Older Workers Retirement Security

Executive Summary

The dominant narrative describing older U.S. workers tends to be heavily positive: On average, they are living longer, healthier lives; options for part-time and remote work are on the rise, especially since the pandemic; and physically challenging jobs are rare. While this picture accurately describes work life for many, the reality for other older workers is much more precarious. Well over 10 million of them are in jobs that are physically challenging, yet lack the resources to secure more viable ones or to retire.

Physically challenging work is thus not disappearing, but rather shifting in type and nature, with construction and manufacturing jobs replaced in recent decades by warehouse, home health, and others that are less unionized, and more likely to be contract work that provides little financial protection or stability. These workers are disproportionately low earners, with lower educational attainment than the average American worker and are predominantly workers of color.

The Older Workers’ Retirement Security Task Force convened by the National Academy of Social Insurance explored in depth the many challenges facing these “invisible” older workers and identified and assessed policy options to enhance their security. Some require legislative action, and some do not. In keeping with Academy practice, this report does not advocate for or against any particular set of options, but is intended to provide strategies the Task Force believes would effectively address the challenges facing this group of workers.

Challenges Impede Continued Work and Stable retirement

Health problems and physical limitations that tend to ramp up at the “50s cliff” are exacerbated by years of arduous work. Warehouse and home health jobs, for example, which often involve rapid, repeated movement and tremendous force, can shift from difficult to impossible as a worker reaches his/her mid-50s. And even less strenuous jobs like retail or education, which require standing for hours, become much harder. Indeed, “health shocks” are a major driver of earlier-than-anticipated retirements.

The COVID-19 pandemic compounded these problems. While workers with office jobs could protect themselves by working remotely, older workers with physical jobs faced the double jeopardy of increased exposure and heightened risk of severe illness and even death. They are now at heightened risk of long COVID and its potentially permanently disabling conditions.

As a result, those who need to retire early are least prepared to do so. Low wages that limit their ability to save, lack of access to employer-sponsored retirement accounts, the near disappearance of defined-benefit pension plans, and these workers’ inconsistent and low-wage contributions to Social Security, along with early-claiming penalties, add up to a lack of sufficient resources to survive in old age.

Furthermore, strict disability standards and hard-to-navigate processes leave many ineligible or unprotected. The United States has among the most stringent standards among peer nations for qualifying for disability benefits, exacerbated by complex application and appeals systems that pose particular challenges for workers with limited formal education, English, and/or computer skills.

The employment and training programs intended to help struggling workers are insufficiently tailored to these older workers. The federal Department of Labor has developed programs that serve this population, but these are not all targeted to this large, but largely invisible portion of the labor force.

Age, race, and gender discrimination come together to hurt this target population. Workers must meet a very high standard of proof to enforce age discrimination provisions. And AARP survey data indicates the problem is growing: in 2022, 64% of workers ages 40 to 65 reported having seen or experienced age discrimination in the workplace, up from 61% in 2018. For women and workers of color, employer and societal biases add additional layers of challenges.

Workers of color are disproportionately harmed. They are far more likely than their White peers to be working physically challenging jobs and, within those jobs, to be doing the most dangerous tasks. Among workers ages 58+, while just over 40% of White older men had such jobs, roughly half of older Black and Asian workers, and over 60% of older Latino workers, were doing such work as of 2014. The disparities are even more striking for jobs deemed “highly physically demanding”: nearly one in ten Latino workers and almost one in twenty Black and Asian workers were in such jobs, versus fewer than one in forty older White workers.

Other societal trends – the rise in non-standard work, the growing burdens of caregiving, and the lasting impacts of recessions on those who are most vulnerable – also hit these older workers hard.

A Range of Program and Policy Options Could Stabilize Retirement, Enhance Access to Disability Benefits, and Enable More Older People to Continue Working

Policymakers could take a number of steps within the Social Security program to improve these workers’ retirement security:

• Raising the Social Security Minimum Benefit would bring it into alignment with both its original intent and peer OECD nations, while boosting financial security for precarious older workers.
• Creating a bridge benefit between early claiming and Full Retirement Age for workers who have done physically challenging jobs would provide added income for these workers and reduce the lasting penalty they currently incur.
• Revising the Social Security Earnings Test could reduce disincentives to work among some while simplifying the program’s complex administrative processes.
• Allowing workers to claim partial early benefits would incentivize part-time work and reduce penalties at no cost to the program.

There are many options for improving these workers’ access to Social Security disability benefits (DI and SSI):

• Updating and Simplifying the Special Medical-Vocational Profiles provisions would bring them into alignment with today’s labor market, helping more workers with limited educational attainment receive benefits more quickly and reducing administrative burdens on the agency.
• Developing and Funding a Program to Assist Older Low-Income Claimants would improve access and reduce barriers to navigating the complex process.
• Eliminating the Reconsideration Stage and Improving Initial Decision-Making would reduce waits for claimants.
• Modernizing vocational information would ensure that assessments for claimants’ capacity for future work are accurate and meaningful.
• Removing SSA’s Administrative Budget from the Discretionary Spending Caps would provide a long-overdue boost to the agency’s capacity and enable program enhancements to be properly implemented.
• Addressing the disability implications of Long COVID, including preparing detailed guidance for evaluating related disability claims, would ensure the agency is better prepared to support this emerging and growing source of work-impeding impairments.

In addition, SSA could improve its communications and public education efforts:

• Mailing Social Security Statements to All Eligible Workers would bring practice back in line with legal requirements and help lower-wage workers leverage their prime working years to boost their retirement benefits.
• Increasing the use of mySocial Security accounts would give more workers consistent access to benefit and other key information and narrow the digital divide.
• Improving field-office outreach could boost public understanding about Social Security, with a particular focus on reaching workers who are least educated and would benefit most.

Department of Labor (DOL) programs also have an important role to play in improving these workers’ well-being:

• Expanding the Senior Community Service Employment Program (SCSEP), including adopting key OECD recommendations, would make DOL services more widely available and particularly benefit this target population.
• Improving employment, rehabilitation, and training programs to focus more on older workers would enhance opportunities for these workers in precarious situations.
• Strengthening Unemployment Insurance (UI) coverage for older workers could narrow gaps with younger peers and better support older laid-off workers in their search for new jobs.
• Taking steps to ensure that older workers are a prime focus across DOL would bring the Department in line with other federal agencies and better leverage this important segment of the U.S. labor force.
• Finally, improving coordination and cooperation across federal government services for older workers would enable DOL to take advantage of other agencies’ resources and expertise to maximize support for these workers.

Outside of these agencies, older workers would benefit from:

• Enhanced and Better Enforced Age Discrimination Provisions, especially those in the Age Discrimination in Employment Act (ADEA).

Reforms to state Workers’ Compensation programs, whose deterioration and growing state-to- state disparities over the past several decades disproportionately harm this target population.

Conclusion

Relative to other U.S. groups facing major barriers, this target population has received little attention, and there is a dearth of solid data documenting the challenges it faces. That appears to be changing, however; in addition to this report, the Task Force is encouraged by the recent release of several other major research publications on this so-called “invisible population: the 2020 Brookings Institution event on Improving Economic Opportunity for Older Workers; the Older Workers and Retirement Chartbook co- produced by the Economic Policy Institute and the New School’s Schwartz Center for Economic Policy Analysis (2022); and the 2022 Oxford University Press book Overtime: America’s Aging Workforce and the Future of Working Longer.

We hope that policymakers will take note of this increased attention.

The Task Force does not claim to have all the answers, but offers a number of policy options that, if implemented, individually or in concert, could help this group of forgotten workers. The most effective assistance will come through improvements to Social Security programs—retirement and disability both— and to DOL employment supports. Without these actions, millions of older workers in physically challenging jobs will continue to struggle, at substantial cost to them, their families, and society as a whole.