scott argue that this approach to work should be better supported for everyone.

You Can’t Postpone Retirement If You’re Not Working

The sociologists Lisa F. Berkman and Beth C. Truesdale, however, throw some cold water on this rosy picture arguing that working longer is easier said than done, or rather, easier for some than for others. In their book, Overtime: America’s Aging Workforce and the Future of Working Longer, they collect essays by social scientists on the challenges for older workers including health and age discrimination.

In their introductory essay, “When I’m 54: Working Longer Starts Younger Than We Think,” Berkman and Truesdale, along with graduate student Alexandra Mitukiewicz, explain the link between longer working lives and employment during one’s 50s, it being difficult to postpone retirement if one doesn’t have a job from which to retire. Unfortunately, a growing number of American workers, especially men without college degrees, are leaving the workforce before reaching age 60.

They point out that in 2018, while 18% of 25 to 54-year-olds were out of the workforce for one reason or another, 28% of those aged 55 to 59 were no longer working or seeking work. In addition, while 80% of those continuously employed during their 50s are employed at some point between ages 62 and 66, only 35% of those intermittently employed during their 50s work at all from age 62 to 66.

In general, the higher one’s education level, the more likely they are to be working and to stay working during their 50s, though employment rates fall dramatically for all workers during that decade. “For instance, among men, employment rates fall between ages 50 and 60 from roughly 94 to 74 percent among those with college degrees, from 86 to 63 percent among those with high school diplomas, and from 73 percent to 50 percent among those without high school diplomas.” And disparities in employment rates by education level have increased since the 1960s.

Also notable are the statistics regarding employment of different racial groups and rates over time. Black American men are much less likely to be employed than white men.

The authors observe that employment by older workers has grown since the 1960s, but caution that this trend is likely to slow or reverse because “the cohorts now in their 40s and 50s are approaching retirement with lower employment rates than the cohorts now in their 60s and 70s, which may mean that fewer members across recent cohorts are in a good position to work longer.”

The result is that “only about half of Americans — 61 percent of men and 43 percent of women — are in continuous employment during their 50s.” Employment rates fall by about 20 percent for all Americans during their 50s, but those with lower education and members of disadvantages racial groups start from a lower employment base. Unfortunately, it’s these groups that are more likely to need the increased earnings and increased Social Security benefits that result from working longer.

Injuries Lead to Earlier than Planned Retirements

Other studies find similar results. According to an analysis of data about retirees by Hearts & Wallets, almost a quarter of respondents said they had retired before they wanted to. This is consistent with the results of a survey conducted by The Harris Poll for the Transamerica Center for Retirement Studies that found that while the median expected age for retirement of workers in their 50s was age 67, the actual median retirement age is 62. Most of those who retired earlier than planned had to do so due to health reasons. “Forty-five percent retired sooner than planned for health reasons such as physical limitations or disability or ill health, and 42% did so for employment reasons such as unhappiness, organizational changes, job loss, and/or a buyout.” Most of those who worked longer than planned did so due to their financial need. Just 17 percent of respondents retired sooner than planned due to their financial ability to do so.

A report by the economists Melissa McInerney and Erin Bronchetti, “The Long-run Effects of Workplace Injuries on Older Workers: Earnings, SSDI, SSI, and Early Retirement,” demonstrates the effect of health on the ability to continue working. They find that injuries among older workers that result in chronic conditions, whether or not they occur on the job, can mean the end of employment with severe financial consequences. “Results indicate sharp and immediate declines in earnings and employment upon injury – declines that contribute to marked increases in the likelihood of retirement and OASI claiming, as well as participation in SSDI and WC, and to a lesser extent, SSI.”

Bad Fit with Available Jobs

Gratton and Scott point out that another factor in the loss of employment by many workers is the change in the available jobs over time. During a 40-year work life, the economy may change dramatically, whether due to globalization, technological changes, or (at least in the past) from an agrarian society to an urban one. The type of work that was available, and for which a worker may have been trained, at the beginning of a career may not longer be available at the end.

This aspect of a changing economy over time could strike tomorrow’s workers even harder if they need to work longer to pay for a longer retirement due to increases in longevity. Gratton and Scott recommend a more flexible view of work that anticipates the need for retraining and the possibility that people will move in and out of the workforce as their needs and desires and the needs of the economy change over time.

So, while working longer may seem like a panacea that could help resolve both our growing imbalance between the number of workers and retirees and the financial straits facing most current and future retirees, it may not be possible for many, if not most, older Americans, especially for those in physically demanding jobs that are lower paid. In other words, those who most need to work longer for financial reasons, may be the least able to do so due to their physical health and declining stamina.

Solutions

This has great bearing on efforts to shore up Social Security finances, should Congress ever take this up. Postponing the full retirement from age 67 to 70, for instance, could be part of a solution, but it’s a solution that would hurt most those who most need Social Security’s assistance.

Instead, Truesdale and Berkman recommend changes in job protections that can help workers of all ages and enable them to stay working longer, many of which can be enacted on the state level. These would include higher minimum wages and better job protection for those who must take time off to care for other family members.

They also include laws that would would require work schedules to be determined well in advance. Many restaurants and other employers currently create work schedules at the beginning of each week, making it nearly impossible for employees to plan ahead. This can wreak havoc on the lives of those who have caregiving obligations for children or older adults, forcing many to stop working all together. We need these changes to keep people in the workforce as the number of working-age Americans as compared to retired workers continues to decline.