Given rapid population ageing, providing older people with better work incentives and choices is tremendously important to promote economic growth and to ensure the sustainability of public social expenditures. Therefore, in 2011 the OECD Employment, Labour and Social Affairs Committee decided to carry out a new series of policy reviews entitled Working Better with Age to encourage greater labour market participation at an older age, through the fostering of employability, job mobility and labour demand. It builds upon previous work that the OECD has conducted in this area in the Ageing and Employment Policies series, summarised in the Organisation’s major cross-country report Live Longer, Work Longer, published in 2006.

In the United States, employment rates at older ages are comparatively high at 62% among 55-64 year-olds against 59% on average in OECD countries in 2016. However, there are large disparities across population groups. Early retirement remains a widespread phenomenon, especially among workers from vulnerable socio-economic backgrounds. Preventing old-age disparities in terms of employment outcomes and retirement income from widening is crucial. Poverty among older persons in the United States is already a challenge today, as more than 20% of those over 65 have incomes under the relative poverty line — defined as half of median disposable household income — compared to less than 13% on average in the OECD. Social Security and Supplemental Security Income provisions are set at low levels compared to other countries. Effective and well-tailored policy action is needed to achieve greater inclusiveness at old age. Further efforts should promote broader access to employment opportunities and foster longer and better working lives.

Poverty rates are very high in the United States compared to other OECD countries, especially among older people. Supporting longer careers for all socio-economic groups is one way of reducing old-age poverty without putting additional strain on the fiscal sustainability of pension systems. In the United States, like in many other OECD countries, working lives and the pathways out of the labour market vary substantially across socio-economic groups, however. Low-educated people tend to stop working earlier than their high-educated peers and they are far more likely to face periods of unemployment or disability prior to retirement. In addition, bad health as a barrier to extended careers is more widespread among low-educated people. Tackling the main drivers of early retirement involves eliminating disincentives to work in the pension system, preventing health problems among all workers, including among older workers, and increasing the flexibility of labour market exits through well-tailored policy intervention.

With relatively little employment protection and no mandatory retirement age, US firms’ willingness to hire and retain older workers is key to ensuring older workers have access to good jobs. Employers’ attitudes are central. While the United States has pioneered anti-age discrimination, coverage has not been extended to all workers so far. The skill-set of older workers in the United States is relatively good, both with respect to younger workers and older workers in other large OECD countries. While older workers perform less well on information-processing tasks, they have interpersonal skills that are called upon to plan, supervise, and influence others. This highlights the importance of mobility across tasks, jobs and occupations. Occupational mobility is higher in the United States than in other large OECD countries but changes to health insurance rules (such as repealing the Affordable Care Act) risk creating barriers to job mobility of older workers. Non-wage costs continue to create a disincentive to hire older workers, especially the higher costs for health insurance of older workers.

In addition to strengthened economic incentives and age-friendly employer practices, employability and willingness to stay on are prerequisites for longer working lives. The employability of older workers depends importantly on three key factors: up-to-date skills, ready access to employment services, and good working conditions. This chapter assesses the situation in the United States in these areas. Older adults in the United States are relatively highly educated, skilled and among the most frequent participants in training in the OECD. However, the United States faces large disparities among older adults in education, access to training, and quality employment services as well as in working conditions.