Transcript Slide 1

Retired vs. Rehired:
Employment Challenges and
Opportunities at Older Ages
Richard W. Johnson
Urban Institute
Plus 50 Initiative 3rd Annual Conference
July 8, 2010
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
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program
After 2021
www.RetirementPolicy.org
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
Constant 2008 Dollars (000s)
$50
$40
Men
$30
$20
$10
Women
$0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007
Source: Social Security Administration.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Traditional Defined Benefit Pensions Are Disappearing
in the Private Sector
Employer-Sponsored Pension Participation,
Private-Sector Workers, 1980-2009
45%
40%
35%
Defined Benefit
Pension
31%
39%
30%
25%
20%
15%
8%
20%
Only Defined
Contribution Plan
10%
5%
0%
1980
1984
1988
1992
1996
2000
2004
2008
Source: Cushing-Daniels and Johnson (2008); BLS (2009).
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Fewer Large Employers Are Offering Retiree
Health Benefits
Percentage of Firms with 200+ Employees Offering Retiree Health
Benefits
66%
40%
29%
1988
1998
2008
Source: Kaiser Family Foundation (2009).
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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+
45%
35%
23%
18%
2010
2020
2030
2040
Source: Johnson and Mommaerts (2010).
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Most People Will Eventually Need
Long-Term Care
Pct of People Age 65 in 2005 Who Will Ever Need LTC
79%
69%
58%
47%
41%
33%
All
Men
Any LTC
Women
Nursing Home
Source: Kemper, Komisar, and Alecxih (2006); Spillman and Lubitz (2002)
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
40%
35%
30%
30%
33%
28%
25%
Age 75-84
23%
22%
20%
19%
18%
Age 65-74
Age 55-64
10%
0%
1983
1986
1989
1992
1995
1998
2001
2004
2007
Source: Urban Institute calculations from the National Health Interview Survey.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Jobs Are Less Physically Demanding Now, but
Require More Cognitive Ability
Percentage of Workers Facing Job Demands, 1971 & 2006
57%
46%
35%
26%
General Physical Demands
1971
High Cognitive Ability
2006
Source: Johnson, Mermin, and Resseger (2007)
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Older Adults Are Much Better Educated Today
Than 20 Years Ago
Educational Attainment of Adults Age 55-64, 1989 and 2009
32%
31%
1989
16%
11%
2009
Not High School Grad
College Grad
Source: Urban institute calculations from the Current Population Survey.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
80%
81%
75%
75%
Age 55-61
60%
Age 62-64
46%
56%
55%
40%
Age 65-69
36%
20%
29%
0%
1976
25%
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Older Women Are Also Working Longer
Share of Older Women Working or Looking for Work, 1976-2009
80%
66%
Age 55-61
54%
60%
46%
Age 62-64
40%
44%
32%
20%
Age 65-69
28%
27%
16%
15%
0%
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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
24%
19%
18%
14%
1969
1979
12%
13%
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.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Where Do Older Workers Work?
Occupational Distribution, by Age, 2003-2007
23.8%
17.9%
13.9%
13.8%
11.5%
15.3%
16.3%
17.1%
24.3%
21.6%
10.2%
14.2%
All
65+
Urban Institute Retirement Policy Program
Blue collar
Office/admin sup.
Sales
Services
Other Prof.
Management
www.RetirementPolicy.org
Occupations Employing the Most Workers
Ages 65+
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%
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Grayest Occupations
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%
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Employment Transitions between 1992 and 2006
(Workers Employed Full-Time & Ages 51-55 in 1992)
New employer,
new occupation,
26.9%
New employer,
same
occupation,
15.7%
Urban Institute Retirement Policy Program
Stay with 1992
employer, 14.2%
Leave 1992
employer, not
reemployed,
43.3%
www.RetirementPolicy.org
Reason Given for Leaving 1992 Employer
(Job Separators Employed Full-Time & Ages 51-55 in 1992)
Other, 8.6%
Layoff, 23.3%
Quit, 15.3%
Health, 13.1%
Retire, 39.7%
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Reason Given for Leaving 1992 Employer,
by Education
(Job Separators Employed Full-Time & Ages 51-55 in 1992)
6%
14%
8%
13%
7%
12%
15%
19%
Other
Quit
31%
Retire
39%
38%
61%
Health
21%
14%
27%
24%
8%
23%
Layoff
7%
13%
Not HS Grad
(17%)
HS Grad
College
(55%)
(17%)
Urban Institute Retirement Policy Program
>Bachelor's
(11%)
www.RetirementPolicy.org
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)
100%
89%
80%
60%
New job and
occup
71%
61%
50%
40%
31%
42%
32%
21%
20%
20%
18%
28%
29%
12%
Retired
14%
7%
0%
All
New job, same
occup
Quit
Urban Institute Retirement Policy Program
Layoff
Health
www.RetirementPolicy.org
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)
57%
52%
48%
43%
34%
26%
New job and
occup
25%
New job, same
occup
33%
23%
17%
15%
Not HS Grad
HS Grad
College
27%
>Bachelor's
Source: Johnson, Kawachi, and Lewis (2008).
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Median Hourly Wage on Old and New Occupation
(All Workers Who Change Occupations After Age 51
$22
Old job
$17
New job
$15
$13
$11
All
$12
$11
$10
Retire
Source: Johnson, Kawachi, & Lewis (2008).
Urban Institute Retirement Policy Program
Quit
Layoff
Note: Restricted to workers employed full-time
on old occupation.
www.RetirementPolicy.org
Employer-Sponsored Health Insurance Coverage
on Old and New Occupation,
(All Workers Who Change Occupations After Age 51)
87%
Old job
71%
70%
64%
55% 57%
56%
All
New job
Retire
Urban Institute Retirement Policy Program
Quit
51%
Layoff
www.RetirementPolicy.org
Selected Job Characteristics on
Old & New Occupation
(All Workers Who Change Occupations After Age 51)
61%
Old job
45%
24%
20%
27%
22%
14%
12%
Pension
Coverage
Self-employment
New job
Management
Urban Institute Retirement Policy Program
Flexible
Schedule
www.RetirementPolicy.org
Selected Job Characteristics
on Old and New Occupation
(All Workers Who Change Occupations After Age 51)
91%
79%
Old job
65%
New job
51%
36%
Part-Time
Stressful Work
Urban Institute Retirement Policy Program
Enjoy Work
www.RetirementPolicy.org
Mean Prestige Score for Old and New Occupation
(All Workers Who Change Occupations After Age 51)
48.3
45.7
43.1
43.3
46.0 45.4
43.3
41.1
Old job
New job
All
Retire
Urban Institute Retirement Policy Program
Quit
Layoff
www.RetirementPolicy.org
Participation Rates At Older Ages Increase
with Education
Labor Force Participation Rates, Age 62-69, 2009
56.0%
44.2%
44.2%
37.8%
37.6%
30.3%
29.2%
19.4%
Not HSG
HSG
Some
College
College
Grad
Men
Urban Institute Retirement Policy Program
Not HSG
HSG
Some
College
College
Grad
Women
www.RetirementPolicy.org
Health Problems Are More Common Among
Workers With Limited Education
Pct. Reporting Work Disabilities, Ages 55-64, 2006
45%
43%
30%
30%
26%
25%
18%
11%
Not HSG
HSG
Some
College
College
Grad
Men
Urban Institute Retirement Policy Program
Not HSG
HSG
Some
College
College
Grad
Women
www.RetirementPolicy.org
Unemployment Rates Have Soared at
Older Ages
Unemployment Rate for Men, 1948-2009
12%
10%
8%
All
6%
55-64
65+
4%
2%
0%
1948
1954
1960
1966
1972
1978
Urban Institute Retirement Policy Program
1984
1990
1996
2002
2008
www.RetirementPolicy.org
Unemployment Rate for Women, 1948-2009
12%
10%
8%
All
55-64
65+
6%
4%
2%
0%
1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Low-Skilled Workers Are Much More
Likely to Unemployed
May 2010 Unemployment Rates, Men and Women Age 55+
12.5%
Not high school
grad
9.3%
High school grad
8.2%
7.1%
6.9%
6.5%
4.8%
Some college
4.0%
4+ years of
college
Men
Urban Institute Retirement Policy Program
Women
www.RetirementPolicy.org
Older Workers Are Less Likely to Lose
Their Jobs than Younger Workers
Cumulative Probability of Being Laid Off, by Age, 19962007
8%
7%
6%
5%
4%
3%
2%
1%
0%
18-24
25-34
35-49
50-61
62+
0
6
12
18
24
30
36
Months Since First Observation
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
Older Unemployed Workers Spend More Time
Out of Work Than Their Younger Counterparts
Average Weeks Unemployed, May 2010, by Age
34.3
40.3
41.3
45-54
55-64
37.7
36.9
25.6
16.5
16-19
20-24
25-34
35-44
Urban Institute Retirement Policy Program
65+
www.RetirementPolicy.org
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
22.8%
20.5%
15.4%
16.2%
15.4%
11.0%
7.4%
25-34
35-49
50-61
62+
3.3%
Men
Urban Institute Retirement Policy Program
Women
www.RetirementPolicy.org
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?"
Don't Know
2%
No
31%
Source: AARP (2002)
Urban Institute Retirement Policy Program
Yes
67%
www.RetirementPolicy.org
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. .
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
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. .
Urban Institute Retirement Policy Program
www.RetirementPolicy.org