The February 2015 employment report issued by the U.S. Department of Labor today reports an increase in the unemployment rate for workers over the age of 55. An estimated 62,000 more older workers joined the ranks of the unemployed in the month of February, bringing the unemployment rate of older workers to 4.3% from 4.1% last month.

These changes stand in contrast to the employment situation for all workers (16 years and over). Both the unemployment rate (5.5%) and the number of unemployed persons (8.7 million) edged down in the month of February.

As a sign of more trouble for older workers, the month of February marked a decline for the share of older workers with a job; the employment-to-population ratio declined from 38.3% to 38.0%.

The prolonged sluggishness of the labor market also forced an estimated 125,000 older workers to leave the labor force in the month of February. Older workers are becoming increasingly aware that as they are asked to work further into old age, the workplace grows no friendlier to their needs.

At SCEPA, our research finds that older workers have seen their job quality erode by more physically and demanding jobs. From 1992 to 2008, the proportion of jobs that always require "good eyesight" increased by 26.0%, 31.0% and 78.6% for workers aged 50-55, 56-61 and 62-65, respectively. We find that workers ages 56-61 report a much higher rate of jobs that always require "stooping, kneeling or crouching." In fact, we estimate that the rate of 'all the time' "stooping, kneeling or crouching" has increased by a remarkable 21.9% (for workers ages 50- 55) and 35.9% (for workers ages 56-61).

These findings are troubling because, as the National Center for Chronic Disease Prevention and Health Promotion points out, maximum strength diminishes after the age of 30 and by the age 65 maximum oxygen intake is reduced by 30%. This means that a lot of older workers are often working at maximum capacity.

We also know that as the workforce ages, the incidence of disability also rises. The University of Wisconsin-Madison's Trace Center study finds that the incidence of disability among working-age Americans is: 9.5% for workers in the 18- to 24-year-old range, 20+% for workers in the 45- to 54-year-old range, and nearly 42% for workers in the 65+ age range. Unfortunately, McMullin and Shuey (2006) find that when an employer believes a worker's limitations are due to "natural aging," accommodation is less likely.

These findings are in line with a Society for Human Resource Management (SHRM) study, which shows a majority of companies have not made special provisions for older workers. Older workers, for example, are often denied access to training, as employers are more likely to favor early-career and mid-career employees. Older workers also report wanting to move away from the standard nine-to-five, five-day workweek. Yet, only about 10% of workers are enrolled in formal, employer-sponsored flextime programs.

Clearly, the workplace remains far from friendly to older workers. It is no surprise that a lot of them are having a hard time findings work and find themselves forced to leave the labor force altogether.

SCEPA's Retirement Equity Lab at The New School published my paper with co-author Adam Hayes titled, "401(k) Tax Policy Creates Inequality." Though well-intentioned, the current system of tax deferral for retirement contributions undermines public policy aimed at strengthening retirement security for all Americans. In fact, it has become a regressive policy that contributes to wealth inequality.

Ghilarducci Hayes PN 2015-1 graph 1

This policy notes illustrates how two employees who are identical savers and investors in every way except for income receive different rates of return due only to the effects of the tax code. Converting the current system of tax deductions for defined contribution retirement plans to a refundable tax credit would solve this problem and treat all retirement savers the same.

I am proud and honored to be named to a group organized by New York City Comptroller Scott Stringer to study how to provide retirement security to New York City residents who lack retirement plans at work. The Comptroller announced his intentions to create the panel at SCEPA's 2014 conference, "Confronting New York City's Retirement Crisis," co-sponsored by the New York City Central Labor Council, AFL-CIO.

SCEPA's report, "Retirement Readiness in New York City," identified that employer sponsorship of retirement plans is falling. Between 2001 and 2011, the percentage of workers in the New York region with any type of retirement plan – either a traditional pension plan or a more widespread 401(k) plan – decreased from 49% to a mere 41%.

Nevada testimony picOn March 3, 2015, I spoke before the Government Affairs Committee of the Nevada State Assembly on AB 190. This legislation seeks to cut the state's healthy public pension system by decreasing its defined benefit (DB) program and introducing a defined contribution (DC) plan for future workers. 

In my testimony, I focus on failed experiments with the same formula in other states, including Alaska, Michigan and West Virginia. In each case, the changes increased the state’s pension debt beyond what it would have been if their DBs plan had been kept intact. 

The Las Vegas Review-Journal covered the hearing in their article, "Bill to Change Nevada PERS Sparks Debate in Assembly Panel."

On NPR's On Point with Tom Ashbrooke on February 25th, I referred to a list of questions that each investor should ask his or her financial advisory, aka "your guy." These will help ensure your savings are invested to benefit you, rather than the advisor or their company. Here they are. Please, please use them. 

Six Critical Questions to Ask Your “Guy”: 

1. How are you paid? Fee-only advisers receive no compensation from the sale of investment products. All others do. You can’t count on an adviser who gets a significant portion of their pay in sales commissions. Period. Leave if they are not fee-only.

2. Do you have any conflicts of interest that influence the advice you provide? Financial advisers who are registered representatives get paid to sell insurance or annuity products promoted by their brokers. Ask how they choose the investments they recommend. Ask them directly how they are paid.

3. Will my assets be housed with an independent custodian -- that is, a bank that is not selling the investment products? “Yes” is the only acceptable answer here. Bernie Madoff’s firm did not use one. Enough said.

4. Are your clients similar to me? If your fee-only adviser’s typical client has a net worth of $1 million or more, and you aren’t rich, think twice.

5. What services do you provide? If the adviser’s primary service is investment advice, and you are looking for someone to construct a complete financial plan for you, this adviser is unlikely to be a good match.

6. Do you act in a fiduciary capacity towards your clients? Leave fast if they don’t say yes. You are asking the broker if he or she is obligated to put your interest first, before that of his or her firm. If there is any other answer but a clear yes, grab your wallet tight and leave.

NPR on point logoI was proud to join Tom Ashbrook on NPR's On Point on February 25, 2015, to discuss President Obama's recent announcement at AARP that the Department of Labor would move forward with a fiduciary rule requiring brokers to put their clients' retirement savings before their own profits.

The rule is expected to protect future retirees from excessive and hidden fees. In May 2012, Demos, a nonprofit advocacy group and SCEPA partner on retirement security, published the report "The Retirement Savings Drain: Hidden and Excessive Costs of 401(k)s." Written by Policy Analyst and New School PhD student Robbie Hiltonsmith, it finds that the average two-member household will lose over $150,000 over their lifetime from their retirement savings to pay these fees - without their knowledge.

Institutional Investor"States Move to Implement Retirement Accounts," a February 4, 2015, article by Joel Kranc of Institutional Investor, summarizes the movement of retirement reform from the federal level to the state level. "But whereas the federal level is talking, the states are taking action on their own plans," says Kranc. He cites Illinois and California as the early leaders in the effort, both having passed legislation. He summarizes, "Some of the states taking a look at these types of plans are Connecticut, Vermont and Minnesota, which have passed legislation that creates frameworks for a plan. Maryland and Oregon have started taskforces, and 15 others are considering their options as well."

Kranc takes it one step further, interviewing experts to assess the quality and content of plans under consideration. 'Illinois is the first and boldest among 37 states that have something in the works,' notes Teresa Ghilarducci, a labor economist at the New School for Social Research in New York. 'But Illinois has passed the most simple, least regulated and therefore least helpful plan. Other states are looking at ways to create exchanges or a public option that creates a low-cost option. This is certainly a state-by-state movement for add-on plans,' she says."