Chapter 3. Promoting the employability of United States workers throughout their working lives

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.

Boosting the employability of older workers in the United States requires: First, the basic skills of workers throughout their working lives should be improved. Second, inequalities accumulated by those with poor basic skills need to be tackled. Finally, the access and quality of employment and training programmes for older jobseekers enhanced.

  

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Introduction

Many barriers deter people from working longer. Some are related to employers’ willingness to retain and hire older workers (Chapter 2) but other barriers affect older workers directly, which make it difficult for them to either stay in their existing job or find a new one. Problems include poor working conditions, limited training possibilities and interrupted careers earlier on in workers’ lives as well as a lack of rewarding job opportunities at an older age.

Moreover, as a result of globalisation, digitalisation and rapid population ageing, people will not only be working longer but they will also be more likely to experience multiple jobs during their working lives. Lifelong learning and activation policies have a crucial role to play in fostering the employability of workers throughout their working lives and by doing so, reducing inequalities later in life.

This chapter first explores the impact of skill proficiency and training on the employability of older workers. It is likely to be harder for older adults with weak generic skills, such as literacy and numeracy skills but also Information and Communication Technology (ICT) skills, to find and keep a high-quality job. The chapter also reviews the main barriers that older adults face in obtaining training in the United States, notably the least educated among them.

Support by employment and training programmes for the older unemployed is the second area discussed in this chapter. Effective activation policies, in particular, are crucial to prevent workers cumulating disadvantages from experiencing poverty and long-term unemployment, and to avoid early exit from the labour force.

The final section of the chapter takes stock of measures that have been implemented in the United States to promote age-friendly working conditions. Drawing on good practices that can be found in other OECD countries, it puts forward areas where further actions could be taken. The extent to where firms award workers with job security, safe and healthy work conditions, and consultation with workers are also important determinants of older workers willingness to continue working. While many determinants of working conditions are primarily an issue for business, policies and institutions can provide employers with incentives and tools to improve them.

From old to new skills: the importance of training

US older workers are on average highly educated but with large inequalities

On average, older adults in the United States have high levels of educational attainment and basic skills proficiency, score high in problem solving and are among the most active users of ICT in comparison with their peers in other OECD countries. However, there are large disparities in skills, education and other socio-economic characteristics among Americans, which start at younger ages and are often further reinforced with age.

Low education dividend in the future

Contrary to other OECD countries, educational levels are not increasing in the United States, removing a potential source of productivity growth. Over 41% of the population aged 55-64 in the United States had tertiary-level education in 2015; this is well above the OECD average of 26% (Figure 3.1). In the future older workers will generally be better educated, but in the United States the size of this “education dividend” is much lower compared with other OECD countries. Whereas in the United States there will be little increase in the proportion of older workers who have completed tertiary education over the next 30 years, especially amongst men, this proportion will rise considerably in many OECD countries. Thus, in the future, older adults in the United States will lose some of their competitive advantage as the level of education of older workers in other OECD countries rises to similar levels as their own.

Figure 3.1. Older workers of tomorrow will be better educated, except for men in Germany and the United States
OECD, EU28 and selected OECD countries by gender, 2015 and 2045 Percentage share of population aged 55-64 by educational attainment
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Note: These projections of the education level of older people (55-64) in 2045 are calculated taking the education attainment of people aged 25-34 in 2015 and assuming that that they acquire no further education during the next 30 years and that mortality rates do not vary significantly by education levels between 25-34 and 55-64.

Source: OECD calculations based on OECD Education at a Glance, Educational attainment and labour-force status dataset (http://stats.oecd.org/Index.aspx?DataSetCode=EAG_NEAC) and Eurostat (http://ec.europa.eu/eurostat/web/education-and-training/data/database).

 StatLink http://dx.doi.org/10.1787/888933644338

Poor prospects of future US older workers relative to other OECD countries

US older workers have high levels of proficiency on average both in numeracy and literacy compared with their peers in other countries; but this is largely because of their higher educational attainment. Once education is taken into account by comparing individuals with the same level of education and language background (excluding foreign-born adults), the basic skills of older adults in the United States are relatively weak by international standards based on the Survey of Adult Skills (PIAAC) (Figure 3.2, Panel A). Besides, unlike many other OECD countries, there has been little sign of improvement in recent decades. Currently, young adults in the United States have similar or weaker literacy skills than their counterparts in the mid-90s (OECD, 2013[1]), and their average basic skills are not very different from those of older persons (Figure 3.2, Panel B). Finally, adult skills are closely linked to the performance of the initial schooling system. The US results from the Programme for International Student Assessment (PISA) (2016[2]) on the basic skills of 15 year-olds are below the OECD average in both reading and mathematics. Thus, not surprisingly, US young adults also score well below the average in the Survey of Adult Skills (Figure 3.2).

Figure 3.2. Small skills gap by age in the United States but poor skills performance of future older workers
Progress in literacy skills between two age groups, selected OECD countries, 2012
Score on the literacy scale
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a. Comparing individuals with the same level of education and language background (excluding foreign born adults).

b. England and Northern Ireland

Source: OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, OECD Publishing, Paris.

 StatLink http://dx.doi.org/10.1787/888933644357

Basic skills such as numeracy and literacy are important as they are the basis for employability and the ability to update and learn new skills. However, in an increasingly complex and digitalised society other cognitive skills, particularly problem solving and the use of ICT skills, are even more relevant for the employability of individuals. The OECD has developed in PIAAC a new domain of competency designed to assess problem solving in technology-rich environments that represents the intersection of what are sometimes described as “computer literacy” skills (i.e. the capacity to use ICT tools and applications) and the cognitive skills required to solve problems. In this new domain, older Americans outperform their counterparts in other OECD countries: the share of older persons with high levels of proficiency in the United States is one of the highest among all OECD participant countries in PIAAC. However, the share of young people aged 20-24 with high levels of proficiency is one of the lowest among OECD countries (Figure 3.3). All in all, the future prospects of older Americans vis-à-vis their peers in other OECD countries must be a matter of concern, as young cohorts replace older ones and the basic skills of other developed countries workforces will progressively outpace those of the United States, taking the edge of the competitive advantage of the US workforce.

Figure 3.3. US older adults are among the most proficient in the use of ICT but US young adults among the least
Proficiency (levels 2 or 3) in technology-rich environments of two age groups, 2012 or 2015a
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Note: The OECD is a weighted average of the countries shown in the figure.

a. For Chile, Greece, Israel, New Zealand, Slovenia and Turkey the year of reference is 2015.

b. Data for Belgium refer only to Flanders and data for the United Kingdom refer to England and Northern Ireland jointly.

Source: OECD calculations based on the Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/.

 StatLink http://dx.doi.org/10.1787/888933644376

Large skills discrepancies among adults

A further source of concern is the large skills discrepancies among adults within the United States, which is higher than in most other OECD countries (OECD, 2013[3]). There is also evidence that socio-economic background has a stronger influence on adult basic skills in the United States than in most countries (OECD, 2013[1]), mainly because migration status and ethnicity remain important predictors of skills proficiency. Finally, the US population is becoming more racially and ethnically diverse (Pew Research Center, 2015[4]). This diversity is still concentrated in the youngest age groups, but the older population will gradually become more diverse (Mather, Jacobsen and Pollard, 2015[5]), potentially leading to even more inequalities among older Americans in the future if current disparities in skills proficiency continue.

Labour market status is another important source of skills inequality. As expected, employed workers have higher levels of education and skills than unemployed workers in the same age group. However, on average for the same age group, early retirees in the United States have somewhat higher skill levels than unemployed and inactive older adults, although lower than employed workers (Table 3.1). This highlights the potential for firms to hire retired workers in case workforce requirements increase. However, the observed gap in skills amongst the unemployed and early retirees relative to employed workers raises the question whether periods out of the labour force for older workers lead to skill loss.

Exclusion from the labour market may negatively impact older workers’ chances of being re-hired if certain skills are lost more quickly when not practiced. Mazzonna and Peracchi (2017[6]) use repeated observations on older workers who retire and find that retirement reduces both physical and mental capacities. However, in addition to the possibility of skill loss when not employed, it is worth mentioning that lower levels of skills of unemployed and retired workers may also be partly driven by a selection of less able workers into retirement and unemployment. For example, firms may incite more able workers to remain in employment at older ages – or workers with higher skills and wages have an interest in retiring later. Nevertheless, it is clear that it is important to seek to reduce periods of unemployment or inactivity for both younger and older workers because of the negative impact this can have on their skills and subsequent employment opportunities.

Table 3.1. Retirees have higher skills than the older unemployed but lower skills than the older employed
Characteristics of individuals aged 50-65
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Note: The OECD an unweighted average and excludes Hungary, Iceland, Latvia, Luxembourg, Mexico, Portugal and Switzerland. The EU is an unweighted average of the following 20 countries: Austria, Belgium (Flanders), Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Lithuania, Netherlands, Poland, Slovakia, Slovenia, Spain, Sweden and the United Kingdom (England and Northern Ireland).

Source: OECD calculations based on the Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/.

 StatLink http://dx.doi.org/10.1787/888933644471

Adult education and training (AET) in the United States

In addition to preventing skill depreciation as a result of unemployment or inactivity, workers should have good opportunities and incentives to upgrade their skills and acquire new ones. A very good way to develop skills is to use existing skills, since skills use and skills development are mutually reinforcing processes that can help to slow or reverse age-related declines in skills (OECD, 2013[3]). In this respect, US workers, including older workers, use their skills at work (Chapter 2) and participate in AET more than in most OECD countries (Figure 3.4).

Combined private and public investments make the United States the top country spending on post-secondary education per student (OECD, 2017[7]) and among the countries that spend most on AET. American post-secondary institutions, government agencies and employers spend USD 1.1 trillion (over 6% of GDP) annually on formal and informal higher education and training (Carnevale, Strohl and Gulish, 2015[8]). However, in the United States there are large barriers to AET that prevent a part of the US workforce benefiting from further education and training. In the United States, most AET is provided by employers that primarily invest in college-educated prime-aged workers. Alternatively, individuals themselves have to invest in increasingly costly private post-secondary education. Consequently, a large share of Americans faces notable barriers to access additional education and training. Among them are older adults, who have less access to both employer-sponsored and publicly funded training programmes than younger workers. This implies that their skills remain weak and may face a vicious cycle in which poor proficiency leads to fewer opportunities to further develop proficiency and vice versa. Thus, far from correcting the inequalities that exist at the time of leaving school, which in the United States are already large (OECD, 2017[9]), AET reinforces inequalities accumulated over the life course.

One explanation for this tendency is that employers may be reluctant to make investments in training older workers out of concern that they may not recoup their training costs before older employees retire (Eyster, Johnson and Toder, 2008[10]). In addition, older workers themselves may be afraid of pursuing training, either because they fear their managers will not support them or they doubt their own abilities (U.S. Department of Labor, 2008[11]). Moreover, many older jobseekers are not well informed about the skills they will need to obtain a job or the best and most cost-effective way to obtain them (Van Horn, Krepcio and Heidkamp, 2015[12]). Thus, according to Jenkins (2016[13]), it is important to disrupt ageing to break down the barriers and create new opportunities to learn as people get older.

Public policies and initiatives (both private and public) have a role to play in addressing these challenges. First, policy makers should insist on maximum transparency of training providers and require them to report on costs, duration, completion rates, and employment and earnings outcomes of their courses so adult learners can make informed decisions. Second, the public sector should support the access to post-secondary education for those with fewer resources. Third, access to employment and training programmes for older jobseekers and the quality of services received should be enhanced. Finally, promoting positive attitudes from both employers and older adults may pay off. Awareness and information campaigns might help reduce both employers’ reluctance to make investments in training older workers and older workers’ willingness to participate in training. All these actions will lead to a more skilled workforce with lower gaps in access to AET.

Vocational Education and Training (VET) 1 in the United States

Many of the basic features of the US system are strong. For instance, its extensive decentralisation leads to diverse and flexible forms of provision meeting the needs of many groups of learners and to a rich field of policy development and innovation, involving state governments and many non-government organisations. A significant proportion of VET is provided by companies to their employees independent of government or educational connections. Private employers spent USD 177 billion in formal training and USD 413 billion in informal training in 2013 whereas the federal job training accounts only USD 18 million.

However, the system includes substantial barriers to post-secondary attainment (Kuczera and Field, 2013[14]). First, as shown in the previous section, basic skills of US teenagers and high school graduates are relatively weak compared with many other OECD countries. Second, decentralization means that the choices faced by any individual are more difficult and more uncertain, with many routes to a target career or occupation. Third, since costs and returns are highly variable, the financial risks of investing in post-secondary education can be higher in the United States. As a result, investing in post-secondary education is often more confusing and risky than in many other OECD countries.

US workers are among the most active participants in AET but with large inequalities

In terms of further education and training, US adults, including older adults, are some of the most engaged participants among OECD countries (Figure 3.5). According to PIAAC (2012), around 62% of prime-age adults participated in some form of education or training in the last 12 months, well above the OECD average of 52% (Table 3.2). However, these averages mask significant differences in the access to AET. First, labour market status affects the probability of being engaged in AET even more than in other countries. In the United States, the majority of employees (60%) participate and even many of the unemployed (36%) are also involved in job-related training, although the gap between these two groups is quite substantial (Figure 3.4, Panel A). Moreover, as in many OECD countries, the US participation rate in job-related training for those who are not in the labour force is low (17%). There are also some differences by gender, firm size and sector which also affect the probability of receiving training (Table 3.2). Finally and above all, access of workers to continued training is closely linked to the level of initial education. Workers with only high school education or less are much less likely to have participated in job-related training than those with tertiary education (Table 3.2).

Figure 3.4. US adults participate in education and training more than most OECD countries, but large discrepancies exist by employment status
Share of job-related adult participation in education and training by employment status, 2012 or 2015a
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a. For Chile, Greece, Israel, New Zealand, Slovenia and Turkey the year of reference is 2015.

b. Data for Belgium refer only to Flanders and data for the United Kingdom refer to England and Northern Ireland jointly.

Source: OECD calculations based on the Survey of Adult Skills ((PIAAC) (2012, 2015), www.oecd.org/skills/piaac/.

 StatLink http://dx.doi.org/10.1787/888933644395

Older workers and AET

As in other countries, older workers in the United States participate less in AET than prime-age workers, but the gap between the two age groups in the United States is smaller than in the OECD on average (Table 3.2). While 50% of older workers are engaged in some AET, this rises to 62% for prime-age workers (in comparison, the OECD averages for the two groups are 34% and 52%, respectively). A gap in AET by age is expected, but the quality and quantity of job-related training provided by employers to older workers over the past decades might be a cause of concern: only 11% of employers’ spending on formal training was devoted toward workers aged 55 or more (Carnevale, Strohl and Gulish, 2015[8]) whereas the share of employees who are older than 55 is around 23%2. Moreover, according to PIAAC data, in the United States employees over 55 received 81 hours per year of job-related training compared with 139 hours for employees between the ages of 25 and 34; and the gap is even larger when considering all types of training.

Table 3.2. Participation in adult education and training by age group, United States and OECD, 2012
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Note: The OECD average excludes Hungary, Iceland, Latvia, Luxembourg, Mexico, Portugal and Switzerland.

Source: OECD calculations based on the Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/.

 StatLink http://dx.doi.org/10.1787/888933644490

Among older workers there are also significant discrepancies in access to AET. In the United States, there is already a small gap in favour of older women (Table 3.2) which will likely be reinforced by the larger increase in educational attainment of women compared to men in the next decades (Figure 3.1). By firm and sector there are also significant differences, over 85% of older workers employed in large firms receive training compared with less than 60% in small firms, and, in sectors that employ more older workers, around 79% of them in the education sector received training compared with less than 50% in the construction or mining sectors. Finally, educational attainment is also the main driver of inequality in access to AET among older workers. Thus, even though a decline in participation for older workers relative to prime-age workers can be observed across all levels of education, older workers (aged 50-64) with at least some education at the college level record significantly higher rates of participation on average than prime-age workers with only high school education or less (Table 3.2).

Inequalities in access to employer-based programmes

Access to employer-based programmes as well as to post-secondary VET is increasingly difficult for a significant part of the workforce. First, the cost of post-secondary education has skyrocketed in recent years3, while government support has eroded significantly.4 Second, there is some evidence that over the past two decades employer-based training programmes have been on the decline (Advisers, 2016[15]). This was particularly noticeable for apprenticeships in the United States, which decreased by 40% from 2003 to 2013. However, since 2013 the trend has reversed and by the end of 2016 the number of apprentices was slightly higher than in 20035. In part due to the Workforce Innovation and Opportunity Act (WIOA) that has better aligned and integrated apprenticeship programmes into the public workforce system. Further, there are very promising local programmes6 and the current US government has announced that it will expand apprenticeship programmes7.

Programmes designed along the lines of an apprenticeship concept – combining short classroom sessions with a firm-based approach – are more effective for older workers, as is informal, self-determined training with a clear focus on practical, relevant work issues (OECD, 2017[16]). However, apprenticeships have been traditionally focused on younger adults and only recently have countries started to promote the access of adults to apprenticeship schemes. One example is New Zealand Apprenticeships, a programme introduced in 2014 which gives all apprentices the same level of government support, regardless of age8.

Employment programmes and older jobseekers

The Great Recession pushed many older workers in the United States into long-term unemployment, with the share of those unemployed for one year or longer reaching a historical high of 42% in 2011 amongst older adults. Although long-term unemployment among the older labour force is gradually decreasing, its incidence remained higher in 2016 than a decade ago (Table 2.A.1 in Annex 2.A). Thus, providing effective employment and training assistance is crucial to prevent vulnerable workers from becoming long-term unemployed, and ultimately, to avoid their exit from the labour force.

Public Employment Services for jobseekers in the United States

Unemployment compensation

Unemployment insurance (UI) is the major tool in the United States to provide income support to the unemployed (severance pay plays a minor role). The UI programme provides eligible unemployed individuals temporary benefits that partially replace their lost wages. The UI programme is a federal-state programme that is generally funded through taxes on employers and, in some states, employee contributions. UI benefits are generally available to eligible unemployed workers for up to 26 weeks9, although recently many states have opted to reduce payment duration and the extent of UI eligibility. However, income support provided by UI benefits is not sufficient to prevent poverty and exclusion. Around one-quarter of all displaced workers exhaust their unemployment benefit entitlement before finding a job and they have poorer employment outcomes in the long run and face bigger income losses when they do find a new job. As a result they face a higher risk of poverty and strongly rely on means-tested social benefits for considerable periods (OECD, 2016[17]).

Active labour market policies programmes (ALMPs)

In addition to UI, there are, at the broadest level, three key sets of ALMPs in the United States to help the unemployed: employment services and job search assistance; job training programmes; and employment subsidies. Employment services and job search assistance seek to help workers find work quickly and to improve the quality of matches between workers and vacancies by helping workers with a given set of skills match to appropriate employment opportunities. Typical services include the provision of labour market information, job search workshops and labour exchange services, which collect and refer workers directly to openings. By contrast, job training programmes seek to improve individuals’ labour market outcomes by helping them develop skills. Finally, employment subsidies seek to support targeted groups directly by subsidising their employment.

The US workforce system (Box 3.1) is a network of federal and state-funded employment and training programmes largely administered at the federal level by the US Departments of Labor, Education, and Health and Human Services. It provides employment and training services to jobseekers and connects employers to qualified workers through a nationwide network of over 2 400 American Job Centers (AJCs known also as One-Stop Centers) (U.S. Government Accountability Office, 2011[18]). Despite the objective of the Workforce Innovation and Opportunity Act (WIOA) that in 2015 replaced the Workforce Investment Act (WIA) of 1998 (Box 3.2) to reduce the number of programmes, the US system remains fragmented, consisting of several large programmes accessible to any American and many smaller programmes that provide services to narrow groups. Each programme includes one or a combination of the three ALMPs mentioned. The Employment Service and WIOA programmes account for about 80% of worker-assistance participants. The remaining workers receive assistance through one of nearly four dozen narrowly tailored programmes.

Box 3.1. The US federal worker-assistance system

Most Americans are eligible for employment assistance through one of two laws: the Wagner-Peyser Act of 1933 or the Workforce Innovation and Opportunity Act (WIOA) that in 2014 replaced the Workforce Investment Act (WIA) of 1998.

The Wagner-Peyser Act and WIOA form the backbone of the federal worker-assistance system. The Wagner-Peyser Act was a Great Depression era law that matched individuals seeking work with New Deal public-works programmes through a nationwide network of public employment offices known as the Employment Service. Today, the original Wagner-Peyser Employment Service still exists and provides job-search assistance and counselling for any worker seeking new employment.

WIA, which amended the Wagner-Peyser Act of 1933, was aimed at better serving the needs of employers and employment-ready individuals through local career employment and training services. When the bill passed in 1998, the economy was growing strongly and unemployment was low, around 4% of the labour force, and dropping. There were many job openings and relatively few jobseekers, so the primary focus of the One-Stop Centers was matching unemployed workers with available jobs rather than providing training or other skill development. Congress re-authorised WIA in 2003, but did not make any substantive updates until WIOA, which amended again the Wagner-Peyser Act.

Box 3.2. Highlights of the Workforce Innovation and Opportunity Act (WIOA)

WIOA, which more strongly integrates employment and training programmes and provides for more opportunities for work-based learning, represents the first major reform of federal job training programmes in nearly 20 years. WIOA is not an older worker bill, although a number of its provisions are of particular relevance to older workers and could make the Act more responsive to their needs. The goals of WIOA include improving the provision of services, especially for individuals with barriers to employment (notably, individuals over the age of 55 are among the groups singled out); streamlining services and connections between different programmes, the UI system and sector partners; and allowing for flexible transfers of funds between WIA programmes.

WIOA eliminates 15 small programmes, but preserves the existing adult, displaced worker and youth programme models, as well as the Employment Service. It also eliminates the core and intensive service sequence, which it combines into a single career services category, and allows workers to bypass these services and enrol directly in training. WIOA will be more oriented toward economic regions within states and local areas have flexibility to serve jobseekers with the greatest need by transferring up to 100% of funds between Adult and Dislocated Worker programmes. Additionally, WIOA puts an increased emphasis on partnerships with business and on-the-job training, reimbursing eligible employers for up to 75% of the costs to train workers.

WIOA also strengthens evaluation and data reporting requirements by standardising them across programmes. For example, job training programmes will be evaluated by independent third parties at least every four years, with a minimum of one multistate random control trial study to be conducted by September 2019. It also requires that the data published in state and local performance reports of core employment and training services be open to the public and disaggregated by subgroups, including age, sex and ethnicity. An impediment to serving older workers in the past was the lack of data on just how they fared compared to other groups: the new requirements should be an improvement.

According to the Council on Foreign Relations (2016[19]) WIOA has been a positive development, but it largely leaves the existing system intact. WIOA did not address several major issues with the US worker assistance system, such as eliminating the inequities between the Trade Adjustment Assistance programme launched in 1962 to link job loss to trade and other programmes, providing enough funding to guarantee adequate assistance for every worker, or insulating financing from the politics of the congressional appropriations process. Nevertheless, the extent to which outcomes for older jobseekers will improve under WIOA is likely to depend as much on federal regulations, state and local implementation, economic conditions, funding levels and other policy considerations as the specific reforms embodied in the law.

Source: WIOA (2014), HR 803, www.congress.gov; Council on Foreign Relations (2016), No Helping Hand: Federal Worker-Retraining Policy; and Wandner, S., D. Balducchi and C. O 'leary (2014), Selected Public Workforce Development Programs in the United States: Lessons Learned for Older Workers, AARP, Washington, DC.

ALMPs effectiveness and evaluation

In general

There is evidence that ALMPs can help funnel workers into jobs, which reduces unemployment even during downturns. A recent meta-analysis of impact estimates from over 200 recent econometric evaluations of ALMPs from around the world from Card et al. (2015[20]) shows that on average, ALMPs show positive impacts in the medium and long term and that training programmes are overall effective in helping the unemployed find employment. Lechner et al. (2013[21]) confirm that training measures tend to have a positive impact on employment outcomes in the medium and long term, especially if training leads to the acquisition of formal vocational qualifications and if it is workplace-based.

However, ALMPs are more effective for some groups and in some contexts than others but as Immervoll and Scarpetta (2012[22]) stress, there is very limited information on the distributional effects of different policies, and even less systematic evaluation of possible equity-efficiency trade-offs. This makes it difficult to draw general lessons of what works for whom. On average, ALMPs have larger effects for females and long-term unemployed and smaller effects for older workers, and programmes have larger impacts in periods of slow growth and higher unemployment (Card, Kluve and Weber, 2015[20]). In addition, certain types of programmes work better for specific subgroups of participants. Young people entering the labour force for the first time can benefit from programmes that combine classroom and vocational instruction, as well as programmes that offer on-the-job training. However, youth training programmes in the United States vary in design, which leads to discrepancies in their effectiveness.

For older jobseekers

US unemployed older adults are more likely to stop searching for a job if they are: in fair or poor health or if they have a work-limiting health condition; female; or married with a non-working spouse. They are also more likely to stop searching if they are wealthy or covered by a pension system. Instead, the local unemployment rate seemed to have a surprisingly small effect (Rutledge, 2014[23]). Besides, opportunities to change occupation decline for workers changing jobs after age 50 (Rutledge, Sass and Ramos-Mercado, 2016[24]).

Merkurieva (2016[25]) shows that involuntary job loss results in an average worker retiring 15 months earlier. Using data of the Health and Retirement Study, a nationally representative panel of individuals over age 50 in the United States, she finds that one quarter of older laid-off workers retire after displacement. About 80% of these layoff-induced retirements happen right after displacement while the other 20% stay and keep searching for a new job, eventually retiring after an average unemployment spell of 27 months. The share of immediate retirements rises rapidly with age at job loss, from only 3% at age 50 to more than 50% by age 70.

Re-employment rates are lower for older displaced workers aged 55 and over, those with long job tenure and those with low levels of education. Many of these workers actually withdraw from the labour market altogether. But the picture is not necessarily rosy either for all those who find a new job, as many of them face considerable and often persistent wage losses, especially older workers (OECD, 2016[17]). According to the 2008 Panel of the Survey of Income and Program Participation (SIPP), average hourly wages for re-employed displaced workers aged 55 years and over are as much as 40% lower on the new job, compared with the old job.

Employment measures may help older displaced workers who have the most difficulty finding work again (OECD, 2016[17]). These workers have often spent their entire careers developing skills for one type of job; if that job is permanently lost to international competition or new technologies, then they need to develop new skills or face a significant loss of income.

The evidence is mixed however on whether programmes targeted at older workers can help them find employment or secure higher wages. For instance, although the evidence on the effectiveness of age-targeted wage subsidies to increase the employment of older workers is scarce, it shows, at best, limited overall effectiveness. In general, subsidised work appears simply to displace unsubsidised work, with little net gain in employment of older workers. A closer look shows differences in effectiveness by gender, with some net gains for women and only in some regions. Albanese and Cokx (2015[26]), for example, find in Belgium small positive short-run impacts on reduced working time and larger ones on the employment rate, but only for employees at high risk of leaving to early retirement with no effect on wages. Bookman et al. (2012[27]) using a natural experiment in Germany only found employment effects for women in East Germany.

Similarly, impact assessments do not show significant increases in income for these workers after completing retraining programmes. This is because many of these workers were at the height of their experience and lifetime earnings before losing their jobs and are unlikely to see higher wages in any new career. Nonetheless, ALMPs can help these workers identify new positions and prevent further wage erosion (Council on Foreign Relations, 2016[19]). For instance, in a recent study, Dauth and Toomet (2016[28]) find that subsidised training programmes in Germany improved the probability to remain in paid employment, particularly for workers over 55. The results suggest that the main driver of these outcomes is postponed retirement, potentially because of improved job satisfaction. Although as a study of U.S. trade adjustment assistance programmes suggests, dislocated worker fare the best when they find employment in their training field and when they receive a degree or certificate through training, particularly women who receive training in health care professional fields (Heinrich, 2013[29]).

Employment and training programmes for older jobseekers in the United States

In the United States there are three main federal employment and training programmes that are potentially available to older workers, as well as two small programmes specifically targeted to them (Box 3.3). As outlined above, older workers also benefit from UI and have access to general public employment services that provide basic job search assistance.

Box 3.3. Key employment and training programmes for older workers in the United States

There are three main federal employment and training programmes that older workers have access to:

  1. The Employment Service (ES) is part of the One-Stop delivery system and provides public employment services, including registering and matching vacancies with jobseekers, employability assessment, re-employment services and job search workshops.

  2. Adult and Dislocated Worker programmes. Under WIA, there were three tiers of services that were provided: core, intensive and training. Core services included basic job search and placement activities and were available to the general public without any eligibility requirements. Intensive assistance was available to customers who face employment barriers and they may subsequently receive more intensive job search assistance. Finally, training services were available to enable workers to retain new positions or become qualified for higher-skill, better-paid positions. WIOA eliminates the core and intensive service sequence enabling workers to bypass these services and enrol directly in training (see Box 3.2). The Adult programme provides employment and training services for adults aged 18 or older. The Dislocated Workers programme targets laid-off workers and displaced “homemakers” aged 18 and over.

  3. Trade Adjustment Assistance (TAA) for Workers programme. The TAA Program’s mission is to transition workers who have lost or may lose their jobs as a result of foreign trade, to in-demand careers.  The TAA Program’s benefits and services include:  up to two years paid training, employment and case management services, job search allowances, relocation allowances, wage supplements for reemployed workers age 50 and older, and a health coverage tax credit.

There are also two small programmes specifically targeted to older workers

  1. The Senior Community Service Employment Programme (SCSEP) is funded and operates under the Older American Act (OAA) but is run by the US Department of Labor (DOL). OAA in 2016 re-authorised among other programmes the SCSEP for three years (FYs 2017-2019). It offers part-time community service employment opportunities for low-income unemployed individuals aged 55 or over at non-profits or government agencies, with a view to prepare them to enter or re-enter the workforce. SCSEP uses a combination of measures to track performance outcomes, the most critical of which include: Six Months’ Average Earnings, Entered Employment rates, and Employment Retention rates. Under SCSEP reauthorisation, these performance outcome measures will be changed to align with WIOA relevant performance indicators: Employment Rate (2nd Quarter and 4th Quarter after exit) and Median Earnings (2nd Quarter after exit).

Box 3.3. Key employment and training programmes for older workers in the United States (Cont.)

  1. The Reemployment Trade Adjustment Assistance (RTAA) programme. The RTAA programme is a benefit available to workers who lost their jobs as a result of international trade, aimed at workers over the age of 50. The benefit provides a wage supplement to older workers once eligible participants accept new employment at a lower wage. RTAA participants are also entitled to receive employment and case management services and are eligible to apply for the Health Coverage Tax Credit and TAA-approved training.

ES and the WIOA Dislocated Worker programmes are the public workforce programmes that serve the greatest number of older workers.

Source: Wandner, S., D. Balducchi and C. O 'leary (2014), Selected Public Workforce Development Programs in the United States: Lessons Learned for Older Workers, AARP, Washington, DC.

Compared with other OECD countries, very little is spent in the United States on ALMPs

Despite the large potential of ALMPs to help US workers, the current level of public investment of the United States is low by both international and historical standards (Figure 3.5, Panel A). The United States spent just 0.1% of GDP on ALMPs in 2015 compared to 0.5% spent on average by OECD countries.10 The breakdown by age is not available.

In fact, the United States spent in the 2010s less than half of what it did on such employment programmes 30 years ago (Dunn, 2013[30]). Besides, the total number of participants of all ages in employment programmes is relatively small in relation to the total number of jobseekers (Table 3.3). However, the small percentage of eligible older workers served under WIOA is particularly noticeable; funds are not sufficient to serve all who are potentially eligible and very few – far fewer than in younger age groups – receive training under WIOA (Table 3.4)

Figure 3.5. Compared with other OECD countries, very little is spent on active labour market programmes and training
Expenditure on ALMPs by main category, selected OECD countries, 2015 or latest year available, percentage of GDP
picture

GDP: Gross domestic product.

Note: Countries are ranked in decreasing order of expenditure in each respective panel. Data refer to 2014 for New Zealand and to 2010 for the United Kingdom.

Source: OECD calculations based on OECD/Eurostat Labour Market Programme Database, http://dx.doi.org/10.1787/data-00312-en.

 StatLink http://dx.doi.org/10.1787/888933644414

Towards better employment policies to assist older jobseekers

Improving the evaluation and effectiveness of employment programmes in the United States

The performance evaluation system under WIA served as a disincentive for staff to offer programmes to older workers. One-Stop Centers serving jobseekers were evaluated on the basis of placements and post-programme earnings compared to previous earnings. Because older re-employed workers’ earnings often fell short of their former earnings and because many older workers could only find part-time work, post-WIA earnings were often lower, thus adversely affecting the performance measures of service providers (Heidkamp, Mabe and Degraaf, 2012[31]). However, introduction of a more sophisticated performance evaluation system has not lead to improved outcomes. During the last few years, states have evaluated programmes based on a statistical model that takes into account participants’ age. Nonetheless, there has not been a significant increase either in the number or in the percentage of older workers served (Table 3.3). Other possible disincentives to cater for older workers include the priority to serve low-income individuals and veterans.

Nevertheless, performance measurement is scarce among all programmes in the United States. Most programmes track outcome measures such as the number of participants who found jobs after some months, retained employment, or saw a wage gain. However, only five of the 47 US programmes between 2004 and 2011 had undergone a comprehensive impact study to determine whether workers’ employment and wage outcomes could actually be attributed to the programme (U.S. Government Accountability Office, 2011[18]). Furthermore, the U.S. Government Accountability Office reported that half of the programmes had not received a performance review in the previous seven years. The absence of effective programme measurement limits the ability of policymakers to compare programmes and determine which ones are worthwhile investments.

Fortunately, this seems to be changing; in 2012 DOL conducted a process evaluation of SCSEP (Kogan et al., 2012[32]) and the new requirements of information imposed by WIOA (Box 3.2) could prove very useful in improving the evaluation of programmes that provide employment services to older jobseekers in the United States.

The evaluation of SCSEP provided recommendations that included: (1) arranging for skills training in addition to community service assignments; (2) providing direct job search training and assistance; and (3) increasing access to AJC services by either co-locating staff members at AJCs or specifically arranging for participants to use core services. Since the evaluation, DOL has offered technical assistance to grantees to address these recommendations and also held a competition among some SCSEP grantees for grants to expand training options for participants. A continuation of these efforts is to be encouraged.

Table 3.3. Few older workers served by WIA services
Number and percentage of individuals exiting WIA services, 2006-15
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Note: Numbers for each year are from April that year to March next year.

Source: OECD calculations based on WIASRD Data Books (www.doleta.gov/performance/results/) and Bureau of Labor Statistics (BLS) Current Population Survey (CPS).

 StatLink http://dx.doi.org/10.1787/888933644509

Table 3.4. Far fewer older workers than in younger age groups receive training provided by WIA programmes
Percentage of jobseekers who received training, by age
picture

Note: Numbers for each year are from April that year to March next year.

Source: OECD calculations based on WIA State Annual Reports and Summaries (WIASRD) Data Books (www.doleta.gov/performance/results/) and Bureau of Labor Statistics (BLS) Current Population Survey (CPS).

 StatLink http://dx.doi.org/10.1787/888933644528

Good practices in OECD countries

Personalised action plans together with targeted group activities are recommended as the best means of getting the older unemployed back to work (PES-to-PES, 2012[33]).

  • The older unemployed is far from constituting a homogeneous group, and personalised action plans, if they are to be effective, must be based on individual profiling. As an example, a greater emphasis has been placed on intensive counselling for the older unemployed under the German Perspektive 50plus, Employment Pacts for older workers in the regions running from 2005-15, although it was primarily the younger seniors who benefit from such programmes (see Box 3.4).

  • Identifying problems and making arrangements for marketing the skills of older workers is important. This sometimes requires not only offering job counsellors further training, but also raising awareness among staff of job centres about this objective. Moreover, the creation of specific teams with lower counsellor-to-client ratios can help to tackle some of the additional challenges facing many older workers. In addition, counsellors should be better equipped to address the real problems encountered by older jobseekers and to establish, early on, a solid profiling of their chances of finding a job quickly. The UK Government introduced Older Claimant Champions in all Jobcentre Plus regions, to increase awareness of the barriers faced by older claimants and how to address them (DWP, 2017[34]).

  • A number of ALMPs have achieved good outcomes using group activities targeted at the older unemployed. For example, in the Netherlands, organising counselling sessions in self-help groups has been found useful in tackling social isolation and the lack of networking opportunities while enhancing job search skills (OECD, 2014[35]). Job clubs, whether they are age-centered or not, can also help to identify “hidden” vacancies. Because of the stereotypes that employers tend to entertain regarding older workers, it may also be more important for this target group to benefit from measures that bring jobseekers directly into contact with employers, such as job fairs, speed dating and work trials.

Furthermore, the potential for empowering the resources that people have should not be underestimated. The Senior Network in Denmark (Box 3.5) is an example of an innovative practice that engages the older unemployed themselves in job search: unemployed older workers are reaching out to employers directly through participation in teams to find jobs for themselves or to promote other older workers as a resource. Participating in local independent networks receives financing from the public budget; in relying on the efforts of members, they ensure a dynamic and enthusiastic approach to job search.

Box 3.4. Germany’s Perspektive 50 Plus programme (2005-15)

In 2005, the Federal Ministry of Labour and Social Affairs launched and financed the Perspektive 50 Plus - Employment Pacts for Older Workers in the Regions. All former programmes and centralised measures were financed by the Federal Employment Agency. This programme ran from 2005 to 2015. It aimed to re-activate and integrate older workers (50+), predominantly those who are low- or semi-skilled and long-term unemployed, into employment. Furthermore, the programme worked to change the attitudes of employers as well as to identify and share best practices and innovative tools.

Local impact. About 77 regional employment pacts were set up with nearly all Jobcentres as partners as well as with a wide range of local stakeholders such as companies, chambers and various associations, trade-unions, municipalities, training institutions, churches, and social service providers (Duell and Vogler-Ludwig, 2012[36]). Regional partners were able to adapt the programme to fit their regional and local needs, which is made possible through the rigorous simplification of administrative rules. The budget was free-to-use and Jobcentre counsellors had a great deal of discretion.

Services provided. Coaching, profiling, training in communication skills and job application training, job training, internships, and wage subsidies.

Evaluation. Evaluation of the first phase conducted in 2007 showed that the success of the programme rested on the combination of individualised counselling and coaching as well as on proactive outreach towards employers. The most recent evaluation showed that placement results were better than in the case of more traditional approaches (Knuth, Stegmann and Zink, 2014[37]).

Limitations. i) The average age of the effectively activated and placed unemployed is relatively young (about 54 years with a peak at 51 years) and the share of people aged 60 and more represented only 3% of all participants placed in the regular labour market; and ii) The programme does not sufficiently raise awareness about more effectively coping with ageing (Büttner et al., 2008[38]).

The new programmes launched in 2016 were targeted towards the (very) long-term unemployed, among whom many are older workers.

Source: Duell, N. and K. Vogler-Ludwig (2012), European Employment Observatory EEO Review: Employment policies to promote active ageing. Germany, European Employment Observatory, Brussels; Knuth, M., T. Stegmann and L. Zink (2014), “Die Wirkungen des Bundesprogramms Perspektive 50plus;. Chancen für ältere Langzeitarbeitslose, ( Impact of the Federal Programme 50+. Results for the older long-term unemployed)”, IAQ-Report, No. 2014-01, Universität Duisburg-Essen, http://www.iaq.uni-due.de/iaq-report/2014/report2014-01.pdf; and Büttner, R. et al. (2008), “Perspektiven auf dem Arbeitsmarkt auch mit 50plus. Ausgewählte Ergebnisse aus der Evaluation des Bundesprogramms Perspektive 50plus für ältere Langzeitarbeitslose, (Perspectives in the labour market also for people aged 50+. Selected results of the evaluation of the Federal Programme 50+)”, IAQ-Report, No. 2008-3, http://www.iaq.uni-due.de/iaq-report/2008/report2008-03.pdf.

Box 3.5. Senior networks in Denmark

The “senior networks” consist of local, independent networks for seniors who are looking for jobs and other activities (OECD, 2015[39]). The local networks are based on voluntary and active contributions from their members, and receive public financing. The Danish Government has allocated DKK 6.3 million per year for the period 2014-17. To be eligible for public support, the local network must have a co-operation agreement with at least one jobcentre, and at least 25 unemployed members over the age of 50. In some of the local networks a small fee is paid by the members to cover local social activities.

The primary aim is to find jobs for seniors. Members are unemployed, above the age of 50, and are searching for jobs. Early retired persons and pensioners are also included. “Help to self-help” is the basic concept of the network. Outreach activities to promote older workers are also among the priorities.

Source: OECD (2015), Ageing and Employment Policies: Denmark 2015: Working Better with Age, OECD Publishing, Paris; and http://seniorerhvervdanmark.dk.

Finally, going local might help to boost opportunities for vulnerable groups among older people. As the examples in Denmark (Box 3.5), Germany (Box 3.4) and Canada (Box 3.6) show, the employment chances of older persons can be improved by involving all local actors: industry, trade unions, joint agencies and local authority agencies. What makes these programmes particularly successful are:

  • Flexibility: Local authorities have the flexibility to customise and tailor projects according to their local labour market situations and client needs.

  • Projects include a mix of services and activities: Group-based employment assistance services and job search assistance and employability improvement activities.

  • Engagement of local employers: Establish and maintain links with local employers in a variety of ways to motivate and encourage employers to hire older workers. Improving awareness among local employers of the valuable role older workers can play in helping them to address their challenges in recruitment and retention.

Box 3.6. The Targeted Initiative for Older Workers (TIOW) programme in Canada

TIOW was launched in 2007 as a temporary, two-year pilot initiative to support unemployed older workers (typically between the ages of 55-64) living in small, vulnerable communities of 250 000 or less to re-integrate into the labour market and to improve their employability (Hicks, 2015[40]). Unemployed older workers between the ages of 50-54 and over the age of 64 may also be eligible for TIOW provided that their participation is not at the exclusion of those in the core age group. TIOW is an initiative between the Government of Canada and each participating province and territory and normally implemented via community-based organisations. TIOW projects include a mix of group-based employment assistance services such as résumé writing, counselling, interview techniques, and job search assistance and employability improvement activities such as skills upgrading and training, work placements, and self-employment assistance.

TIOW’s group-based project model places significant emphasis on peer mentoring and support. Project participants are encouraged to learn from and support one another during the training. The initiative has been very successful and has been renewed three times to-date in Budgets 2008, 2011, and 2014 (until 2017) respectively. Initially limited to vulnerable communities experiencing high unemployment or significant downsizing, Budget 2014 broadened TIOW eligibility criteria so that communities experiencing skills mismatch or unfulfilled employer demand can now participate. As of March 2015, more than 35 280 unemployed older workers have been targeted by provinces and territories for TIOW participation in small, vulnerable communities across the country.

Evidence shows that the programme supports local community adjustment, and most employers indicate that they would participate in TIOW again. The evaluation report (2014[41]) shows that 30% of TIOW participants did not have high school diplomas; half were unemployed for more than 12 months prior to participation, and more than half lived in communities with unemployment rates of 10% or more. Findings from various phases of programme evaluations indicate consistently positive results.

Given that provinces and territories have the flexibility to customise and tailor TIOW projects according to their local labour market situations and client needs, there have been numerous examples of innovative and successful practices across Canada. The Government of Canada, in collaboration with provinces and territories, produced in 2014 a “Best Practices Compendium” with a compilation of best practices that can be shared widely so that the model can be replicated within other jurisdictions.

All in all, TIOW is an innovative project presented as a good practice in local employment and skills strategies in G20 countries. TIOW has much to contribute to the design and management of active labour market policies and programmes in Canada and internationally for years to come.

Source: Hicks, P. (2015), “Local economic strategies for ageing labour markets: The Canadian Targeted Initiative for Older Workers in Fort St. James, British Columbia”, OECD Local Economic and Employment Development (LEED) Working Papers, No. 2015/3, OECD Publishing, Paris, http://dx.doi.org/10.1787/5jrnwqk5d4f7-en; and Employment and Social Development Canada (2014), Summative Evaluation of the Targeted Initiative for Older Workers, Ottawa, http://www.esdc.gc.ca/eng/publications/evaluations/skills_and_employment/2014/tiow.shtml.

Working conditions

Improving the employability of older adults via better education and skills and an effective employment support system for jobseekers is important to enable older adults remain in the labour force at later ages. However, that is not enough; there is one underlying requirement to effectively reach that goal: older adults should be willing and able to work; and working conditions are one of the decisive factors affecting both.

Towards better job quality throughout worker’s career

There is evidence that working conditions can have a profound impact on workers’ physical and mental health (OECD, 2015[42]) and recent studies (Böckerman and Ilmakunnas, 2017[43]) and surveys indicate that for many people, working conditions are one of the decisive factors in the choice between work and retirement. In the United States, Angrisani et al. (2013[44]) find that job quality indicators are strongly predictive of labour force transitions. Their analysis shows that a higher wage is associated with a higher probability of remaining in full-time employment and a lower probability of moving to part-time or out of the labour force. Interestingly, individuals with higher wages are also more likely to retire. Physical effort, age discrimination and stress are all non-monetary factors that decrease the chances of remaining in full-time employment while increasing the chances of retiring early. Thus, to ensure that workers are willing and able to continue working for longer, policies and institutions should provide employers with incentives and tools to improve working conditions in their companies.

Improving working conditions not only benefits workers by providing them better, healthier and longer working lives, but also benefits employers, since job satisfaction and productivity at the firm level are also positively related (Böckerman and Ilmakunnas, 2017[43]; Arends, Prinz and Abma, 2017[45]). Thus, in a context of rapidly ageing population, not only governments, but also employers, trade-unions and civil societies, should not miss this opportunity. In addition, in this context, work organisations should also make the most of a diverse workforce. Therefore, complementarities between generations of workers should adequately be reflected in an age-friendly work organisation and good working conditions at all ages. A broad-based strategy to enhance job quality should be implemented not only by strong and effective actions by governments but also by employers, trade unions and non-governmental organisations.

Even if younger workers may be considered as more able to carry out physically and mentally demanding work than older workers, enhancing job quality is crucial to reduce their exposure to strenuous work. Working conditions should be adapted and modified to facilitate career mobility so that people can move out of arduous occupations. In particular, assistance such as retraining and offers of alternative job opportunities would need to be provided throughout the career to ensure that workers do not get sick and disabled on the job. Currently, too many policies relating to strenuous work are still confined to making provision for early retirement or disability benefits.

Working conditions and job quality in the United States

A recent study (Maestas et al., 2017[46]) provides some insights on working conditions in the United States. According to the study, the US workplace overall is “very physically and emotionally taxing”. However, the analysis found that for workers over 50, conditions improve: Older workers report having more flexible work schedules, more predictable hours, fewer scheduling changes, less stress, and greater ease in arranging time off to take care of personal matters. Besides, the vast majority of workers aged 50-59 predict they will have the physical and mental ability to continue in their jobs for another ten years. Nevertheless, larger shares of older workers than younger workers feel under-employed or have unsupportive bosses and there are large discrepancies by level of education.

To measure and assess the quality of jobs in an international perspective, the OECD has developed a framework with three objective and measurable dimensions that can be observed for all OECD countries (OECD, 2014). 11

  • A first dimension, the quality of the working environment, captures non-economic aspects of jobs including the nature and content of the work performed, working-time arrangements and workplace relationships. These are measured as the incidence of job strain characterised as high job demands with low job resources.

  • The second dimension, labour market security, captures those aspects of economic security related to the risks of job loss and its economic cost for workers, and is defined by the unemployment risks and benefits received in case of unemployment.

  • The third dimension, earnings quality, captures the extent to which earnings contribute to workers' well-being in terms of average earnings and their distribution across the workforce.

The United States performs better than the OECD average in the three indicators of job quality for older workers. However, in the earnings quality indicator, the average earnings mask a combination of a more unequal distribution and higher average earnings across the workforce than the OECD average (Figure 3.6, Panel A). Besides, the United States is far from reaching job quality levels reached by top OECD performers in all three indicators.

When comparing the job quality in the United States by age group (Figure 3.6, Panel B), the situation is somewhat better for US older workers as compared with their younger counterparts in all three indicators, thanks to a lower unemployment risk and a better coverage in terms of benefits (labour market insecurity indicator) and also older workers are less likely to be confronted with high job demands and low job resources (job strain indicator).

Finally, there are also large inequalities in job quality among American workers (Figure 3.6, Panel C). Not only there are large differences in working conditions by level of education, but these differences are larger than in the OECD on average. One of the major reasons to encourage people to remain in the labour force at later ages is the idea that working longer might provide much-needed income to older workers who could not otherwise afford to retire. However, to the extent that inequalities in health and wealth go hand-in-hand (McNamara and Williamson, 2013[47]), those most in need of additional income are in higher risk of not being able to work. Thus, certain sectors and industries with high outflows to disability pension and early retirement should be a special focus of attention to enhance access to job quality.

Figure 3.6. Above-average working conditions among older workers in the United States but far from reaching job quality levels in top OECD countries
Job quality indicators of older workers, of different age groups and education levels, United States and OECD
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Note: An upward (downward ) pointing arrow for an indicator means that higher (lower) values reflect better performance. Earnings quality: Gross hourly earnings in USD adjusted for inequality. Labour market insecurity: Expected monetary loss associated with becoming unemployed as a share of previous earnings. Job strain: Percentage of workers in jobs characterised by a combination of high job demands and few job resources to meet those demands. Data on earnings quality and labour market security refer to 2013 or latest available. Data for job strain refer to 2015 or latest available.

Source: OECD calculations based on OECD Job Quality database (https://stats.oecd.org/Index.aspx?DataSetCode=JOBQ).

 StatLink http://dx.doi.org/10.1787/888933644433

Actions to address the safety and health of older workers in the workplace

Studies have so far found that occupational safety regulations have had only a minimal effect on workplace safety performance. One of the main alternative measures discussed in the literature is the use of experience-rated workers compensation premiums. The premise of experience rating is that employers who maintain safer workplaces are rewarded with lower premiums, while those with more workplace accidents face higher premiums. This approach is used in Australia, Canada and New Zealand. In the United States it has been widely adopted as well, although small firms are usually excluded from its mandatory application. However, the use of experience rating in workers' compensation is controversial and the evidence from the literature is mixed (Liz et al., 2012[48]). Insurers may pay little attention to the safety justification of experience rating and rely on it almost exclusively as an underwriting tool. Thus, it is paramount that policymakers design and implement experience rating in such a way that can be used as an effective tool for improving safety. Although more research is needed (Liz et al., 2012[48]), recent studies show positive results (Tompa, Cullen and McLeod, 2012[49]). Moreover, Neuhauser, Seabury and Mendeloff (2013[50]) find that lowering the threshold to subject more employers (mostly small firms) to experience rating would improve safety of workers at these smaller firms.

The US Occupational Safety and Health Administration (OSHA) has taken a number of actions since 2005 that address the safety and health of workers in the workplace. For instance, the 2011 campaign was conducted to prevent heat illness in outdoor workers and the distracted driving campaign. OSHA continues to seek and study feedback on this issue. For example, OSHA’s Office of Small Business Assistance hosted a Small Business Forum in 2009 on “Safety and Health Issues in an Aging Workforce”. The broader European healthy workplaces campaigns (Box 3.7) and some initiatives like the Initiative New Quality of Work (INQA) in Germany (Box 3.8) could provide useful information to US stakeholders to implement innovative campaigns and initiatives to improve competiveness, health and working conditions.

As it has been mentioned, workers with low socio-economic backgrounds have a higher chance of being in bad health, one common reason among older workers for permanent withdrawing from the labour market and definitive loss of human capital for society. Yet a considerable proportion of them would like to return to work. Occupational Safety and Health (OSH) services and disability policies have a crucial role to play in this respect. Early intervention is often the best way of preventing long-term dependence on benefits, particularly among older workers. In the first place, it is important to mitigate the effects of bad working conditions in a preventative way through toolkits and guidance material for companies with a focus on older workers. The European Agency for Safety and Health at Work (EU-OSHA) E-guide “Health and safety at work is everybody’s business” prepared by EU-OSHA Europe is a practical tool to help employers and workers manage OSH in the context of an ageing workforce.12 The E-guide offers simple explanations of the issues, along with practical examples of how to deal with risks relating to ageing and how to make sure that all workers stay safe and healthy in the long term, as well as links to further resources.

Box 3.7. The European Healthy Workplaces campaigns

The European Agency for Safety and Health at Work (EU-OSHA) runs since 2000 Healthy Workplaces Campaigns, backed by the EU institutions and the European social partners, and co-ordinated at the national level by the Agency’s network of focal points. In 2007, the duration of each campaign increased from one year to two years, responding to the increasing need to raise awareness of safety and health issues at different levels by providing accessible data, information and tools over a more sustained period of time.

The key objectives are:

  • Promote sustainable work and healthy ageing from the beginning of working life

  • Highlight the importance of prevention throughout working life

  • Assist employers and workers (including in small companies) by providing information and tools for managing OSH in the context of an ageing workforce

  • Facilitate information exchange and good practice

The campaigns have grown from strength to strength, in particular with a wider network of stakeholders and media partners committed to the campaign, and more campaign materials being produced and distributed or accessed online.

The success of the Healthy Workplaces campaigns, their capacity to permeate organisations at different levels and the positive cascade effect from policy-makers to shop floors are largely due to the commitment and effort of the broad range of network of partners, which encompasses all professional profiles in different sectors across Europe.

The central issue varied in each campaign, the present 2016-2017 Healthy Workplaces for All Ages campaign, for instance, promotes sustainable work and healthy ageing. The campaign promotes the importance of risk prevention through the whole working life, and raises awareness of tailoring work to individual abilities, assists employers and workers by providing information and tools for managing occupational safety and health in the context of an ageing workforce, and facilitates the exchange of good practice in this area.

The Healthy Workplaces Good Practice Awards are an important component of each campaign. The competition is organised by EU-OSHA in co-operation with Member States and the Council presidencies of the EU, to recognise outstanding and innovative contributions to workplace safety and health. The Good Practice Awards also serve as a platform for sharing and promoting good practice across Europe.

The campaigns are now the largest of their kind in the world and they can be used as a reference to guide stakeholders in other regions and countries to implement similar campaigns.

Source: https://osha.europa.eu/en/healthy-workplaces-campaigns https://osha.europa.eu/en/healthy-workplaces-campaigns

Box 3.8. Initiative New Quality of Work (INQA) in Germany

Aim: Improving the quality of work in ways which benefit companies and employees. Launched in 2002 by the German Federal Ministry of Labour and Social Affairs and leading social partners, today INQA brings various actors together which includes Federal and State-level government, business associations, trade unions, the Federal Employment Agency, companies, social insurance providers and foundations.

Tools: collecting good practice examples on job quality at company level; monitoring collective bargaining agreements on shaping quality of work; and increasing the attractiveness of jobs, especially in small companies in rural areas. Furthermore, the initiative is responsible for conducting research and elaborating guidelines and has led to the establishment of local networks for the promotion of age management throughout Germany.

Expert task forces have prepared different INQA memorandum putting forward strong messages, in particular:

  • Prevention is necessary for a longer healthy working life in the 2012 memorandum entitled “Securing the future through prevention –Strategies for a world of work aligned to demographic change”.

  • Skills promotion contributes to improving workplace conditions and boosting a company’s capacity for innovation and competitiveness in the 2016 memorandum entitled “Competence, health and good working conditions – for the future of work”.

After more than ten years, the results are proving positive. Many businesses are committed to sound practical solutions and ensuring competitiveness in the context of demographic change, and are making use of the various INQA campaigns and the resources offered by the Initiative for those purposes.

Source: http://www.inqa.de/EN/Home/home.html

Flexible retirement

Some older workers are not able or willing to continue full-time work at older ages. Inflexible working patterns mean that many of them face a stark choice between full-time work and full-time retirement. Entry into “phased” or “partial retirement may be an option to facilitate a smooth transition into retirement, thereby preventing older workers from quitting work abruptly. This requires modifying inflexible arrangements of pension as indicated in Chapter 1 as well as both employers and employees to become more flexible in terms of retirement and working patterns. According to Graham (2014[51]), flexible approaches to retirement and to part-time work are linked to higher levels of well-being, at least in labour markets where flexible work is a choice. In particular, voluntary part-time workers have more life satisfaction, less stress and are more satisfied with their jobs than full-time workers.

A solution that might benefit both older workers and employers

Given the potential negative effects of job switches among older adults (Chapter 2), extending on-going employee-employer relationships might benefit both employers and employees. However, some older adults might want to continue working for their current employer on different terms than standard full-time jobs. According to surveys in the United States (Collision, 2014[52]), a significant proportion of workers envision a phased transition into retirement during which they will continue working, reduce hours with more leisure time to enjoy life and work in a different capacity that is less demanding and bringing greater personal satisfaction.

A nationally representative survey conducted in 2012 by AARP and the Society for Human Resource Management (SHRM), covering 1 000 adults aged 50 and more who were working or looking for work, illustrated that about one third of older workers consider it very important that their employer offers flexible working time (AARP, 2012[53]). About one fourth also attached great importance to a compressed work schedule, telecommuting and a formal phased retirement programme. The importance of such flexible work arrangements declined somewhat with age: 37% of workers aged 50-59 considered flex time very important, compared with only 27% of workers aged 70 and more. However, these findings may be related to a positive selection bias of more healthier and motivated workers who continue working beyond age 70. Another AARP survey, covering 1 500 adults aged 45-74 who were working or looking for work in 2013, illustrated that 91% of them selected a friendly working environment as an essential part of their ideal job (AARP, 2014[54]).

All in all, in a context of increasing participation of older workers, particularly over age 65, where older workers seem to consider flexible working options very important and employers recognise the need to mitigate potential knowledge loss as older workers retire, phased or partial retirement options seem to be the answer to align both employers and employees’ needs. These options refer to a broad range of flexible retirement arrangements, both informal practices and formal workplace policies, which allow employees approaching normal retirement age to reduce the hours worked or work for their employers in a different capacity after retirement. Employers can use phased retirement as a human resource tool not only to retain workers with essential skills or knowledge, but also to tackle skill shortages issues. For instance, in the United States the Manufacturing Institute (MI) is concerned that there is a major shortage of high quality manufacturing educators and an emerging best practice is for older workers to serve as adjunct faculty while continuing to work in a part-time basis. This helps to introduce the future workforce to the most in-demand skills while creating a talent pipeline for the company and the community.

An option still uncommon in many OECD countries

Several countries and sectors have facilitated flexible retirement over the past few years. Good examples are found in Australia where the Transition-To-Retirement Pensions (TRIPs) let workers move from full-time to part-time work and complement their income with the pension. About 20% of Australian workers over 55 have participated in this programme since it was introduced in 2005. EU countries have also implemented flexible retirement schemes but their prevalence varies largely by country (Eurofound, 2016[55]). It was most common in 2012 for people aged 55–69 who are in employment or retired to report having at some point reduced their working hours in a move towards full retirement in the Netherlands (21%), Finland (18%), Belgium and Sweden (both 17%) while less than 1% do so in Latvia or the Slovak Republic. Flexible retirement may be easier to implement in countries, such as the Netherlands, where a voluntary part-time culture is common.

Low and unequal prevalence of phased retirement in the United States

Phased retirement could be harder to implement in countries where the voluntary part-time culture is less common. In the United States, despite many employers report that they enable employees to reduce their work hours13, part-time work is less widespread than in many OECD countries (Figure 3.7). In the United States, in 2016, 16% of workers aged 55-64 and 39% of those aged 65 and more worked less than 35 hours per week in their main job. An incidence below the OECD average, despite the definition of part-time employment is less strict in many other countries.

Figure 3.7. Low prevalence of part-time work among older workers in the United States, 2016
Part-time employment of older workers (55-64) as a share of total employment, by age groups
picture

Note: Part-time employment is based on national definitions which is less than 35 hours per week in the United States. The OECD is a weighted average and excludes Korea. For definitions for other countries, see www.oecd.org/els/employmentpoliciesanddata/LFSNOTES_SOURCES.pdf.

Source: OECD dataset on Incidence of full-time part-time employment - national definition, http://stats.oecd.org//Index.aspx?QueryId=9582.

 StatLink http://dx.doi.org/10.1787/888933644452

In the United States, very few older workers benefit from phased retirement options and few employers offer them (particularly formal phased retirement programmes). Besides, there is little indication that the prevalence of phased retirement has changed much in recent years, and if nothing changes, these programmes may be unlikely to increase in the near future.

Box 3.9. Main barriers to phased retirement in the United States

From worker’s side, while there may be unobserved barriers to a gradual reduction in hours, there are reasons, mainly financial, that explain why more workers may plan to retire gradually than actually do.

  • Gradually retiring may have consequences for employer-provided health and pension benefits. For example, in the private sector part-time workers are less likely to be eligible to participate in workplace retirement plans than full-time employees and employers are not required to provide benefits to part-time employees.

  • Americans’ low savings approaching retirement and a desire to maximise earnings prior to retiring fully.

  • Further, many workers retire sooner than they thought they would and therefore may not be able to carry out their plan to reduce work hours leading into retirement.

From the side of the employers, the main barriers come from the potential challenges in complying with various laws and regulations when designing a phased retirement programme. Employers tend to be selective about which employees they offer phased retirement, and those denied enrolment in the programme may sue on grounds of age discrimination. Even if these claims would be difficult to prove, the threat of expensive litigation may discourage many employers from implementing phased retirement programmes.

  • Issues relate to receipt of pensions under defined benefit (DB) plans during a period of phased retirement. Employers may not provide in-service distributions to workers younger than 62, yet relatively few workers can afford to reduce their work schedules without access to retirement benefits. Also, DB plan participants usually lose substantial pension wealth if they reduce their earnings in the years immediately before retirement, because pension benefits are generally tied to earnings near the end of the career. Nevertheless, this is becoming largely irrelevant since 11% of US private sector workers have both DB and Defined Contribution (DC) plans and only about 2% rely solely on DB.14

  • Phased retirement complicates the provision of other types of benefits as well, including health insurance, life insurance, and disability. For example, many employers do not provide benefits to part-time workers, and antidiscrimination rules make it difficult to provide exceptions for older workers. Federal law requires that benefits provided through tax-qualified plans be fairly evenly distributed between highly compensated and lower-paid employees. For formal phased retirement programmes is difficult to meet these standards because most employers gear them toward well-paid workers, who tend to have the specialised skills and knowledge that employers value and who can generally afford to reduce their work schedules. Federal law also prohibits employment discrimination against workers age 40 and older (see Chapter 2).

  • There are also logistics barriers. Only some of the industries, due to how their work is structured, are more likely to offer phased retirement. For example, in education it is logistically easier to reduce working hours than in manufacturing.

Source: U.S. Government Accountability Office (2017), Older Workers: Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers, Washington DC, http://www.gao.gov/products/GAO-17-536; U.S. Department of Labor (2016), Labor Market and DOL-Funded Employment Assistance for Older Workers Literature Review Report, IMPAQ International, Washington, DC; and Johnson, R. (2011), “Phased Retirement and Workplace Flexibility for Older Adults”, The ANNALS of the American Academy of Political and Social Science, Vol. 638/1, pp. 68-85, http://dx.doi.org/10.1177/0002716211413542.

Although there is no nationally representative data on the prevalence of phased retirement in the United States, a 2008 report15, a more recent report from the U.S. Government Accountability Office (2017[56]) and surveys like the last Employee Benefits Survey of the Society for Human Resource Management (SHRM)16, indicate that formal phased retirement programmes are relatively uncommon. It is far more common for employers to implement other informal programmes that take the form of reduced work schedules or rehiring retired workers. Why flexible retirement options are not more widespread seems to be related to several barriers from both employers and workers that make difficult the expansion of formal, and even informal, phased retirement programmes (see Box 3.9).

Even in the public sector, these types of programmes have proved to be difficult to implement. In 2014, the Office of Personnel Management (OPM) issued the final regulations on Phased Retirement to permit US federal employees to phase into retirement by shifting from full-time to part-time work and receive partial retirement benefits while continuing to accrue prorated future retirement benefits. In order to take advantage of the phased retirement programme, workers must spend at least 10% of their time mentoring younger workers, thereby ensuring critical knowledge transfer. While the plan is seen as a best practice in encouraging phased retirement, and has the potential to reach 2.5 million government employees, to date very few government agencies have chosen to make it available to their employees resulting in very few workers have signed up for phased retirement.17

It is not only the case that few workers gradually retire from their career jobs, but there are also inequalities in access to flexible retirement options on top of all the inequalities that workers experience throughout their working lives. Workers with higher-paying jobs and at the top of the occupational hierarchy have the most access to flexible work options (Golden, 2009[57]). Further, the more secure the worker’s status is within an organisation, the more likely they are to use the flexible programmes that are available (McNamara and Williamson, 2013[47]). Finally, large firms offer phased retirement more than small firms as well as employers in certain industries, particularly in industries with technical and professional workforces such as education, government, utilities, consulting, and high-tech companies (U.S. Government Accountability Office, 2017[56]).

Directions for Policy

Older adults in the United States are relatively highly educated, highly skilled and among the most active participants in training in the OECD area. In addition, job quality and working conditions in the United States are above the OECD average and the situation for older workers is better compared with their younger counterparts. However, the United States faces several issues. First, contrary to many OECD countries, educational levels and skills proficiency are not increasing among younger generations in the United States. This might lead to poorer skills proficiency prospects of future generations of older workers relative to other OECD countries. Second, there are large inequalities in access to education and training among older US adults. Finally, there is much room for improvement regarding job quality and working conditions. The United States is far from being among the top OECD performers, flexible work arrangements, in particular to implement phased retirement, are scarce and there are also large inequalities in access to good working conditions among US workers.

Public policies and institutions have an important role to play in helping jobseekers, particularly older adults most in need, by providing income support, assisting with job search or ensuring access to skills development. However, in the United States, income support provided by unemployment benefits is not sufficient to prevent poverty and exclusion, and, despite the large potential of employment and training programmes to help the unemployed, the current level of public investment is low by both international and historical standards, in particular for older jobseekers. Finally, WIOA has been a positive development. It strengthens evaluation and data reporting requirements of programmes and might benefit older workers since now there is data on how they fared compared to other groups. However, it largely leaves the existing system intact.

The following measures can improve the employability of older workers:

  • Take concerted action to boost basic skills of workers throughout their working lives and tackle inequalities accumulated by those with poor basic skills. Two compelling arguments underline the priority which needs to be attached to action on basic skills – skills matter, and without action, the United States will fall further behind other countries which could harm the prospects of future generations of older workers as well as reinforce the persistence of inequalities at an older age (OECD, 2013[1]).

  • Improve access to employment and training programmes for older jobseekers and the quality of services received. It is not clear how successfully the federally-funded employment programmes (WIOA) in the United States are meeting the challenge of helping growing cohorts of older jobseekers to find jobs. Despite the improvement in the performance evaluation system under WIOA that might help to increase the number of older workers served, there is a need for a careful evaluation of the impact of employment and training programmes on employment outcomes of older jobseekers, in particular those at risk of long-term unemployment. The evaluation of SCSEP programmes was a first step but it should be expanded to other programmes.

  • Enhance opportunities for phased retirement. Phased retirement is more common in other OECD countries than in the United States. In the United States, low-paid workers planning to phase into retirement confront financial obstacles. In addition, there are barriers stemming from the difficulty in complying with various laws and regulations that may discourage many employers from implementing phased retirement programmes. More research is needed to help guide policy choices. A first step should be to monitor and analyse the reasons of the very slow deployment of the federal phased retirement programme. Moreover, the United States could learn from existing flexible retirement options in other OECD countries.

  • Encourage and assist employers to enhance working conditions throughout working lives. In order to foster sustainable work and healthy ageing, the U.S. Department of Labor, in collaboration with OSHA, should seek to promote best practices among employers in terms of preventing poor working conditions. Employer groups themselves should be encouraged to set up websites with information on best practices and tools for employers to assess their own performance as an age-friendly employer. The European Healthy Workplaces campaigns and the Healthy Workplaces Good Practice Awards can serve as an example.

  • Design and implement experience rating programmes that effectively motivate employers to improve safety and expand the experience rating of workers’ compensation insurance to smaller firms. In the absence of such an expansion, OSHA should target its enforcement efforts toward smaller firms.

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Notes

← 1. In the United States, VET is commonly known as Career and Technical Education, or CTE.

← 2. U.S. Bureau of Labor Statistics (BLS).

← 3. CollegeBoard, “Trends in College Pricing 2012” (2012).

← 4. CollegeBoard, “Student Aid 2012 Source Data,” available at http://trends.collegeboard.org/sites/default/files/student-aid-2012-source-data_01122013.xls

← 5. https://doleta.gov/oa/data_statistics.cfm.

← 6. http://www.npr.org/2014/11/06/361136336/in-south-carolina-a-program-that-makes-apprenticeships-work

← 7. https://www.dol.gov/newsroom/releases/osec/osec20170811

← 8. New Zealand Apprenticeships replaced the Modern Apprenticeships programme, which had been designed for 16-21 year-olds.

← 9. Extended UI benefits are sometimes made available to those who exhaust these UI benefits, as has occurred during the recent recession.

← 10. This may be an underestimate since some state-funded programmes outside of the federally-funded ones may not be included.

← 11. http://www.oecd.org/statistics/job-quality.htm

← 12. https://healthy-workplaces.eu/en/healthy-workplaces-all-ages-e-guide.

← 13. Transamerica 15th Annual Retirement Survey (2014)

← 14. https://www.ebri.org/publications/benfaq/index.cfm?fa=retfaq14.

← 15. See in https://www.transamericacenter.org/retirement-research/global-retirement-survey/the-new-flexible-retirement

← 16. https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/2017-employee-benefits.aspx.

← 17. As of August 2016, less than 100 federal employees had signed up for phased retirement. http://federalnewsradio.com/retirement/2016/08/less-100-federal-employees-signed-phased-retirement/