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Growing Labor Force Participation by Older Workers May Reduce Stress on Social Security Retirement Fund

May 12, 2003
Jim Jaffe
(202) 775-6353
jaffe@ebri.org, EBRI
Craig Copeland
(202) 775-6356
copeland@ebri.org, EBRI

WASHINGTON, DC—The percentage of "near-elderly" Americans (between 55 and 64) participating in the nation's work force has risen significantly in the past 22 years, according to a new report from the Employee Benefit Research Institute. Among women, the participation rate rose from 41 to 55 percent. The rate among men, which declined from 72 percent to 66 percent between 1980 and 1994, has risen from 67 percent in 2000 to 69 percent in 2002.

Rising workforce participation, particularly by older workers, is good news for the Social Security retirement program that will extend the plan's economic life, concludes a report by the Employee Benefit Research Institute (EBRI). Each 1 percent increase in labor force participation will enhance the actuarial balance, now --1.92 percent of taxable payroll, by 0.06 to 0.07 percent. The research is included in the May 2003 issue of EBRI Notes.

The EBRI data show there was a big drop in labor force participation among the youngest male workers (ages 16-24) from nearly 3 in 4 (74 percent) to less than 2 in 3 (65 percent) between 1980 and 2002. The biggest increase, from 41 percent to 55 percent, was recorded among women 55-64.

Among the report's other findings:

• While the work force participation rate for most women increased, a modest decline (to 61 percent) was noted for youngest women workers (ages 16-24)
• The highest labor force participation rates for both sexes are reported for those between 35 and 44.
• In 2002, total labor force participation declined to 66.9 percent from a high of 67.2 percent set in 2000. This was still well above the 63.8 percent level of 1980.

"If this pattern persists and people work longer," said EBRI President and CEO Dallas Salisbury, "that could have a substantial impact on retirement policies, especially for the Social Security program."

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EBRI is a private, nonprofit, nonpartisan public policy research organization based in Washington, DC (www.ebri.org). Founded in 1978, its mission is to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI does not lobby and does not take positions on legislative proposals. EBRI receives funding from individuals, employers of all types, unions, foundations, and government.

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