January 17, 2023

Photograph by Lewis Hines, West Virginia 1937.

The Great Depression, sparked by a devastating collapse in stocks followed by 25 percent unemployment, remains the deepest recession in U.S. history.

A new study laying out the long-term negative impacts to Americans born during that time might be consequential for today’s youngest citizens –  teenagers born during the Great Recession of 2008 and 2009 and toddlers born in the midst of the steep COVID downturn in 2020.

The researchers found that the stresses and financial strains on parents from the Depression’s extraordinarily high unemployment over a protracted period of time did long-term damage to the health and careers of their children that persisted late into their lives. In a separate but related paper, they also found that people exposed to the Depression in utero experienced an acceleration in the aging process after age 75.

“The shock of the Great Depression was massive and everyone, no matter what group they belonged to, was to some extent impacted,” concluded the researchers, Valentina Duque and Lauren Schmitz.

For a whole host of reasons, a parent’s loss of income and joblessness have a huge impact on their children’s development and socioeconomic status, which in turn determine how they will do when they grow up. Prenatal stress on mothers, for example, has been linked to lower earnings for their offspring as adults. In utero stress also contributes to cognitive and behavioral problems late in life.

A father’s financial distress can harm the long-term health of children if the family can’t afford to buy nutritious groceries and quality healthcare or isn’t able to relocate to another part of the country with better job prospects.

To assess the Depression’s impact on health and careers, this study used a survey of older Americans. The researchers identified adults born in the 1930s to analyze how they fared late in their careers based on how severe the Depression was in the state where they were born or lived as young children.

The analysis, using IRS tax records, indicated that the offspring of the Depression’s parents living in states with larger declines in wages earned less throughout their careers – the impact in utero was larger than for the workers exposed to the Depression as young children.

The Depression created other deficiencies too: by the time the people born in more depressed states reached their 50s and early 60s, they were less productive and less attached to the labor force than their counterparts who grew up in states with stronger economies during that difficult time. They also had poorer health, were more often disabled, and had higher mortality due to health problems like diabetes and cardiovascular disease.Learn More

January 5, 2023

As the lower-paid sex, women have no shortage of insecurities about their retirement finances.

Only one in five working women feels “very confident” of being able to retire comfortably, the Transamerica Center for Retirement Studies reports in its annual retirement survey. More than half say they don’t earn enough or have too much debt to leave a lot of room for saving. Four in 10 expect to retire after 70 or not at all.

These insecurities probably reflect, to some extent, the poor retirement preparedness of Americans as a whole, not just women. In fact, women have made significant strides over the past half century. A new study documenting their personal and economic progress since the 1970s finds that their financial standing, compared with men, has improved.

Granted, women are still a long way from pay parity. But the improvements in retirement preparedness are impressive because they occurred despite the fact that women have become more independent – they are more likely to be living on their own and supporting themselves. Roughly two-thirds of boomer women born after 1953 either have never married or have been divorced for some part of their adult lives, according to the Center for Retirement Research.

What undergirds their personal and financial independence are college degrees and women’s growing participation in the labor force over five decades.

One in three baby boomer women born in the mid-1950s through the mid-1960s has a college degree – twice that of their mothers who were born during the Great Depression. Armed with the degrees, young boomer women flooded into the labor force. Three-fourths were working between their mid-30s and mid-40s, compared with 57 percent employment in the Depression-era cohort at that age. Men’s labor force participation has been much higher historically but barely changes over time.

Black women have always worked more than White women. But they too increased their labor force participation as they gained more education.

So how has women’s robust participation in the work world bolstered their financial security? …Learn More

Research

October 11, 2022

Older Americans’ share of the labor force has doubled since the early 1990s, and they constitute roughly one in four workers today.

But their dominance is mainly an artifact of the baby boomers’ demographic bulge moving through the labor force and says little about how employers view the growing ranks of aging workers.

Employers’ willingness to hire or retain older workers, especially when someone younger is available, is an important issue for a couple related reasons. Boomers are under increasing pressure to work as long as possible to improve their finances before retiring. It’s also easier for many to work well into their 60s since people are living longer and technological advances have reduced the physical requirements for some types of work.

But do employers want boomers on the payroll?

A study by Damir Cosic at the Congressional Budget Office and C. Eugene Steuerle at the Urban Institute finds some evidence that employers increasingly view them as pretty good substitutes for workers in their prime whose age – the mid-30s to mid-50s – and experience puts them at peak productivity. What distinguishes this research is its focus on understanding the demand for older workers, a departure from the many studies describing the changes in their labor supply.

The analysis turned on whether the growth in the older labor force has affected prime-aged workers’ wages. If, for example, their wages are increasing relative to the wages of workers over 55, this may indicate that employers are more willing to hire workers in their prime, because they have qualities the older workers lack.

If, however, the younger workers’ wages are declining relative to boomers’ wages as the growing supply of older workers puts some downward pressure on pay, employers may view the boomers as acceptable substitutes for their younger counterparts and are equally willing to employ them.

The researchers found that employers viewed older workers as increasingly attractive substitutes over the period 2000 through 2018. This trend was clearly evident in several specific industries, including utilities, real estate, information, government, finance, transportation, and wholesale. …Learn More

Research

October 6, 2022

U.S. industries have become increasingly concentrated in the 21^st century, leaving fewer employers in local labor markets. This is not good for workers.

The simplest example is a town with one company in the business of producing widgets. The company has little competition when hiring widget workers and can pay them lower wages.

A new study finds that the increase in employer concentration – one or a few firms that dominate locally – has played a role in the 20-year decline in labor force participation in the United States. When workers have fewer employment options and wages are lower, looking for and finding a job is a more difficult, less fruitful pursuit. Some give up and drop out of the labor force.

Employer concentration “push[es] marginally attached workers out of the labor force entirely,” concluded Anqi Chen, Laura Quinby and Gal Wettstein at the Center for Retirement Research at Boston College.

Their research builds on several recent studies showing that when firms possess more bargaining power with workers, they can drive down wages. This new study is the first to make a direct link between employer concentration and its impact on employment activity.

Labor force participation – the share of adults of all ages who are either working or looking for a job – is lower in concentrated markets, the researchers found. Actual employment levels are also lower, though this is mainly the case for teenagers and workers in their 20s. …
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December 21, 2021

Three months into the pandemic, a few million older workers had been laid off or quit. But what happened next?

The rapid drop in employment due to COVID gave the Center for Retirement Research an unusual opportunity to study the labor force decisions of baby boomers, who are within striking distance of retirement age but may or may not be ready to take the leap.

Traditionally, older workers who left a job tended to retire. But there was little indication that the people who stopped working during the pandemic saw retirement as their best fallback option.

This conclusion by the researchers is consistent with the pre-COVID trend of boomers working longer to put themselves in a better financial position when they eventually do retire. In fact, many older workers have returned to the labor force as the economy has rebounded and vaccines have become widely available.

But in April 2020, job departures spiked before settling back down at a new, much higher level. The annual pace of departures increased from 15 percent of workers 55 and over in 2019, prior to COVID, to 23 percent in 2020.

The researchers found a surprise when they looked at who stopped working. Although older people are vulnerable to becoming seriously ill from COVID, age wasn’t a big factor in their decisions. Boomers in their 60s were no more likely to leave their jobs than people in their mid- to late-50s, according to the analysis of monthly Census Bureau surveys.

The groups most likely to leave the labor force were women, Asian-Americans, and workers who either don’t have a college degree or don’t have a job that easily lends itself to working remotely.

But among all of the age 55-plus workers in the study, the share reporting that they had retired barely increased, from an average of 12 percent prior to COVID to 13 percent last year.

The only people who left their jobs and retired in significant numbers during the pandemic were over 70. This finding reinforced what the researchers found in data from the U.S. Social Security Administration: the pandemic didn’t have a major impact on retirement because the share of workers between 62 and 70 who signed up for Social Security was relatively flat between April 2019 and June 2021. …Learn More

Research

June 23, 2020

Anyone who’s suffered through depression knows it can be difficult to get out of bed, much less find the energy to go to work. Mental illness has been on the rise, and depression and myriad other symptoms get in the way of being a productive employee.

So it’s not surprising that men and women with mental illness are much less likely to be employed than people who have no symptoms. But the problem gets worse in a recession.

In 2008, the first year of the Great Recession, the economy slowed sharply as 2.6 million workers lost their jobs. During that time, people who suffered from mental illness left the labor force at a much faster pace than everyone else, according to a new study from the Retirement and Disability Research Consortium.

The researchers compared average labor force participation, as reported in the National Health Interview Survey, for three periods. Two periods of consistent economic growth bracketed a period that included the onset of the Great Recession: 1997-1999, 2006-2008, and 2015-2017.

Labor force participation for people with no mental illness dipped less than 1 percent between the late 1990s and the period that included the recession. By 2015-2017, roughly three out of four of them were still in the labor force – only slightly below pre-recession levels.

Contrast this relative stability to large declines in activity for people with mental illness – the more severe the condition, the steeper the drop. Participation fell 17 percent among people with the most severe forms of mental illness between the late 1990s and the period that included the recession. By 2015-2017, only 38 percent of them remained in the labor force – well below pre-recession levels. …Learn More

August 6, 2019

The decline in Americans’ labor force activity started around the year 2000 and accelerated after the 2008-2009 recession. Labor force participation is now at its lowest level since the 1970s.

The main reason for the drop is our aging population. But the news in a systematic review of current research in this area is a more troubling trend that’s also driving it: people in their prime working years – ages 25 through 54 – are falling out of the labor force.

Prime-age men are the most active members of the labor force. Yet in 2017, only 89.1 percent of them were either working or seeking a job, down from 91.5 percent in 2000, according to the review by University of Southern California economists.

Prime-age women’s labor force activity also fell, to 75.2 percent in 2017 from about 77 percent in 2000. This decline ends decades in which women were streaming into the nation’s workplaces at an increasing rate. One possible reason for the leveling off is the scarcity of family-friendly policies, including more generous childcare assistance.

The forces pushing and pulling various groups in and out of the labor force make it difficult to pin down the primary reasons for the overall drop in participation. The decline among prime-age men and women may be tied to opioid addiction, alcoholism, and suicide. Other studies point to the surge in incarcerations of black men.

And while technological advances like robots and growing trade with China have increased the need for many highly skilled workers, they have reduced the demand for less-educated, lower-paid people, including U.S. factory workers, in their peak working years. The resulting fall in their wages has also made work less attractive to them. …Learn More