Retirement Security: News

May Unemployment Report for Workers Over 55  

The Bureau of Labor Statistics (BLS) today reported a X.X% unemployment rate for workers age 55 and older in May, a decrease/increase of X.X percentage points from April.

Near retirees with inadequate retirement savings face a stark choice between working longer to increase their retirement savings or retiring without adequate income. However, black men are more likely than white men to face a tradeoff between cutting their standard of living and never getting to retire.Tweet: #Jobs Report: Senate jeopardizes retirement coverage for over 1/2 million older workers</a>/a>;

The racial mortality gap narrowed between 2005 and 2015, reflecting significant mortality reductions for black men, while white male mortality rates barely budged. At 2005 mortality rates, 17.6% of black men aged 55 died by age 65, compared to 10.2% of white men, a difference of 7.4 percentage points. By 2015, 15.4% of black men aged 55 died by age 65, compared to 10.4% of white men, a difference of 5 percentage points.

Compared to Whites, a smaller share of black workers age 55 survive to either the early retirement age (ERA) age of 62 and even fewer to 67, the age those born 1960 or later collect full Social Security benefits. Even fewer Blacks live to 70, the age Social Security benefits max out.

Every worker is entitled to a secure and dignified retirement. Raising the early retirement age and increasing the full retirement age would further reduce the share of workers who can look forward to retirement. More people will die without retiring.

Rather than cut Social Security benefits -- raising the full retirement age from 65 to 67 reduces Social Security benefits by 13% -- policy makers should strengthen Social Security and provide all workers with Guaranteed Retirement Accounts (GRAs). GRAs are individual accounts requiring contributions from both employees and employers and government  throughout a worker’s career. They provide a safe, effective vehicle for workers to accumulate personal retirement savings.

Image Source: Centers for Disease Control and Prevention, National Center for Health Statistics. Compressed Mortality File 1999-2015 on CDC WONDER Online Database, released December 2016. Data are from the Compressed Mortality File 1999-2015 Series 20 No. 2U, 2016, as compiled from data provided by the 57 vital statistics jurisdictions through the Vital Statistics Cooperative Program. 






Low-Paying jobs




Median Weekly earnings




 Percent without Pensions

Cohort Size PB figure 1

Inadequate retirement savings will force millions of older Americans to seek work at older ages. Many who delay retirement will find work, but no study has looked at the effect on wages. ReLab's new policy brief, "Larger Birth Cohort Lowers Wages," shows that being a member of a super-sized birth cohort has depressed Boomers’ wages throughout their careers.

Labor market crowding caused by Boomers delaying retirement will continue to reduce their wages in old age relative to what would have happened had their share of the labor force declined at the same rate as prior generations.

The reduction in wages resulting from the increase in older workers provides a cautionary note to those advocating delayed retirement as a solution to the retirement savings crisis.

Key Findings:

  1. Boomers’ (born 1948 to 1964) real wages adjusted for in ation grew less than other generations. Boomers’ wages grew an average of 3.9% a year when they were young and 0.7% when they were prime-aged, compared to 5.0% and 0.9% for the Silent Generation (born 1925 to 1947) and 6.3% and 1.3% for Generation X (born 1965 to 1982).
  2. Boomers are staying in the labor force longer than prior generations. Boomers’ share of the labor force has declined 27 percentage points in the three decades after the cohort reached their highest share of the labor force, whereas the Silent Generation’s share declined 31 percentage points in the three decades after their peak, and the Greatest Generation’s share declined by 46 percentage points.
  3. If Boomers’ share of the labor force declined at the same rate as that of the Silent Generation, high school-educated Boomers would have earned $800 more in 2015, Boomers with some college-level education would have earned $1,500 more, and Boomers with a college degree would have earned $1,700 more.

Figure 1 Source: Authors’ calculations using data from the Annual Social and Economic Supplement of the Current Population Survey (CPS ASEC), 1964- 2015.
Note: Annual average growth in real median earnings of full-time high-school educated males. We lack data for Greatest Generation, ages 22-34. 

April Unemployment Report for Workers Over 55  

The headline unemployment rate for workers aged 55 and older is still low – 3.2% in April, according to today’s jobs report from the Bureau of Labor Statistics.

After Tuesday’s Senate vote to deny 63 million workers1 coverage through state-level retirement savings plans, fewer people will be able to retireTweet: #Jobs Report: Senate jeopardizes retirement coverage for over 1/2 million older workers</a>/a>;.

Our “Older Workers at a Glance” (OWAAG) feature highlights how, despite a low unemployment rate, older workers condemned to work till they drop face difficulty finding jobs that allow them to save for retirement.

This month, we expand and update OWAAG to provide a comprehensive picture of older workers’ experience in the labor market. Highlights include:

  1. ReLab’s U-7 - a ReLab-constructed index that captures the true unemployment rate. ReLab’s U-7 measures the share of the older labor force who are unemployed, discouraged workers, or involuntarily working part-time but wanting a full-time job.
  2. Long-term Unemployment - A new feature using the Bureau of Labor Statistics definition of long-term unemployment - the share of older unemployed workers jobless for at least 21 weeks
  3. Low-paying Jobs - A new feature documenting trends in the share of college-educated older workers earning less than $15 per hour in real (2016) dollars
  4. Median Weekly earnings - Now updated quarterly rather than monthly, in line with Bureau of Labor Statistics conventions designed to limit volatility

Tracking older workers’ labor market outcomes is important for two reasons. First, low wages and a lack of retirement plan coverage make it difficult for many to save for retirement. Second, forcing older people to work longer by cutting Social Security benefits by a direct cut to benefits or raising the retirement age is not a solution to the retirement crisis.2 Many cannot work longer due to ill health or lack of employment opportunities, while increased competition for jobs lowers wages which makes the retirement savings crisis worse.

Instead, the federal and state governments need to provide all workers with Guaranteed Retirement Accounts in addition to Social Security. Guaranteed Retirement Accounts (GRAs) are individual accounts requiring contributions from both employees and employers throughout a worker’s career. GRAs provide a safe, effective vehicle for workers to accumulate personal retirement savings.

1We estimate 63 million workers age 25-64 in the public and private sector combined, including self-employed workers. AARP estimates 55 million workers age 18-64 in the private sector, excluding self-employed workers.
2Raising the Full Retirement Age from 66 to 67 is equivalent to a 6.7 percent cut in benefits because workers claiming at age 66 will no longer receive full benefits but will instead suffer a one-year early claiming penalty.




Low-Paying jobs




Median Weekly earnings




 Percent without Pensions

SCEPA’s Retirement Equity Lab (ReLab) is honored to be selected to participate in AARP’s Social Security Innovation Challenge. The project supports research by SCEPA Director Teresa Ghilarducci and ReLab Research Director Anthony Webb on “Catch-Up Contributions: A Voluntary, Equitable, and Affordable Solution to the Retirement Savings Crisis.”

AARP launched its Innovation Challenge in 2016 to identify and support policy proposals to strengthen Social Security. After receiving an “overwhelming number” of submissions, ReLab’s proposal is one out of seven chosen after a blind review by an expert panel.

Ghilarducci and Webb’s proposal aims to alleviate the lack of retirement savings amongst older workers and retirees by allowing workers to make “catch-up” contributions to Social Security via increased payroll deductions starting at age 40 or 50. At age 40, the contribution would constitute an additional 1.86% of salary in payroll taxes; at age 50, the contribution would be 3.1% of salary. Workers would be defaulted into the program with the ability to opt out – this way, contributions are viewed as a purchase of valuable future benefits rather than as a tax. The employer contribution would remain unchanged to ensure that older workers seeking employment would not face additional age discrimination.

March Unemployment Report for Workers Over 55

The Bureau of Labor Statistics (BLS) today reported a 3.4 percent unemployment rate for workers age 55 and older in March, unchanged from February.

Elderly Poverty Rates

While the unemployment rate for older workers remains low, many lack a pathway to a secure retirement. Over one third (37%) lack access to a retirement plan at work.

Despite the need to expand coverage to curb old-age poverty, city efforts to create auto-IRAs for private sector workers are under attack by the GOP-controlled Congress. Last week, the Senate voted to jeopardize initiatives by New York City, Philadelphia, and Seattle that would extend retirement plan coverage to 3.7 million workers, over half a million of whom are near retirees Tweet: #Jobs Report: Senate jeopardizes retirement coverage for over 1/2 million older workers</a>/a>;.

These cities were relying on legal guidelines issued by the Department of Labor that the Senate voted to roll back. While city legislators have declared their intention to continue, in the absence of these protective regulations, the initiatives will likely end up in court.

City and state initiatives are an indication of the political will for reform and are a first step to reform at the federal level, such as Guaranteed Retirement Accounts. This proposal would give all workers access to safe, effective retirement accounts by requiring both employee and employer to contribute 1.5% of pay over a lifetime.



GOP-Controlled House Votes on Resolution to Undo Federal Regulations Supporting State Efforts to Provide Retirement Savings Accounts to Uncovered Workers

Today’s vote in the U.S. House of Representatives to overturn regulations supporting state efforts to provide retirement savings accounts to private sector workers risks denying retirement savings plans to 63 million workers without access to employer-based plans. This includes 23 million people who will lose coverage in the seven states that have enacted plans, including California, Connecticut, Illinois, Maryland, New Jersey, Oregon and Washington, and 40 million people who will lose coverage in the 28 states that are considering similar legislation.

“If Republicans succeed in rolling back DOL regulations, they will destroy the best chance 63 million American workers have of getting access to a retirement plan,” said Teresa Ghilarducci, director of the Retirement Equity Lab (ReLab) at The New School. “These states took the responsible first step to save their residents from a retirement crisis defined by low coverage and inadequate savings and protect their taxpayers from the fiscal crisis resulting from millions of indigent elderly. This would be a painful step backwards for the millions who are shut out from the dwindling number of employer-sponsored plans.”

State by State Uncovered Workers

According to ReLab’s calculations using the U.S. Census Bureau’s Community Population Survey, of the 161 million workers in the United States, over half - 54.2% or 87 million workers - do not have access to a retirement plan at work.

The U.S. House of Representatives is set to vote today on a Republican-sponsored Congressional Review Act resolution to overturn the Department of Labor’s final rule, “Savings Arrangements Established by States for Non-Governmental Employees,” that provides legal support to city and states who have either enacted or are considering plans to provide retirement accounts to private sector employees who are not offered a plan through their employer. The regulations clarify and define the ability of states and certain cities to enact plans in coordination with the federal law known as ERISA (the Employee Retirement Income Security Act of 1974). ERISA provides federal protections for workers participating in most retirement and pension plans sponsored by private employers. Without this support, state plans will be left with legal uncertainties that could prevent implementation or enactment of state-administered IRA accounts for uncovered private workers.

“Evidence has shown again and again that access to employer-sponsored plans is the linchpin of retirement security. Without workplace plans, people simply don’t save enough to support themselves in retirement,” said Ghilarducci. “The breathtaking pace of state efforts to increase coverage reflects the political will to address a need that is not being met in the private market. Few workers without access to an employer-sponsored plan invest in an IRA, many of which come with high fees. In contrast, state plans will default uncovered workers into low-cost, state-administered IRAs.”

Since 2011, 35 states have proposed or enacted retirement reform to provide private sector workers access to retirement savings accounts. State plans, also known as Secure Choice Plans or SCPs, are state-level retirement plans designed to provide retirement savings accounts to private sector workers who do not have access to such a plan at work. Under SCPs, designated private-sector employers are required to automatically deduct a percentage of their workers’ pay and forward it to state-sponsored individual retirement accounts (IRAs). Accounts are individually owned and professionally managed administered by independent boards headed by state-appointed trustees. Under these plans, employees would have the right to change their contribution rates or opt out of making contributions.

On October 16, 2016, Richard Wolff of the University of Massachusetts Amherst hosted SCEPA Director Teresa Ghilarducci for “The Pension Crisis” (minute 30-58) segment of Wolff’s Economic Update. According to Ghilarducci, the guiding principle in any retirement system should be that “we all deserve time at the end of our working lives for our own lives, to control the pace and content of our time.” Wolff and Ghilarducci go on to discuss, what are pensions?, how have they changed?, and what is “the pension crisis”?

Ghilarducci highlights that the Social Security Act of 1935 (SSA) created the Social Security system and made old age benefits universal. Victories for labor unions continued into the 1950s and 60s, as negotiations held firms accountable to the standards set by the SSA. Pensions were originally defined-benefit plans, or a secure amount of compensation one would receive upon completion of their working life.

A well-functioning retirement system stabilizes the economy. A secure retirement allows people to make other long-term investments throughout their life, such as a home, real estate and education. It can be a path to upward mobility or at least a safeguard against downward mobility for future generations.

Our current pension crisis is characterized by the erosion of retirement security. Defined-benefit plans gave way to the current 401(k) defined-contribution system. In the defined-contribution system, benefits are voluntary, and more than half of workers do not have access to an employer-sponsored retirement plan. Lower earners are less likely to have access to a retirement plan, and higher earners can save more throughout their working life. This is the basis for a twin crisis of inequality and retirement insecurity. Without secure employer-sponsored plans, lower- and middle-income workers are working later in life, squeezing the years of retirement time that ought to be enjoyed. Even those who do have plans pay high fees on their IRA and have confusing and sub-par investment options, leaving many IRAs with negative returns.

“We need to revive that ambition we had to ensure quality of time in end of life,” says Ghilarducci.

Referring to the ideal of universal support set by the SSA, Ghilarducci calls for mandatory retirement savings. The pension system should benefit employees and the real economy rather than financiers of retirement accounts. She proposes Guaranteed Retirement Accounts as a well-managed public-private system to ensure retirement income for all workers. Twenty-nine states are currently in the process of pension reform toward public-private systems. Finally, there are steps individuals can take to support the need for retirement reform, including voting for representatives that would expand Social Security and Medicare.

January Unemployment Report for Workers Over 55  

The Bureau of Labor Statistics (BLS) today reported a 3.5% unemployment rate for workers ages 55 and older in January, a decrease of 0.1 percentage points from December.

The low headline unemployment rate hides a racial gap in the physical job demands faced by older workers. At all income levels, older black workers are more likely to experience physical demands at work than older white workers, Tweet: #JobsReport: Racial Gap in Older Workers’ Physical Demands At All Wage Levels</a> including requirements to lift heavy loads, stoop, kneel or crouch during most of the workday.

The racial gap, which exists at all wage levels, is largest among older low wage workers. The gap among those earning less than $22 an hour is 22 percentage points, with 62% of Blacks in physically demanding jobs compared to 40% of Whites. For workers earning between $22 and $40 an hour, the gap is 11 percentage points, with 43% of Blacks are in physically demanding jobs compared to 32% of Whites. The racial gap persists even for higher earners. For those in the top 20% of the earnings distribution making more than $40 an hour, the gap is 8 percentage points, with 24% of older Blacks are in physically demanding jobs, compared to 16% of older Whites.

This persistent racial gap means that proposals to increase Social Security’s Early Retirement Age would require black workers to continue to do physically demanding work at older ages. To enable all workers to retire - whether due to physical necessity or choice - policymakers should both expand Social Security and create Guaranteed Retirement Accounts (GRAs). GRAs are are individual accounts requiring contributions from both employees and employers throughout a worker’s career. They provide a safe, effective vehicle for individuals to accumulate personal retirement savings and receive lifelong income as a supplement to Social Security.



November Unemployment Report for Workers Over 55 Tweet:

The Bureau of Labor Statistics (BLS) today reported a 3.5% unemployment rate for workers age 55 and older in November, a decrease of 0.2 percentage points from October.

Older Workers in Rust-Belt States Flip

While “Older Workers at a Glance” shows steady growth in real earnings for older workers, national averages mask long-run stagnation and decline in the four rust-belt states - Michigan, Ohio, Pennsylvania, and Wisconsin - that unexpectedly voted for Donald Trump after voting for President Obama in 2012. 

Before Reagan, older workers in these four states received higher wages than older workers in the rest of the country. Now they are doing worse. In 1979, rust-belt older workers were making $3,600 more than their counterparts elsewhere. In 2015, they were earning $4,000 less. Between 1979 and 2015, the median real wage for older workers in the four rust-belt states that flipped to Trump increased only 1% compared to 17% in the rest of the U.S.

Stagnant and declining real wages erode workers’ ability to save for retirement and increase their reliance on Social Security. To address the economic insecurities of working families, the Trump administration needs to create a path to a secure retirement by expanding Social Security and providing universal access to secure retirement plans through Guaranteed Retirement Accounts.


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NEFE 2 graphUSA Today reporter Michael Molinski's article, "Don't Be a Retirement Saving Sucker: 401(k)s Not for Emergencies," discusses a report by SCEPA's Retirement Equity Lab (ReLab) titled, "Household Economic Shocks Increase Retirement Wealth Inequality." 

Economic shocks, such as job-loss, have a particularly adverse effect on the retirement savings of workers in low-income households, exacerbating retirement savings inequality. Low income households are more likely than moderate- and upper-income households to experience economic shocks. Workers in low-income households are also more likely to withdraw from their retirement account after a shock. ReLab's study shows that these shocks have significant effects on the finances of low-income households, causing up to a third of all withdrawals, and possibly more.

“It is not that low-income households are making the wrong decisions, they just have too many obstacles to overcome,” said Siavash Radpour, a research associate at SCEPA. The policy recommendations of this research include a prohibition on pre-retirement withdrawals and a contribution mandate in the form of Guaranteed Retirement Accounts.