Labor-Force Participation Rates of the Population Age 55 and Older : What Did the Recession Do to the Trends?

This paper examines recent U.S. Census Bureau data on labor-force participation among Americans age 55 and older, including what happened to the trends after the economic recession that started in late 2007-early 2008. The first section uses annualized data on labor-force participation from the Current Population Survey (CPS), available from the Bureau of Labor Statistics website. However, these data provide only an overall picture, not specific demographic details. In order to examine demographic trends of the U.S. population, the second section uses data from the March Supplement to the CPS. For those age 55 and older, the labor-force participation rate continued to increase even after the economic downturn of 2008-2009. For those ages 55-64, this is being driven almost exclusively by the increase in women in the work force; the male participation rate is flat to declining. But among those age 65 and older, labor-force participation increased for both males and females. Education is a big factor: Those with higher levels of education are more likely to stay at work. The upward trend is not surprising and is likely to continue because of workers’ need for access to employment-based health insurance and for more earning years to accumulate assets in defined contribution (401(k)-type) plans, particularly after the stock market and economic downturn in 2007-2008. Older Americans, particularly those who worked in the private sector, increasingly have considerably less access to guaranteed levels of income (such as pensions) or health insurance benefits when they retire; consequently, they have a greater need to work to help make their assets last longer or to continue to build up (or to rebuild) assets that they did not (or were not able to) accumulate when they were younger or may have lost during the recent downturn in the stock and bond markets. However, financial concerns are not the only incentives involved here - there also is an increased desire among many Americans to work longer, particularly among those with more education, for whom more meaningful jobs that can be done well into older ages are often available. The recent economic downturn did not alter the trend of older workers increasingly being in the labor force; rather, it appears that this remains the trend, as more opportunities for older workers exist and there is a greater necessity for them to remain in the labor force to accumulate sufficient or adequate resources for retirement. As many workers have found, the road to retirement is not always smooth. The PDF for the above title, published in the February 2011 issue of EBRI Notes, also contains the fulltext of another February 2011 EBRI Notes article abstracted on SSRN: “Who Tries to Find Objective Information on Health Care? Findings From the 2010 Health Confidence Survey.”