Should retired workers continue to work or enjoy retirement?
With more Americans working past the traditional age of retirement at 65, one has to wonder how this affects the jobs prospects of younger workers. Older workers are valued for many reasons including their experience, work ethic and flexibility. Often times, after retiring from one job, a retiree might decide to stay in the job market to continue in a profession they love, stay active or provide a little extra income for travel.
Number of seniors working is at highest rate since 1965
Golden years are valuable to employers
From an employer perspective, people over 65 bring a lot of value to the table because of their reduce cost of employment. Specifically, workers over 65 tend to be enrolled in Medicare and won’t need to participate in the employer’s group health insurance plan.
Medicare drastically reduces employee cost
This is a huge cost savings, particularly if the employer contributes 50% of the employee’s health insurance premium. The monthly health insurance premium for a 64 year old in a group plan can range from $700 to $1100. If the employer no longer has to chip in a contribution because the employee enrolls in Medicare, that can add up to thousands of dollars of year in savings.
Are there more older people in the workplace?
Seniors willing to take less pay?
Because some retirees may be receiving a pension from a previous job and Social Security, they are more apt to accept a lower wage. The minimum wage may not be a “living wage” for a younger person trying to support a family, but it might be satisfactory for a retiree with no children and a small mortgage. The overall effect is that people willing to work for less pay depresses the wage market for all employees in the group.
Do retired consultants and contractors bid cheaper?
Retirees that are independent contractors or consultants, receiving a pension and Medicare, also have lower overhead to cover. When they go to bid on a job, retirees don’t have the same expenses as a younger contractor. The lower expenses is magnified if the retiree also employs fellow retirees which have a lower cost foot print to employee. Again, the net effect is to depress the overall bids prices. This is great for those putting a job out to bid; it may not be so wonderful for younger contractors trying to price jobs to meet their basic expenses.
Senior workforce growing
President Obama has called for increasing of the minimum wage from $7.25 to $9.00 per hour. A minimum wage doesn’t discriminate based on age. Both young and retired people working at a variety of jobs would benefit. In 2009 there were 6.5 million people 65 and older still working and that number is estimated to reach 11 million by 2018. Individuals over 65 comprised and estimated 16% of America’s labor force.
Can younger workers compete with retirees?
As the U.S. population growth rate decreases older workers could become a vital pool of labor for a variety of jobs. If the labor market tightens and employers bid more than the minimum wage to attract employees, that will only help those people who may be competing with a retired person for a job. But the inherent cost advantage a retired person has over a younger worker because of Medicare or retiree health benefits will never go away.