Lost Housing Equity, Not Stock Declines Forced Older Workers to Keep Working

A NYT blogpost noted the rise in labor force participation among older workers and the decline in participation among younger workers. It lists the fall in stock prices and therefore 401(k) values as one reason for the rise in older workers' participation.

This is not likely to be an important factor, since few older workers had a substantial amount of stock even before the crisis. The loss of housing equity was likely a far more important factor in causing older workers to remain in the workforce. For the vast majority of older workers housing equity is their major source of wealth.

(The piece also lists the rise in the minimum wage as a reason that younger workers may be leaving the labor force. There is a vast amount of economic research that indicates that minimum wages have very little effect on the employment of younger workers.)

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written by izzatzo, July 16, 2010 7:23

Younger worker: Why are you re-entering the labor force? It's crowded enough in here with the minimum wage killing hiring incentives. Don't you listen to Glenn Beck? There's no free lunch. Everytime one of you greys comes in, one of us young 'uns has to leave the labor force.

Older worker: Why are you children preaching zero sum trade-off games to me now, when a few years ago you were screaming positive sum games during the bubble with a religious zeal that would make Christian Right Manhood look like the head of a pin on which many angels dance.

You're just trying to stir up a class war aren't you, buncha goddamn Marxists, you're all alike, you'll never get it. There's no class difference, there's only opportunities for differential comparative advantage that produce more positive sum growth for everyone. There's plenty of room for both of us in the labor force. Get over it punk. Turn off Glenn Beck and join the real world.

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written by PeonInChief, July 16, 2010 8:53

Most workers didn't have enough in their 401ks for it to make much difference to their retirement. People with lots of money often use 401ks to shelter income, while people who are actually using them to augment their Social Security can expect to get an additional, oh, $150 a month.

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written by Queen of Sheba, July 16, 2010 4:30

Dean;
The report you refer to in your post is over 18 months old. Is there more recent information, or do you know whether there have been substantial changes, such as whether housing prices have continued to drop? All I have is anecdotal evidence from retirees and near-retirees, who see their portfolio worth increasing, albeit very slowly with occasional setbacks, while giving no thought to selling their homes which in nearly all instances are paid for. Most of these people's investments are in bonds of one sort or another, and they're all scared to death that congress's refusal to help the states is going to result in some of their municipal and utility bonds to become worthless.

Lost Housing Equity, Not Stock Declines Forced Older Workers to Keep Working

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