Guess what 3 things really happen to younger workers when older workers stay in the labor force…

It’s no longer news that more and more Baby Boomers are not retiring “on schedule” at 65. They’re staying in the labor force – and their refusal to “get out of the way” and make room for younger workers is a big factor in youth unemployment. Or is it?

Two economists at the Center for Retirement Research at Boston College  argue that the whole thing is a myth. Far from harming younger workers, they say, “evidence suggests that greater employment of older persons leads to better outcomes for the young.” Specifically, three huge benefits:

– reduced unemployment

– increased employment

– higher wages

Can this really be true? How so? And why does just about everyone, from pundits to policymakers, believe the opposite?

The economists, April Yanyuan Wu and Alicia Munnell, director of the Center, say the mistake is part of a long-running fallacy about the “lump of labor” – the idea that there is a fixed amount of jobs available, and so employment for  some implies unemployment  for others. But evidence in other contexts, they point out, has destroyed that theory. For example, technology. Once it was thought that machines would take away jobs from people, but in fact technology created many more jobs through increased productivity, new products and categories of business, expansion of markets, etc.

This appears to be the  case with the older worker phenomenon, as well. After all, they are not only workers but consumers – and as they continue to earn, they continue to fuel markets.

Wu and Munnell used Current Population Survey data to analyze changes in employment among younger workers when those aged 55 plus worked in greater numbers. Their conclusions:

An exhaustive search found no evidence to support the lump of labor theory in the United States. In fact, the evidence suggests that greater employment of older persons leads to better outcomes for the”  young – reduced unemployment, increased employment, and a higher wage. The patterns are consistent for both men and women and for groups with different levels of education… Finally, the effects of older worker employment on other segments of the labor market during the Great Recession do not differ from those during typical business cycles.


You can read more about their findings here.

And here is a link to a pdf of their full brief:

center for retirement research 3

I urge you to read it, because it’s important to dispel these myths. As the authors themselves point out:

Convincing employers and policymakers that the lump-of-labor theory does not hold is extremely important, given the state of the U.S. retirement system and the need for people to work longer in order to have a secure retirement. Employers already have reservations about older workers, so adding the false argument that retaining older workers hurts younger ones could impede the ability of older workers to remain in the labor force. Therefore, the lump-of-labor theory needs to be put to rest. The theory may sound plausible, but the data do not support it



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. Vice President, Zoomer Media Ltd. . Author of "The New Old" . 30 years experience in marketing communications, advertising, media . Speaker, writer, commentator on the revolution in aging and how to market to Boomers and seniors