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Correcting Labor Supply Projections for Older Workers Could Help Social Security and Economic Reform

Overview

Changes in life expectancies, birth rates, and health care are among the many factors that can influence the employment of older workers. This report was organized by Urban Institute Program on Retirement Policy to analyze labor force projections for older adults, taking into account factors that existing research may not. The report looks at older adult labor participation trends, discusses the missing factor of labor demand, and recommends policy reform that could allow more people to work longer.

Key Points

This report uses information and projections from the Bureau of Labor Statistics as the basis. It is stated that current projections over-predict the share of life spent in retirement, and under-predict the future labor force participation of older workers. In evaluating trends in participation, it was noted that older Americans, both male and female, are working at a higher rate than they were 20 years ago, despite the recession. The report also addresses Social Security reform proposals, saying that they often do not account for certain employment effects.

Other key takeaways include:

  1. Labor demand among older adults is one factor not often accounted for. With the current aging population considerably healthier than previous generations, they often remain extremely valuable workers for a longer period of time.
  2. According to the report, “older workers are to the first half of the 21st century what women were to the last half of the 20th: the largest underused source of labor and human capital in the economy.”
  3. The report concludes by encouraging policymakers to think differently, and consider new reforms. Some of these ideas include raising the earliest retirement age, and increasing minimum benefits for workers with low lifetime incomes.

How To Use

This report is aimed primarily at policymakers involved with retirement and Social Security. By taking into account factors such as labor demand, which may go beyond the surface of other projections, policymakers can have a better idea of the upcoming employment landscape. Rather than accepting that certain programs like Social Security are doomed, this report encourages creativity and simple reforms.

View full report: Correcting Labor Supply Projections for Older Workers Could Help Social Security and Economic Reform (PDF – 1.1 MB)


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