Too Many Older Workers Are Stuck In Low-Wage Jobs

The Economist recently insisted that the “employment of older workers is vital if prosperity is to be maintained.” But as much as pundits insist work in old age is vital, meaningful, and fulfilling, the truth is that many of the jobs older people find themselves in sap their vitality and are hardly rewarding. 

In 2020, over one-fifth (21%) of the 35 million American workers 55 and over earned so little that they qualified as the working poor. That is the finding of my new research coauthored with Barbara Schuster. In comparison, 19% of mid-career workers—ages 35-54—earned wages low enough to be deemed working poor. (We use the conventional definition of low-wage as earning below two-thirds of the U.S. median annual hourly wage; the cutoff for low-wage was $15.29 an hour in 2020.)

Because of the persistent gender wage gap, 26% of women workers over 55 are working poor, compared to 16% of older working men. That number rises to 30% for working women 65 and older. Nonwhite workers 65 and up face similar risks; 31% work in low-wage jobs.

Pause here. These numbers suggest that as you get older, the chances you are working in a low-wage job increase.

Job quality for older workers is also too low. Many older workers have the kinds of jobs that break down health and provide little in the way of retirement or health benefits. Among the lowest-paid and fastest-growing occupations is home health and personal care. This occupation, which will add 1.1 million jobs between 2020 and 2030, often pays close to minimum wage; 56% are working poor. These jobs have few benefits, long hours, and intermittent work shifts. Though the aged-care workforce provides a core role for our society, employees often work alone with difficult clients who physically and verbally abuse them. 

Despite the physical demands on home health and personal care workers, the workforce runs old. Nearly one-third of home health and personal care workers are 55 or older. Another large category of workers employing a disproportionate share of older workers is maids and housekeeping cleaners, 29% of whom are 55 or older and 54% of whom are working poor. And older workers make up 34% of another hard job: janitorial services, about half of whom are working poor. (For a benchmark, 23% of all workers are 55 and up.)

What can we do for the older working poor? An aggressive set of policies to raise pay would help older workers. These policies include an increased minimum wage and fair workweek laws, as researcher Beth Truesdale of the W.E. Upjohn Institute argues. Increased union representation would also benefit the older workforce.

Another set of policies, usually not associated with directly raising pay, would in fact help get wages up. Policies to improve pensions and Social Security benefits would help increase pay for older workers. Why would better pensions increase pay? With higher non-work income, older workers would have more bargaining power. They could threaten to leave bad jobs unless their employers paid better, improved the working conditions, or raised the value of employee benefits.

While expanding the Earned Income Tax Credit (EITC) increases low-wage workers’ total income, it does not raise pay. The insidious unintended side effect of the EITC could be an expansion of low wage jobs. The EITC works as a partial subsidy to low-wage employers because the extra income to low-paid workers—which is conditional on them working in the first place—reduces the pressure on employers to raise wages. New School economists Aida Farmand and Owen Davis confirm the result that the EITC lowers the wages paid by employers.

Older workers may be the new precariat and it will take pension hikes, more pension coverage, higher Social Security benefits to help elders refuse the worst jobs in society until they are better.