A RELUCTANCE TO RETIRE MEANS FEWER OPENINGS
September 4, 2009
In today's turbulent economy, many older American workers are unable, or afraid, to retire. And delayed retirement translates into fewer job openings for younger workers, say authors Catherine Rampell and Matthew Saltmarsh.
In other parts of the developed world, people are retiring as planned, because of relatively flush state and corporate pensions that await them. But here in the United States, financial security in old age rests increasingly on private savings, which have taken a beating in the last year. Prospective retirees are clinging to their jobs despite some cherished life plans.
As a result, companies are not only reluctant to create new jobs, but have fewer job openings to fill from attrition. For the 14 million Americans looking for work -- a number expected to rise in Friday's jobs report for August -- this lack of turnover has made a tough job market even tougher.
By comparison, people in many countries with stronger safety nets are still exiting the labor force in lockstep despite the global recession and strained pension systems:
- Last year in France, just 4 percent of people ages 65 to 69 were still in the labor force;
- In the United States, about one third of people this age were still working or looking for work.
After all, Europe isn't just the land of "socialized" medicine. It is also the land of "socialized" retirement plans, and like other automatic stabilizers, pensions help cushion the blow of an economic crisis.
- The typical American receives just 45 percent of his preretirement wage through Social Security, according to the Organization of Economic Cooperation and Development.
- By contrast, a worker in Denmark, which has one of the most comprehensive and generous retirement arrangements in the world, can retire with a state pension that is 91 percent of his salary.
Of course, such a system comes with tradeoffs. To help pay for generous state pensions, Danish workers have one of the highest tax burdens. The population is also aging, meaning that there will be fewer working people to pay for the pensions and care of a graying society.
Source: Catherine Rampell and Matthew Saltmarsh, "A Reluctance to Retire Means Fewer Openings," New York Times, September 2, 2009.
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