Employment Policies to Increase the Labor Force Participation of Older Workers

Abstract

The aging of the U.S. population will strain the financial resources of retirement public retirement programs such as Social Security and Medicare. Drawing on the labor resources of people age 55 and older, who currently have a labor force participation rate of 34.7%, could mitigate some of this financial problem and add to the growth rate of the economy by adding to the growth rate of the labor force. Some promising steps have been taken recently by private and public sector employers to encourage older persons to work to later ages. Private sector programs, however, are not currently available to significant numbers of older workers. Pension incentives in the public sector have met with success in retaining older workers, but similar incentives are unlikely to occur in the private sector due to Employee Retirement Income Security Act (ERISA) restrictions on in-service distributions.