The Deteriorating Labor Market Plight of Lower Income Older Adults in the U.S.: The Case for an Expanded Senior Community Service Employment Program

  1. During the course of the recent labor market recession, the nation’s older workers (55-74) as a group fared much better than younger workers in avoiding job losses and declining employment/population (E/P) ratios. The labor market well being of older workers, however, varies enormously by their socioeconomic status. The labor market fate of older workers (55+) was strongly associated with their family’s income level, with low income older workers faring the worst by a wide margin on all labor market problems, especially on labor underutilization problems.
  2. Aggregate employment among older workers (55+) actually rose during the recession while it fell sharply among all younger age groups, especially among teens and 20-24 year olds between the fourth quarter of 2007 immediately prior to the recession and the fourth quarter of 2009. Employment of persons (55+) rose by nearly 1.1 million while employment of those under 55 declined by 9.1 million or 7.5% with the steepest declines among those under 25 years of age.
  3. However, when we disaggregate the employment, unemployment, and labor underutilization data for 55-74 year olds by income group, we find rapidly deteriorating unemployment and labor underutilization problems among the lower income groups. Key findings are as follows:
    • The unemployment rate of 55-64 year olds with an income under $15,000 rose from an already high 15.5% in 2007 IV to 23.5% in 2009 IV, a gain of 8 percentage points. They were 4* as likely to be unemployed as their similar-aged peers with incomes of $25,000 or higher. Among workers 65-74, the unemployment rate rose from 10% in 2007 IV to 16% in 2009 IV. They were 2.5 times as likely to be unemployed as their same age peers with incomes of $25,000+.
    • Labor underutilization rates of older workers with incomes under $15,000 and from $15- 25,000 exploded between 2007 IV and 2009 IV due to rising open and hidden unemployment and underemployment. In the last quarter of 2009, the underutilization rate of 55-64 year olds with incomes under $15,000 was 46.3% , which was 4* as high as that for similar aged peers with incomes above $25,000 and nearly 3* as high as the 18% underutilization rate for all adults (16+) in the country (See Table 1).
      Table 1: Estimated Labor Underutilization Rates of Older Workers in Selected Age/Household Income Groups in 2007 4th Quarter and 2009 4th Quarter (in %, not seasonally Adjusted)
      55–64 65–74
      Year (A) Under $15,000 (B) $15,000–$25,000 (C) $25,000 or higher (D) Under $15,000 (E) $15,000–$25,000 (F) $25,000 or higher
      2007 4th Quarter 30.4 46.3 5.1 27.1 21.4 8.5
      2009 4th Quarter 33.4 16.1 11.5 35.1 26.5 14.5
      Percentage Point Change +15.9 +17.3 +6.4 +8.0 +5.1 +6.0
    • In March 2009, based on the poverty and income statistics from the March 2009 CPS survey, we estimate that the underutilization rate for all 55–74 year olds with adjusted annual incomes under 125% of the poverty line was just under 42% versus only 12% for all 55–74 year olds, with incomes more than double the poverty line, representing a relative difference of 3.6 times.
      Table 2: Labor Underutilization(1) Rates of 55-74 Year Old Labor Force Participants(2) in Selected Adjusted Income Categories, March 2009
      Income Group Underutilization Rate (in %)
      Under 100% of poverty 45.4%
      Under 125% of poverty 41.7%
      125–199% of poverty 26.9%
      200%+ of poverty 11.7%
      All 55–74 year olds 14.7%

Note

  1. Labor underutilization includes the unemployed, labor force reserve, and underemployed.
  2. Labor force includes members of the labor force reserve.