65 Is the New 55. And Vice Versa.
The Wall Street Journal's Lev Borodovsky, taking notice of this phenomenon Wednesday, said it is making it "increasingly challenging to boost the speed of economic expansion." But "prime age" isn't necessarily what it used to be in the workplace, and this nation certainly has no shortage of 55-plussers.
People 55 and older are less likely to be in the labor force than those aged 25 through 54 -- that's why the latter is called "prime age." But there's much less of a gap in the labor force participation rate (that is, those with jobs plus those actively looking for them as a percentage of the civilian population) between the two groups now than there was in the 1980s and 1990s.
The reason I'm looking at the labor-force participation rate, as opposed to unemployment or the employment-population ratio, is that it's less cyclical and thus makes it easier to see medium- and long-term trends. One worrying medium-term trend that has been discussed again and again and again and again and again and again over the past few years is that the prime-age participation rate peaked and began falling at the turn of the millennium. The participation rate for prime-age men has actually been falling since the 1950s; it was women's labor-force participation that, after rising for decades, tipped the overall rate into decline in the 2000s.
Labor-force participation among those 55 and older, on the other hand, rose during the 1990s and kept rising during the 2000s -- even through the recession of 2007-2009. But then ... it stopped. Even as prime-age participation made a modest recovery starting in 2015, 55-and-older participation has stayed flat. I wondered if this was just because there are more and more people living deep into their 80s and 90s, but that doesn't seem to be the main issue. Here's labor-force participation among men 55 and older, divided into narrower age bands (the lines are squigglier than in the previous chart because there are no seasonally adjusted numbers available for these series):
And here's the same chart for women:
There is a bit of a slowdown after 2010 for most of the 60-plus segments. I'm guessing that's partly because there's a limit to how many people in those age groups actually want to work and partly because, as financial markets and the economy recovered from the financial crisis and recession, fewer older Americans stayed in or rejoined the labor force out of desperation. But what's really striking to me here is what has happened with the 55-59 age group -- and not just because I will be joining it in a couple of years. Labor-force participation among women in their late 50s has declined markedly since 2010 after years of gains, while among men in their late 50s, it dipped somewhat after two decades of stability -- although there's been an uptick since 2016.
Earlier in the current economic recovery, there were several alarming reports about people in their 50s who lost their jobs in the recession being subsequently more or less locked out of the workforce. "The New Unemployables" is how researchers from Boston College and Rutgers University described them in 2010. 2 They reported that
workers aged 55+ were more likely to remain unemployed longer than younger, prime age job seekers. Over two-thirds of older workers (67%) included in the survey reported looking for work longer than a year, compared to 43% of those workers under 55.
A 2012 Urban Institute report found that, among other things:
Median hourly earnings for reemployed workers age 51 to 61 were 21 percent lower on the new job than the prelayoff job, compared with only 7 percent for those age 25 to 34.
At the same time, though, U.S. workplaces have been getting more welcoming to those 65 and older. Once-standard mandatory retirement policies have become rare, while some employers now actively court older workers for certain jobs (often temporary or part-time ones). There have also been changes on the supply side: More people are staying alive and healthy for longer, while generous pensions have become rarer, so more 65-plussers want to work -- for fulfillment, out of necessity or both.
So we have this weird bifurcation. Employers appear to have kept pushing out workers in their 50s because they're expensive and perceived to be less productive and open to change 3 (maybe, just maybe, the recent rise in the male 55-59 participation rate indicates an easing of this trend). But the lucky ones who make it through that gauntlet with their careers intact can now keep working well into their 70s if they want, while the less lucky can come back a few years later and rejoin the workforce, albeit often at lower wages and without much in the way of benefits or job security.
On the flipside, though, this means that employers struggling to find workers in an age of zero prime-age population growth have one clearly undertapped demographic that they can avail themselves of. You know, those people in their 50s that they've been firing.
The civilian noninstitutional population excludes active-duty military personnel and prison and jail inmates. But both those groups have declined in number since 2007, so they can't be responsible for the civilian population plateau.
I should also note that, at least among the executives coached by psychologists Lois Tamir and Laura Finfer, those in their 50s are more open to change than those in their 30s.
To contact the editor responsible for this story:
Brooke Sample at email@example.com