The Bureau of Labor Statistics (BLS) today reported a 2.8% unemployment rate for workers age 55 and older in October, which reflects no change from September. The headline rate remains near a record low, as it has for a year.
Despite reports of a hot job market for older workers, older Americans are not being lured back to work. At a time when economists would expect new entrants* to the labor force to be increasing, the share of new workers in the older workforce fell last month by over half from the beginning of 2018, from 2.5% in January to 1.0% in September.
The drop in new entrants could mean the labor market has absorbed almost all the older people who want a job. That would be good news, but our evidence points in another direction. The share of older people who want a job but don't have one (ReLab’s U-7) has not recovered to pre-recession lows. At 7.4%, U-7 is 0.8 percentage points higher than the pre-recession low of 6.6%. Even for the college educated, U-7 is 6.8%.
There are two main reasons why older workers are not entering the labor market. First, older Americans, especially older women, face age discrimination in the hiring process, which discourages job search. Second, most jobs created in the recovery have been low-paying, low-quality jobs, including contingent and alternative jobs.
This evidence does not support the belief that the retirement crisis can be solved by working longer. To ensure workers can retire in dignity, policymakers should expand Social Security and create Guaranteed Retirements Accounts (GRAs). GRAs are universal, secure retirement accounts funded by employer and employee contributions throughout a worker’s career paired with a refundable tax credit. These policies will help prevent downward mobility in the event of involuntary retirement.
*New entrants are defined as those previously not working who found a job in the last year.
**Arrows next to "Older Workers at a Glance" statistics reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.