By 2030, the U.S. Census Bureau projects that one in every five residents will be older than age 65. What do we know about older workers’ labor market participation and earnings today?
We know that the number of older workers is on the rise. We also know that these workers are not only making more money on average than ever before but are outpacing the average earnings growth of other age groups.
“All age groups experienced an 18 to 22 percent growth during the 1994 to 2000 time period. But after 2000, this was not the case.”
— James Spletzer, Principal Economist, Center for Economic Studies
Statistics from the Bureau of Labor Statistics show that the employment-population ratio of persons aged 65 and over has risen from approximately 12% in the mid-1990s to over 18% in 2015 and 2016. Data from the Census Bureau’s Longitudinal Employer-Household Dynamics (LEHD) program can tell us more about the jobs of older persons.
“Statistics from the LEHD program at the Census Bureau show that not only are older persons working more, but these older workers are also earning more than in previous years” said James Spletzer, Principal Economist at the Center for Economic Studies. “Inflation-adjusted average monthly earnings of persons aged 65 and older were $4,092 in 2015, which is substantially higher than the $2,276 statistic in 1994.”
This growth of average earnings of older workers is greater than the growth of average earnings of other age groups. The figure below shows inflation-adjusted average monthly earnings for various age groups from 1994 to 2015. As noted earlier, the average earnings of persons aged 65 and older exhibits 80 percent growth during that time. This growth, both in levels and in percentage terms, is substantially higher than any other age group. The 1994-2015 growth rate of average real monthly earnings for all age groups in the figure is:
“It’s also interesting to look at the past 15 years and see how older workers’ average earnings have grown relative to other age groups,” Spletzer said. “All age groups experienced an 18 to 22 percent growth during the 1994 to 2000 time period. But after 2000, this was not the case.”
From 2000 to 2015, the average earnings of workers aged 14-24 and 25-34 declined in real terms, while the average earnings of workers aged 35-44 increased by 8.4 percent during these 15 years. Workers aged 45-54 and 55-64 did somewhat better, with 11.5 percent and 16.6 percent growth, respectively. However, these are all much smaller than the 47.6 percent growth that older workers aged 65 and over experienced.
The earnings statistics cited in this release do not indicate the source of the earnings. Further research is needed to distinguish what percent of older workers are working full-time at jobs where they have worked for many years, versus what percent of older workers are in part-time jobs. More research is also needed to understand the degree to which the earnings of older workers supplements any retirement income they receive from other sources.
These earnings statistics are from the Quarterly Workforce Indicators (QWI) produced by the Longitudinal Employer-Household Dynamics (LEHD) program at the U.S. Census Bureau. To replicate the Figure, start at the LEHD website lehd.ces.census.gov/ and click on QWI Explorer. Choose “United States” for the geography and choose “EarnS – Full Quarter Employment (Stable) Average Monthly Earnings” as the indicator. Choosing “Yearly Averages” instead of “Quarters” results in nominal earnings by age group for the 1994-2015 period of time. The statistics in the graph above were deflated by the Price Index for Gross Domestic Product (Table 1.1.4) available from the Bureau of Economic Analysis, with an index year of 2015=100. The age ranges 14-18, 19-21, and 22-24 were aggregated into one age group 14-24 using employment weights available from the LED Extraction Tool on the LEHD website.
Erika McEntarfer is head of research for the LEHD program at the Center for Economic Studies (CES) at the U.S. Census Bureau.