Older Workers Report

Larger Shares of Older Workers are Working in Low-Wage Industries

April 3, 2015

Brief — March 2015 Unemployment Report for Workers Over 55

On April 3, the U.S. Department of Labor reported the unemployment rate for older workers fell from 4.3% in February to 3.9% in March.  As a sign of labor market strength, 200,000 older people joined the ranks of the employed and job seekers, which increased labor force engagement from 39.7% to 39.9%. Employment for workers aged 55 and over increased by more than 300,000, increasing the employment-to-population ratio for older workers from 38.0% to 38.3%.

The rise in employment among older workers is good news, decreasing the number of older workers queuing for job vacancies. But what types of jobs are older workers landing? Instead of extending middle-class careers, larger shares of older workers are working in low-wage industries.

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The data shows that all American workers with bachelor's degrees have moved increasingly into service and retail jobs. However, the portion of educated older male workers moving into low-wage jobs is even higher. The proportion of men ages 55-62 working in service increased by 45.7% from 1980 to 2010. In 1980, over a fourth - 27.2% - of men with BAs worked in service jobs and in 2010 almost 4 out of 10 (39.6%) worked in service jobs. The results are similar for educated men in the older groups: the share of educated men ages 63-69 working in service soared by 61.2%, and the oldest workers (ages 70+) increased their share in the service sector by 44.7% since the early '80s.

The proportion of educated men moving into retail is smaller, but the trend is the same. Increasingly older educated men are in low-wage jobs not requiring their education or experience.

Women have long made up the largest fraction of workers in low-wage sectors like services and retail. The share of older, college-educated women ages 63-69 working in retail increased by a whopping 83.1% from 1980 to 2010. Even the share of the oldest women workers (age 70+) in retail rose by 25.7% since the early 1980s.



The service and retail sectors are among the lowest paid industries in the economy. The increasing fraction of older men and women with bachelor's degrees working in these industries suggests the jobs that are growing are low-quality and low-paying.

SCEPA Faculty Fellow Rick McGahey finds that low-wage industries such as food services, retail, and administrative services accounted for almost 40% of net private sector job growth over the last four years. He sees no end to this trend, as these low-wage industries have made up 35% of total job growth each month into 2015.

SCEPA Director and retirement expert Teresa Ghilarducci describes the increasing share of older workers in low-wage industries as a disturbing new work reality. Declining traditional pensions and too-small 401(k) account balances are leaving older workers without the bargaining power to retire or quit a low-wage job with poor working conditions.