Older Workers and the Modern Labor Market
Hi Everyone. In this post, we'll discuss the economics of an aging workforce, including why more seniors are working later in life and what policies shape that trend.
The Trend Toward Working Longer
There has been a significant increase in the number of Americans over age 65 who participate in the labor force. This reverses a trend of earlier retirement ages over many decades. Reasons include greater life expectancy, insufficient retirement savings, and increases to the full retirement age for Social Security, making early claiming less attractive. While some older workers are staying employed because they must, many others want to.
Legal Protections and Their Limits
With an increase in the number of older people staying in or re-entering the workforce age-related issues of fairness have re-emerged as important topics in the workplace. The Age Discrimination in Employment Act of 19 67 forbids employment discrimination against anyone 40 years of age or older. It applies to hiring, firing, promotions, layoffs, compensation, benefits, job assignments and training. Although illegal, some older workers still face less obvious types of age discrimination when it comes to hiring, especially in youth-oriented fields or in professions that require constantly changing technical expertise. It is also very difficult to prove age discrimination in the courts due to the stringent burden of proof.
The Case for Phased Retirement
Instead of leaving the workforce abruptly, phased retirement allows senior employees to transition into retirement by reducing work hours or responsibilities. The benefit of this setup is that the employee can continue to receive a paycheck and sometimes benefits from retirement while beginning to cut back on hours at work. Employers see benefits of phased retirement because they can continue to keep valuable workers, even if not at full capacity. Phased retirement allows for less of a financial and psychological shock for retirees than completely stopping work all at once.
Economic Contributions of Older Workers
Age inclusion has economic value aside from just staffing available jobs. Older workers provide experience, networks, and institutional knowledge accrued over years of work. Research has shown that workplaces with a wide range of ages can create mutually beneficial environments where knowledge and skills are transferred between older and younger generations. On a larger scale, increased labor force participation from older adults can help to ease the burden on Social Security as payroll taxes are still being contributed.
Remaining Barriers
Still, barriers to working longer remain, particularly when it comes to retraining and continuing education opportunities that have become harder to access for older workers just as technological change is increasing the need for those skills. Health issues, caring for a spouse or grandchildren, and strenuous physical labor can also make extending careers more difficult, especially for blue-collar and other service-sector workers. Policy solutions to these challenges include training programs, flexible workplace policies and stricter enforcement of age discrimination laws.
References
U.S. Bureau of Labor Statistics, "Nearly One in Five Older Americans in the Labor Force in 2025," The Economics Daily, May 28, 2026. https://www.bls.gov/opub/ted/2026/nearly-one-in-five-older-americans-in-the-labor-force-in-2025.htm
U.S. Equal Employment Opportunity Commission, "The State of Age Discrimination and Older Workers in the U.S. 50 Years After the ADEA." https://www.eeoc.gov/reports/state-age-discrimination-and-older-workers-us-50-years-after-age-discrimination-employment
AARP Public Policy Institute, "Employment Data Digest," June 2026. https://www.aarp.org/pri/topics/work-finances-retirement/employers-workforce/employment-data-digest/
Social Security Administration, "The Increasing Labor Force Participation of Older Workers and Its Effect on the Income of the Aged," Social Security Bulletin, Vol. 72, No. 1. https://www.ssa.gov/policy/docs/ssb/v72n1/v72n1p59.html
