NCPA - National Center for Policy Analysis

The Declining Labor Force Participation Of Older Workers

February 26, 1999

Next to the unprecedented increase in the proportion of women of all ages in paid employment, analysts say the most significant employment trend during the post-war era has been the decline in the proportion of older men and women who keep working.

According to the Bureau of Labor Statistics, the labor force participation rate -- the percentage employed or looking for work, rather than retired or disabled -- has declined dramatically for older workers. For example,

  • Until recent decades, it was normal for men in good health to keep working at age 65 and older.
  • In 1955, for instance, nearly 45 percent of all men 65 or older were still in the labor force.
  • Today, more than two-thirds of men drop out of the workforce by age 65.

The proportion of women in paid employment during their working lives is still lower than men's. However, for both men and women, their participation in the labor force begins declining rapidly after age 54.

  • Thus, in 1990, for example, 92.3 percent of men and 74.8 percent of women ages 45 to 49 were in the labor force.
  • But only 55.5 percent of men and 35.5 percent of women ages 55 to 59 were employed or looking for work.
  • And only 15.4 percent of men and 8.2 percent of women ages 65 to 69 were still workers.

Analysts say these trends toward retirement and early retirement are partly due to the availability of Social Security retirement benefits beginning at age 62, and tax laws that penalize Social Security beneficiaries if they continue to work. Thus, for instance, among males who were age 62 or 63 during the period 1990 to 1993, 75 percent of men still in the workforce were not receiving Social Security benefits, while only 18 percent were.

Sources: Bureau of Labor Statistics data; and Ralph Smith, et al., "Raising the Earliest Eligibility Age for Social Security Benefits," January 1999, Congressional Budget Office, Washington, D.C.


Browse more articles on Economic Issues