Life,  Wealth

Gray Tsunami: Are We Ready for the Surge of Older Workers?

Biden, at the age of 80, persists in his pursuit of the next presidency, while the US Republican luminary, Mitch McConnell, stands at the seasoned age of 81. Increasingly, constituents harbor apprehensions regarding the efficacy of these venerable statesmen. A recent CBS poll reveals that four-fifths of Americans harbor such concerns regarding elected officials aged 75 and above.

This epoch of leadership, though unconventional in most nations, resonates with a social paradigm shift within the United States: a burgeoning inclination among Americans to prolong their vocational engagement post-retirement.

As per a December 21, 2023, report by the Pew Research Center, despite the impending retirement of Baby Boomers by 2030 and the advancing age of the eldest Generation X members (born 1965-1980), a notable proportion opts to remain in the workforce—1 in 5 Americans over 65 remained industrious in 2023, constituting 19% of the workforce.

Remarkably, individuals aged 75 and above emerge as the swiftest-growing demographic within the US labor landscape.

The US Bureau of Labor Statistics’ 2021 report forecasts an augmentation of 8.9 million individuals in the labor force from 2020 to 2030, marking a 5.5% rise. Yet, this trajectory harbors a shade of pessimism: a projected 7.5% decline in the labor force among 16- to 24-year-olds, juxtaposed with a striking 96.5% surge among septuagenarians and beyond within the next decade.

By 2030, the “baby boom” cohort will predominantly surpass the age of 65, with this demographic constituting 9.5% of the civilian labor force in the United States.

In tandem with global population aging, an increasing cohort may find themselves compelled to seek livelihoods post-retirement to sustain familial obligations. This phenomenon transcends national borders, manifesting as a ubiquitous trend across diverse societies worldwide.

Return to Employment in the Golden Years

While the statutory retirement age in most nations ranges between 55 and 67 years, the veracity for many defies such demarcations.

In the spring of 2021, Julie Diaz, an elderly denizen of the United States, relinquished her post as a legal secretary. However, her golden years did not unfold in leisure. Come 2022, at the age of 70, Julie found herself reentering the workforce. Her daughter’s marital dissolution necessitated Julie’s financial assistance in meeting exorbitant legal fees, while she concurrently shouldered familial responsibilities by aiding her granddaughter, amidst her daughter’s employment in a restaurant. Additionally, Julie provided support to another unemployed granddaughter in navigating rent obligations.

March 2023 saw Julie securing employment with Home Instead, a purveyor of home care services for seniors. Tending to a 79-year-old gentleman afflicted with Parkinson’s disease and mild Alzheimer’s, Julie undertakes grueling 12-hour shifts daily in Phoenix. Post-duty, she embarks on an 80-kilometer journey to attend to her granddaughter’s needs.

“In the absence of this occupation, I would be remiss in fulfilling my familial obligations,” Julie divulged to Bloomberg News. “As long as my health endures, I shall persist in my labor.”

Julie epitomizes the plight of numerous elderly Americans compelled to rejoin the workforce, navigating exigencies such as inflation, dwindling savings, and diminishing birth rates.

This scenario presents a dialectic conundrum between market exigencies and the aging populace—a discourse underscored in a December 19, 2023, missive by the US Chamber of Commerce. Presently, the United States grapples with 9.5 million job vacancies juxtaposed against 6.5 million unemployed individuals, underscoring a glaring lacuna in labor fulfillment. Forecasts posit that an aged workforce may assuage this void.

Primordial among the motivations impelling elders back into the labor fray is the specter of financial precarity engendered by paltry savings and soaring inflation.

On one hand, a burgeoning swath of Americans confronts destitution in their twilight years, bereft of retirement nest eggs. A 2023 analysis by the US Government Accountability Office unveils a disquieting reality: a mere tenth of low-income workers aged 51-64 possess retirement savings, contrasting starkly with a fifth in 2007. Middle-class strata fare little better, with stagnant retirement account ownership rates around 60% over a twelve-year span, while the median account balance plummets from $86,800 to $64,300.

Teresa Ghilarducci, a luminary in retirement studies and an economics professor at the New School for Social Research in New York, prognosticates an impending surge in elderly poverty. Perusing US Census data from January 2023, one discerns a disconcerting uptick in poverty rates among senior citizens—a portent of economic adversity.

On the other hand, a 2022 survey by F&G Life illuminates anxieties plaguing four-fifths of American adults aged 50 and above, holding financial assets exceeding $10,000, concerning post-retirement inflationary pressures. Over half of imminent retirees avow their intent to seek part-time employment to defray daily expenses post-retirement.

Postponement of Retirement

Indicators abound of seniors assuming an integral mantle within the labor market—a phenomenon not confined to the United States.

A recent study by global consultancy Bain & Company postulates that by 2030, upwards of 150 million positions globally shall be occupied by individuals aged 55 and above. The report anticipates that seasoned professionals shall constitute over a quarter of the G7 workforce by 2031.

Andrew Schwedel, a partner at Bain & Company, elucidates, “Japan stands as a harbinger of demographic transition, with nearly 40% of its workforce aged over 55; comparable figures for Europe and the United States range between 25% and 30%.”

Within East Asia, South Korea commands attention. World Bank data reveals that 45% of South Korea’s labor pool comprises individuals aged over 55—an alarming precedent. Conversely, China boasts a more sanguine statistic, with a 15.49% ratio.

This paradigm, emblematic of plummeting birth rates and an aging populace, heralds a scenario wherein the paucity of new labor entrants necessitates the integration of middle-aged and elderly cohorts into the workforce. Yet, this imbalance portends a concomitant surge in societal burdens, chief among them being the exigency for comprehensive elderly care—a shared obligation for society at large.

Various nations have also discerned this tendency early on, beseeching the elder populace to persist in “illuminating their talents,” thereby elevating the retirement age to the forefront as the most expedient and efficacious measure.

As far back as 1983, the United States progressively elevated the customary retirement age for full pension entitlements from 65 to 67.

In China, the discourse on postponing retirement has remained incessant. The gradual extension of the prescribed retirement age has been enshrined in the “Strategic Plan for Augmenting Domestic Demand (2022-2035)” and is deemed an inexorable trajectory.

During the 2019 Singapore National Day Rally, Prime Minister Lee Hsien Loong declared that within a decade, the government would protract the national retirement age and re-employment age restriction by three years. By 2030, the statutory retirement age will burgeon from 62 to 65 years, while the re-employment age limit will stretch from 67 to 70 years.

Even at the age of 70, one can still re-enter the workforce. Previously, employment was precluded beyond the age of 67. In essence, one can authentically engage in both life and labor into advanced age.

To mitigate the labor dearth engendered by demographic decline, Japan will augment the retirement age for national and local civil servants from 60 to 61 years commencing April 1, 2023. Subsequently, the retirement age will increment by one year biennially until reaching 65 in fiscal year 2031. This connotes that the public pension age will also ascend to 65. Nevertheless, an extended tenure does not necessarily equate to sustained wages. Pursuant to the amended rendition of Japan’s National Civil Service Law promulgated in 2021, personnel aged over 60 must retire from managerial roles, and their remuneration will be curtailed by approximately 70%.

More than half of those on the cusp of retirement have expressed intentions to undertake part-time work to meet daily expenditures post-retirement.

Japanese enterprises have already implemented this framework. As per data from the Ministry of Labor, as of June 2022, 25.5% of companies have established the retirement age as 65 or above.

In January 2023, France, renowned for its abbreviated work hours, unveiled plans to overhaul the retirement system, raising the eligibility age for pensions from 62 to 64 years. Commencing September 2023, the statutory retirement age will be deferred by three months annually until reaching 64 by 2030. Furthermore, starting in 2027, only retirees with 43 years of employment history will qualify for full pensions. Prime Minister Borne asserted that France’s pension system is already in deficit, and advancing the retirement age stands as the sole avenue for augmenting revenue sans tax hikes.

This initiative triggered demonstrations encompassing over a million individuals.

Inauspicious Employment Landscape

In late March 2023, the U.S. Social Security Administration issued a proclamation indicating that the Social Security Trust Fund reserves would be depleted a year earlier than anticipated, transitioning from 2034 to 2033. The situation is graver than anticipated.

By then, individuals aged 50 to 64 may confront a retirement predicament within the ensuing decade. Consequently, retirees’ pensions may diminish by approximately 25%—a substantial setback for households unable to amass retirement savings.

In the United States, many low-wage laborers still lack access to employer-sponsored retirement schemes such as the “401k plan” (a fully funded pension scheme funded by employee and employer contributions). Only 15% of private sector employees benefit from such pensions.

Various impediments have coerced the elderly back into the labor force—according to Forbes, a majority of Americans lack the financial means for retirement. In the United States, accumulating $1 million is imperative to retire at the age of 65.

Facilitating the reintegration of seniors into the job market is a strategy being pursued by numerous nations. However, this approach may overlook a crucial aspect: Is the job market poised to accommodate older individuals?

At Home Instead, the establishment where Julie is employed, approximately 36,000 healthcare professionals are on staff, with roughly one-third aged over 60. Seniors4Hire, another platform catering to older job seekers, witnessed a 20% surge in applications from March to July 2022 alone, alongside a 12% uptick in employers posting job vacancies, albeit predominated by part-time and low-wage positions.

A survey conducted by Bain & Company among 40,000 workers across 19 nations revealed that 22% of respondents aged 55 to 64 deemed themselves in need of additional technical proficiency. Contrarily, a 2020 global employer survey indicates that merely 4% of companies are dedicated to facilitating the integration of older workers into the workforce.

While some seniors have opted to rejoin the labor force, businesses and institutions appear ill-prepared. Age discrimination remains an insurmountable obstacle in most corporations.

In truth, most companies favor younger, more economical laborers. Several years ago, Forbes, in collaboration with Deloitte, queried about 10,000 firms: “Is older age deemed advantageous or disadvantageous in your organization?” Over two-thirds of respondents deemed older age a competitive drawback.

Data from the American Association of Retired Persons (AARP) reveals that two-thirds of individuals aged 45 to 74 have encountered age-related discrimination. Moreover, 95% of employers have not formulated tailored strategies to accommodate older individuals.

Presently, two distinct demographic trends are evident worldwide. Firstly, life expectancy has burgeoned—every year witnesses a three-month augmentation in the average human lifespan. In the United States, life expectancy at the dawn of the 20th century stood at a mere 47 years. Presently, it stands at 79 years—an increase of 32 years. Secondly, fertility rates are dwindling in myriad nations, resulting in a diminution of youthful entrants into the labor pool. It is foreseeable that labor will claim a lengthier segment of individuals’ lives, progressively crystallizing into reality.

Nonetheless, amid the persisting “midlife crisis” in the job market, envisaging the nature of employment for older individuals post-retirement remains challenging. Presently, only a fraction of the harsh verity is comprehensible. They, or we in the future, will inevitably require gainful employment.

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