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 retire.
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:
- 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.
- 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
- 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
- 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.