Employment of Workers Over Age 55

            In early 2001, when I was 6, my Dad’s company went bankrupt, and he consequently lost his job. Immediately, he began to search for work. The process began with a pack of back hair dye. At the time, my Dad was 58, and believed his age would work against him in his search for employment.

            Fortunately, the U.S. economy prospered during this period. Soon, my Dad got a job with an engineering firm in Cleveland. His successful reentry into the workplace is part of the general increase in employment of older people, attributed by the Wall Street Journal to “changing incentives in Social Security,”  improved health, and a surge in attempts by older people to gain employment after their 401(k) balances were hit by the financial crisis.

              As Social Security incentives changed, workers had more incentive to remain in their jobs as the longer they delayed their retirement, the larger their benefits. According to the SSA, if workers retire before 62, they run the risk of having their benefits reduced by up to 30%. As people respond to incentives, this factor, among others contributed to raising rates of older people remaining in the work force.  Similarly, employers have made cuts to retiree health insurance to reduce input costs to production. This lead workers to strive towards working past 65, when they would qualify for Medicare.  

            Also mentioned by the WSJ article in the rise in employment of those over age 55 was a general increase in the American workers’ life span by 3.5 years since 1980. This situation created an increase in supply of older workers. As the economy suffered, businesses began to see to benefits of hiring and retaining older workers, creating a rise in demand for them. The primary reason for this was the reduced labor cost of workers over 55 coupled with with no harm to efficiency through hiring them, according to the NY Times.

            Perhaps most influential in the rate of older workers work place was the financial crisis hitting their 401(k)’s. Once again, my Dad is in this set of people. Before the crash, he had planned to retire, like many, at 65 to qualify for Medicare. Regrettably, the financial crisis set back these plans. He had to make a decision at the margin, and decide whether to carry on with his plans, or retire at an older age. At an opportunity cost of additional years of work, he decided to push his retirement back to when I graduate.

            These factors laid the groundwork for what we see in the economy today- higher unemployment in those under age 55 than older people actively seeking work. However, though there has been a comparative rise in the employment of older people, today’s economy does not necessarily suit their best interests, as those who do lose their jobs struggle more than the average worker to regain employment, and their 401(k) balances continue to experience anemic growth.