October 6, 2022

One Reason the US Labor Force is Shrinking

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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May 18, 2021

Nearly Half on Disability Want to Work

An unfortunate misperception about people on federal disability is that they’re not interested in working. In fact, nearly half of them want to work or expect to go back to work, and that share has been rising.

But getting or keeping a job has proved difficult, and the employment rate is very low for people who get Social Security disability benefits – or cash assistance from a companion program, Supplemental Security Income (SSI). Yet the vast majority of beneficiaries have past work experience that should help them in the job market.

Researchers at Mathematica mined a survey of people on disability for clues about how to help them find a job or promotion or learn a new skill.

Many of these work-oriented individuals are under extreme financial pressures and are also younger and healthier, despite their disabilities, than the people on disability who didn’t express a desire to work.

Yet only a third of the 2.6 million beneficiaries in the new study who say they want to work are either working now, were recently employed, or are looking for a job.

So, if they are willing to work and feel able to work, why are so few of them in the labor force?

The researchers landed on two big reasons. First, the work-oriented individuals, despite their desire to work, said they can’t find a job. This is a common experience because employers are either reluctant to hire people with disabilities or the available jobs don’t accommodate them. Others are hesitant to try the job market again because they feel discouraged by past employment experiences.

Second, the majority of work-oriented beneficiaries are unaware of federal programs designed to support a return to work or connect them with employers. …Learn More

July 28, 2020

Retirement Research Presented Virtually

Like much in life under a pandemic, the research presentations for the Retirement and Disability Research Consortium’s annual meeting are going virtual.

This year’s online meeting will also be scaled down from the traditional two days to one: Thursday, Aug. 6.

The purpose of the meeting, which is usually held in Washington, D.C., is for academics from universities and think tanks to describe their latest research to colleagues, policy experts, financial professionals, and the press. Topics this year will include taxes in retirement, federal disability insurance, housing, health, and labor markets. The U.S. Social Security Administration has funded the research and is sponsoring the meeting.

The agenda and information about registration are available online, and participants can register anytime. Questions for the researchers can be submitted during the presentations via a moderator.

One fresh idea being explored this year is taxes in retirement. Taxes are central to whether retirees have enough money to cover their essential expenses, but households that are approaching retirement age may not factor the need to pay federal and state taxes into their planning. Despite the importance of this issue, only a handful of existing studies have tried to estimate the tax burden. This paper fills the gap.

One session will feature a pair of papers looking at whether cognitive decline has a detrimental effect on older Americans’ finances. One will explore whether dementia leads to financial problems overall, and the other will focus exclusively on debt.

Researchers will also try to resolve a conundrum in the disability field: why are applications for federal benefits declining at the same time that Americans’ health is deteriorating? One hypothesis is that jobs are becoming less physically demanding. A second disability study will produce a publicly available database for researchers who want to examine the local factors affecting applications.

The agenda lists all of the papers that will be presented. Learn More

January 28, 2020

Education Could Shield Workers from AI

Not so long ago, computers were incapable of driving a car or translating a traveler’s question from English to Hindi.

Artificial intelligence changed all that.

Computers have advanced beyond the routine work they do so efficiently on assembly lines and in financial company back offices. Today, major advances in artificial intelligence, namely machine learning, have opened up a new pathway to expanding the tasks computers can do – and, potentially, the number of workers who may lose their jobs to progress over the next 20 years.

Machine learning works this way. A computer used to identify a cat by following explicit instructions telling it a cat has pointy ears, fur, and whiskers. Now, a computer can rapidly analyze and synthesize vast amounts of data to recognize a cat, based on millions of images labeled “cat” and “not-cat.” Eventually, the machine “learns” to see a cat.

But is this technological leap fundamentally different than past advances in terms of what it will mean for workers? And what about older workers, who arguably are more vulnerable to progress, because they have less time to see the payoff from updating their outmoded skills?

The answer, according to a third and final report in a series on technology’s impact on the labor market, is that advances in machine learning are likely to affect all workers – regardless of age – in the same way that computers have over the past 40 years.

And the dividing line, according to the Center for Retirement Research, will not be age. The dividing line will continue to be education: job options are expected to narrow for workers lacking a college degree or other specialized training, while jobs requiring these credentials will expand. …Learn More

July 16, 2019

Spotlight on Our Research, Aug. 1-2

Topics for this year’s Retirement and Disability Research Consortium meeting include the opioid crisis, retirement wealth inequality over several decades, trends in Social Security’s disability program, and the impacts of payday loans, college debt, and mortgages on household finances.

Researchers from around the country will present their findings at the annual meeting in Washington, D.C. Anyone with an interest in retirement and disability policy is welcome. Registration will be open through Monday, July 29. For those unable to attend, the event will be live-streamed. The agenda lists all of the studies.

Here are a few:

• Why are 401(k)/IRA Balances Substantially Below Potential?
• The Impacts of Payday Loan Use on the Financial Well-being of OASDI and SSI Beneficiaries
• The Causes and Consequences of State Variation in Healthcare Spending for Individuals with Disabilities
• Forecasting Survival by Socioeconomic Status and Implications for Social Security Benefits
• What is the Extent of Opioid Use among Disability Applicants? …

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March 19, 2019

Boomers Cope with Real Financial Pain

We really appreciate readers opening up about their personal experiences in the comments section at the end of each blog. It’s important to stop occasionally and listen to what they have to say.

Aging readers reacted strongly to blog posts in recent weeks about two of the biggest challenges they face: spiraling prescription drug costs and a so-so job market for older workers who aren’t ready to retire.

Here are summaries of their comments on each article:

High Drug Prices Erode Part D Coverage

Readers expressed anger about rising prescription drug prices in response to a blog featuring a diabetic in Arizona who, despite having a Medicare Part D plan, spends thousands of dollars a year for her insulin. She resorts occasionally to buying surplus supplies on eBay from private individuals.

Dr. Edward Hoffer in Boston responded that Americans pay five times more for Lantus than diabetics in the rest of the world. “The same is true for most brand name drugs and most medical devices. It is an embarrassment that we pay double per capita what comparable western countries pay for health care with worse national health statistics,” he said.

Bill MacDonald shared his story in a Tweet and follow-up messages.  This North Carolina retiree on a fixed income has paid $6,000 annually out-of-pocket – a third of his income – for two drugs he’s taken since an automobile accident caused medical problems and depression that led to other issues. He spends $3,200 for one of the drugs, a cholesterol medication called Repatha – that’s his tab after his insurance company pays for most of it. (Last year, Amgen slashed Repatha’s price from more than $10,000 per year to $5,850, which MacDonald hopes will reduce this expense.)

Steve B. was thrilled about a new generic on the market to replace his Rapaflo, a prostate medication. Then he learned that the generic is not much of a bargain either.

Careers Become Dicey after Age 50 …Learn More