October 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics today reported a 3.2% unemployment rate for workers age 55 and older in October, a rate unchanged from September. While this aggregate number is low, the reality is that many older workers have low-paying jobs that don’t provide retirement savings coverage. Older women are especially likely to be in low-paying jobs, in part due to the unequal division of household work.

Both men and women ages 55-64 spend the same amount of time working each week – 47.9 hours a week for men and 48 hours a week for women - including both paid work in the labor market and unpaid household work.  But of this total, men spend more time in paid work than women - 30.1 hours for men vs 21.8 hours for women.  Women spend more time on unpaid household work such as food preparation, cleaning, care giving, etc.  Not only do older women get paid for a smaller share of their working time, in the labor market they are more likely than men to be in low-paid jobs – 38% of older women make less than $15 an hour vs 28% of men.1

While older men and women have about the same low rates of access to a retirement plan at work (45% for men and 45% for women), women’s ability to save for retirement is further hurt by the combination of low hourly pay and crowd out of paid work by unpaid work. Older women have a median balance of $90,000 in their retirement accounts, compared to $125,000 for men.

To ensure all workers have a secure retirement, Congress needs to not only raise the minimum wage, but also enact Guaranteed Retirement Accounts (GRAs).  GRAs provide retirement savings accounts to all workers as a supplement to an expanded Social Security program.  The GRA’s $600 refundable tax credit and employer contribution ensure that even low-paid workers, a majority of whom are women, can afford to save for retirement.


1 SCEPA calculations based on 2017 Current Population Survey ASEC, U,S. Census Bureau, Washington D.C.
*Arrows next to "Older Workers at a Glance" statistics reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.


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 Percent without Pensions

 September 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics today reported a 3.2% unemployment rate for workers age 55 and older in September, a rate unchanged from August. While this aggregate number is low, the reality is that many older workers have low-paying jobs that don’t provide retirement savings coverage.

It’s no surprise that older workers have little retirement savings ($12,000 on average). This is despite the $180 billion a year in tax breaks meant to encourage people to save for retirement. That’s because these tax breaks are highly regressive, giving 66% of the benefits to those in the top 20% of the income distribution – who are likely to save without incentives – while the 35% of near-retirees without retirement plans get nothing.

Rather than address the unfairness and inefficiency of retirement savings tax breaks, the majority party in Congress announced a tax reform plan designed to generate revenue to pay for tax breaks for the wealthy. Reports suggest the needed revenue could come from taxing 401(k) dollars on contribution rather than at withdrawal in retirement, funding current tax breaks by shifting retirement subsidies to the future.

Tax incentives are a key driver of retirement plan coverage and adequacy. In the midst of a retirement crisis, changing the timing of retirement tax breaks does nothing to increase coverage or make the distribution of incentives more equitable.

To encourage retirement savings, Congress needs to give all workers access to coverage and provide fair and effective tax incentives. Guaranteed Retirement Accounts (GRAs) do both. GRAs provide accounts to all workers as a supplement to an expanded Social Security program and replace regressive retirement subsidies with universal tax credits of $600 a year. This ensures that even low earners benefit from federal tax incentives to save for retirement. 


1Authors used data on 2016 tax expenditures and methodology from Harris, Edward, and Joshua Shakin. The Distribution of Major Tax Expenditures in the Individual Income Tax System. Congressional Budget Office, 2013. 
*Arrows next to "Older Workers at a Glance" statistics reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.


September Jobs Report


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August 2017 Unemployment Report for Workers Over 55

Today the Bureau of Labor Statistics reported a 3.2% unemployment rate for workers ages 55 and older in August, no change from July. While the headline unemployment rate for near retirees is low, it doesn't indicate the economic fragility faced by workers aged 55-64. 

Low-, middle-, and high-income near retirees are almost one-third short of the savings they need to maintain their standard of living in retirement.   ReLab's new report using just-released government data documents that the median level of retirement savings in IRAs and 401(k)-type plans among workers ages 55-64 is $15,000. When workers who do not have any retirement savings are excluded, the median is just $92,000 - a sum that would replace only about $400 per month for the rest of a person's life.

Even with generous assumptions,1 workers in the bottom half of the earnings distribution (earning less than $40,000) are 28 percentage points below the median replacement rate -- the ratio of retirement income to preretirement income. Workers in the middle 40% are 31 percentage points short. And even workers in the top 10% (earning above $115,000 a year) face a shortfall of 29 percentage points short. One third of workers without retirement accounts will only have Social Security.


Regardless of income, many older workers face an unpalatable choice between delaying retirement or downward mobility in retirement. If forced to stay in the labor market, jobs for older workers are often low-paid and lacking retirement coverage. For many, delaying retirement is not an option due to physical and mental limitations and employer distaste for older workers.

In the short term, older workers need well-paying jobs that provide pensions. In the long term, every worker needs an advanced-funded supplement to an expanded Social Security system. Guaranteed Retirement Accounts (GRAs) are proposed as individual accounts on top of Social Security funded by contributions from employees, employers, and government throughout a worker's career. GRAs provide workers with a lifetime, consistent savings vehicle, ensuring workers can retire when they need or chose.
 
1 Using recently released data from the 2014 Survey of Income and Program Participation (SIPP), we compared the projected post-retirement incomes of low-, middle-, and high-income workers with retirement accounts with replacement rate targets (ratio of retirement income to preretirement income) that will permit them to maintain their preretirement standard of living.  Assumptions include retiring at age 65, continued employee contributions of 6% and employer contributions of 3%, and a 4.5% real investment return.
 
August Jobs Report
 

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July 2017 Unemployment Report for Workers Over 55  

The Bureau of Labor Statistics (BLS) today reported a 3.2% unemployment rate for workers age 55 and older in July, no change from June. While the low unemployment rate may indicate a healthy labor market for older workers, it doesn’t tell us about job quality.

Only 76% of older workers obtain health insurance through their or their spouse’s job. Tweet: One of four older workers lack employer provided health insurance #JobsReport @tghilarducci http://bit.ly/2fd31hM pic.twitter.com/GCFLges2fN </a>/a>; The remaining 24% fall into three groups; those who purchase private health insurance, often at higher prices or with less coverage and higher deductibles than employer coverage, those eligible for means-tested Medicaid, and those who remain uninsured, typically because they earn too much to qualify for Medicaid but too little to qualify for private health insurance.

High insurance premiums and out-of-pocket costs reduce the amount workers can afford to save for retirement, while the uninsured or underinsured risk catastrophic medical costs that can rapidly deplete their retirement savings.

Access to both health coverage and retirement plans protects older workers’ ability to save for retirement. Policymakers should strengthen the Affordable Care Act and provide a path to a secure retirement by expanding Social Security and implementing Guaranteed Retirement Accounts (GRAs). GRAs are individual accounts on top of Social Security that require contributions from employees, employers, and government throughout a worker’s career.

*Arrows reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.

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What is the “retirement wealth inequality machine?” The result of a failed retirement savings system, according to retirement expert and economist Teresa Ghilarducci in an interview with INET. In short, the retirement system in the United States is increasingly financialized - dependent on individual assets rather than social insurance - as pensions have given way to 401(k)s. The result? People are not able to save enough. Half of americans that are currently working have less than $5,000 saved for retirement, and otherwise would only have $12,000 per year to rely on from Social Security.

Over 90% of Americans do not have enough saved. As a result, they face the daunting choice of either experiencing downward mobility - and possibly deprivation - in their old age, or working later in life than anyone would hope or dream.

ReLab documents the status of older workers, including their state of employment and working conditions, as well as class, race, and gender divides. Half of older workers report having physically demanding jobs, and those without enough savings are forced to continue working with poor conditions and compensation.

Ghilarducci’s policy proposals to reform our failed retirement system are based in law, history, politics, and the ethics of human well-being. She adds retirement to the list of historically disputed territory that includes the weekend, the length of the working day, paid sick leave, and vacation days. She calls for universal, mandatory, and portable Guaranteed Retirement Accounts (GRAs) in addition to strengthening Social Security to ensure a dignified retirement for all.

June 2017 Unemployment Report for Workers Over 55  

The Bureau of Labor Statistics (BLS) today reported a 3.2% unemployment rate for workers age 55 and older in June, an increase of 0.1 percentage points from May. The low unemployment rate for near retirees is good news. The bad news is that no one can work forever, and our calculations report a collapse in retirement plan coverage for near retirees in the 36 years since Reagan took office.

Unfortunately, workers in the four rust belt states -- states where workers once had bargaining power -- suffered steeper declines in retirement plan coverage rates than did workers in the rest of the country. Tweet: What older workers in the rust belt need from Trump #JobsReport @tghilarducci http://bit.ly/2tWdR1D pic.twitter.com/kFxRrtS8XJ </a>/a>; Thanks to unionized manufacturing jobs, 61% of near retirees in Michigan, Ohio, Pennsylvania, and Wisconsin were covered by a retirement plan at work during Reagan's first term. The share of covered workers collapsed by 10 percentage points to 51% during Obama's second term, after which these states voted for Trump. In the rest of the U.S., the share declined by 7 percentage points, from 53% to 46%.

The closing coverage gap reflects a race to the bottom in which firms are less likely to offer retirement benefits. As a result, workers are at greater risk of facing poverty and hardship in old age.

Obama’s automatic IRA plan didn’t get anywhere, and in 2017 Congressional Republicans rolled back support for state and city coverage reform efforts. Now it’s up to the Trump administration to make a dignified retirement possible for workers by expanding Social Security and increasing access to retirement savings plan for future generations through Guaranteed Retirement Accounts (GRAs). GRAs are individual accounts requiring contributions from employees, employers, and government throughout a worker’s career. They provide a safe, effective vehicle for workers to accumulate personal retirement savings. 

*Arrows reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.

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Time’s Money Magazine features my recent research on the damaging effects of income shocks on retirement savings in, “Here's How Much a Job Loss Now Will Cost You by Retirement.”

Income shocks are pervasive, with 96 percent of Americans experiencing at least four in their working years. For example, a drop of 10 percent or more four times in your life can reduce retirement savings by $25,000 on average. This average is higher for low-income Americans, whereas wealthier Americans have healthy emergency funds to draw from. I would like to challenge the notion that the retirement crisis is due to poor savings habits. Less privileged Americans have few options when unexpected hardship hits before retirement.