One of the worrying trends in the labor market in recent years has been a decline in the percentage of Americans working or actively looking for work. There have always been a large portion of the working-age population considered to be not in the workforce. These may include stay-at-home parents, full-time college students, or retired persons. But the relative number of these folks has been increasing for about a decade, as the more of the workforce enters retirement age. That trend accelerated during the recession, likely due to a weak economy encouraging more people to stop looking for work altogether.
But according to a new paper released today from Gary Burtless and Barry P. Bosworth of Brookings Institution, we shouldn’t blame older workers for this trend. In fact, across the vast majority of wealthy nations, the Great Recession actually encouraged a higher percentage of retirement-age workers to hold on to their jobs past typical retirement age. According to the paper, the Great Recession actually exacerbated a trend of later retirement which has been ongoing since the 1980s across the wealthy world.
It is still the case, however, that older folks tend to work at a lower rate than those in the prime of their life. It’s just that the disparity in participation rate between prime-working age people and those in retirement-eligible years has decreased.
This should be seen as a good thing. After a severe recession brought on by overly-indebted private sector, and a recovery marked by growing public sector debt, what we need more of is people working and earning money. It can also be seen as evidence against the argument that welfare benefits are holding back the labor market. After all, people of retirement age are eligible for benefits like Social Security here in the U.S., but they’re increasingly choosing work instead.