This is a repost from Forbes.
America romances low wage jobs and obsessively depends on work as the answer. No friends? Answer: work. Lack structure in your day? Answer: work. No pensions? Answer: work.
The consequence of this relationship is U.S. old age poverty and old age labor force participation rates standing out in unusual ways.
Retirement income security is weak, so American retirement policy encourages paid work among the elderly and Americans live with unusually high rates of old age poverty. The two are related because we do have a failed retirement system that leads to inadequate balances as I argued in a previous blog.
- According to the OECD, America leads the club of rich nations in the provision of low wage jobs. According to the OECD over 1 out of 5 jobs pay very low wages (two thirds the median wage). In comparison, less than 1 out of 7 of New Zealand’s jobs are low wage.
- The Social Security system rewards people for delaying claiming their Social Security benefits until the age of 70. Lifetime benefits rise by 70% if you delay claiming for 8 years between 62 and 70. But only 8% of Americans get the reward, most claim before 65.
- Most older Americans retire by the age of 65 according to our calculations.
- The educated work more than the less educated; 53% of college-educated men of age 66-69 work more, compared to 27% of those with high school educations.
- But, Americans retire at far lower rates than elders in other rich nations. Older Americans work hard – only American and Japanese elders and those in emerging nations have elder labor force participation rates over 30%.
- The jobs older Americans have aren’t great, 15% of older Americans with college educations earn less than $15 per hour.
- Despite the work, or because of it, American elder poverty rates top most nations, few nations exceed 20%.
The unusually high rates of old age poverty and high rates of elderly work is related to federal pension and old age policies. Republican President Ronald Reagan’s deputy labor secretary Malcolm Lovell told Congress that older Americans will need to work because Social Security was slowly being cut as the retirement age was increasing and employers were eroding their workplace pension plans. Ever since the 1980s, Americans are expected to save, work or make do.