Snapshot for July 16, 2003.
Older workers staying in the labor force
A recent labor market trend is that more and more older people are remaining in the labor force. By the end of 2002, the share of those between the ages of 55 and 64 who were in the labor force-either working or unemployed-rose to 62.9%, its highest level during the post-war era.
Although there has been a steady increase in the share of the near elderly (those between the ages of 55 and 64) in the labor force since 1985, their share has grown rapidly in recent years. From the end of 2000 to the end of 2002, the number of near elderly in the workforce has increased 3.1 percentage points—1.6 percentage points per year. In the previous 15 years, the increase in the number of near elderly in the workforce totaled only 5.5 percentage points, or 0.4 percentage points per year.
The acceleration of the share of the near elderly in the labor force has been attributed to a loss in retirement savings as the stock market crashed in early 2000, decreasing access to health insurance for early retirees, and rising health care costs for the near elderly and the elderly.
More of the near elderly are in the labor force because older workers are staying in the labor force longer instead of retiring, not because people who had already been retired are returning to the labor force. While there has been a clear trend of rising numbers of near elderly in the labor force, there has also has been a gradual trend toward a smaller share of near-elderly reentrants into the labor force (see figure). Thus, the loss of retirement wealth, and more importantly, the loss of access to retiree health insurance, keeps older workers in the labor force longer than before.
Source: Bureau of Labor Statistics, Current Population Survey.
This week’s snapshot was written by Christian E. Weller.
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