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Older Workers on the Move: Recareering in Later Life

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Document date: April 30, 2009
Released online: May 14, 2009

The text below is an excerpt from the complete report. Read the full report in PDF format.

AARP; posted with permission.

Abstract

Career change is common at older ages. This report shows that 27 percent of workers employed full time at age 51 to 55 change occupations by age 65 to 69. More than one-third of older job leavers separate because of job layoffs or health problems, including nearly half of those who did not complete high school. Workers who change careers typically move into jobs that pay less than their previous jobs and are less likely to offer pension and health benefits. However, new careers tend to offer more flexible employment arrangements, less stressful working conditions, and fewer managerial responsibilities.


Executive Summary

Recareering or career change is common at older ages. Workers who change careers typically move into jobs that pay less then their previous jobs and are less likely to offer pension and health benefits. On the positive side, new careers tend to offer more flexible employment arrangements, less stressful working conditions, and fewer managerial responsibilities.

This report examines the extent and nature of career change by older workers and its consequences for later-life employment. Using data from the Health and Retirement Study (HRS), the analysis tracks a sample of workers ages 51 to 55 and employed full time in 1992 and computes the percentage who changed employers, occupations, or industries by 2006, when they were ages 65 to 69. In addition, the report measures the impact of personal and job characteristics on the likelihood that older workers switch employers and occupations.

The report also examines how job characteristics such as wages, health insurance coverage, and pension coverage change when older workers move into new careers. Tabulations compare the new and old jobs in terms of occupation, industry, selfemployment, flexible work options, part-time work, stressful work conditions, managerial responsibilities, overall job satisfaction, and prestige scores that rank occupations in terms of social standing.

Special attention is paid to the circumstances surrounding later-life job separations that influence career change. Older job changers who say they are retiring from their previous employers are especially likely to downshift into less demanding, more flexible new careers that pay less than their former positions. Laid-off workers and those who simply say they quit their former jobs are more likely than retirees to take new jobs in the same occupation.

For this study, recareering involves a move to a new employer in a new occupation. The terms "occupational change" and "career change" or "recareering" are used interchangeably.

LATER-LIFE EMPLOYER AND OCCUPATIONAL TRANSITIONS

Many workers change employers and move into new careers in their fifties and sixties.

  • More than 8 out of 10 full-time workers ages 51 to 55 in 1992 had left their 1992 employer by 2006 (when they were ages 65 to 69). Half of workers who left their jobs (and 43 percent of all older workers) had a new employer by 2006.
  • Nearly two-thirds of workers who changed jobs (and 27 percent of all older workers) switched occupations.

The likelihood that older workers change jobs and careers varies by a number of factors, including educational attainment, sex, and pension coverage.

  • When other factors are controlled for, older workers who have completed college and those who did not complete high school are significantly less likely to change careers than high school graduates who did not attend college.
  • Late-life occupational change is more common among men because women are less likely than men to continue working if they leave an employer in their fifties. Among those who do change jobs, however, women and men are equally likely to change occupations.
  • Defined-benefit pension coverage significantly reduces the likelihood that older workers change jobs.

The circumstances under which older workers leave their old jobs partly determine whether they change careers.

  • One in four adults ages 51 to 55 and working full time in 1992 lost their jobs due to layoffs or business closings by 2006 (before the 2007—2009 recession began). Seventy-one percent of these became reemployed, the majority in new occupations.
  • One in eight older workers say they left their jobs for health reasons. Older workers with health problems are much less likely to move into new jobs or new careers than those in better health.
  • Just under half of workers ages 51 to 55 who left their 1992 jobs said they were retiring. More than 3 in 10 retirees took new jobs, and nearly two-thirds of these job changers moved into new occupations.
  • When other factors are controlled for, retirees who take new jobs are nearly twice as likely to move into new occupations as laid-off workers who become reemployed.

COMPARISONS BETWEEN OLD AND NEW JOBS

Older workers who change careers, especially those who retire from their previous jobs, tend to move into occupations that are less demanding and pay less than their former occupations. Differences in job attributes are less pronounced for workers who quit or are laid off from their former jobs.

  • Hourly wages are substantially lower on new jobs than former jobs for all older career changers. Median wages fell by 57 percent for retirees, 22 percent for those who were laid off, and 5 percent for those who quit their former jobs.
  • Nearly a quarter of career changers lose health insurance when they change jobs; only about 10 percent gain insurance.
  • Older workers who change careers are most likely to move out of managerial jobs and most likely to move into sales or operator positions.
  • Older career changers—especially those who have retired&mdashare more likely to have flexible work schedules on their new jobs than on their old ones.
  • Stressful working conditions fall sharply in the new jobs of older career changers.
  • The large majority of older career changers say that they enjoy their jobs, but they are more likely to enjoy their new jobs than their old ones. This tends to be the case despite a decline in the prestige score, or social standing, of the new careers.

CONCLUSIONS

Later-life career change appears to be an important part of the retirement process. Many older workers who change jobs, and especially those who change careers, downshift into part-time work that involves less stress and responsibility and more flexible work schedules than their previous jobs. Many older job changers end up working for themselves. These new careers pay less per hour and are less likely to offer benefits. They also tend to have less social standing than the former jobs held by older workers who make these transitions. More older job changers say they enjoy their new jobs than say they enjoyed their former positions, despite the fact that the new jobs do not pay as well and are less likely to offer benefits such as health insurance. Many older workers appear to place a high premium on escaping from the 9-to-5 grind that their flexible new positions often provide, even if it means a pay cut.

Some older workers may also change jobs in hopes of finding more meaningful jobs that give added purpose to their lives. Although our data do not allow us to identify any particular motivations for voluntary job changes by older adults, our results suggest that financial need may be a more important driver of late-life career change than a desire to find purposeful work. For example, wealthy workers and those with defined benefit plans, which guarantee retirees with a lifelong stream of income, are less likely to change employers or move into new careers than workers with fewer assets and those without pension benefits. Relatively few workers with defined benefit pension coverage continue working after they leave the jobs they held in their early fifties.

Additionally, many late-life career changers appear to be pushed into new lines of work involuntarily following job layoffs or business closings. Many older displaced workers who become reemployed suffer substantial pay losses and benefit cuts on their new jobs.

Workers from all walks of life change careers at older ages, but recareering rates are significantly lower for Hispanics, women, and those who did not complete high school than for other workers. Expanding public workforce development initiatives for older adults with limited skills or little work experience could improve their employment options. More training for older adults with limited education could give them the skills and confidence they need to move into new careers, enabling them to extend their working years, increase their retirement income security, and improve the quality of their lives.

(End of excerpt. The entire report is available in pdf format.



Topics/Tags: | Employment | Retirement and Older Americans


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