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Research Paper

A Fact Sheet on the Economics of Aging in Canada

·         Labour participation rates of persons 55+ declined by almost 9% between 1970 and 1990. Between 1971 and 1994, participation dropped by 27% for men 60-64 and 12% for men 55-59. For women 60-64 it declined by 3.6% (though for women 55-59 it increased by 1.7%). The average retirement age in Canada is now under 62. Generally this is seen as a positive phenomenon. To put such views into perspective, however, it is necessary to note that many people who retire before 65 do not do so voluntarily. Reinforcing what I said earlier about older worker employability, studies have reported that an absolute majority of men 60+ who become unemployed are unable to return to active labour force participation. In the U.S. approximately one-third of all career jobs have ended by the time the incumbent is 55, and about one-half have ended by age 60. This clearly underwrites the indication that many older persons move into retirement through the absence of alternatives. It is notable in this respect that older individuals are significantly overrepresented (almost 2:1) in the “discouraged” category of unemployed workers. One researcher speculates that if these people were factored into unemployment statistics, the real unemployment rate for 55+ workers would be over 23%. Contra popular images of golf-playing beach-bound fiftysomethings with fat RRSPs and golden parachutes, it is also notable (and this is something else that is masked by the aggregate data) that early retirement rates are higher for the gender that is least likely to have such financial supports (see below). In 1991, 38% of women left the labour force before the age of 60 and almost 70% left before 65, compared with only 27% and 60% of men. Such data reflect significantly on the meaning of retirement. [10, 14, 17, 23, 30, 34, 37, 39, 42, 45, 46, 51, 61, 67, 70, 75, 80]

·         What do the subjects themselves have to say about the situation? In a 1990-92 Statistics Canada survey of Persons Not In the Labour Force (NILF), 211,000 retirees said that they had retired earlier than planned. Asked for their reasons, 30% cited illness or disability, 42% cited economic reasons, and 28% cited all other reasons, including caring for a relative (reported disproportionately by women) and personal preference. Of those citing economic reasons, 49% (predominately white males) specified incentives compared to 51% specifying job loss. This does not, on the face of it, look particularly dire. Illuminating the reality behind these figures, however, it is important to realize that even in the incentives category, many individuals do not have much choice. Accepting a severance package is obviously the lesser of evils when one is going to be laid off anyway. Another group whose departure is often only technically voluntary, moreover, is the caregivers. Because of the combination of increased lifespan and later childbearing in recent generations – not to mention the reduction in healthcare budgets and community services – an increasing number of people are finding themselves at middle age in what has come to be called the ”caregiving crunch”, with both dependent children and dependent parents to look after. Last but not least, there is also the shame factor to consider. Many out-of-work 55 or 60-year-olds, confronting the fact that they are unemployable, self-classify as voluntary retirees simply in order to save face. No-one has ever tracked the numbers who begin by classing themselves as unemployed and then switch to calling it retirement. It seems notable in this respect, though, that in 1994 67% of all unemployed workers over the age of 45 indicated that they had been forced out of employment. [32, 39, 42, 45, 46, 52b, 89]

·         Another factor that muddies the retirement picture is the difficulty of drawing a line between before and after. About 30-40% of people moving toward a “final” retirement do so through a process that includes a bridge job or jobs. Adding to the confusion, in a 1991 survey 21% of men and 11% of women reported that they worked even after they officially retired. The desire for post-retirement work is fuelled largely by financial need. Unfortunately, such work is both less secure and less lucrative than career employment. Three-quarters of bridge jobs for male workers involve a change in occupation and more than one-half lead to pay cuts of 25% or more. (Women lose less because they had less to begin with.) A majority for both genders are part-time. Among men 55-64 who are working, the percentage in part-time jobs rose from 3% in 1981 to 7% in 1993; among women the comparable increase was 25% to 30%. If 45 is used as the lower threshold, 14% of all workers are part-time, one-third of them involuntarily. Of the small number of people working past 65 (10% of men and 3% of women in 1998), 30% of the men and 45% of the women are part-time. Fully 76% of men and 88% of women who return to paid employment after “retirement” do so as part-time workers. Some of this, to be sure, is voluntary. In 1993, 59% of men and 73% of women 55-64 working part-time indicated that it was a matter of choice. The fact that an older person may want or need to reduce his or her workload, however, does not make up for the disadvantages, sometimes comprising outright exploitation, faced by contingency workers. [21, 31, 45, 46, 50, 56, 70, 75, 85]

·         Blacks are 3.7 times as likely and Hispanics seven times as likely as Whites to want post-retirement employment. Involuntary retirees are more likely to seek work than voluntary retirees, but less likely to find it. Counter levelling theories of age, evidence shows that traditional status markers still operate to predictable effect among post-retirement work-seekers, such that previously disadvantaged groups are still, or more, disadvantaged after retirement. Unsuccessful would-be re-entrants are more likely to be women or racial minorities, to have retired from lower-status jobs, to have less education and to have retired involuntarily. Older men are three times more likely than women to be able to find post-retirement employment. Success rates also diminish with increasing age. Of those who re-enter, 51% move to a new employer, 27% stay with a former employer, and 20% start their own business. The likeliest re-entrants are well-educated professionals, those in the periphery of the economy, those who have job-related pensions, and men with income from investments. (These data are American, but there is strong reason to believe that Canadian patterns are similar.) [31, 85]