Insights Blog

Why We Need An Older Workers Bureau

August 4, 2021

(This article initially appeared in a Forbes column authored by SCEPA Director Teresa Ghilarducci)

Over the past quarter-century, the American labor market went through a quiet transformation. The share of workers 55 or older more than doubled, rising from 12% in 1995 to nearly 25% in 2020. At no point in U.S. history have older workers been more essential, and economists predict the trend to continue.

Yet this transformation has received scant attention from the federal government. The growing numbers of older workers make it imperative that policy makers understand the reasons why elders work and the conditions they face. Divisions of race, class and gender will drive gaps in wealth, health and wellbeing in retirement. Shockingly, no part of the Department of Labor actively monitors these questions. 

Luckily, there is a blueprint to follow. When women made up 20% of the workforce in 1920, the government addressed their unique needs in the labor market by forming the Women’s Bureau in the Department of Labor. The time is now for an Older Workers Bureau. 

Pressing questions for the Older Workers Bureau

The Covid-19 recession is exhibit A in the case for why we need an Older Workers Bureau (OWB). Since pandemic unemployment spiked in April, older workers have experienced higher unemployment rates than mid-career workers—the first time in nearly 50 years that older workers have suffered such a persistent unemployment gap relative to mid-career workers

The unemployment gap raises important questions. Do older workers just happen to work in jobs hit harder by the pandemic? Or did some employers decide to take the opportunity to offload older workers? The OWB would take the lead in sorting these urgent questions out. 

The work of an OWB would be an essential complement to the work lawmakers are doing to address the challenges to older workers brought about by the pandemic. As Representative Don Beyer (D-Va.) said, “If you’re in the 55 to 65 range, it’s not just six months, a year or a year and a half, it’s the rest of your life that is affected by this.” Representative Richard Neal (D-Ma.), who introduced legislation addressing retirement security in October, said, “Covid-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security.”

Bargaining power and retirement

Covid-19 may present the most pressing questions, but it is hardly the only challenge facing older workers. The OWB has the potential to help tackle a variety of issues facing elders in the labor market, many of them revolving around the notion of bargaining power.

Workers with bargaining power get better pay, better benefits, and healthier and safer jobs. But older workers are experiencing a dramatic decrease in their bargaining power on the job. Boomers’ wage growth has been consistently slower than that of previous generations, and returns to experience have been falling for decades. That means an extra year of experience on the job pays less and less as time goes on. 

The erosion of unions and job protections weakened leverage for Boomers. Since most older workers have inadequate retirement savings, they have no “walk-away” option in wage negotiations—their fallback option is poverty or near-poverty in retirement, giving employers the upper hand. The result is lower bargaining power not just for older workers, but for all workers.

An OWB could explore why bargaining power has fallen for older workers and help coordinate all parts of the federal government, and state agencies also, to help older workers find and keep good jobs. 

Working longer is a risky proposition

The twin problems of falling bargaining power and inadequate retirement balances lead some to argue that working longer is the answer. Older workers can make up for lost ground by putting off their retirements to age 66 or 70—or never! 

The work-longer argument makes two risky assumptions. First, it assumes that all workers choose to retire. In reality, we find that at least half of retired workers enter retirement involuntarily. The work-longer argument also assumes that those working longer also delay claiming Social Security and contribute steadily to retirement plans. The reality is far from the ideal. Many older workers claim Social Security while working, and retirement contributions in workers’ final years on the job usually aren’t enough to make up the gap.

An OWB could be essential in helping us understand exactly who can and should work longer, how to ensure quality work at older ages, and how to help everyone else transition to retirement. 

Age discrimination, worker training and empowerment

For the OWB to be effective, it would fulfill three broad functions: identify and analyze issues of concern for older workers, devise innovative policies to address these issues, and engage in outreach and education. That last point is crucial: the OWB should play an empowerment role.

One of the major issues facing older workers is age discrimination. As a recent AARP study found, about a quarter of older workers who are underemployed (for reasons other than health and family) cite age discrimination as a reason. Yet many older workers lack awareness of their rights regarding discrimination. Another recent AARP study found that while a majority of older workers know age discrimination is illegal, shockingly few know the law applies to them.

A related problem is that of worker training. Training programs often avoid older workers because they are more difficult to place, and training programs want to be evaluated favorably. Research shows older workers face barriers to entering retraining programs.

A new U.S Older Workers Bureau would help empower older workers and rationalize the transition to full and partial retirement. No government body currently plays this role. As older workers make up an increasingly large part of the U.S. labor market, it is long past time that we form an Older Workers Bureau to hear from older workers and their employers, investigate their needs, coordinate the vast resources of the U.S. government and modernize age discrimination laws and worker training.