How Older Workers Could Help Save America From Workforce PerilBy
Labor market participation steadied in 2016 on slow retirement
Change could be a blip, but shows power of senior workforce
Something strange happened in the U.S. labor market last year. Even as the population grew older, the participation rate -- the measure of all adults who are working or looking for work -- stabilized, bucking its downward trend and surprising some economists.
It turns out, you can thank people like Philip Lenowitz.
When the National Institutes of Health calls, Lenowitz, 67, is still there for his long-time employer. The former deputy director of human resources at the Institutes walks upstairs to his home office in Asheville, North Carolina, fires up his government computer and lends his expertise as a contractor. “It’s about being tied to the mission, and the people,” he said.
Lenowitz isn’t alone in choosing to put off full retirement. The share of workers older than 61 transitioning into retirement slowed last year for the first time since 2012. As graying workers continued to toil, they were the biggest single driver helping to prop up labor force participation, Atlanta Federal Reserve researcher Ellyn Terry found in recent analysis.
The slowdown in retirement was small -- and could prove short-lived -- but still supported the overall participation rate. Blip or not, that’s a powerful statement about how much labor potential America could harness by retaining older workers for longer. Doing so could be a viable option at a time when older workers are increasingly educated, in good health and in need of extra cash.
“It’s possible to have policy that encourages people to work longer,” said Matthew Rutledge, a research economist at the Center for Retirement Research at Boston College. “It’s pretty clear that people do have to work longer. It’s something that they seem capable of doing.”
Even as workers retire at a later age than previous generations, they report wanting to stay on the job even longer than they’re managing. About 60 percent of retirees in a 2016 Transamerica Center for Retirement Studies survey reported retiring earlier than they had planned, while just 7 percent reported retiring later.
Poor health was a common reason for early retirement, but lost employment or organizational changes also topped the list. An earlier study by AARP, a nonprofit that caters to senior citizens, reported that older workers feel they face age discrimination, which could be one contributor to such problems. These issues could be combated by public policies that provide better protection from discrimination or easier access to training for graying employees, and by corporate efforts that prioritize retaining older talent.
When it comes to the share of people working past retirement age, “there’s room for that percentage to go higher,” said Jen Schramm, an AARP Public Policy Institute policy adviser.
The fact that older Americans are willing to punch the clock is especially relevant now. After aging pulled down the labor force participation in past years, Donald Trump during the presidential campaign zeroed in on the falling rate -- which slows growth of the labor force -- as a factor holding back the U.S. economy. So has Federal Reserve Chair Janet Yellen.
“The economy’s potential to grow is largely determined by the growth of the labor force and by productivity growth output per worker,” Yellen said in Senate testimony on Feb. 14. “We have an aging population and labor force growth is relatively slow, and productivity growth in recent years has been depressingly slow.”
The implication here? If older workers continue to stay in the labor force longer, aging won’t be as much of a drag on labor force participation. That would help to stabilize labor force growth, keeping the economy expanding more than it otherwise would.
Productivity is difficult to understand, and policy makers still don’t know exactly why it has slumped. Labor force growth is more straightforward. It comes as immigrants enter the country, as more people choose to work, or as young people enter the workforce in greater numbers than older people leave it.
The outlook here isn’t rosy. Inflows of undocumented workers have slowed and immigration could decline further under an administration that’s pledged stricter enforcement and restrictions. What’s more, a smaller share of people in their prime work than in the past.
And the aging of baby boomers remains a concern, as the massive generation quickly heads into retirement age. While millennials are another big group, they’ve mostly matured into their prime working years -- they’re between 20 and 36 today -- and the generation after them is much smaller, meaning they won’t pack the same punch when it comes to offsetting retirements.
And that’s where the story comes back to Lenowitz. If organizations like NIH -- which AARP has repeatedly ranked among the best employers of older workers -- can work with people like him to keep them working for longer, it could keep the labor force bigger for more time.
Policies that accomplish that end would also come at personal benefit to today’s soon-to-be seniors. While Lenowitz’s decision to work wasn’t motivated by money, many of his contemporaries have inadequate retirement savings.
Though it’s harder to measure, work is also a way to stay connected and fulfilled. That’s Lenowitz’s rationale for continuing to dial into conference calls, even though he’s traded in his suit and tie for a sports shirt, and the Bethesda, Maryland, office for his home in the Blue Ridge Mountains.
“The mission pull is tremendous,” said Lenowitz, who was an options trader before he went on to work at Veterans Affairs and then the NIH for 16 years. He revels in the chance to help researchers working to find cures to cancer and diabetes. “You’ve got knowledge about what’s been done before, what didn’t work, what did work -- there’s a sense that you want to give back.”