When President Obama delivers the State of the Union address, a major focus likely will be jobs.  Although the unemployment rate seems to have stabilized in recent months, roughly one in ten Americans actively looking for a job cannot find one.

The unemployment problem is impacting Americans in all regions of the country and from all walks of life. And although in past recessions older Americans seemed spared from the hardship of unemployment, this no longer seems to be true.

Part of the reason is that more and more older Americans are staying in the labor force longer, or at least, they are trying.  With greater competition for fewer jobs, greater numbers of older Americans find themselves on the unemployment line.

Last year, the unemployment rate among Americans aged 65 and up averaged 6.4% - this is the highest on level on record since the government began collecting statistics in 1948.

Back when the government started tracking this data, roughly one in four Americans over the age of 65 participated in the paid labor force. With improvements in Social Security, the enactment of Medicare, and the steady expansion of pension coverage as the decades went on, more and more Americans were able to exit the work world as they approached their golden years and enjoy a decent pension as the reward for a lifetime of work.  By the mid 1980s only about one in ten seniors participated in the labor force.

But since that time, we've seen a sharp reversal of this trend.  Since about 2000, there has been a steady upward march in the proportion of older folks who seek paid work.  Last year, 17.2% of American seniors held down a job or were actively looking for one.  If recent trends continue, within then next decade, we could find ourselves back to the situation of the late 1940s and early 1950s with one in four older Americans in the labor force - a stunning reversal.

While there is no doubt that many mature folks work because they enjoy it, it’s also true that more and more older Americans are turning to paid work out of necessity.  As pension coverage in the private sector has declined over the course of three decades, fewer people can rely on a secure lifetime pension income.  And the share of private sector workers with any kind of retirement plan at work dropped from 50.3% in 2000 to 43.6% in 2008.  It's no wonder that when the stock market and housing market hit the skids in 2008, many were left with no other options than to keep on working, or even to "unretire."

It's hard to know exactly how many older Americans are in the labor force because they want to be rather than because of necessity.  But, here's an interesting thought exercise.  If we as a nation had been able to provide the same level of retirement security that folks enjoyed in the 1980s and 1990s, perhaps labor force participation rates for those 65 and over would have held steady rather than escalating.

If that were the case, there would be roughly 2.1 million fewer older Americans competing in the labor market for jobs today.  That would have translated into a reduction in the unemployment rate of about 1.4 percentage points.  In other words, instead of the unemployment rate averaging 9.3% during 2009, we might have seen something like 7.9% unemployment rate.  Still much too high, but a substantial improvement.

This exercise is not to suggest that there is no room for older workers in the labor market. Seasoned employees are often the most productive and contribute in critical ways to their employers.  Rather, this calculation merely illustrates that our nation’s lack of urgency in responding to a long-simmering retirement security crisis is now boiling over.  Many Americans can't afford to retire but are having a harder time hanging on in the job market.

This policy neglect is not just a problem for our nation's seniors, but for us all.

Posted by: Beth Almeida, NIRS Executive Director, January 24, 2010