Fewer Seniors Working but They Are Healthy, Wealthy and Wise

March 11, 2006 – The percent of older men - senior citizens 65 and older - in America's workforce declined dramatically over the past decades from 46 percent in 1950 to only 19 percent in 2003, but for senior women there has been no change. But many seniors continue to work, many part-time, primarily because they enjoy their work. These are some of the findings about older workers in a new report by the U.S. Census Bureau, that also says older workers are relatively healthy, prosperous, and well educated.

● By 2020, people age 55 and over are expected to make up 20.3 percent of the labor force, up from 15.1 percent in 2003.

● As employed men and women get older, their likelihood of working part time increases. In 2003, about half of employed men age 70 and over and almost two-thirds of employed women aged 70 and over worked part time.

Work and Retirement

Labor Force Participation Trends

During the past half-century, for the U.S. population as a whole, labor force participation rates of men have fallen, while women’s have increased

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The labor force participation rates of older men and women have also followed divergent trends.

The percentage of men aged 65 and over who were in the labor force fell during the second half of the 20th century from 45.8 percent in 1950 to 18.6 percent in 2003. The decline was not constant during this time. Between 1950 and 1985, the rate dropped 30 percentage points—from 45.8 percent to 15.8 percent—while from 1985 to 1993 it remained unchanged, and thereafter increased to 18.6 percent in 2003.

Labor force participation rates for older women, on the other hand, changed so little that the apparent difference between the 2003 rate of 10.6 percent and the 1950 rate of 9.7 percent is not statistically significant.

Labor Force Participation Rates – 1980 to 2003 Population Aged 50 and Over by Age & Sex In Percent
All Races	Men				Women
	1980	1990	2000	2003	1980	1990	2000	2003
50 to 54	89.3	88.8	86.8	86.0	57.8	66.9	74.1	74.7
55 to 59	81.7	79.9	77.1	77.6	48.5	55.3	61.2	65.5
60 to 64	60.8	55.5	54.8	57.2	33.2	35.5	40.1	45.3
65 and over	19.0	16.3	17.5	18.6	8.1	8.6	9.4	10.6
> 65 to 69	28.5	26.0	30.1	32.8	15.1	17.0	19.4	22.7
> 70 to 74	17.9	15.4	17.9	18.8	7.5	8.2	9.9	11.2
> 75 and up	8.8	7.1	8.0	8.3	2.5	2.7	3.5	4.1

Older men’s and women’s labor force participation rates have converged over the past decades.

In 1950, the rate of men aged 55 to 64 was 59.9 percentage points higher than that of women in the same age group. Thirty years later, this gap had narrowed by about half, to a 30.8 percentage-point difference. By 2003, the gap was 12.1 percentage points.

The gender gap for workers 65 and over also narrowed from 1950 to 1990, with the 1990 gender difference (7.7 percentage points) about one-fifth of the 1950 difference (36.1 percentage points). The gender gap did not change from 1990 to 2003.

Researchers point out that labor force participation decisions at older ages are influenced by many factors, such as macroeconomic trends, government policy, pension benefits, and similar factors that affect most individuals’ personal financial situations.

Prior to 1980, the decreases in the labor force participation rates of older men reflect the increased availability of pensions and disability awards.

The decrease in participation over the 1950 - 80 period for men 65 and older was 26.8 percentage points, with most of the decrease occurring in the 1950s.

During the 1970s, the Social Security payments were over-adjusted for inflation and the decrease in labor force participation for men 65 and older was greater than that in the 1960s. The decrease in participation was much lower in the 1980s, after the inflation adjustment procedure was changed. By the 1990s, participation increased for this group of older men.

Labor force participation rates for older men across race and Hispanic-origin groups did not differ statistically in 2003.

The same is true for older women, although older men had higher rates than older women for each group. In 2003, 18.7 percent of older non-Hispanic White men were in the labor force, compared with 10.8 percent of older non-Hispanic White women.

Similarly, 20.3 percent of older Asian men were in the labor force, compared with 8.7 percent of older Asian women.

	Labor Force Participation Rates for the Population Aged 65 and Over by Sex, Race, and Hispanic Origin: 1980, 1990, 2000, and 2003 (In percent) 1 Data for 2003 are for single-race groups; i.e., people who reported only one race, and therefore are not comparable to data shown for previous years. Note: The reference population for these data is the civilian noninstitutionalized population. Sources: 1980 and 1990, Bureau of Labor Statistics (BLS), 2003c; 2000, BLS, 2003d; 2003, BLS, 2004a.

	Percent Distribution of the Labor Force by Age: 1950, 2000, 2003, and 2020 Note: The reference population for these data is the civilian non-institutionalized population. Sources: 1950, 2000, and 2020, Toossi, 2002, 2003, Bureau of Labor Statistics, 2004a.

Age Structure of the Labor Force

The age structure of the labor force changes over time. In 1950, people aged 55 to 64 represented 12.3 percent of the labor force, and people 65 years and older accounted for 4.9 percent. In 2003, the labor force was younger; while the share of the labor force aged 55 to 64 did not differ statistically, at 11.8 percent, the proportion of older people (aged 65 and older) declined to 3.3 percent.

Projections indicate that by 2020, when all Baby Boomers will be 55 years or older, people in the 55-to-64 age group will represent 15.3 percent of the labor force, and those in the 65-and-older age group will account for 5.0 percent.

The median age of the labor force is another indication of how old the workforce is and will be in the future. The median age of the labor force was 40.5 years in 1962, the highest level attained before the Baby Boomers entered the labor force. It dropped steadily until 1980, and since then it has been rising, to 36.6 in 1990 and 39.3 in 2000. The median age is expected to return to its 1962 level, 40.6 years, in 2010.

The labor force participation of the “near-old” population (people aged 55 to 64) can indicate early retirement trends and other work patterns.

The labor force participation rate for men aged 55 to 64 dropped about 20 percentage points from 1950 to 2003. During that time, it increased from 86.9 percent in 1950 to 88.5 percent in 1956, and then dropped to 68.7 percent in 2003.

This pattern is different from that of the labor force participation rates for women aged 55 to 64, which has more than doubled from 1950 (27.0 percent) to 2003 (56.6 percent).

There was little to no fluctuation in the 1970s (43.1 percent in 1969, 40.7 percent in 1974, and 41.7 percent in 1979), after which the rate increased to 56.6 percent in 2003.

While the labor force participation rates for men aged 55 to 64 recently showed a downward turn and that of women increased, men still participate in the labor force at a higher rate than women. In 1950, 59.9 percentage points separated the labor force participation rates of men and women in this age group (86.9 percent and 27.0 percent, respectively).

That gap narrowed to 12.1 points in 2003 (68.7 percent for men and 56.6 percent for women), but men’s rates were still higher. If the general trends of the past 50 years continue, the rates for men and women aged 55 to 64 may converge in the future.

In 2010, the Baby Boom cohorts will be aged 46 to 64 and will be the primary factor in the growth of the near-old and young-old working populations. The size of the labor force that is aged 45 to 54 and 55 to 64 (spanning the Baby Boom cohorts) will grow by 7.4 million people between 2003 and 2010. The fastest-growing labor force group, people aged 55 to 64, will increase by over 20 percent by 2010.

Although most other age groups will also increase over this same time period (with the exception of people aged 35 to 44 in the labor force, who are expected to see a decrease of 7.3 percent), none will experience an upsurge that rivals that of those aged 55 to 64.5 Their decisions about whether to work past age 65 will affect the age composition of the labor force.

Civilian Labor Force by Age: 2003 and 2010

(In millions)

Note: The reference population for these data is the civilian non-institutionalized population.

Sources: 2003, Bureau of Labor Statistics.

Transitions to Retirement

The change from a full-time working career to complete retirement is not always accomplished at once; part-time employment or nontraditional work often bridges the move. This transition period can be called partial retirement, and researchers are recognizing it as an important component of an individual’s work history.

Bridge jobs (transitional stages between career employment and complete retirement) are becoming a more frequent part of the retirement process.6 Late-life work patterns take many forms, from a reduction in working hours to self employment to reverse retirement (when a retired individual reenters the labor market).

Older workers give a variety of reasons for being employed.

Many older workers work past full retirement age because they enjoy their jobs. One study listed the following reasons why people of varying ages worked:

● At ages 40–49, workers most often mention (in descending order) the need for money, their enjoyment of working, and the fact that work makes them feel useful.

● At ages 50–62, the most common reasons are the enjoyment of working and the fact that work makes people feel useful, followed by the need to make money.

● At age 62+, however, the need for money is a major reason for working for a much smaller percentage of workers; in this group, the enjoyment of working is the most frequently cited reason.

Work Status of Older Workers

The percentage of the population that is employed declines as age increases. In 2003, 65.6 percent of men and 54.5 percent of women aged 55 to 64 worked, compared with 11.8 percent of men and 6.2 percent of women aged 70 and older.

The proportion of older workers who work part-time increases with age for both men and women.

The majority of employed men aged 55 to 64 worked fulltime (89.6 percent), as did half of employed men aged 70 and older (53.3 percent). Similarly, 76.1 percent of employed women aged 55 to 64 worked full-time, compared with 39.0 percent of employed women aged 70 and over.

Occupations and Type of Employment

Occupations and type of employment also vary by age. After leaving a career job, many people choose to become self-employed, some turning to an activity that was previously a hobby, while others may work independently in their career field of expertise. Knapp and Muller (2000) found that older people are more likely than younger people to be engaged in certain kinds of alternative employment arrangements, such as being independent contractors, on-call workers, temporary help workers, and workers provided by contract firms.

For example, they found that older workers made up a larger share of independent contractors (7.0 percent) than of workers in traditional arrangements (2.5 Researchers have noted that self employment in the United States increases with age (Quinn, 1997).

In 2003, 10.3 percent of the working population aged 55 to 64 and 14.3 percent of workers 65 and older were self-employed in nonagricultural industries, compared with 6.8 percent of workers aged 25 to 54.

In 2003, a smaller proportion of workers 65 and older than those aged 55 to 64 worked in the public sector or the private sector, possibly due in part to early retirement opportunities from accrued pensions. On the other hand, a larger proportion of older workers than their younger counterparts were self-employed or worked in the agricultural sector.

Older women were more likely than older men to work in both the private and public sectors but less likely to be self-employed or work in agriculture.

The proportions employed in the private or public sectors were lower among older men than those aged 55 to 64, and the proportions that were in agriculture or were self-employed were higher.

The proportions of women aged 55 to 64 and aged 65 and over employed in the private sector were not different, while a smaller proportion of the older group than the younger group was employed by the government.

Similar to men, women aged 65 and over were more likely to be self-employed or work in agriculture than those aged 55 to 64.

Researchers point out two complementary factors that explain the higher proportion of workers aged 65 and over that are self-employed (Quinn, 1997).

First, people who are self-employed in their career jobs tend to retire later than traditional wage and salary workers.

Second, retirees often move into self-employment in their later years as a bridge job between career employment and complete retirement.

For older workers who do not want to leave the labor force permanently, self-employment often allows greater flexibility of work arrangements and hours spent at work.

Research that looked extensively at bridge jobs and the type of worker who chooses a bridge job after leaving a career place of employment indicates that women are more likely than men to enter a part-time bridge job (Quinn and Kozy, 1996).

Using data from the Health and Retirement Survey (HRS), these researchers found that bridge jobs are less common among Black women than either White or Hispanic women. For men, bridge jobs are more common among Hispanic men than among White or Black men.

Health, Wealth, and Education of Older Workers

Research has found that older workers are relatively healthy, prosperous, and well educated. A recent study found that “workers age 60 and older are half as likely as their nonworking counterparts to report that they are in fair to poor health. They are also almost two times more likely to report that they are in very good to excellent health” (Kilker and Summer, 2000, p. 3).

This research also found that older workers have higher family incomes and financial assets than their nonworking counterparts.

Using data from the Current Population Survey (CPS), the HRS, and the Asset and Health Dynamics Among the Oldest Old (AHEAD), Haider and Loughran (2001) affirmed that health plays an important role in determining whether one participates in the labor force at all ages, and this is true for older workers.

Less-healthy older individuals tend to leave the labor force through retirement, disability, or death, which results in a healthier older working population. This study also found that people who remain in the workforce at older ages are likely to have higher levels of education. They noted that data from 1991 to 1999 showed that, on average, labor force participation rates for people aged 50 and older were 23 percent for high school dropouts and 62 percent for those with more than a college level education.

A similar pattern emerged when looking at wealth. Haider and Loughran found that the median bequeathable wealth of the working population grows with the worker’s age, while the median bequeathable wealth of the nonworking population increases through ages 68 to 70 and then declines. By the ages of 77 to 79, the median bequeathable wealth of those who were working ($226,500) was more than double that of those who were not working ($112,300). Older workers may continue to contribute to their savings and pension plans, increasing their bequeathable wealth.

Labor force participation rates between the highest and lowest wealth quintiles grow increasingly disparate as age increases.

At ages 65 to 67, the labor force participation is 23 percent in the lowest two quintiles and 26 percent in the highest two quintiles. At ages 77 to 79, they were 9 percent for the highest two quintiles and 5 percent for the lowest two. For older men aged 77 to 79, the difference was larger, at 15 percent compared with 5 percent. Haider and Loughran (2001) observed, “Noting that these quintiles represent equal population shares, it is evident that labor force participation becomes increasingly concentrated among the wealthiest individuals with age.”

Unemployment

The Bureau of Labor Statistics classifies people as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work (Bureau of Labor Statistics, 2002).

A recent study using data from the Displaced Workers Surveys (DWS) found that 3-year average job loss rates for older workers declined during the 1980s, increased from the period of 1989 to 1991, and declined again slowly during the 1990s until the period of 1999 to 2001, when they increased again (Farber, 2003).

Chan and Stevens (2001), using data from the HRS, examined the employment patterns of workers 50 and older who had experienced an involuntary job loss. They found that losing a job at an older age tends to create a long unemployment spell and a low probability of returning to work.

Older people take longer than younger people to find work, and if they are displaced from their jobs, it is harder for older workers to find another job. Statistics show that by January 2002, less than half (49 percent) of all older workers displaced from January 1999 to December 2001 had found another job, compared with two-thirds (67 percent) of displaced workers aged 25 to 54.

At 2 years after a job loss in their fifties, 61 percent of displaced men and 55 percent of displaced women were subsequently employed— compared with employment levels of 91 percent and 88 percent, respectively, for those who had not previously lost a job.

When unemployed older workers find new employment following a job loss, the new jobs tend to be short-lived, or the post displacement employment spells tend to be short.

Age Discrimination

The Age Discrimination in Employment Act (ADEA) of 1967 explicitly prohibited age discrimination against people aged 40 to 65, with a few exceptions. Many amendments have since been added to this act.10 The Age Discrimination Act of 1975 expanded coverage to all programs or activities receiving federal assistance.

In 1978, amendments extended the mandatory retirement age to 70, and in 1986 the upper age limit was removed entirely, prohibiting mandatory retirement based on age.

The effect of the ADEA legislation has been the subject of recent studies on older workers. Research shows that prior to the enactment of the ADEA, hiring discrimination against older workers as well as discrimination in promotions, training, and other areas was evident.

Since the passage of age discrimination legislation at both the state and federal levels, evidence indicates that the ADEA and related acts have boosted the employment of older workers (Neumark, 2001).

Although precise estimates of the incidence of age discrimination are not available, Rix (2003, p. 5) states that “age continues to work against many older men and women, as evidenced by the length of time it takes so many to find employment, the wage loss so many experience upon reemployment, and the size of court awards to victims of discrimination.”

Reasons for Retirement

The decision to retire is often affected by economic, social, familial, and health factors. Haider and Loughran (2001) found that nearly 25 percent of people retiring between ages 50 and 58 cited poor health as a “very important” reason for their retirement decisions, compared with 35 percent of those retiring between ages 59 to 61.

This percentage declined to 13 percent for retirees aged 68 to 74 before increasing to 25 percent for those aged 75 and older.

Few retirees aged 50 and over reported retiring because they did not like their work, while a larger proportion cited wanting to do other things or spending time with family as important reasons.

Using the HRS, Gustman and Steinmeier examined the effects of the stock market boom on retirement behavior and found that the extraordinary returns in the stock market in the late 1990s, which more than doubled stock prices and unexpectedly increased the value of a mixed portfolio by nearly 60 percent, increased retirement for the HRS sample of older workers by over 3 percentage points by the turn of the century and would have decreased the average retirement age by about a quarter of a year if it had not been interrupted.

The subsequent decline in the market, which nearly wiped out the gains that had been made during the preceding surge, effectively neutralized the effect of the preceding stock market gains on retirement. (Gustman and Steinmeier, 2002a, abstract.)

The 2003 Retirement Confidence Survey found that American workers’ confidence in their ability to retire comfortably remains relatively high. The study also noted that many workers have not been affected by the stock market decline because they did not have much, if any, money invested in the stock market (Employee Benefit Research Institute [EBRI], 2003a).

Source: U.S. Census Bureau

The report 65+ in the United States: 2005 [PDF]

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