The latest Canadian employment survey got attention because of an outsized increase of 67,000 new positions in September from the previous month. It probably is wise to look past that figure. Third-quarter indicators will be inflated by a forgettable spring, when the U.S. economy hit a lull and wildfires ravaged Fort McMurray, the heart of Canada’s oil industry. Alberta was one of only three provinces to post significant employment gains in the month, according to Statistics Canada. Unfortunately, Alberta can’t be counted on to lead the economy, not with oil prices around $50 a barrel.
However, beneath the headline of the jobs report, there was evidence of a trend that surely will endure: the end of early retirement. The number of workers aged 55 and older surged by 57,000 from August, and by more than 170,000 from September 2015. The population is aging, so it is only natural that the population of older workers would increase. But there is more to it than that. There were 10.6 million Canadians aged 55 and older in September, an increase of about 3% from a year earlier. The pool of available workers in that age bracket is growing even faster: the labour force, defined as the number of individuals who are either employed or actively looking for work, increased almost 5% from September 2015 to 4.06 million, the most ever.
This is happening around the world, especially in rich countries. The International Labor Organization estimates that the participation rate of workers older than 55 will increase to more than 18% in 2030 from 14.3% in 2014. Canada’s rate has been much higher than than that for decades. What is interesting about the Canadian numbers is that the participation rate began to drift lower in the late 1970s, starting at around 30% and sliding to around 22% by early 1997. Then the rate started creeping back up, slowly at first before accelerating in recent years. Almost 36% of Canadians aged 55 and older were working or seeking work in September, also a record.
Canadians—along with Americans, Europeans, and others—are working longer in part because they haven’t saved enough for retirement. This a familiar story, if no less dispiriting every time it is told. Research released earlier this year by the Broadbent Institute, the research group started by former New Democratic Party leader Ed Broadbent, showed that that almost a third of Canadians aged 55-64 and without a company pension plan have put aside less than $1,000 for retirement. The agreement between the federal government and provinces in June to boost Canada Pension Plan benefits (and contributions) was a response to this reality, which some researchers call a crisis. The CPP changes are a good start, but they will provide only a basic income. They also will do little for anyone whose savings were wiped out by the financial crisis. That person will have little choice but to work longer than perhaps he or she planned earlier in life.
But even if we are finally taking seriously the meagreness of our collective savings, I’m still not sure we are thinking broadly enough about what the shift to an older workforce means for the economy and society. Neither are Cal Halvorsen and Nancy Morrow-Howell, two professors of social work at Washington University in St. Louis. Halverson and Morrow-Howell recently published a paper that reads like a plea to their fellow academics to take the subject more seriously. They are especially interested in self-employment, as older workers have a propensity to set out on their own to a greater extent than younger people.
“We know relatively little about why older adults decide to pursue self-employment in later life, the self-employment experience itself, and the individual and societal outcomes of this growing type of work,” Halverson and Morrow-Howell write. “Additionally, we know very little about how age itself is a factor in the decision to pursue this type of work in later life, how age impacts the type of self-employment pursued and its outcomes, and if and how other factors mediate the effects of age on self-employment.”
Thousands of words could (and hopefully will be) written in response to these questions. The simultaneous jumps in the number of older workers and the ranks of the self-employed prompt an automatic response: men and women are capitalizing on a career’s worth of experience and coasting into retirement as consultants and freelancers.
That surely is happening, but what if there is more to it than that? Halverson and Morrow-Howell use research and psychological theory to hypothesize that as humans see their time on Earth running out, they seek to focus their energy on activities that are emotionally fulfilling. So while some of the elderly self-employed will be motivated by paying their bills, others may have decided to spend the years they have left working for themselves rather than for others. There is an important qualitative difference between these two types: the former only wants a pay cheque, while the later may be inclined to build a business. Policy makers may want to be careful about stereotyping entrepreneurs as overeducated and ambitious youngsters.
That’s just one example of the kinds of conversations we should be having. The debate about aging too often is limited to pensions and generating economic growth with fewer productive workers. Both are important. But what if the oldsters have more to give than conventional thinking imagines? If they do, they should be incentivized to go for it. Currently, all we seem to want them to do is retire.
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