Older Americans are now earning almost as much as younger workers

Michael Sasso | Bloomberg News (TNS)

The share of Americans working beyond retirement age has almost doubled since the late 1980s and the wage gap between them and their younger colleagues is shrinking, according to a Pew Research Center report.

Older workers are now as likely to hold college degrees as younger ones and can expect to earn $22 an hour compared to $13 in 1987, a 69% increase in 2022 dollars, according to the Pew report issued last week. That’s in contrast to the 19% boost in median hourly earnings for 25- to 64-year-olds.

The trends are reshaping the U.S. workforce, as seniors’ participation in the labor market is expected to rise while the participation rates of most other age groups stall or decline. All told, about 19% of people 65 and older today are employed, compared with 11% of that cohort in 1987, according to the report.

A few factors are converging to push older Americans into the workforce, and keep them there longer. Traditional pension plans that often incentivized Americans to retire at a certain age are on the decline, while the sheer number of Baby Boomers naturally increases the older-age workforce. There are also more “age-friendly” jobs that don’t require as much physical exertion than there used to be, the report said.

The share of older workers in the labor force slipped during the pandemic as a wave of “excess retirements” – older Americans quitting work at rates above historical trends – peaked at an estimated 3 million in December 2022, according to research from the Federal Reserve Bank of St. Louis. However, some of those older workers have since returned to the labor force because of higher living costs and other factors, the bank’s research shows.

Over the long term, older workers are far more likely to work full-time than decades ago. Nowadays, 62% of workers 65 and older are working full time, compared with 47% in the late 1980s.

One area where older workers haven’t made as many strides is gig work. Only 10% of people 65 and older performed any gig work in the previous month, according to a recent Federal Reserve study cited in the Pew report. That’s compared to the 17% of younger adults who reported doing so.

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