To the long list of reasons American companies aren’t hiring — business
losses, tight credit, consumer retrenchment — add the fact that many of
their older workers are unable, or afraid, to retire.
In other parts of the developed world, people are retiring as
planned, because of relatively flush state and corporate pensions that
await them. But here in the United States, financial security in old
age rests increasingly on private savings, which have taken a beating
in the last year. Prospective retirees are clinging to their jobs
despite some cherished life plans.
As a result, companies are
not only reluctant to create new jobs, but have fewer job openings to
fill from attrition. For the 14 million Americans looking for work — a
number expected to rise in Friday’s jobs report for August — this lack
of turnover has made a tough job market even tougher.
Consider
Barbara Petrucci, a dialysis nurse who had expected to stop working
soon, or at least scale back to part time. Now that her family savings
have been depleted by market declines, she expects to stay on the job
for a long, long time.
“Retirement is kind of an elusive dream at
this point,” says Ms. Petrucci, 58, who works at an Atlanta hospital
while her retired husband, Ned, 61, interviews for jobs
(unsuccessfully, so far). “We tease at work about someday having to go
around at the hospital with our walkers.”
The diverted life plans of families like the Petruccis are an unintended economic consequence of the nation’s sprawling 401(k)
plans. These private retirement savings vehicles, designed 30 years ago
as a supplement to traditional corporate pensions, have somewhat
haphazardly replaced the old system, like an innocuous weed that
somehow overgrew the garden.
As is apparent in this downturn,
the economic effects of such an ad hoc system can be perverse. In boom
times, when companies need more workers, the most experienced employees
may decide to retire, taking comfort in their bloated401(k)s, whose values typically fluctuate with the financial markets.
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