By Chris Adams
In 1965, nearly 80 percent of American men who were 62 years old worked.
By the early 1990s, that figure had dropped to less than 50 percent. And then it started going back up.
According to Gary Burtless, a senior fellow in economic studies at the Brookings Institution, a big explanation for the change is in the public and private pension systems that have totally transformed how Americans support themselves once their working years are over.
One overriding factor: For nearly 100 years, the U.S. – and peer countries – got wealthier. “The rich countries got quite a bit richer between 1890 and 1990,” he said. “Poorer countries couldn’t afford to have so many people just sitting around and twiddling their thumbs.”
The transformation was led by the development of the Social Security system during the New Deal era and the growth of employer-sponsored pensions after World War II. During the years of rising incomes and national wealth, many aging families could live comfortably even without a breadwinner in the family.
From 1948 to 1989, there was a steep drop in working by those over 65.
But then the net worth of Americans stalled, or grew more slowly. Social Security benefits stopped getting more generous, and traditional pensions were replaced by self-funded plans such as 401ks.
The result, from 1989 to 2011: Labor force participation is up 10 percentage points for people in their 60s and up almost as much for those in their 70s.
Beyond that, older workers are now receiving higher hourly pay than pay earned by prime-age workers – something that has helped them live relatively well, despite stories that the country is shortchanging its elderly population.
“For the aged, we’re not talking about a bad news story,” he said. “It’s fundamentally a good-news story.”