Retirement Security: Grants
In collaboration with the W.E. Upjohn Institute for Employment Research, SCEPA published a report that details the corrosive economic effects the Great Recession has had, and continues to have, on older unemployed workers. The paper, Unemployed Older Americans: A Profile, is based on data from the U.S. Census Bureau's Survey of Income and Program Participation (SIPP).
The U.S. labor force is aging, and so are the people who are unemployed. In March 2011, the U.S. population comprised 305 million people, of whom 36.6 million were age 55-64; over a third (37.5%) of that population were not working -- 4.1% were officially unemployed, and 2% of those out of the labor force were discouraged workers. If we include discouraged workers among the unemployed, 4.8% of older Americans were willing to work but did not have a job in 2011. And these rates are up from the date the recession officially ended in March of 2009. At that time, the official unemployment rate for older workers was 3.04%, the discouraged rate was 1.71%, and the fraction of older Americans who were willing to work but unable to find a job was 3.57%.
While the harm caused by unemployment is unique to each person, this study focuses on the staggering variety of challenges and perils shared by older people. Our analysis results in three broad findings.
First, across every category, for instance male, female, white or nonwhite, an older unemployed person is now more likely to be unemployed longer than any other age group, including teenagers (Johnson 2009). As a result, older people who lose their jobs have a higher risk of remaining unemployed and withdrawing permanently from the labor force in involuntary early retirement.
Second, older workers who retire earlier than expected are less likely to have pension income or household wealth compared with those who retire voluntarily (Munnell 2008) and face higher rates of depression and anxiety (Bender and Jivan 2005 and Bonsang and Klein 2011).
Third, being unemployed is always trouble, but if you are in your late fifties, but not yet 64, you are in big trouble. Why? The age for eligibility for Medicare is age 65, but older people in general, and especially those who are unemployed, tend to experience a steep increase in need for medical care earlier than age 65 (Tu and Liebhaber, 2009). We also find that a loss of health care coverage among this group may cause economic losses beyond those who are unemployed and aged 55-64. The larger population may pay a higher price as uncompensated health care expenses incur. Moreover, since older Americans are more likely to withdraw from the labor force after experiencing a long bout of unemployment (Coile and Levine 2006), we speculate about whether job retraining programs designed to draw this population back into the workforce make sense.
This research is timely in light of the current discussion of the micro impacts of the Great Recession and for debates about the role of jobs and healthcare policy.
SCEPA is partnering with New York City Comptroller John C. Liu on Retirement Security NYC, a major initiative to protect the retirement security of public employees while ensuring the city's financial health by "battling rhetoric with research." The initiative will conduct and publish a series of research studies from SCEPA and the National Institute on Retirement Security (NIRS) that focus on the municipal workforce and pension reform.
Comptroller Liu invited SCEPA to participate in the initiative due to our Retirement Income Security Project (RIS). This project is led by Director Teresa Ghilarducci, a national expert on pensions and retirement issues. Ghilarducci's retirement reform proposal, Guaranteed Retirement Accounts (GRAs), would guarantee safe and secure retirement income for all Americans.
The Rockefeller Foundation's Campaign for American Workers is supporting innovative work to develop "innovative products and policies to increase economic security within the U.S. workforce, particularly among poor and vulnerable workers." The Foundation has recognized that one of the most critical problems facing the workforce is the inadequate provision of retirement security. The Schwartz Center for Economic Policy Analysis (SCEPA) is poised to help solve this problem by advancing policies that will enable all workers to invest regularly for their retirement, including changing tax incentives and subsidies so that all workers have access to the efficient and professional pension institutions available to public sector employees, college professors, and some private sector employees.