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Putting retirement on hold: Rise in older workers redefines labor force, impacts economy

by Tim Anderson ~ March 2013 ~ Stateline Midwest »
For most of the 20th century, thanks in large part to Social Security benefits, the advent of Medicare and widespread access to employee-sponsored pension plans, American workers were retiring earlier and earlier from their jobs.
But over the past two decades, the exact opposite has been occurring: In 1990, 12.1 percent of people 65 and older were in the labor force; U.S. Census Bureau data released earlier this year show that the rate reached 16.1 percent in 2011.
“It is one of the most significant trends in the labor force in the past 25 years,” says Richard Johnson, director of the Urban Institute Program on Retirement Policy.
That is especially true in parts of the aging Midwest, where seven of the region’s 11 states (Iowa, Michigan, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin) have higher proportions of elderly residents than the national average.
According to Johnson, policymakers should expect more and more of their state’s seniors to delay or forgo retirement in the future.
Because of improved health, the rise in less physically demanding jobs and higher levels of education than previous generations, more of today’s seniors can choose to work and have more employment options.
Others have to work, due to factors such as a lack of retirement savings and no access to retiree health care or pensions (the number of private companies offering defined-benefit plans has dwindled, and some states are eliminating them as well).
“When people work, they make more money and pay taxes,” says Johnson, noting that one way to avoid what some have called the nation’s coming “aging crisis” is to simply redefine “what it means to be old.”
He adds, too, that an expanding workforce tends to be a predictor of economic growth and can improve overall productivity by allowing for more specialization.
However, this trend has potentially negative consequences as well. With today’s rates of unemployed and under-employed workers already high, Johnson says, adding more people to the labor force could exacerbate the problem.