A recent report by the Urban Institute and ProPublica revealed that more than half of older U.S. workers are being pushed out of their jobs before they choose to retire. While a separate survey suggests that about half of these were forced out by declining health (their own or a relative’s), the other half retired for job-related reasons, including being fired or laid off.
That means we could solve half of the forced-retirement problem by devising new programs to help older workers keep their jobs through improved skills and education. Doing so could have widespread benefits, both for older workers and for the broader economy.
The negative effects facing these workers are serious: 9 out of 10 of those laid-off older workers will never attain the same earning power. There are currently 40 million Americans age 50 or older in the workforce, with 22 million facing layoffs or forced retirement — that means 20 million who will have to learn to live on less. This is a slow-motion disaster. The effects on their lives, not to mention all the consumer goods companies that rely on Baby Boomer buying power, could be dramatic.
This trend is especially concerning since the U.S. economy continues to add jobs, and the unemployment rate remains low at just 4%. The official unemployment rate for workers over 55 is even lower, at under 3% — but this doesn’t include the long-term unemployed. According to calculations by the New School, the percentage of over-55 people who want to work but can’t get a job is still higher than it was before the Great Recession. According to a Stanford study, one out of three Baby Boomers has zero retirement savings, and even those who have saved something haven’t put away nearly enough.
Given the age of these workers, solving this problem requires solutions that can be put in place today, not decades from now. The good news is that even small wins could have a major impact: according to one study, delaying retirement from 62 to 66 boosts retirement living standards by about 30%.
The most significant and fastest thing we could do is to create ways for these workers to update and enhance their education and skills. Clearly, nothing is as important as education in preparing people to enter the workforce, since according to labor economist Anthony Carnevale, 99% of competitive jobs being created require post-secondary degrees but given changes in the nature of work, it is equally important for those already in the workforce to be given the opportunity to upgrade their education and skills.
Retirement time frame
We should make it easier for the private sector to partner with higher education institutions and to share tuition costs between businesses, states, and the federal government. This would allow employees to more easily obtain the education they need to advance their skills and stay employed. I don’t think it’s realistic to ask employees themselves to foot the bill. Many of them just don’t have the money: remember, 1 out of 3 Baby Boomers have zero retirement savings, and the average American has less than $1,000 in their savings account.) State governments, the federal government, and employers could provide necessary funding for tuition, which at community colleges and public universities is often reasonable. Critics may argue that this will be expensive; but remember that keeping workers employed longer result in additional tax revenue and boosts the consumer economy. Keeping people in the workforce is generally more cost-effective than supporting them through the social safety net.
We can also do more to improve the quality of and access to online learning. California recently added an entirely new online community college with $100 million in state support, and an ongoing $20 million per year. This is just one approach. Beefing up the quality and content of online learning in not just one, but all higher education institutions will broaden their ability to meet the needs of employees in the workforce who are at risk if their skills can’t be upgraded. Shared funding must be accompanied by shared curriculum development, with government and business working not as adversaries, but as partners.
These kinds of public-private partnerships would not only benefit older workers, but would also help make the U.S. more resilient to technological change. A recent report by the World Economic Forum and Boston Consulting Group, “Towards a Reskilling Revolution,” shows that 95% of workers in jobs threatened by technological changes, jobs like secretaries, bookkeepers, and cashiers, could be saved with an intelligent investment in education and skills.
Whether it’s keeping older workers employed or making sure that the U.S. can always offer good jobs to people without college degrees, improving access to education — and making it affordable — is essential. Making it easier for workers to improve their education and skills will help businesses save the cost of severance pay and hiring replacement workers, and help the government save on the cost of welfare and social service benefits. Most importantly, it would help experienced workers hold onto jobs they need, and perform with pride.