Is Education Bad for Younger Workers?

The labor force participation rate of older workers has jumped due to higher levels of education

Is education bad for younger workers? Yes, but not in the way one might think.

Higher levels of education attained by older workers are keeping them in the workforce longer, crowding out younger workers that are looking for jobs.

In its latest issue brief, the Center for Retirement Research at Boston College reports that over the past 25 years, the labor force participation of men ages 60 to 74 jumped from 35% to 44%.

At the same time, the educational levels of older workers increased dramatically in both absolute terms and relative to prime-age workers.

“Over much of the twentieth century, each generation of workers received more education than the previous one,” according to the issue brief. “As a result, younger workers maintained a consistent educational advantage over older workers.”

No longer; increases in schooling among younger cohorts of males slowed dramatically after the mid-1970s.

“As a result, when the baby boom generation of men entered the ranks of the aged, beginning in 2006, the educational advantage of the young compared with the old nearly vanished.”

Better educated workers are healthier and have more opportunities, and the issue brief claims education levels account for more than half of the increase in older workers' labor force participation.

Additionally, the structure and solvency of government and private retirement plans are also having an impact.

“Social Security benefits available at any given age will continue to decline measured as a percentage of workers’ lifetime average earnings,” the brief says. “Older workers will increasingly rely on 401(k) plans rather than traditional workplace pensions for retirement income. Both these trends are likely to push workers toward later exit from the workforce.”

Yet going forward, it adds, gains in education by older workers will slow considerably, as baby boomers move through retirement. This will slow further increases in their labor force participation.

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