Workers older than 60 making more than younger colleagues

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Between 2007 and 2010, older workers’ average hourly wages saw a significant bump, while the young workers’ average hourly wages largely stagnated.
People who are still working when they are near or past traditional retirement age are now earning significantly more per hour, on average, than workers who are in their prime working years, according to a new analysis of government data.

That’s a major shift from the 1980s and 1990s, according to the Brookings Institution analysis.

Experts say that’s partly because people who keep working past age 60 tend to be better educated, in better health and – most likely – in jobs that are going well. But it’s also partly because prime-age workers have had such a tough time of it since the nation went into recession in 2007.

“They all look like they’re doing pretty well because the younger people are doing relatively more poorly,” said Gary Burtless, a labor economist with the Brookings Institution and the author of the analysis.

The report, which was funded by the Social Security Administration, found that 60- to 74-year-old men who were still working earned $25.12 an hour, on average, in 2011. That’s more than 20 percent more than the average hourly wage of working men ages 25 to 59, which was $20.55 an hour in 2011.

Working women ages 60 to 74 earned an average of $18.51 an hour in 2011, nearly 10 percent more than the average hourly wage of $16.87 per hour for 25- to 59-year-old women.

The big disparity is a change from years past. In the 1980s and 1990s, the average older men’s hourly wages were about the same as younger workers’ wages, and older women were earning a bit less per hour, on average, than younger women.

Then, between 2007 and 2010, older workers’ average hourly wages saw a significant bump, while the young workers’ average hourly wages largely stagnated, according to the Brookings analysis.

The average wages for both groups fell in 2011, the most recent year for which data was available. All of the figures are in constant 2010 dollars.

The younger workers' annual wages were slightly higher, overall, than the older workers, which Burtless said is because younger workers tend to work more hours.

Of course, there is a significant pool of older people who aren’t working but could really use the paycheck and may be falling short financially. Some may have lost a job and had trouble finding a new one, while others were forced to stop working because of ill health.

The percentage of Americans working past age 65 has been creeping up, but experts say that those who do keep working are generally still better off.

“On average, the case seems to be that the people who are continuing to work are in better health, they have better schooling (and) they have an employer who values their contributions. They’re the most robust and better trained people,” Burtless said. “It’s not the people who are desperate to top up their Social Security check.”

Ronald Lee, a professor of demography and economics at UC Berkeley, said another factor is that today’s older workers are likely to be more highly educated than the older workers of 30 years ago. That means they can likely command a higher paycheck then the older workers in the 1980s and 1990s could.

He said the fact that prime-age workers are earning less in comparison to their parents and grandparents does raise concerns. People who take longer to get into career-track positions, or who start out earning very low wages, may never make up that lost financial ground.

“There’s a lifetime hit that those generations take," Lee said.

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Firm finds older workers a perfect fit

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| By Karen Aho, MSN Money

Massachusetts manufacturer welcomes the over-65 set for reliable workforce, low turnover.

Bill Ferson punches in at 4:15 a.m. happy to be at work. He rarely misses a day and brings decades of experience to the job.

Who wouldn't want such a gem in their workforce?

If history is any guide, most companies. For one big reason: Ferson is 94 years old. "Ninety-five in September," he chimes, before springing from his chair with a twist to grab another tool. "They're missing out on a lot of knowledge."

Since Rosa Finnegan quit at the age of 101 last year – her family moved – Ferson has become the oldest worker at Vita Needle, a family-run custom needle and tube manufacturer in Massachusetts that consistently churns out record sales while embracing employees whom many other companies toss aside. Half its 49 workers are over 73.

"It works for us," says Frederick Hartman II, a fifth-generation owner who serves as director of marketing and engineering.

As some U.S. baby boomers approach their 70s, often without the desire or ability to retire, much is riding on whether such a so-called elderforce might work for other companies as well.

Many employers would do well to take note of Vita Needle's small Needham, Mass., shop, where rows of seated, graying workers carefully cut, stamp and sharpen tubes by hand. The hollow needles are sold primarily for use in machine lubrication. The company also makes pins used to inflate balls.

"The irony is that we're selling speed," said the company's president, Frederick Hartman. "Don't be fooled by people who have gray hair. We're operating on a time scale of days. Our competitors are operating on a time scale of weeks."

Hartman has long preached the value of moral capital or, in marketing parlance, social responsibility, in attracting customers. Having a reputation for hiring seniors who want to work – as opposed to using machines – helps. Some economists refer to such practices as "humane capitalism."

But goodwill alone won't get repeat customers, nor will it generate productivity that exceeds labor costs. Vita Needle has to compete on the global level.

"We're not stupid. We know that we're making a conscious decision for workers and the community," says Hartman II. But, he added: "There are a lot of benefits we get."

These include:

Loyal workers: Employee turnover is extremely low, zero to one per year. "We were hiring younger people, too. But the young people come and go," says operations manager Michael G. LaRosa.Employees with a strong work ethic: "No one is born with a work ethic. You learn it as you go," LaRosa says. "I think young people should learn a work ethic. I just don't think they should learn it here."Reduced benefits cost: Because workers qualify for Medicare, they do not seek health-care benefits from the company.High-quality work: Nick Poulos, at 20 the youngest employee, says he's learning a valuable lesson from his older colleagues, to "take your time and do it well. Don't rush it. Make sure you get it done right."Reliable workers: It may seem counterintuitive, but older workers take fewer sick days and tend to stay on the job many more years, the company says.
So are these benefits reflected in the bottom line? You bet, says Vita Needle. It experienced record sales in 19 of the past 21 years, with brief dips during two recessions. Sales have quadrupled since the mid '90s.

Could the company achieve high sales with another strategy? Probably. But as LaRosa puts it: "We'd be faced with a different set of problems." He cites as examples higher labor and benefits costs and a less reliable workforce. "And I don't think we'd have 15- to 20-year employees," he says.

While the company offers "market wages" that are not considered outstanding, particularly for unskilled labor, it offers flexibility that's probably unheard of on a shop floor. Workers basically select their own hours and can take time off as needed, even if it means getting up and punching out for a doctor's appointment or a grandchild's school event.

In turn, owners and managers have become adept at managing special health needs, shifting one woman to larger needles when macular degeneration affected her vision, for example, and moving another from accounting to production when early dementia set in.

Employees generally leave on their own when age or health hamper their ability to work, La Rosa said. And while he's had to fire workers – typically younger employees – the company is committed to employment and has not imposed any layoffs since it opened in 1932.

"This is a family business. Its values are people before profit, and yet they still make money," says Warren Chamberlain, 73, who put in a career in welding and spot relief at General Motors until a plant closing forced him into early retirement at 50.

Years later, intrigued by the ever-present "help wanted" sign outside Vita Needle, Chamberlain wandered upstairs to the small shop floor only to think, "This is a daycare center for seniors."

Now he works three- to four-hour shifts in delivering and manufacturing, good exercise and stimulation to supplement his volunteer work.

"When I got here, I wanted to organize everything, make it more efficient. Then I realized that half the people would be gone," he says. "Fred makes a conscientious decision to keep it low-tech and creates an opportunity for seniors to come in and make a living."

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More older couples shacking up, skipping marriage

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Mike Blake / Reuters

A pair of elderly couples view the ocean and waves along the beach in La Jolla, Calif. More couples over 50 are living together (minus the marriage certificate) and for many money is a big factor.

Shacking up. It's not just for the kids anymore.

The number of people over age 50 who are living together romantically has more than doubled in a decade, from 1.2 million in 2000 to 2.75 million in 2010, according to an analysis of government data done by Bowling Green State University.

The 50-plus group represents nearly one-third of the approximately 7.5 million people of all ages who were living together in 2010, the researchers found.

But while young people tend to be testing the waters for marriage, experts say older people aren’t necessarily living together as a step toward tying the knot. They're doing it for the money.

“(They want to) enjoy many of the benefits of marriage without the burdens,” said Susan Brown, a professor of sociology at Bowling Green State University in Ohio who led the research.

Older couples may want to protect their individual nest eggs so they can pass the inheritance down to their kids. They also may not want to jeopardize a pension, Social Security payment or other benefit they are receiving because they are divorced or widowed. And they may not want to be financially responsible for the other person’s health care bills.

Some also may have a “been there, done that” mentality about marriage, Brown said. Her research found that 71 percent of older couples living together were divorced, and another 18 percent were widowed. On the other hand, she found, older people who end up remarrying are disproportionately widowed. (Brown has done other research looking at the surging divorce rate among older Americans.)

Tom Blake was 53 when his third marriage ended, and after the divorce was finalized he knew he wanted to start dating again. But he didn’t want to get married for a fourth time.

“I wasn’t looking for marriage, but I definitely wanted a relationship that was comfortable, enjoyable and non-confrontational,” he remembers.

Blake, who owns a deli in Dana Point, Calif., found that dating after age 50 was much harder than he had expected. His experiences eventually became fodder for a column and website that he’s been writing for almost 18 years.

Now 72, he’s been living with a woman for 11 years. They split their expenses evenly but keep their finances separate, an arrangement that he says has served them very well.

“What I learned for my own self was that I did not need to be married to be happy,” he said.

Some people prefer to keep their financial lives even more separate. Blake said he also hears from a lot of older people who are in long-term, committed relationships but don’t live together. He said some do that to keep the peace with their kids or grandkids who don’t like the idea of a live-in relationship.

Brown, the sociology professor, said the “living apart together relationship” is one she also knows exists but has had trouble quantifying.

“They’re very committed to each other (but they) don’t want to give up the autonomy that they have,” she said.

Although economics play a major role in these late-in-life relationship decisions, Brown said there are also noneconomic reasons older couples aren’t getting hitched.

Brown said some older women want a live-in relationship, but there’s something about actually getting married that seems stifling.

“They’ve taken care of one husband and raised one family, and they don’t want to do that again,” Brown said. “And they feel that if they get married that’s the underlying expectation.”

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