retired vs. rehired: employment challenges and opportunities at older ages

Retired vs. Rehired: Employment Challenges and Opportunities at Older Ages

Richard W. Johnson Urban Institute

Plus 50 Initiative 3rd Annual Conference

July 8, 2010

Urban Institute Retirement Policy Program www.RetirementPolicy.org

Key Points

• Economic security at older ages is becoming increasingly uncertain as the retirement landscape shifts

• Most older Americans will have to work longer

• Many older workers will move into jobs that differ from their career employment

• Education is the key to working longer


The Increase in Social Security’s Full Retirement Age Will Reduce Benefits for Early Retirees

Percentage of Full Benefits Received at Age 62, by Year Turning 62

80%75%

70%

Before 2000 2005-2016 After 2021


Earnings for a Typical Man Haven’t Increased in 30 Years, But Women Are Working and Earning More

Real Median Annual Earnings, Workers Age 50-54, 1950-2007

$0

$10

$20

$30

$40

$50

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007

Cons

tant

200

8 Do

llars

(000

s)

Source: Social Security Administration.

Men

Women


Traditional Defined Benefit Pensions Are Disappearing in the Private Sector

Employer-Sponsored Pension Participation, Private-Sector Workers, 1980-2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1980 1984 1988 1992 1996 2000 2004 2008

Source: Cushing-Daniels and Johnson (2008); BLS (2009).

Defined Benefit Pension

Only Defined Contribution Plan

20%

31%39%

8%


Fewer Large Employers Are Offering Retiree Health Benefits

Percentage of Firms with 200+ Employees Offering Retiree Health Benefits66%

40%

29%

1988 1998 2008

Source: Kaiser Family Foundation (2009).


As Health Costs Grow, More Seniors Will Experience Financially Burdensome Costs, unless Policies Change

Projected Share of Adults Spending More than 20% of Household Income on Health Care, Age 65+

18%

23%

35%

45%

2010 2020 2030 2040

Source: Johnson and Mommaerts (2010).


Most People Will Eventually Need Long-Term Care

Pct of People Age 65 in 2005 Who Will Ever Need LTC

69%58%

79%

41%33%

47%

All Men Women

Any LTC Nursing Home

Source: Kemper, Komisar, and Alecxih (2006); Spillman and Lubitz (2002)


Ongoing Social, Economic, and Demographic Change Will Make Family Care More Difficult

• Family sizes are shrinking

• Childlessness is growing

• More older people are divorced today

• More women are working outside the home


People Can Improve Later-Life Outcomes by Working Longer

• Bolsters individual financial outcomes– More earnings & Social Security and pension credits– Increases ability to save– Shortens the period over which savings are spread– Working an additional year increases annual retirement

income by 9% (Butrica, Smith, & Steuerle 2006)– Impact is larger for low-income people

• Boosts government tax revenue

• May improve emotional well-being, physical health


Americans Age 55-84 Were Generally in Better Health in 2007 Than 1983

Percentage of Older Adults Reporting Fair or Poor Health, by Age 1983-2007

19%18%

25%22%

23%33%

28%

30%

35%

0%

10%

20%

30%

40%

1983 1986 1989 1992 1995 1998 2001 2004 2007

Source: Urban Institute calculations from the National Health Interview Survey.

Age 75-84

Age 65-74

Age 55-64


Jobs Are Less Physically Demanding Now, but Require More Cognitive Ability

Percentage of Workers Facing Job Demands, 1971 & 200657%

26%

46%

35%

General Physical Demands High Cognitive Ability

1971 2006

Source: Johnson, Mermin, and Resseger (2007)


Older Adults Are Much Better Educated Today Than 20 Years Ago

Educational Attainment of Adults Age 55-64, 1989 and 2009

31%

16%

11%

32%

Not High School Grad College Grad

1989

2009

Source: Urban institute calculations from the Current Population Survey.


Men Are Now Working Longer than They Did 15 Years Ago, Which Will Boost Future Retirement Incomes

Share of Older Men Working or Looking for Work, 1976-2009

36%

25%29%

56% 55%46%

75%75%81%

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

20%

40%

60%

80%

0%

Source: Urban Institute computations from BLS data.

Age 55-61

Age 62-64

Age 65-69


Older Women Are Also Working LongerShare of Older Women Working or Looking for Work, 1976-2009

27%16%15%

28%

44%

32%

66%

54%

46%

0%

20%

40%

60%

80%

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Source: Urban Institute computations from BLS data.

Age 55-61

Age 62-64

Age 65-69


The Labor Force Will Turn Grayer as the Population Ages and Older Adults Work More

Share of the U.S. Workforce Age 55+, 1969-2019

18%

14%12% 13%

19%

24%

1969 1979 1989 1999 2009 2019

Source: Urban Institute estimates based on U.S. Census and BLS data. Projections assume that the 1999-2009 growth in age- and sex-specific participation rates for adults age 62+ continue through 2019.


Where Do Older Workers Work?

10.2% 14.2%

24.3% 21.6%

16.3% 17.1%

11.5% 15.3%

23.8% 17.9%

13.9%13.8%

All 65+

Blue collarOffice/admin sup.SalesServicesOther Prof.Management

Occupational Distribution, by Age, 2003-2007


Occupation Share of All 65+ Workers

Retail salesperson 3.5%

Farmers & ranchers 3.4%

Supervisors/managers of retail sales 3.2%

Janitors/building cleaners 2.8%

Driver/sales workers, truck drivers 2.7%

Secretaries/admin assistants 2.7%

Cashiers 2.1%Bookkeepers 2.1%

Real estate brokers/agents 1.8%

Chief executives 1.7%

Occupations Employing the Most Workers Ages 65+


Occupation Share of Workers Age 65+

Funeral service workers 31.4%

Crossing guards 27.7%

Farmers, ranchers 25.7%

Models, demonstrators, product promoters 23.1%

Funeral directors 16.3%

Tax preparers 14.3%

Farm managers 13.2%

Barbers 13.0%

Tool grinders, filers, sharpeners 11.6%

Clergy 11.4%

Grayest Occupations


Employment Transitions between 1992 and 2006 (Workers Employed Full-Time & Ages 51-55 in 1992)

Stay with 1992 employer, 14.2%New employer,

new occupation, 26.9%

New employer, same

occupation, 15.7%

Leave 1992 employer, not reemployed,

43.3%


Reason Given for Leaving 1992 Employer (Job Separators Employed Full-Time & Ages 51-55 in 1992)

Layoff, 23.3%

Health, 13.1%

Quit, 15.3%

Other, 8.6%

Retire, 39.7%


Reason Given for Leaving 1992 Employer,by Education

(Job Separators Employed Full-Time & Ages 51-55 in 1992)

27% 24% 23%13%

21%14%

8%

7%

31%39%

38% 61%

14% 15%19%

12%

8% 13% 7%6%

Not HS Grad HS Grad College >Bachelor's

Other

Quit

Retire

Health

Layoff

(17%) (55%) (17%) (11%)


Share of Job Leavers Who Obtain New Jobs or Occupations between 1992 and 2006,

by Reason for Job Separation (Workers Employed Full-Time & Ages 51-55 in 1992)

18% 12%28% 29%

7%

31%

20%

61%42%

14%

0%

20%

40%

60%

80%

100%

All Retired Quit Layoff Health

New job andoccup

New job, sameoccup

50%

32%

89%

71%

21%


Share of Job Leavers Who Obtain New Jobs or Occupations between 1992 and 2006, by Education

(Workers Employed Full-Time & Ages 51-55 in 1992)

17% 15%23% 27%

26% 33%

34% 25%

Not HS Grad HS Grad College >Bachelor's

New job andoccup

New job, sameoccup

Source: Johnson, Kawachi, and Lewis (2008).

43%48%

57%52%


Median Hourly Wage on Old and New Occupation(All Workers Who Change Occupations After Age 51

$17

$22

$13$15

$11$10

$12 $11

All Retire Quit Layoff

Old job

New job

Source: Johnson, Kawachi, & Lewis (2008).Note: Restricted to workers employed full-time on old occupation.


Employer-Sponsored Health Insurance Coverage on Old and New Occupation,

(All Workers Who Change Occupations After Age 51)

70%

87%

55%

71%

56%64%

57%51%


Old job

New job


Selected Job Characteristics on Old & New Occupation


61%

12%

22%27%

20%24%

14%

45%

PensionCoverage

Self-employment Management FlexibleSchedule

Old job

New job


Selected Job Characteristics on Old and New Occupation


65%

79%

51%

36%

91%

Part-Time Stressful Work Enjoy Work

Old job

New job


Mean Prestige Score for Old and New Occupation (All Workers Who Change Occupations After Age 51)

45.748.3

46.043.343.1 43.3

45.441.1


Old job

New job


Labor Force Participation Rates, Age 62-69, 2009

29.2%

37.6%

44.2%

56.0%

19.4%

30.3%

37.8%44.2%

Not HSG HSG SomeCollege

CollegeGrad


CollegeGrad

Participation Rates At Older Ages Increase with Education

Men Women


Pct. Reporting Work Disabilities, Ages 55-64, 2006

43%

30%26%

11%

45%

30%25%

18%


CollegeGrad


CollegeGrad

Health Problems Are More Common Among Workers With Limited Education

Men Women


Unemployment Rates Have Soared at Older Ages

Unemployment Rate for Men, 1948-2009

0%

2%

4%

6%

8%

10%

12%

1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008

All55-6465+


Unemployment Rate for Women, 1948-2009

0%

2%

4%

6%

8%

10%

12%

1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008

All55-6465+


Low-Skilled Workers Are Much More Likely to Unemployed

May 2010 Unemployment Rates, Men and Women Age 55+

12.5%

8.2%9.3%

7.1%6.9% 6.5%

4.8%4.0%

Men Women

Not high schoolgrad

High school grad

Some college

4+ years ofcollege


Older Workers Are Less Likely to Lose Their Jobs than Younger WorkersCumulative Probability of Being Laid Off, by Age, 1996-

2007

0%1%2%3%4%5%6%7%8%

0 6 12 18 24 30 36Months Since First Observation

18-2425-3435-4950-6162+


Older Unemployed Workers Spend More Time Out of Work Than Their Younger Counterparts

Average Weeks Unemployed, May 2010, by Age

16.5

25.6

34.336.9

40.3 41.337.7

16-19 20-24 25-34 35-44 45-54 55-64 65+


Older Laid-off Workers Usually Take Big Pay Cuts When They Find New Jobs

Pct. Drop in Average Hourly Wage on the New Job, By Age

7.4%

15.4%

3.3%

11.0%

15.4% 16.2%

20.5%22.8%

Men Women

25-3435-4950-6162+


Many Older Workers View Age Discrimination as a Problem

"Based on what you have seen or experienced, do you think workers face age discrimination in the workplace today?"

Yes67%

No31%

Don't Know2%

Source: AARP (2002)


Fewer Workers Say They Experienced Age Discrimination Themselves

Share of Workers Age 55 to 61 Claiming that their Employer Favors Younger Workers in Promotion Decisions, 2008

16%15%

Men Women

Source: Author’s calculations from the Health and Retirement Study. .


Low-Skilled Older Men Are More Likely to Perceive Age Discrimination

Share of Male Workers Age 55 to 61 Claiming that their Employer Favors Younger Workers in Promotion Decisions, 2008

29%

20%

13%

Did Not Complete High School High School Grad At Least Some College

Source: Author’s calculations from the Health and Retirement Study. .

retired vs. rehired: employment challenges and opportunities at older ages

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