Workers older than 60 making more than younger colleagues
People who are still working when they are near or past traditional retirement age are now earning significantly more per hour, on average, than workers who are in their prime working years, according to a new analysis of government data.
That’s a major shift from the 1980s and 1990s, according to the Brookings Institution analysis.
Experts say that’s partly because people who keep working past age 60 tend to be better educated, in better health and – most likely – in jobs that are going well. But it’s also partly because prime-age workers have had such a tough time of it since the nation went into recession in 2007.
“They all look like they’re doing pretty well because the younger people are doing relatively more poorly,” said Gary Burtless, a labor economist with the Brookings Institution and the author of the analysis.
The report, which was funded by the Social Security Administration, found that 60- to 74-year-old men who were still working earned $25.12 an hour, on average, in 2011. That’s more than 20 percent more than the average hourly wage of working men ages 25 to 59, which was $20.55 an hour in 2011.
Working women ages 60 to 74 earned an average of $18.51 an hour in 2011, nearly 10 percent more than the average hourly wage of $16.87 per hour for 25- to 59-year-old women.
The big disparity is a change from years past. In the 1980s and 1990s, the average older men’s hourly wages were about the same as younger workers’ wages, and older women were earning a bit less per hour, on average, than younger women.
Then, between 2007 and 2010, older workers’ average hourly wages saw a significant bump, while the young workers’ average hourly wages largely stagnated, according to the Brookings analysis.
The average wages for both groups fell in 2011, the most recent year for which data was available. All of the figures are in constant 2010 dollars.
The younger workers' annual wages were slightly higher, overall, than the older workers, which Burtless said is because younger workers tend to work more hours.
Of course, there is a significant pool of older people who aren’t working but could really use the paycheck and may be falling short financially. Some may have lost a job and had trouble finding a new one, while others were forced to stop working because of ill health.
The percentage of Americans working past age 65 has been creeping up, but experts say that those who do keep working are generally still better off.
“On average, the case seems to be that the people who are continuing to work are in better health, they have better schooling (and) they have an employer who values their contributions. They’re the most robust and better trained people,” Burtless said. “It’s not the people who are desperate to top up their Social Security check.”
Ronald Lee, a professor of demography and economics at UC Berkeley, said another factor is that today’s older workers are likely to be more highly educated than the older workers of 30 years ago. That means they can likely command a higher paycheck then the older workers in the 1980s and 1990s could.
He said the fact that prime-age workers are earning less in comparison to their parents and grandparents does raise concerns. People who take longer to get into career-track positions, or who start out earning very low wages, may never make up that lost financial ground.
“There’s a lifetime hit that those generations take," Lee said.