The roots of the working-longer consensus can be traced to the 1980s, when policy makers, pundits, and politicians promoted working longer as a solution to the harsh reality of Congress cutting Social Security benefits and employers eroding pensions throughout that decade. At the time, patching together paid work at older ages seemed a prudent response to these broad rollbacks.

But four myths seeped into the culture that served employers’ and politicians’ desires for more labor supply and less opposition to pension cuts, obscuring critical thinking about the approach. 

The first myth is that people choose when they retire – in truth, older workers are usually pushed out before they are ready. 

The second myth advertises that work is good for older people – but the reality is that older workers are more likely to find themselves stuck in low-paid jobs without benefits. 

The third myth purports that because we all are living longer; we should work more. But those longevity improvements are not spread evenly across race, class, and gender. Longevity gains in recent decades have all gone to the top half of the income distribution, a predominantly white and male cohort. 

The fourth myth insists that working longer makes people substantially more financially prepared for retirement; this sounds logical enough, but it’s just not true, the evidence shows. 

Because older workers are usually low paid, often have mentally and physically taxing jobs, get no pension benefits, and collect Social Security while they are working, work in old age not only does not add to a person’s wealth; work can hasten ill health because it reduces time for exercise, sleep, and other forms of self-care. People who work until 70 are not much richer, their monthly Social Security benefits are not larger, and working might have even made them sicker….

The working-longer consensus, a term I coined, is an homage to the pro-market Washington Consensus of the late 1980s, which emerged from institutions with DC headquarters – including the International Monetary Fund, the World Bank, the US Treasury – and was supported by American academics. The Washington Consensus rolled up the disease, the cause, and the cure into one big technocratic market-based set of economic policies that would cure sluggish economies that were supposedly stymied by “excessive” government regulation.

Like the Washington Consensus, the working-longer consensus involves the promotion of neoliberal and technocratic ways to prod older people to work, to cure what is diagnosed as a “sluggish economy,” caused by aging populations and too-generous pensions. This consensus promises that persuading elders to work more will help a nation’s poor retirees while also solving labor shortages and cutting government spending. The working-longer consensus promises healthier elders and richer economies, as well as improved economic performance. Making older people work longer is billed as the ultimate free lunch - all winners, no losers. 

But there is no such thing as a free lunch. Making older people work longer creates very real, specific losers, especially among older people who have a harder time meeting employers’ physical, mental, and time demands. Meanwhile, according to the evidence, these elderly workers end up treading in the financial waters. Working-longer consensus policies have the same key ingredients - reduced pensions and longer working lives. The working-longer consensus aims to “fix” inadequate retirement funding by eliminating retirement. That’s like “fixing” the car by junking it….

The evidence bears out a disturbing and surprising reality: elder poverty is positively correlated with working longer, despite the myths propagated by the working-longer movement that laboring into your old age reduces hardship. Creating a reserve army of gray labor goes hand in hand with tolerating poverty among the elderly. A reserve army is often made up of desperate people….

Following World War II, as almost every demographic group in America began living longer, the US enacted policies so that children and older men worked less. But since the 1980s and the working-longer consensus, retirement – the ultimate paid time off – has been contested and eroded. Other nations used their riches to expand leisure time to its citizen – the US fell behind and opted to expand the labor force instead.

It is quite stunning how much older workers matter to the economy. Older workers over age 65 are projected to grow by more than 4.8 million, which accounts for most (58 percent!) of the 8.3 million jobs predicted to be created between 2021 and 2031. And older workers, and how they are treated, are gaining influence in the labor market. From 1995 to 2020, the share of workers older than 55 has more than doubled, to nearly 24 percent from 12 percent. 

If we as a country don’t do something about creating better pensions, most older people will work or will seek work under circumstances that guarantee them to have weak bargaining power. The result, because of spillovers, is less bargaining power for everyone. In other words, the sheer size of the baby boomer cohort, coupled with their insecure pensions, means that the quality and balance of power in the American labor market depend on the circumstances of older workers. 

When those five million older adults enter the labor market, bargaining power will shift to employers because those adults won’t have enough retirement income to meet basic needs. Older workers’ lack of retirement readiness will shape employment patterns, the direction of public policy, and the strength of workers’ bargaining power for all American workers, old and young….

The working-longer consensus makes some accommodations for a small minority of people who cannot work (e.g., because of disability), but proponents insist that most elders must either have private wealth or work. This seismic shift in American retirement policy rests on dangerous myths about working through old age – that work is good for older folks and good for society. The evidence demonstrates otherwise, pointing to an urgent need for sweeping change.

A nationally recognized expert on retirement policy, Teresa Ghilarducci is a professor of economics and policy analysis at the New School for Social Research and director of The New School’s Schwartz Center for Economic Policy Analysis.

Reprinted with permission from Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy, by Teresa Ghilarducci, published by the University of Chicago Press. © 2024 by The University of Chicago. All rights reserved.

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