How Did Older Workers Fare in 2009?

How Did Older Workers Fare in 2009? Richard W. Johnson Corina Mommaerts March 2010 THE URBAN INSTITUTE 2100 M STREET, N.W. / WASHINGTON D.C. 20037 The Retirement Policy Program A crosscutting team of Urban Institute experts in Social Security, labor markets, savings behavior, tax and budget policy, and microsimulation modeling ponder the aging of American society. The aging of America raises many questions about what’s in store for future and current retirees and whether society can sustain current systems that support the retired population. Who will prosper? Who won’t? Many good things are happening too, like longer life and better health. Although much of the baby boom generation will be better off than those retiring today, many face uncertain prospects. Especially vulnerable are divorced women, single mothers, never-married men, high school dropouts, and lower-income African Americans and Hispanics. Even Social Security—which tends to equalize the distribution of retirement income by paying low-income people more then they put in and wealthier contributors less—may not make them financially secure. Uncertainty about whether workers today are saving enough for retirement further complicates the outlook. New trends in employment, employer-sponsored pensions, and health insurance influence retirement decisions and financial security at older ages. And, the sheer number of reform proposals, such as personal retirement accounts to augment traditional Social Security or changes in the Medicare eligibility age, makes solid analyses imperative. Urban Institute researchers assess how current retirement policies, demographic trends, and private sector practices influence older Americans’ security and decisionmaking. Numerous studies and reports provide objective, nonpartisan guidance for policymakers. The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance problems facing the nation. The authors are grateful to Sheila Zedlewski for valuable comments on an earlier draft. Financial support was provided by the Rockefeller Foundation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. The Urban Institute, 2100 M Street, N.W., Washington, D.C. 20037 Copyright © 2010. Permission is granted for reproduction of this document, with attribution to the Urban Institute. How Did Older Workers Fare in 2009? ii Contents Executive Summary ...................................................................................................................... iv Introduction.....................................................................................................................................1 Unemployment Rates by Age .........................................................................................................3 Industry and Demographic Differences in Old-Age Unemployment ............................................ 7 Unemployment Duration ............................................................................................................. 11 Labor Force Participation Rates................................................................................................... 14 Social Security Benefit Receipt ................................................................................................... 18 Earnings ....................................................................................................................................... 19 Conclusions.................................................................................................................................. 21 References.................................................................................................................................... 24 iii Retirement Policy Program Figures 1. Average Monthly Unemployment Rates by Detailed Age, 2007 and 2009 .............................3 2. Average Monthly Unemployment Rates for Men and Women by Age, 2009 .........................4 3. Average Monthly Unemployment Rates for Men by Age, 1948–2009....................................5 4. Average Monthly Unemployment Rates for Women by Age, 1948–2009 ..............................7 5. Average Unemployment Rates for Adults Age 55 and Older by Industry, 2007 and 2009 .....8 6. Percentage of Unemployed Men out of Work for More than Six Months by Age, 1983 and 2009.............................................................................................................................11 7. Percentage of Unemployed Women out of Work for More than Six Months by Age, 1983 and 2009.............................................................................................................................12 8. Labor Force Status of Men by Age, 2007 and 2009 .................................................