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

Friday, 16 July 2010 04:58

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.)