Older, better-educated labor force helps stabilize retirement outlook
By Paula Aven Gladych
The increase in labor force participation by older workers could help improve Americans’ retirement income prospects, according to the Center for Retirement Research at Boston College.
The number of men over 60 who are still working has increased steadily since a post-World War II low of 33 percent in 1993, the center said in a study.
Part of that increase can be attributed to men who have achieved a higher level of education. In other words, better educated workers are healthier and have more opportunities.
Changes in the retirement system, and its incentives, over the past 20 years have helped keep workers in the labor force longer. In the past, younger workers had the educational edge on older workers, but after the mid-1970s, the amount of schooling among younger men slowed, eliminating the educational advantage of the young over the old.
The amount of money individuals can rely on from Social Security has steadily declined so working a little longer to take advantage of employer retirement incentives has helped offset the drop in Social Security wages.
According to the study, the gains in the educational attainment of older men is especially striking at the top and bottom of the educational ladder. In 1985, only 15 percent of men between the ages of 60 and 74 had a college degree. That number has since doubled, with 32 percent having a college degree.
The number of men without a high school diploma also has declined drastically. In 1985, more than 40 percent of this older generation of men lacked a high school diploma. By 2011, only 13 percent didn’t finish school.
A more educated workforce is a more productive workforce, according to the study, and as older workers have become more educated, “we should expect their gains to be reflected in better compensation and employment opportunities,” the report found.
Low earners tend to leave the workforce earlier. From 1985 until 2000, older men earned an average hourly wage that was more than one-tenth lower than the average wage earned by men between the ages of 35 and 54. After 2000, that gap narrowed and then nearly disappeared as the hourly wage of older workers climbed by 22 percent. The average wage for the younger generation increased only 7 percent in that time frame.
More educated employees earn higher wages, have better employment opportunities and health and typically hold less physically demanding jobs. All of these factors increase a worker’s ability and willingness to work longer.
The study found that people with advanced schooling are much more likely to work past age 65 than those with less education.
In the early ‘90s, nearly 60 percent of men over age 60 who had a doctoral or post-college professional degree were still in the workforce. In the same years, just 20 percent of men without a high school diploma were employed or looking for a job.
Originally published on BenefitsPro.com