Kristie M. Engemann

Michael T. Owyang

English

Research Papers in Economics

June 2007 NationalEconomicTrends
Views expressed do not necessarily reflect official positions of the Federal Reserve System.
M
any older workers are transitioning from full-time
to part-time jobs before fully retiring. The accom-
panying chart shows the changes in the ratio of
workers 55 years of age and older who are employed part-
time. If this ratio had remained at its 1986 level, there would
have been nearly 1 million fewer part-time workers age 55
and older in 2006. Are these workers moving voluntarily
from full-time to part-time work or are economic hardships
forcing them to do so?
Leora Friedberg examined this transition to part-time
employment,1 comparing Current Population Survey data
for working men from two periods: 1980-82 and 1995-97.
She observed that the rise in part-time employment from
the earlier to the later period was concentrated among those
60 through 69 years of age. In the earlier period, almost 40
percent of workers aged 65 through 69 were employed part-
time, which was 3.6 times larger than the proportion of
workers in the younger, 60 through 64, age group. However,
across the two periods, the younger group appeared to be
catching up some: The increase in the proportion in the
younger group was two times larger.
Also, part-time work rose more for educated workers
and those with skilled and semi-skilled jobs, suggesting that
the least-educated and least-skilled men were more likely to
retire from their full-time jobs rather than transition to part-
time jobs. Friedberg found that, while all education groups
experienced a decline in full-time work, a
switch from full-time to part-time work
was at least three times higher for men
with a college degree than for those with-
out a high school degree. In addition,
from 1983-85 to 1995-97, the majority
of male part-time workers aged 60
through 64 shifted from blue-collar
workers to white-collar and pink-collar
(e.g., clerical and sales) workers.
Wealth, too, factors into the decision
of how to transition to retirement.
Friedberg analyzed data from the Health
and Retirement Study, which began in
1992 and covers those born from 1931 to
1941. Controlling for age, skill, tenure,
and health, she found that those who
ended up shifting to part-time work had
the highest wealth—as measured by net worth—in 1992.
The initial median net worth for men who worked full-time
in 1992 but part-time by 1996 was $31,600 higher than for
those still working full-time and $25,800 higher than for
those who had retired.
The evidence suggests that this rise in part-time employ-
ment does not signal an increase in economic hardships
among potential retirees. Friedberg argued that part-time work
is a luxury good for older workers rather than a necessity.
In 1996-98, only a small fraction of those aged 55 through
59, 60 through 64, and 65 through 69 who worked part-time
did so for economic reasons (19 percent, 10 percent, and 3
percent, respectively). Similarly, Nicole Maestas found that,
if anything, retirees overestimated their likelihood of working
after retirement.2 One-third of them expected to work but
didn’t, and 80 percent of those who did work after their ini-
tial retirement had expected to. Overall, economic factors
(unexpected financial hardship, poor planning, etc.) did not
affect work expectations. For the most part, working part-
time later in life appears to be a voluntary choice before
transitioning to full retirement.
—Kristie M. Engemann and Michael T. Owyang
1 Friedberg, Leora. “The Trend towards Part-time Work among Older Workers.”
Unpublished manuscript, November 2001.
2 Maestas, Nicole. “Back to Work: Expectations and Realizations of Work after
Retirement.” RAND Working Paper WR-196-1, August 2005; data from the
Health and Retirement Study.
research.stlouisfed.org
Look Who’s Still Working Now
Part-time Employment–to-Population Ratio, Ages 55+
6.0
6.5
7.0
7.5
8.0
8.5
9.0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Total
Men
Women
Percent
SOURCE: Bureau of Labor Statistics; annual data, not seasonally adjusted.

Look who's still working now

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Look who's still working now

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