Insights Blog

Chartbook: Retirement Insecurity and Falling Bargaining Power Among Older Workers

May 26, 2020

Brief— ReLab's chartbook documenting retirement insecurity and the decline in older workers' bargaining power is a resource for workers, employers, media, policymakers, scholars, and the broader public to answer questions about the state of older working America and retirement income security.

The COVID-19 economic crisis exposes the flaws and fault lines in the U.S. retirement system. Millions of older workers forced out of work not only stopped contributing to retirement plans, but had to raid their retirement savings to make ends meet. For those who kept their jobs, many saw their employers halt matching 401(k) contributions. Millions of those deemed essential workers continue laboring without any retirement plans at all. 

If we do nothing to fix our retirement system, 43 million people now in their fifties and early sixties will be poor or near-poor elders, owing to both the recession and to inadequate retirement plans. Widespread retirement insecurity weakens older workers’ bargaining power. Without a solid fallback plan, older workers must accept whatever wages are offered. 

The retirement crisis did not begin with the COVID-19 pandemic. Even in normal times, millions of older workers face a choice between earning insufficient wages under bad working conditions or retiring without adequate income. Since half of workers fall into retirement involuntarily (Chart 6), retiring without adequate savings is not their choice.

The reality is that employers and market conditions often determine the desirability of older workers. This differs from the idealized vision of work at older ages, which includes seniority in the workplace, control over hours and pace of work, and a dignified retirement. These are benefits available only to a privileged upper class of older workers. 

This chartbook is a resource for workers, employers, media, policymakers, scholars, and the broader public, to answer questions about the state of older working America and retirement income security. Like the Economic Policy Institute’s (EPI) 2019 publication “The State of American Retirement Savings,” we delve into the insufficiency and inequality in retirement savings. This chartbook complements EPI’s analysis by additionally exploring older workers’ challenges in the labor market. It also provides insights into older workers’ economic vulnerability, such as their increasingly fragile finances (Chart 4). 

This chartbook connects retirement insecurity to older workers’ basic labor market realities, revealing a central point: secure retirement income boosts older workers’ bargaining power, which leads to better wages, hours, and working conditions. Access to quality retirement savings plans improve older workers’ jobs. 

The retirement crisis reflects systemic problems that require systemic solutions. Assigning blame to individuals for saving too little ignores the reality that many older workers are vulnerable because of flaws in the retirement system and imbalances in bargaining power between workers and employers. Addressing the retirement crisis means acknowledging these underlying realities. 

 Download the full chartbook here


12 Million Of The 29 Million Middle-Class Older Workers Will Be Downwardly Mobile In Retirement


Americans Work Longer And Die Earlier Than Elders In Other Advanced Countries



In the U.S., retirement time has failed to keep up with our peer nations. For countries in the G7 group excluding the U.S. (Germany, France, U.K., Canada, Japan and Italy), estimated time between retirement and death for men rose about 75 percent, compared to roughly 50 percent for male elders in the United States. For women, the disparity is greater in absolute terms, with a four-year gap in retirement time opening up since the early 2000s. 


Older Workers Are Getting Paid Less For Their Experience



Typically, more job experience and seniority results in higher wages. But for the last 20 years, older workers experienced falling returns to tenure once we control for other factors like occupation, race, gender, and union status. In the early 2000s, an additional year of tenure was associated with a roughly 1.5 percent increase in wages. By the 2010s, the average returns to tenure fell by almost half to around 0.8 percent. This decrease in returns to tenure reflects diminished bargaining power among older workers, whose on-the-job experience no longer commands the same wage increases as it once did.


Suggested Citation: Davis, O., Radpour, S., and Ghilarducci, T. (2020) “Chartbook: Retirement Insecurity and Falling Bargaining Power Among Older Workers.” Schwartz Center for Economic Policy Analysis, The New School for Social Research.


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