Last week in our Immigration blog, The common wealth, we discussed how difficulty in accessing higher education was causing the American dream to become a nightmare for DACA recipients. This week we are going to look at another sector of the populous for whom that same dream –the promise that going to school, finding a job, buying a home, raising a family, and working hard will eventually pay off in a comfortable retirement- may be looking a little tarnished -people beyond retirement years.
They say 70 is the new 40. Given the advances in modern medicine and improved health consciousness, many people who we’d traditionally think of as ready for retirement are staying in the work force longer than individuals just one or two generations ago. Many Americans continue contributing to the workplace, lending their experience, and even opening their own businesses well into their 70s rather than heading off to the golf course or carting around grandchildren.
According to the Pew Research Center, 9 million Americans age 65 or older-19% of the population- are working either part or full-time. That’s a steady increase since the turn of the 20th Century and in fact has more than doubled. The share of older workers has risen even when overall unemployment fell, and more are working full time.
In many cases sexagenarians and septuagenarians are staying in the workplace not because they enjoy good health and want to remain active. Unfortunately a great number of people are there because they simply don’t have a choice.
Beginning about 30 years ago, there was a shift in how companies treated retired workers. In the 1980s companies began dropping traditional pensions, forcing workers to become more dependent on personal savings. The concept of a pension itself is relatively new, fairly short-lived, and basically only existed during the mid 20th Century. The first pensions were offered by American Express in 1875, but under union pressure many companies began to adopt the idea. By the 1980s defined benefit pensions were the norm. Then things started changing because of three main factors:
In 1950 the average life-expectancy was 68, meaning a pension only had to last 3 years past the typical retirement age of 65. Today average life-expectancy is 79, and now only 24% of workers have traditional pensions. In 1978 Congress first set up 401(k)s, and workers began moving from traditional pensions to retirement accounts, which of course are at the mercy of fluctuations in the stock market. These retirement accounts were meant to supplement Social Security, which today barely covers basic needs.
According to the Fed’s 2016 Survey of Consumer Finances almost half of U.S. families don’t have any retirement account at all. Those who do don’t have enough funds. Estimates vary but one rule of thumb is to have built up a nest egg of 5-8 times your pre-retirement salary. The median savings account of workers is $25,000 -far less than what the average person would need per year to maintain their lifestyle.
The Bureau of Labor and Statistics notes U.S. seniors are employed at the highest rate in 55 years, and this trend will continue-by 2024 36% of 65-69 year olds will be in the labor market. We know that part of this is due to lack of resources needed to retire fully, but it’s not the whole story. People also continue to work past retirement age because of rising healthcare costs and stagnant wages.
So what are the implications? First of all, the job market is directly impacted by older workers holding on to their jobs, leaving less opportunity for entry-level workers. Furthermore, when defined pensions were more the norm, it was often easier for companies to weather down-turns in the economy by “easing” older worker into retirement, sometimes by enhancing pensions as an incentive. Perhaps the most important point is not only the fact that seniors are working longer but one need look at the type of work they’re engaged in. According to the Center for Economic and Policy Research (CEPR), 37% of males and 31% of females 58 and older hold what are considered physically demanding jobs. These jobs are also disproportionately held by minorities and those with lower levels of education. “Physically demanding” includes jobs requiring standing all day, lifting heavy objects, working outdoors, and with hazardous materials.
It’s natural that there will be change as a nation ages, its populace matures, and as the nature of the workplace itself is transformed. But what shouldn’t be altered is the very spirit of what our nation has to offer and the ability of its citizens to continue to see that promise as a bright, shining object still within their grasp. Maybe it’s time to burnish the American dream
posted by Amy Levengood