Understanding the Aging Workforce Defining a Research Agenda (2022) / Chapter Skim
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8 Public Policy
8 Public Policy
Pages 155-186
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From page 155... ...
This category of policies that support the financial security of disabled and retired workers includes other programs, notably retirement savings policies. In addition, several policies in this category are designed to boost retirement security among low-income individuals specifically.
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From page 156... ...
• Family and medical leave • (End of) Mandatory retirement • Worker's compensation • Gradual retirement policies • Senior Community Employment Program Policies to support financial • Disability Insurance security • Social Security • Supplemental Security Income (SSI)
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find that people with disabilities were much more sensitive to government transfer program rules than they were to the ADA, which suggests that proposals targeting such transfer programs may provide maximal impact on the labor force participation of older disabled people.
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From page 158... ...
However, most of the research to date on family leave policies does not elucidate whether the FMLA or other paid-leave policies affect the employment rates of older workers. Workers' Compensation An unfortunate but, to some extent, inevitable consequence of work is the occurrence of workplace injuries.
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From page 159... ...
The most recent evidence for the United States (Savych and Ruser, 2019) , from a database of workers' compensation claims covering a large share of the United States, indicates that injury rates and the rates of injuries with lost work time are not very different for older workers (and are highest for younger workers)
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From page 160... ...
find rising medical and indemnity costs, owing in part to more severe injuries, among construction workers. Some evidence indicates, not surprisingly, that age differences in preexisting health conditions contribute to the greater severity of workplace injuries among older workers, looking at musculoskeletal injuries (Smith et al., 2014)
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From page 161... ...
The ADEA affects organizations that regularly employ 20 or more employees. The current law also protects against mandatory retirement for most occupations (Lahey, 2008)
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The abolition of mandatory retirement under the ADEA has increased labor force participation rates among older workers. Von Wachter (2002)
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From page 163... ...
used variations across states in older workers' responses to the changes in Social Security that were phased in between 2003 and 2008 for cohorts born after 1938 -- a reduction in benefits for those retiring early at age 62 and a gradual increase in the age of full retirement from 65 to 66 -- to estimate the impact of age discrimination laws. They found that in states that had stronger age discrimination laws (those that allowed for larger damages and/or extended coverage to small firms exempt from federal age discrimination law)
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Mandatory retirement ensures that workers leave the 10 The key prior executive orders with regard to hiring and employment include no.
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The elimination of mandatory retirement at age 65 is estimated to have increased the labor force participation of workers ages 65 to 69 by five to 20 percent relative to then current levels (Morrison, 1988; von Wachter, 2002)
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Partial retirement policies exist in many European countries. An international comparison of nine OECD countries that have introduced such policies suggests that the policies increase labor force participation (extensive margin)
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SCSEP participants face many barriers to work, including but not limited to health, social, and economic shocks; age discrimination; caregiving; homelessness or being atrisk of homelessness; limited education; limited English proficiency; chronic health conditions; and/or physically demanding lifetime jobs that are a mismatch with their health (Carolan et al., 2020; Gonzales et al., 2019)
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From page 168... ...
The next set of policies we discuss are generally designed to enhance the financial security of disabled and retired workers and protect them against a variety of risks. By providing cash or health insurance benefits upon becoming disabled or reaching a certain age, or by encouraging workers to save for retirement, these policies may enable retirement.
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From page 169... ...
estimate that the combination of rising replacement rates, reduced medical stringency, and declining demand for less-skilled workers made high school dropouts two to three times more likely to apply for SSDI and nearly twice as likely to exit the labor force in response to demand shocks after 1984. SSDI payments respond counter-cyclically to boom and bust cycles in the coal and oil and gas industries (Charles et al., 2018; Black et al., 2002)
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From page 170... ...
The long-term rise in the SSDI rolls has generated interest in existing or prospective policies that might increase labor force participation and reduce SSDI receipt among disabled individuals who retain some work capacity. One such policy is state vocational rehabilitation programs, which provide employment-related services to individuals with disabling conditions.
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From page 171... ...
Interventions designed to support employment and reduce SSDI use among disabled individuals have a mixed record of success, although there is some evidence that providing access to vocational rehabilitation services and employer-provided short-term disability benefits may support work. Social Security Established by the Social Security Act of 1935, the Social Security program provides benefits to retired workers and their dependents and survivors.
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From page 172... ...
The probability of having Social Security income is quite similar across income quintiles. By contrast, families in the highest quintile of income are at least four times as likely to have income from pensions and retirement savings and twice as likely to have income from other assets than are families in the lowest quintile (Waid, 2016)
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From page 173... ...
The project was launched in the late 1990s, motivated by a long-term decline in men's labor force participation as well as large cross-country dif ferences in work at older ages. For each project phase, research teams use a harmonized approach to con duct country-specific studies, whose results are combined to draw meaningful cross-country comparisons.
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From page 174... ...
These changes have generally not affected the incentive to work before age 65, nor to work after age 70, yet the labor force participation rate has risen in all of these age groups. Future research may provide a more complete accounting of the share of increased labor force participation at older ages that can be attributed to changes in Social Security vs.
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From page 175... ...
Retirement Savings Policies Government policies that support saving for retirement may increase the likelihood that workers nearing traditional retirement ages have adequate resources to retire. Adequacy of Retirement Saving There is an active debate in the literature over whether people are saving enough for retirement.
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From page 176... ...
Most plans have both early and normal retirement ages, and the benefit amount is often adjusted for claiming age in a way that creates strong financial incentives to work to these ages and retire and claim thereafter -- for example, increasing for each year the worker delays between the early and normal retirement ages (Stock and Wise, 1990)
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All of the retirement savings policies discussed thus far could potentially affect retirement behavior by boosting retirement resources. Putting aside for a moment the question of whether these policies do increase savings, estimating the effect of retirement savings on retirement is difficult.
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federal government provides $250 billion per year in tax incentives for retirement saving through defined contribution plans and IRAs (Tax Policy Center, 2020)
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by 44 percentage points. In other countries, such as Australia, a mandatory retirement savings program is one of the pillars of the retirement system.
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Established in 1965 through Title XVIII of the Social Security Act, Medicare provides health insurance to people age 65 or older and to SSDI beneficiaries (after a two-year waiting period) .24 The Medicare program has several components: Part A, which covers inpatient hospital services; Part B, which provides physician and outpatient services; Part D, which offers prescription drug coverage; and Part C, or Medicare Advantage, which allows beneficiaries to enroll in a private insurance plan for their Part A, B, and D benefits.25 Most Medicare beneficiaries pay no premiums for Part A benefits but have premiums for Parts B and D as well as deductibles and co-insurance payments (Kaiser Family Foundation, 2015)
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estimates that the labor force participation rate of men ages 23 to 62 would be 0.7 percentage points higher if Medicare benefits were not available to SSDI beneficiaries. In recent years, there have been calls to raise the Medicare eligibility age to 67, matching the rise in the Social Security FRA.
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Stronger state-based age discrimination laws do not reduce the hiring of older workers. • Mandatory retirement has been abolished in the United States since 1986 (except in a few occupations)
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From page 183... ...
Findings: Policies to Support Financial Security • SSDI provides income support to individuals experiencing a long-term work-limiting disability. Growth in SSDI over time has been driven by changes in medical stringency, population aging, rising female labor force participation, and economic factors.
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Certain groups continue to have very low levels of retirement savings, decades after the introduction of IRAs and the start of the shift from defined benefit to defined contribution pensions. Several programs designed to benefit low-income savers have had mixed results.
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From page 185... ...
Displaced workers who have lost employer-provided health insurance may turn to the ACA's health insurance exchanges and Medicaid for coverage. Early evidence indicates a decrease in SSI and SSDI applications since the beginning of the pandemic, which might be due to the temporary availability of extended unemployment benefits and stimulus payments or to access problems due to the closure of Social Security Administration field offices and of public internet access sites like libraries (Goda et al., 2021)
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