Americans have been working longer (in years) — and the researcher/author of this MarketWatch blog post says that is a good thing. But recent findings suggest that the primary factor has been increased educational attainment among men. With that pattern showing signs of slowing down, will the opportunities and desires to continue to remain in the workforce also be scaled back?
As a strong proponent of working longer, I have been delighted to see the increase in the labor-force participation of men age 60 to 74 in recent years. I, and other researchers, attribute this pattern to a host of factors, including changes in Social Security (lower replacement rates as the full retirement age increases and the maturation of the delayed retirement credit); the shift from defined-benefit plans with strong early-retirement incentives to 401(k)s; an improvement in the health and education of older workers; less physically demanding jobs; the desire to postpone retirement until the availability of Medicare; and the joint decision-making of dual-earner couples. With all these forces at play, my assumption was that we would continue to see gains in the labor force activity of older workers as they responded to declines in the retirement income system by remaining in the labor force longer.
A recent study by Gary Burtless of the Brookings Institution has caused me to worry. Burtless explored the extent to which the increased educational attainment of older workers – both absolutely and relative to the attainment of prime-age workers – could explain their greater labor force participation.
The gains in educational attainment among older men have been dramatic. In 1985, only 15% of men age 60 to 74 had been to college; today that fraction has more than doubled, reaching 32%. Similarly, in 1985, more than 40% of older men had not finished high school; today only 13% lack a high school diploma.
Just as important, the gap in education levels between older and younger men has largely disappeared. For example, men in their early 60s are now as likely to have completed college as those in their early 40s. These two groups are also similar in terms of the percentage who lack a high school diploma. As the educational gap between older and younger workers has narrowed, so too has the wage gap. Today, men age 60 to 74 earn about the same as their counterparts age 35 to 54.