Robert Samuelson December 18, 2013

We may be witnessing the last gasp of early retirement — not just inthe United States but in many industrialized countries. Considering thehigh unemployment since the 2008 financial crisis, you might expect theopposite. Early retirement would flourish. It would strike manyunemployed older workers as the path of least resistance. Can’t get ajob? Retire instead. Surely this has happened, but it’s being diluted by a determination to work longer. Early retirement is in retreat.

So finds a new study of 20 advanced countries done by economists Gary Burtless and Barry Bosworth of the Brookings Institution think tank. Excluding countries with depression-like unemployment —Greece, Portugal, Spain and Ireland — all these nations have experienced higher labor force participation by older workers since 2007. Somegains are startling. In Germany, the share of the 60-to-64 populationwith jobs went from 33 percent in 2007 to 47 percent in 2012; in theNetherlands, from 30 percent to 44 percent.

This continues a trend of working longer that started in the 1980s and 1990s. In the UnitedStates, 52 percent of the 60-to-64 population held jobs in 2012, thesame as in 2007. But the share of older people with work or searchingfor a job — the broad definition of “labor force participation rate” —has continued to rise. Translation: A shrinking share of older Americans are dropping out of the labor force and relying exclusively onretirement benefits and savings.

What’s occurring is a massiveshift in private behavior. For most of the 20th century, working yearsdecreased in industrial countries. People stayed in school longer andretired earlier. In 1910, reports Burtless, more than half of Americanmen aged 73 were still working; by 1994, half of men aged 62 hadretired. This is now shifting: In 2011, only at 64 had half of menretired. At 65, men’s labor force participation rate was 46 percent, upfrom the historical low of 31 percent in 1982. Trends for women aresimilar.

The causes lie in a messy mix of public policy, improvedhealth and changes in lifestyles and economic conditions. For the United States, Burtless cites an increase in Social Security’s eligibility age for full benefits from 65 to 66; a shift among employers from “definedbenefit” pensions (which provide payments until a recipient’s death) to“defined contribution” pensions (which provide support only untilpension savings are exhausted); and higher education levels among babyboomers. “Better educated people retire later in life,” he says, “andbaby boomers are much better educated than previous generations.”

Similar factors are probably at work abroad: cuts in public programs — or fearof cuts; more economic uncertainty; longer lives and jobs that are lessphysically demanding. Still, a few advanced countries retain lowretirement ages: prominently, France, Italy and Belgium. In 2012, onlyabout 20 percent of their populations aged 60 to 64 had jobs.

Onthe whole, the lengthening of working lives is a good thing, with onebig caveat. First, the benefit: As populations age, countries no longercan afford to have growing numbers of elderly supported by decliningnumbers of young and middle-aged individuals. Welfare states arestrained, and the costs of caring for the elderly are a main cause.People need to remain productive for longer. Now, the caveat: Thistransition is happening at an awful time. Without stronger economicrecoveries, jobs taken by older workers contribute to the highunemployment of the young.

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