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Older workers have seen their wages come to a halt.
That’s the takeaway from a new report by researchers at the Retirement Equity Lab at the New School for Social Research.
Weekly earnings for workers aged 55 to 64 were only 0.8% higher in the first quarter of 2019 than they were in the first quarter of 2007, after accounting for inflation, they found.
For comparison, earnings rose 4.7% during that same period for workers between the ages of 35 and 54.
As the wages of older workers peter out, the number of them in the workforce are only growing. Some 10,000 baby boomers turn 65 every day. More than half of the 11.4 million jobs expected to be added to the U.S. economy over the next seven years will be filled by workers over 55.
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Why are these workers getting the short end of the stick?
“The main reason people working at older ages don’t have higher wages is because they don’t have bargaining power, and the reason they don’t have bargaining power is they don’t have a good fallback pension,” said Teresa Ghilarducci, an economics professor at the New School for Social Research.
“If everyone has a really secure pension plan, they can go to the labor market and bargain with employers,” she said.
However, today less than half of older employees have access to a retirement plan though their job.
Source: Teresa Ghilarducci
Employers also exploit the fact that many older people can’t pack up and move across the country for different job opportunities, Ghilarducci said.
As a result, employers “can basically offer them just enough money to get them above the poverty line and they have to take it or leave it.”
Another problem? The growth of the gig economy, where wages are low and uncertain, and retirement plans basically are non-existent, Ghilarducci said.
In 2015, nearly 25% of older workers said they were in an “alternative work arrangement,” defined as on-call, contract or gig work, up from 15% in 2005, the researchers at the New School found.
What’s more, workers over the age of 55 are three times more likely than workers under 35 to be in alternative work arrangements.
Harry Campbell, the founder of TheRideshareGuy.com, surveyed more than 1,000 Uber and Lyft drivers last year. He found that 66 percent of them were over 50.
Older drivers find it hard to plan for the future, he said.
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“It’s a good job to help pay the bills but very difficult to save for big purchases like the house or retirement,” Campbell said.
A vicious cycle develops, in which older workers lack the retirement savings to negotiate better wages, and then the lower wages they pick up make it all that much harder for them to walk away from the workforce.
“More people will die in their boots,” Ghilarducci said. “They’ll never be able to retire.”