The Covid-19 pandemic worsened many pre-existing economic inequalities, including the precarious situation of Black and non-white workers and the pressures on women juggle work and care responsibilities. The pandemic also magnified the economic pressures on vulnerable older workers, and our post-pandemic equity and economic policies must include them.
Why are older workers important to the economy? First, they make up a surprisingly large portion of the American workforce and are essential to a full economic recovery. About one in four workers is old 54 have ended and by 2029 their participation will grow.
The U.S. Bureau of Labor Statistics and an analysis in The New School’s Retirement Equity Lab quarterly report on older workers show that of the six million jobs expected to be added to the economy by 2029, 4.4 million will be filled by workers over 55. That’s more than 70 percent of all expected new jobs. Workers over 65 have higher projected workforce growth rate of any age group.
Many older workers would like to retire, but cannot afford it. As our private pension system has moved from defined benefits (a regular and predictable flow of payments) to defined contributions [401(k)-type plans that depend on people’s individual contributions], retirement is much more difficult, especially for low-income workers.
meconomist Teresa Ghilarducci, director of the New School’s Schwartz Center for Economic Policy Analysis (SCEPA), calls the 401 (k) system a “failed experiment.” (She is my colleague and also my wife). It rewards very high-income people with most of the tax breaks, while many workers have meager balances or no plans. Work at SCEPA (our most valuable resource on older workers and the economy) shows that there is virtually no 401 (k) coverage for the 50% of the workforce with lower wages and inadequate financial balances even for those with a plan.
But despite inadequate retirement coverage and the need to keep working, the pandemic recession has forced many older workers in premature retirement. SCEPA finds that “at least 1.7 million more older workers”He retired earlier than expected in the pandemic.
As with other economic outcomes, the damage is not evenly distributed. Black workers and those without a college degree suffered much higher rates of early retirement, while they had lower retirement wealth to begin with. SCEPA estimates that in 2019 older workers with a college degree lived in households with an average of $ 167,000 in retirement savings. But for households without a college-educated worker, the average savings was just $ 9,000.
So if the economy needs workers, and these older workers need money, why don’t they keep working? The pandemic hit older workers hard; SCEPA finds that “Unemployment rates for workers over 55”it remained above rates for mid-career workers for the first time since 1973. Older workers were disproportionately concentrated in vulnerable jobs and faced discrimination from employers. “They lost jobs faster and got back to work more slowly” than their mid-career counterparts. And for older blacks, women, or those with less credentials in education, the challenges were even tougher.
The market will not correct these problems. Continued age discrimination, skills mismatches with increased technology, inadequate training programs, and a lack of retirement savings mean that older workers remain vulnerable to economic exploitation.
SCEPA has a valuable comprehensive policy guide to address these issues. A key proposal is the creation of an Office of Older Workers in the Department of Labor (DOL), inspired by the innovative Women’s Office founded in the roaring 1920s when the nation’s demand for labor outstripped supply and women emerged as voting citizens. The DOL already has offices focused on veterans, disabled workers, and women, and this new office would provide information, analysis, and policy ideas to federal agencies, businesses (especially small businesses), unions, state and local governments, and community colleges and training providers. .
Older worker issues cut across economic sectors and federal programs (including Social Security, disability, Medicare and Medicaid, job training and education, and health care), but many stakeholders have limited insight into complex issues and interconnectedness faced by older workers. There is no unified source of analysis and information that analyzes all of these programs and stakeholders in a systematic way. An Office of Older Workers would fill this gap, improving program performance and helping businesses and workers plan and perform better.
Other reforms include lowering Medicare’s age to 50 from the current 65 and making Medicare the “first payer” rather than a backing from private insurance. This would remove cost pressures from many businesses, especially small ones. And it could actually save money in the long run, as more workers would have health care that would help them avoid a sudden and costly decline in health as they age.
There are other good ideas, including expansion Social Security (especially for those who earn less), President Biden’s proposal compulsory paid leave, fighting age discrimination in the workplace and creating guaranteed retirement accounts, which it’s a 15-year proposal to cover all workers who currently lack private retirement plans.
But the essential first step in helping older workers and the economy is for policy makers, advocates, businesses, and all of us, to recognize the economic importance and challenges older workers face. Without attention to their needs, both they and the economy in general will suffer.