(Bloomberg) — Older U.S. workers are defying expectations, and international trends, when it comes to their labor force involvement.
Americans are living longer, are less likely to have pension plans, and are in better health further into old age — yet a long-running uptrend in 55-64 year old labor force participation rates has stalled in the U.S. since 2008, even as it’s persisted in most other advanced industrial nations.
It’s not clear why Americans are bucking the trend toward later retirement visible elsewhere, but economists at Goldman Sachs Group Inc. suspect it has to do with the lagged effects of deep job losses during the Great Recession.
What’s going on with older workers matters to the broader labor market. As the population ages it’s depressing how many people work or are looking for a job. Goldman projects that if the uptrend in 55-64 year old labor market participation resumes, it could soften the overall decline in the participation rate, which would in turn slow the drop in the level of unemployment.
“The difficult job market likely depressed participation among older American workers, but the later-retirement trend is likely to resume eventually,” Goldman Sachs economist David Mericle wrote in an Oct. 14 note. “This should partially offset the impact of population aging on the aggregate participation rate.”
Mericle’s confidence that older Americans are going to start working in greater numbers is rooted in international data. While participation rates for 55-64 year olds have continued to accelerate in most of the U.S. peer nations, the rate actually declined in the U.S. between 2008 and 2014, based on the most up-to-date Organization for Economic Cooperation and Development data.
Between those dates, the participation rate edged down by 0.4 percent in the United States, OECD data show. Of countries covered by that data, only Russia, Greece, South Africa and Latvia joined the U.S. in posting a decline, while countries including Italy, France and Germany saw double-digit increases.