Trends in Job Demands among Older Workers, 1992-2002

Job Demands among Older Workers48 Monthly Labor Review July 2004Job Demands Among Older WorkersRichard W. Johnsonis a senior researchassociate in theIncome and BenefitsPolicy Centerat the Urban Institutein Washington, DC.E-mail:RJohnson@ui.urban.orgEmployment increases among older adults could relieve some of thedemographic pressures created by population aging, but only if olderworkers are physically able to perform their job responsibilities;the share of workers ages 55 to 60 in jobs that never require muchphysical effort increased 18 percent between 1992 and 2002Trends in job demandsamong older workers, 1992–2002Richard W. JohnsonThe aging of the population raises concernsabout the Nation’s ability to support fu-ture retirees, whose numbers will soaronce members of the “baby-boom” cohort beginreaching old age in coming years. If current em-ployment patterns persist, there will be fewerworkers in the future available to produce goodsand services, threatening standards of living forAmericans of all ages. As long as job demandsdo not force many older workers into retirement,increasing employment among older adults couldrelieve these demographic pressures. This ar-ticle explores the ability of the labor force to ac-commodate older adults by examining recenttrends in job demands among older workers.Once the oldest baby-boomers reach age 65in 2011, the population will begin to age rap-idly. The U.S. Census Bureau predicts thatbetween 2000 and 2040, the number of Ameri-cans ages 65 and older will more than double,to 77 million, while the number of prime work-ing-age adults, between the ages of 25 and 54,will increase by only 12 percent.1 As a result,the number of prime working-age adults perelderly American will fall over the next 40 yearsfrom 3.5 to 1.8. The number of dependent chil-dren will also grow relatively rapidly over thenext 40 years, compounding the pressures onworking adults. In 2040, the number of Ameri-cans under 18 and ages 65 and older, who havebeen less likely to work, will exceed the num-ber of prime working-age adults by 21 percent.In 2000, by contrast, prime working-age adultsoutnumbered dependent children and elderlyadults by 14 percent.The growing imbalance between working ageadults and elderly persons is reducing the num-ber of workers who can finance retirement ben-efits for older Americans. Both Social Securityand Medicare are funded primarily on a pay-as-you-go basis, with payroll taxes on workers fi-nancing benefits received by retirees. Accordingto the latest official projections, outlays will be-gin to exceed revenues for Medicare in 2011 andfor Social Security in 2018.2 More fundamentally,the aging of the population reduces the numberof workers available to produce the goods andservices that the economy needs. Without dra-matic increases in productivity or changes inemployment patterns, the looming worker short-age will reduce per-capita output and lower livingstandards.3Higher employment rates among older adultscould relieve these pressures, by increasing thelabor force and reducing claims on retirementbenefits. The average retirement age has beenfalling over most of the past century—despiteimprovements in health and life expectancy thatcould allow individuals to work until olderages4—although the trend seems to have leveledoff and even reversed in recent years.5 Congresshas increased the age at which retirees qualify forfull Social Security benefits, which could encour-age older workers to remain in the labor force.The legislation slowly raises the normal retire-ment age from 65 to 67 (for workers born after1959, who will reach age 67 after 2026). Someexperts have proposed that Congress increasethe normal retirement age to 67 more quickly,6 in-crease it to age 70,7 or tie the retirement age to 49 Monthly Labor Review July 2004changes in life expectancy.8 Others have advocated removingsome of the legal impediments to work at older ages.9 Forexample, many older workers prefer to reduce their work hoursgradually, but Federal law prohibits employers from payingretirement benefits to active employees, even if they workonly part time.Job demands also encourage early retirement. Studies havefound that workers in blue collar jobs tend to retire beforeworkers in white collar jobs,10 and that workers in physicallydemanding jobs are less likely to remain in the labor force afterthe initial receipt of Social Security benefits.11 Other studieshave found that physical job demands and stress are impor-tant predictors of early retirement.12The decline of the manufacturing sector over the past halfcentury and the growing computerization of the workplacehave likely reduced physical job demands, potentially enablingmore older adults to remain at work. Between 1950 and 2000,the share of jobs in the goods-producing sector—which in-cludes the construction and mining industries as well as manu-facturing—fell from 41 percent to 20 pe