Private Pension Plans 

and Manpower Policy

Bulletin No. 1359

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS 

Ewan Clague, Commissioner

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Private Pension Plans

and Manpower Policy

Bulletin No. 1359

May 1963

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

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Preface

In March 1962, President John F. Kennedy established an interagency 

Committee on Corporate Pension Funds and other Private Retirement and 

Welfare Programs, under the chairmanship of the Secretary of Labor, “ to 

review legislative and administrative practices relating to these programs.” 

One of the issues to which the Committee's attention was specifically directed 

was how these programs “ may contribute more effectively to efficient manpower utilization and mobility.”

The responsibility for compiling the basic information needed for the 

Committee's consideration of this issue fell to the Department of Labor. In 

consultation with the Bureau of Labor Statistics, the Department invited 

Dr. Hugh Folk, of the University of California, to prepare a report analyzing 

the interaction of private pension plans and manpower utilization and mobility. 

Dr. Folk's report was prepared during the summer of 1962.

Because of its long-range interest in this subject, the Bureau of Labor 

Statistics gladly accepted the opportunity to bring Dr. Folk's comprehensive 

report to the attention of a larger audience. Detailed studies of the patterns 

of labor mobility and features of pension plans bearing upon mobility, now 

in progress in the Bureau, promise to add substantially to the data resources 

available for manpower policy research.

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Contents

Page

Chapter I. Summary of findings______________________________________________________________________ 1

Labor mobility____________________________________________________________________________________ 1

Employment opportunities of older workers____________________________________________________ 2

Retirement and withdrawal from the labor force_______________________________________________ 3

Chapter II. Labor mobility___________________________________________________________________________ 4

Summary__________________________________________________________________________________________ 4

Introduction_______________________________________________________________________________________ 5

Patterns of labor mobility________________________________________________________________________ 6

Trends in labor mobility_________________________________________________________________________ 10

Effects of pensions on mobility__________________________________________________________________ 12

Pension trends affecting mobility________________________________________________________________ 16

Chapter III. Employment opportunities of older workers__________________________________________ 19

Summary__________________________________________________________________________________________ 19

Introduction_______________________________________________________________________________________ 19

Unemployment of older workers_________________________________________________________________ 21

Characteristics of unemployed older workers------------------------------------------------------------------------------ 23

Discrimination against older workers------------------------------------------------------------------------------------------ 24

Pension and insurance costs and hiring practices_______________________________________________ 25

Effect of pension plans on hires and separations of older workers_____________________________ 27

Chapter IV. Retirement and withdrawal from the labor force_____________________________________ 29

Summary__________________________________________________________________________________________ 29

Aged workers in the labor force---------------------------------------------------------------------------------------------------- 30

Relation of pensions to retirement_______________________________________________________________ 32

Involuntary retirement___________________________________________________________________________ 33

Tables:

2.1. Workers who changed jobs as percent of all persons who worked, 1955 and 1961____ 7

2.2. Number of jobs left per 100 persons who worked during 1961, by reason for leaving

job, age, and sex________________________________________________________________________ 7

2.3. Annual turnover rates, by age and sex, seven areas, 1955-------------------------------------------- 8

2.4. Separations of workers by length of service and age, seven areas, 1955----------------------- 9

2.5. Separation rates, by age and length of service---------------------------------------------------------------- 9

2.6. Percent of job shifts in 1961 involving change of major occupation group, by

occupation group of job left___________________________________________________________ 10

2.7. Percent of job shifts in 1961 involving change of industry group, by industry of job

left_______________________________________________________________________________________ 10

2.8. Turnover rates in manufacturing, annual averages, 1948-61__________________________ 11

2.9. Number of voluntary and involuntary job shifts per 100 persons who worked,

1955 and 1961__________________________________________________________________________ 11

2.10. Reason for leaving job, by occupation: Distribution of jobs left in 1961 and 1955,

by major occupation group____________________________________________________________ 12

2.11. Hires and separation rates, by industry, age, and pension coverage, 1955, six

areas_____________________________________________________________________________________ 13

2.12. Annual separation and hire rates, by size of establishment, age, and pension

coverage, 1955, six areas_______________________________________________________________ 14

2.13. Annual quit rates, by industry, age, and pension coverage, 1955, six areas___________ 15

2.14. Annual quit rates, by size of establishment, age, and pension coverage, 1955, six

areas_____________________________________________________________________________________ 15

2.15. Likelihood of workers of given age and length of service having vested pension

rights, 124 large company plans------------------------------------------------------------------------------------ 17

3.1. Unemployment rates of men, by age, 1948-61---------------------------------------------------------------- 20

4.1. Percent of population in the labor force, by sex and age, 1940-61____________________ 31

4.2. Employment by occupation groups of aged men and all men, and changes in

employment, 1952 and 1961______________________________________________________________ 32

4.3. Employment of aged men, by major occupation groups, 1952 and 1961______________ 33

4.4. Percent of aged men with part-time and full-time jobs, 1950-60---------------------------------- 33

4.5. Normal, compulsory, and automatic retirement ages in 300 pension plans under

collective bargaining, late 1958------------------------------------------------------------------------------------------ 34

4.6. Normal and compulsory retirement ages in coventional plans, 1956-59 and 1953-55— _ 35

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Private Pension Plans and Manpower Policy

Chapter I. Summary of Findings

This paper reviews the effects of corporate pensions on various aspects of manpower policy, including labor mobility, the employment opportunities of older workers, and retirement and withdrawal from the labor force.1

Manpower policy, broadly defined, includes 

Government programs affecting the size and 

quality of the labor supply and its allocation 

among competing demands for labor. Measures 

which increase or decrease the number of people 

seeking work, or which introduce or remove obstacles to the movement of workers between jobs 

may be considered aspects of the Nation's manpower policy. Among the specific parts of the 

Nation's manpower policy are the operation of the 

employment service, apprenticeship and training 

programs, and the requirement for a nondiscrimination policy in performing work on Government 

contracts.

The goals of manpower programs in the United 

States are to aid persons who are willing and able 

to work in finding jobs, to assist employers in 

meeting their manpower requirements, to facilitate 

the free movement of workers between jobs, and to 

assist workers in gaining the education and skills 

needed in the modern labor market. Manpower 

programs thereby contribute to the attainment of 

high levels of employment and to the adjustment 

of the labor force to the changing patterns of 

demand for labor.

However, these manpower programs cannot by 

themselves assure a properly functioning labor 

market and a high employment economy. Obviously, they cannot create jobs where the demand 

for labor is insufficient. Thus, the use of other 

economic instruments, such as monetary and 

fiscal policy, may be needed to provide an economic 

environment in which consumers, investors, and 

Government create adequate demand for labor.

Labor Mobility

A growing economy requires changes in the 

occupational, industrial, and geographical distribution of labor. In a period of rapid change such 

as the present when new processes are being introduced, new centers of industry growing up, and 

other industries declining, the tasks for manpower 

policy are great. The remarkable increases in 

labor productivity in industries for whose products 

demand is limited, such as farming and coal 

mining, imply sharp reductions in demand for 

labor in these industries. At the same time, 

growing industries such as education and health 

services require an increasing work force. To meet 

these changing demands, a certain degree of job 

shifting is needed, but there is little agreement as 

to how much constitutes the “ optimum" or 

“necessary" level of labor mobility. In recent 

years, the extent of turnover among factory 

workers has declined, and some observers believe 

that present levels are too low. Similarly, the 

continuing high unemployment rates of workers 

in some areas and industries of chronic labor 

surplus are seen by some as evidence of a reluctance 

of workers to change location or occupation, thus 

obstructing the achievement of high levels of 

employment and rapid economic growth.

Despite the apparent low mobility of workers in 

some depressed areas and industries, there is 

probably no widespread reluctance of workers to 

change jobs where good jobs are available. The 

proportion of workers who change jobs during the 

year falls off with increasing age and with increasing length of service, but even among workers 

in their fifties and among workers with 10 years or 

more of service with a single firm, there is a sizable 

number of voluntary job shifts. The reasons for

i Excerpts from this bulletin appeared in the Monthly Labor Review,

March 1963, pp. 285-288.

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the reluctance of older workers or long-service 

workers to leave their jobs are obvious. Long 

familiarity with the work, seniority and job 

security, and the privileges which come with long 

service hold workers willingly to their jobs. Moreover, the older worker usually can expect some 

difficulty in finding another job. The need for an 

older worker to decide to leave a job seldom arises 

because the opportunity to change to another job 

is seldom presented.

It is difficult to determine the effect of pensions 

as such on mobility. Studies have demonstrated 

that firms with pensions have lower separation and 

quit rates than firms without pensions, and this difference is often cited as evidence that pensions 

reduce labor mobility. However, firms with pension plans frequently have other characteristics 

which tend to hold older workers on their jobs. 

The same firms are also likely to be unionized, to 

pay higher wages and salaries, and to have more 

effective job-security provisions based on length of 

service. These other factors probably account for 

much of the relatively lower mobility in pension 

firms. No study of mobility has been conducted in 

such depth as to isolate the effects of these individual factors. The effect of pensions may, however, 

be significant for certain occupational groups (such 

as senior white-collar workers and executives), and 

may also reduce the mobility of older manual 

workers in some depressed industries and areas.

For older workers with greater seniority the 

effect of pensions on voluntary job changing depends partly on the extent to which the individuals pension rights are vested. For longer service 

workers the existence of nonvested pension rights 

may be, in many cases, a deterrent to voluntary 

job changing. To the extent that the individuals 

pension rights are vested (or some degree of 

portability is provided in other ways) the immobilizing effects of pensions are counteracted. The 

trend in recent years toward the adoption of 

vesting provisions and the increasing prevalence of 

multiemployer plans has acted to limit any adverse 

effects of pensions.

In summary, the effects of private pensions on 

mobility are significant but limited and selective. 

Effects seem to be most important with regard to 

senior white-collar workers and older workers in 

some depressed industries and areas. However,

there are other more important factors than pensions that lie behind the long-term decline of 

voluntary job changing. While mobility appears 

to have decreased in recent years, there is still a 

substantial amount of job changing, and it does 

not appear that inadequate job changing is now a 

general problem in terms of the needs of the 

economy.

Employment Opportunities of Older Workers

Older workers have long been faced with a lack 

of job opportunities. While younger workers 

usually have higher unemployment rates, older 

workers who become unemployed tend to remain 

without a job for longer periods of time. It is this 

fact that gives the older worker problem its special 

importance.

Firms with private pensions often refuse to hire 

workers who are older than a certain age. The 

reasons given by employers for not hiring older 

workers often relate to the presence of a pension 

plan. Thus employers appear to be reluctant to 

hire older workers who are too close to retirement 

age or whose pension costs are higher than the 

pension costs of younger workers. Under most 

definite-benefit pension formulas the pension costs 

of older workers are likely to be somewhat higher 

than those of younger workers. While the 

additional costs in many instances will not be large 

enough to be a significant factor in the hiring 

decision, they may be given undue weight by 

employers.

The reluctance of pension firms to hire older 

workers is usually not a direct result of the pension 

plan itself. Rather, it is likely to reflect the same 

factors that led to establishment of a pension 

program—namely, a desire to keep a balanced age 

distribution of the work force, to promote from 

within the organization, and to train as new employees individuals who have a relatively long 

future working life.

While the difficulties older workers experience in 

finding jobs are undoubtedly complicated by 

hiring practices associated with pensions, it cannot 

be concluded that pension plans are primarily 

responsible for the older workers’ lack of job 

opportunities. This is supported by studies 

showing that in spite of age limitations, in practice

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firms with pensions appear to hire about as many 

older workers as they separate and have about the 

same proportion of older employees as do firms 

without pensions.

Retirement and Withdrawal From the Labor Force

Private pensions, as a major supplement to income from public retirement programs, have 

served to induce voluntary retirement and withdrawal from the labor force. At the same time, it 

has been asserted that through the practice of 

involuntary retirement, private pensions have also 

had the effect of forcing into retirement many who 

still wish to work and who remain capable of 

contributing effectively to the national output.

The attitude of workers toward involuntary 

retirement is difficult to determine. On the whole, 

there appears to be little dissatisfaction with retirement among those involuntarily retired, or 

among those older workers for whom involuntary 

retirement lies in the near future. From many 

points of view, however, “ automatic” systems of 

involuntary retirement (which apply without exception to all workers reaching a specified age) are 

less desirable than flexibly administered “ compulsory” systems which permit exceptions.

From the point of view of manpower policy, the 

desirability of retirement and the resulting reduction in the labor force depends chiefly on the 

level of demand for labor. In wartime when manpower is severely limited, the appropriate manpower policy is to induce older workers to remain 

active workers. With unemployment at more 

normal levels, retirement serves the interest of 

manpower policy by permitting many aged workers 

who are partially disabled or for whom work is 

especially burdensome to withdraw from the labor 

force, providing retirement income is sufficient,

thereby opening greater opportunities for other 

employed and unemployed workers. In occupations and industries in which unemployment is 

especially severe, retirement reduces the level of 

unemployment and facilitates the employment 

adjustments essential in a rapidly changing 

economy.

Changes in retirement programs, both public 

and private, will have manpower effects by making 

retirement more or less desirable and thus influencing the incentive for aged workers to remain 

in the labor force. One example of such a change 

is the recent adoption of early retirement provisions in both public and private programs. It is 

yet too soon to evaluate the effect of the recent 

change permitting early retirement at age 62 under 

the old-age, survivors, and disability insurance 

program.

The decentralized nature of private pension 

systems provides an important element of flexibility in meeting manpower problems. The 

OASDI system does provide flexibility in the regard to the age at which an individual may retire, 

but it does not include any special provisions 

applying to the needs of particular industries. 

These would be difficult to justify in the public 

system, in which uniformity of retirement age and 

benefit schedules for all covered workers is a well 

established principle. On the other hand, private 

pensions are well suited to meet such problems, 

since the content of the plans may be varied to 

meet the special needs of an industry or firm. 

Illustrative of the flexibility inherent in pensions 

negotiated through decentralized collective bargaining are provisions for early retirement at employer’s request included in certain recent bargaining agreements which provide twice the normal 

private pension from the time the employee retires until he becomes eligible for OASDI benefits.

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Chapter II. Labor Mobility

Summary

Labor mobility in the United States appears to 

have decreased in recent years, although it is still 

considerable. The causes of the decline are by no 

means certain, and it is impossible to say whether 

the forces leading to the decline are growing in 

importance. It is true, however, that some 

countries exhibit higher mobility and others have 

lower mobility than the United States. The 

Soviet Union, for instance, has been plagued by 

high turnover, and Soviet labor law places heavy 

penalties on workers who quit without adequate 

notice. Other countries, such as Japan, the 

Federal Republic of Germany, and Sweden, typically exhibit low turnover. In Japan, the “lifetime job” is a well-established principle, and 

workers are very closely bound to the employer. 

In Sweden and Germany efforts have been made to 

increase labor mobility. Yet all of these countries 

have recently exhibited high rates of economic 

growth, whether faced with high or low turnover. 

This suggests that labor mobility is only one of the 

factors contributing to growth and development 

but not the primary factor, and that other adjustments can adequately offset either high or low 

labor mobility.

Movement of workers from one job to another is 

but one of the adjustments which are needed in a 

growing economy. Judging by the evidence for 

factory workers, mobility in the United States has 

decreased, but it does not now appear that inadequate mobility is a general problem of the 

economy, although in certain occupations and 

industries more outward movement is desirable. 

Movement out of these industries and occupations 

is probably not impeded by unwillingness to change 

to other jobs, but rather by the shortage of other 

jobs to which workers might change and by the 

educational and training qualifications necessary 

for the jobs which are available. If mobility is 

generally adequate, then the prevalence of pension 

plans, which in some instances impede mobility, 

cannot be criticized from the point of view of 

economic policy for reducing mobility below desirable levels.

The frequency of job changing commonly is 

inversely related to age, although length of service,

rather than age, may be the dominant influence in 

the lower mobility of older workers. Between twothirds and three-fourths of the workers in all age 

groups who were separated from a sample of firms 

studied in 1955 had less than 1 year of service. 

Apparently most of the job changes are performed 

by the small proportion of workers who are highly 

mobile. The separation rates of workers in all age 

groups fall off with increasing length of service, and 

there are only small differences in the rates of 

workers all age groups younger then 65 years in 

the same length of service classes.

Occupational attachment varies widely among 

occupations, and workers in those occupations 

which require formal education or lengthy training 

usually show a high degree of occupational attachment although they may change jobs frequently or 

move to different industries or areas. Industry 

attachment appears to be somewhat less important 

than occupational attachment, and about threefifths of the job shifts in 1961 involved changes of 

industry.

Data on mobility trends over time are limited. 

The quit rate in manufacturing has shown a secular 

decline on which cyclical variations attributable to 

fluctuations in the level of unemployment are 

superimposed. It has been asserted that the downtrend is attributable to the growth of seniority 

rules and fringe benefits (especially pensions). 

Doubtless these factors have been important, but 

the stability of manufacturing employment and 

somewhat higher levels of unemployment are 

probably more important influences in recent 

years.

The available evidence linking the presence of a 

pension plan with job mobility demonstrates that 

firms with pensions have lower separation rates 

and quit rates than firms without pensions. Data 

from a sample of firms in six major labor market 

areas give this result even when pension and nonpension firms are grouped by major industry 

division or by size of firm. The difference in 

separation and quit rates between pension and 

nonpension firms is especially marked in the 55-64- 

year age group.

Lower separation rates in firms with pensions do 

not prove that pensions are the cause of the lower

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turnover. Pension coverage is more common in 

firms with higher than average wages and in 

unionized firms, and these firms are likely to have 

lower turnover regardless of pension status. Firms 

with pensions also have lower accession rates than 

firms without pensions. Since most of the workers 

in all age brackets who are separated have less 

than 1 year of service, the lower accession rates 

mean that proportionately fewer of the shortservice workers who exhibit high mobility are 

found in firms with pensions. Finally, separation 

rates and quit rates are generally lower for workers 

of all ages in firms with pensions than in firms 

without pensions. Since the effect of pensions on 

the mobility of young workers should be small, the 

lower separation and quit rates of these workers in 

firms with pensions suggests that factors other 

than pensions (and seniority) are important in 

reducing turnover.

Three important trends have mitigated the 

effect of pensions in reducing mobility. First, 

vesting has become much more common both in 

unilateral and in negotiated pensions. Although 

10 years or more of service is commonly required 

for vesting, vesting even on such restrictive terms 

can do much to reduce the immobilizing effects on 

the groups of workers for whom pensions are likely 

to have the most influence. A second important 

trend is the growing frequency of early retirement 

provisions. Early retirement serves as a limited 

kind of vesting for workers who leave their jobs a 

few years before retirement age. Finally, multiemployer plans have become more common. Such 

plans provide portability of pension credits to 

workers who shift to other employers who are 

members of the plan. Despite the low level of 

industry attachment observed in national data on 

job mobility, industry attachment is probably 

much stronger in many of the industries covered 

by multiemployer plans.

2 The most comprehensive review of labor mobility studies is Herbert S. 

Pames, Research on Labor Mobility (Social Science Research Council, New 

York, 1954, Bulletin 65). For studies after this date, see Herbert S. Pames, 

“ The Labor Force and Labor Markets” in Herbert G. Heneman, Jr., and 

others (editors), Employment Relations Research (IRRA Publication 23), 

New York, Harper, 1960.

3 Labor mobility is a characteristic of workers. Hence, most mobility data 

is based on interviews with workers. Turnover is a characteristic of firms. 

Most of the available data bearing on the relation of pensions to job changing 

is establishment data. Nationwide estimates of labor mobility are derived 

from 1955 and 1961 studies of job mobility of workers conducted by the Census 

Bureau as part of the Current Population Survey. Most of the relevant 

turnover data is derived from unpublished tabulations from the Bureau of 

Employment Security’s study of older worker problems in 1955.

Introduction

The study of labor mobility has many aspects. 

In its broadest context, labor mobility may include entry and withdrawal from the labor force; 

social mobility, in the sense of intergeneration 

changes in social status; and job changing among 

industries, occupations, and geographical areas.2 

The analysis of labor mobility here is limited to 

the analysis of job changing particularly with respect to differences in prevalence of job changing 

among workers of different ages, industries, and 

occupations.3

This study is not concerned with the equities or 

inequities of unvested pensions although much 

concern has centered on this problem. Labor 

mobility has implications for personal freedom. 

The worker who is unable to get another job has 

less choice in directing his life. The worker who 

refrains from quitting his job because of accumulated unvested pension benefits which he would forfeit if he left in some sense may be deprived of 

liberty. Pension benefits are compensation and 

some observers feel that it is unfair to withhold 

benefits or make receipt of benefits conditional 

upon completion of lengthy service. On the other 

hand, voluntary movement is not prohibited by 

pensions and seniority. Viewed as one of a number of institutional practices which make job 

changing costly to workers, pensions do not appear 

to be unique in their effects.

Labor mobility also has important implications 

for manpower policy and this is the principal concern of this study. Changes in the structure of 

demand and in the techniques of production call 

for increased employment in some industries, occupations, and areas and reductions elsewhere. 

A highly immobile labor force does not adjust 

rapidly to changing demand for labor. Thus, inadequate mobility may impede the attainment of 

high levels of employment. Yet mobility may also 

be excessive. Too frequent job changes are likely 

to prevent the development of a steady, trained 

work force, and result in low labor productivity.

Labor mobility is but one of the ways in which 

labor is allocated to changing demands. Capital 

mobility is important, and there is some tendency 

for firms to move into areas of high unemployment 

or low wages. Firms in declining industries may 

also shift to new products. These movements 

decrease the amount of labor mobility required.

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Wage flexibility is another way in which the supply 

of labor is allocated among competing demands for 

labor. Firms with ample labor supply generally 

do not have to increase their wages as much as 

they increase overtime as do firms which must 

attract additional labor. Local unemployment 

problems may reflect inadequate capital mobility 

and price inflexibility as much as they do inadequate labor mobility. Since many workers are 

reluctant to move from the localities in which they 

are situated, capital mobility and wage flexibility 

may meet the wants of the unemployed far better 

than movement to a new area.4 *

The existence of areas of persistent unemployment or occupations in which unemployment is 

usually high does not necessarily imply that labor 

mobility is inadequate. Workers may be willing 

to change jobs, but the opportunity to change may 

be lacking. Opportunity depends on the availability of jobs, and availability depends in large 

part on aggregate demand. In recent years there 

have been no labor market areas classified as 

“ areas of tight labor supply,” in contrast to the 

periods of World War II and the Korean conflict 

when there was heavy demand for labor in most 

areas. Only if there were occupations and areas 

with persistent labor shortages while elsewhere 

there were persistent labor surpluses could it be 

concluded that labor mobility was inadequate. 

The occupations which show serious shortages 

(as shown in the public employment service job 

orders in interstate clearance) are typically jobs 

requiring a considerable formal education and 

training or lengthy periods of apprenticeship.

Patterns of Labor Mobility

In 1961, about 8.1 million workers changed jobs, 

and about 5 million of these were younger than 35 

years old. Approximately 11 million job shifts 

were made by these job changers. An additional 

2.3 million jobs were left by workers who did not 

start a new job during the year. Overall, about 

one-tenth of the workers who worked during the 

year changed jobs.6

Mobility commonly differs among industries and 

occupations. Farm laborers are usually quite mobile, but farmers infrequently change jobs. Construction workers frequently work for several 

employers during the course of the year, but usually retain considerable attachment to the industry over a period of years, at least during the 

seasons in which construction work is at high 

levels. These obvious differences in mobility are 

sometimes concealed in studies of job changing 

over periods as brief as 1 year. Similarly, the 

number of industrial and occupational changes 

involved in the total number of job shifts is understated by the use of broad occupational and 

industry classifications.

The volume of job changing in a given year 

also reflects economic conditions. During periods 

of very high labor demand, few workers are laid 

off but many workers quit voluntarily for better 

opportunities elsewhere. Thus, the patterns of 

labor mobility to some extent reflect general 

economic conditions as well as propensities of 

workers with varying personal characteristics and 

in various industries and occupations to change 

jobs.

Characteristics related to mobility such as sex, 

seniority provisions, and region are not treated 

separately in this section, but obviously they have 

a bearing on mobility in general.

Age. Youth is the characteristic most highly 

associated with labor mobility. To many younger 

workers, job changing is a vital part of choosing 

a lifetime occupation. It has often been pointed 

out that workers find it difficult to judge in 

advance whether or not a job is worth taking. In 

many instances, the younger worker finds a job 

worth keeping after trying several jobs, and 

thereafter he does not move voluntarily. The 

younger worker loses little from frequent job 

changes. With little or no seniority or pension 

benefits to lose, the younger worker is not inhibited 

from changing jobs until he finds one that suits 

him well. After age 25, however, the frequency 

of job changing falls off rapidly. About one-

< Implicit in such legislation as the Area Redevelopment Act of 1961 and

the Manpower Training and Development Act of 1962 is the idea that industry should be attracted to areas with unemployment problems and that 

workers should be retrained to staff industries in which jobs are available, 

rather than that workers should move to areas where their skills are in demand. The provision of adjustment assistance to firms injured by foreign 

competition in the Trade Expansion Act of 1962 is directed toward assisting 

these firms to remain in business producing other goods. The appropriate 

role of wage flexibility in the sense of slower rates of wage increase in industries with considerable unemployment is suggested in the Economic

Report of the President Transmitted to the Congress, January l , 1962. Together

With the Annual Report of the Council of Economic Advisers, Washington, 

1962, p. 189.

5 Preliminary data from a forthcoming Bureau of Labor Statistics study of

job mobility of workers in 1961.

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T able 2.1. W orkers W ho C hanged J obs i as P ercent

of All P ersons W ho W o rk ed, 1955 and 1961

A g e

1961 1955

M a le F e m a le M a le F em a le

T o ta l, 14 years a n d o v e r ------------ 11.0 8 .6 12.5 8 .7

14-17 y e a rs__________________________ 8 .9 5.8 12.9 10.8

18-19 y e a rs ____________________ ___ 23.5 22.2 27.4 20.8

20-24 y e a rs_____ _____________ 24.4 16.3 27.8 14.9

25-34 y e a rs______ __ _______ 14.9 10.6 16.0 9 .3

35-44 y e a rs________ _ - ___ _ 10.2 7.2 10.2 7 .8

45-54 y ea rs____ _____ __________ 7.1 5.2 10.0 5 .4

55-64 y e a rs________________ _______ 4 .0 4.1 5 .6 4 .3

65 y ea rs a n d o v e r _______ _ __ 3 .4 1.9 3 .4 1.9

* Includes workers who changed jobs during 1961 and who never held 2 jobs 

at the same time.

Sourcf: Bureau of the Census, Current Population Reports, Labor Force

Series P-50, No. 70, February 1957, and preliminary data from a forthcoming 

BLS study of job mobility of workers in 1961.

fourth of the men 20 to 24 years old who worked 

during 1961 changed jobs, but only 1 out of 15 of 

the men 45 to 54 years old who worked changed 

jobs, and only one-thirtieth of the men 65 years 

and older who worked changed jobs during the 

year (table 2.1).

The number of jobs left voluntarily by workers 

also decreases with increasing age. About onethird of the jobs left by men 18 to 24 years old 

were left voluntarily (improvement in status), 

while about one-fourth of jobs left were left voluntarily by men 45 to 64 years old. The total number of jobs left per 100 men who worked at some 

time during 1961 falls off rapidly with increasing 

age regardless of the reason for leaving (table 2.2). 

Nevertheless, the proportion of jobs left for involuntary reasons is higher for older men.

The Seven City Study conducted in 1955-56 

by the Bureau of Employment Security in cooperation with State employment security agencies 

provides additional data on voluntary job leaving 

(table 2.3). Quit rates for each of the seven 

cities showed similar patterns, but the variation 

in quit rates between cities was substantial. 

Thus, it appears that local labor market characteristics have major effects on quit rates. In the 

rapidly expanding labor markets of Los Angeles, 

Seattle, and Miami, quit rates of workers 45-64 

years old were about twice the quit rates in the 

other cities.

Hire and separation rates are approximately 

equal for workers 45 to 64 years old, hire rates for 

younger workers are higher than separation rates, 

and hire rates for workers 65 years and older are 

lower than separation rates. The quit rates

decline with age much more than do the layoff 

rates. The separation rates for workers 65 and 

over are one and one-half times larger than the 

separation rates for workers 45 to 64, although 

quit rates and layoff rates for aged workers are 

less than one-third larger than the corresponding 

rates of workers 45 to 64. This difference is due 

to retirement and death. New hires are about 

four-fifths or five-sixths of the total hires for all 

age and sex groups, so that rehires cannot be more 

than one-half of the layoffs, even though the year 

studied was a period of recovery from recession.

Length of Service. One of the most firmly established findings in labor mobility research is that 

the probability of a worker leaving a job falls off 

sharply with increasing length of service. This is 

true both of voluntary and involuntary job leaving. 

Voluntary job leaving falls off with increasing 

length of service because the long-service employee 

has become well established in the firm, presumably is satisfied with his job, and has gained 

through accumulated seniority a greater degree 

of job security as well as other benefits, such as 

pension credits, longer vacations, and in many 

cases higher rates of pay. In some firms, workers 

with high seniority gain considerable prestige and 

status because of long service. This includes not 

only “ 25 Year Clubs/7 and service pins, but often 

larger bonuses, better parking facilities, and freedom from punching the timeclock. Voluntary 

mobility of long-service employees is impeded by

T able 2.2. N u m ber of J obs L eft pe r 100 P erson s W ho

W orked D u rin g 1961, b y R eason for L e a v in g J ob,

A ge, and Se x

Reason for leaving job

Age and sex

Total Economic

Improvement in 

status

Termination of 

temporary job

Other

reasons

Total, 14 years and over____ 16.4 5.3 5.3 2.1 3.7

Male, 14 years and over........ 18.1 6.8 6.1 2.0 3.2

14-17 years____________ 15.2 2.8 3.0 4.7 4.7

18-24 years..................... 42.8 13.0 14.0 5.3 10.4

25-44 years____________ 19.6 7.6 7.9 1.5 2.6

45-64 years____________ 8.9 4.6 2.1 .9 1.3

65 years and over______ 6.7 2.8 .9 1.4 1.7

Female, 14 years and over... 13.7 2.8 4.1 2.3 4.4

14-17 years____________ 9.9 1.4 1.4 3.2 3.9

18-24 years____________ 30.8 5.5 9.4 5.4 10.6

25-44 years____________ 13.3 2.8 4.2 1.8 4.5

45-64 years____________ 7.2 2.1 2.3 1.3 1.6

65 years and over______ 3.9 .7 .1 2.2 .9

Source: Preliminary data from a forthcoming BLS study of job mobility

of workers in 1961.

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the worker’s recognition that these privileges 

will be lost and, in a new job, these accompaniments of long service will have to be earned again. 

The long-service employee is usually an older 

worker, so that his opportunity to find a new job 

is often restricted by maximum hiring ages. 

Thus the attractions of the old job in the form of 

security and privileges are made even more important by recognition of the difficulty of finding 

a new job and by the realization that once employed, the worker will have little security in the 

new job. It seems likely that many workers would 

not consider substantially higher pay as sufficient 

compensation for the security and privileges lost 

by changing jobs.

Involuntary job mobility is also less likely 

among long-service employees. The protection 

against layoff provided by formal seniority rules

T a b l e 2.3. A n n u a l T u r n o v e r R a t e s , b y A g e a n d S e x ,

S e v e n A r e a s , 19551

Number per 100 employed

Age

Men Women

Hires Separations Hires Separations

Total New Total Quits Total New Total Quits

Total.......................... . 60 49 54 21 61 53 54 30

Under 45 years___ 70 60 61 26 72 63 64 37

45-64 years............ 39 30 38 10 35 28 32 14

65 years and over.. 36 27 57 13 26 21 48 18

Detroit......................... 40 34 33 17 50 45 37 21

Under 45 years___ 52 46 41 23 60 55 43 25

45-64 years............. 18 14 18 6 20 16 18 9

65 years and over.. 12 7 50 13 20 17 40 13

Los Angeles................. 84 71 79 28 77 69 74 39

Under 45 years----- 93 81 84 33 86 79 83 47

45-64 years............ 65 52 69 17 52 45 48 19

65 years and over.. 71 52 82 19 45 33 79 31

M iam i....................... 112 76 108 43 123 87 137 62

Under 45 years___ 117 82 114 48 127 92 118 70

45-64 years_______ 86 50 82 25 96 63 87 38

65 years and over.. 91 51 102 16 88 51 66 16

Minneapolis-St. Paul. 54 47 47 19 52 46 46 30

Under 45 years___ 59 52 50 23 63 56 54 36

45-64 years............. 30 25 28 7 26 20 21 11

65 years and over- 27 23 47 10 27 14 39 15

Philadelphia............... 25 18 20 7 35 27 26 15

Under 45 years___ 30 22 23 10 45 36 35 21

45-64 years........... 10 7 8 3 14 11 8 4

65 years and over.. 8 5 22 3 9 5 29 6

Seattle.......................... 98 74 89 28 82 60 76 43

Under 45 years___ 101 75 89 34 91 68 84 52

45-64 years............ 86 65 81 15 46 30 43 20

65 years and over.. 79 60 106 15 57 24 68 12

Worcester..................... 44 34 34 15 50 41 45 29

Under 45 years___ 50 40 38 18 63 53 58 37

45-64 years.......... 21 14 15 6 26 21 22 12

65 years and over.. 20 11 32 6 20 3 22 7

112 months ending with March for Los Angeles, December for Seattle, and 

June for other areas. Data for establishments with 8 or more workers covered 

by State unemployment insurance laws or by the Railroad Retirement Act.

Source: Bureau of Employment Security, Older Worker Adjustment to

Labor Market Practices, (BES Bulletin R151, 1956), pp. 265-266.

in unionized firms and informal length-of-service 

considerations in nonunion firms form one of the 

principal attractions of the long-service worker’s 

present job. They also reduce the chance that 

the long-service worker will be laid off or discharged and thereby forced to change his job. 

Once laid off, however, long service in a particular 

occupation or industry is unlikely to be cast aside 

lightly, and most displaced long-service employees will probably be reluctant to change 

occupations or industries, particularly if the 

change entails accepting considerably lower pay. 

Long service may also be associated with extreme 

specialization of work experience, so that the 

worker is unable to earn as much outside of his 

firm, industry, or occupation. Such specialization 

is likely to be a significant cause of the decreasing 

probability of job change with increasing length 

of service, especially among managerial and clerical 

employees whose knowledge of the routine and 

system in a given firm makes them highly productive, but whose knowledge may not be easily 

transferable to other firms.

The immobility of long-service employees may 

be the result of factors which predispose these 

workers in this direction. The low mobility of 

long-service employees may simply reflect the fact 

that they tended toward immobility to begin 

with. It is known, for instance, that some workers 

never settle down to a steady job, but remain 

highly mobile throughout their working lives. 

The probability that a worker will change jobs in 

a given year is not independent of his previous job 

changing experience. In 1951, for instance, 18 

percent of a sample of workers covered by OASDI 

in both 1951 and 1952 changed employers in both 

years and these highly mobile workers were 51 

percent of the workers who changed employers in 

1952.6 Similar results are found in the Seven 

City Study. About three-fourths of the separations of workers under 25 years old were workers 

with less than 1 year of service. The ratio 

decreased slightly with age, but two-thirds of the 

separated workers 55 to 64 years had less than 1 

year of service. Overall, about seven-tenths of 

the workers separated in 1955 by the firms included in the sample had less than 1 year of

6 Bureau of Old-Age and Survivors Insurance, Division of Program Analysis, “ Incidence of Employer Change,” Analytical Note No. 80, April 18, 

1956.

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T able 2.4. Separation s of W ork ers b y L ength of

Se rvice and A ge, Seven A r e a s, 1955

[Percent]

Length of .service (in years)

A ge

T o ta l L ess 

th a n 1

1-4 5-9 10-14 15 a n d 

o v e r

A ll ages................................................ 100.0 69.8 22.1 4 .6 L 6 1.8

U n d e r 25 years _______________ 100.0 75.9 22.9 1.2

25-34 y e a rs ............... ........ ................. 100.0 69.4 24.3 5 .3 .9 .1

35-44 y e a rs ......................................... 100.0 69.5 22.2 5 .4 1.8 1.1

45-54 y e a rs________________ _____ 100.0 69.7 19.2 5 .9 2.1 3 .0

55-64 y e a rs ________________ _____ 100.0 65.2 18.6 7.1 3 .7 5 .4

65 y ea rs a n d o v e r ............................ 100.0 40.5 13.4 9 .2 11.9 25.0

Source: Derived from unpublished tabulations furnished by the Bureau 

of Employment Security.

service (table 2.4). It may be concluded from 

these data that most of the workers of all age 

groups who leave jobs have short service in their 

last jobs.7

Information on separation rates classified both 

by length of service and by age (table 2.5) suggests 

that length of service is the most important 

factor associated with the lower mobility of 

older longer service workers. The very high 

separation rates of workers 65 years and older in 

all length-of-service categories is attributable 

primarily to retirement. The separation rates for 

workers with less than 1 year of service include a 

large proportion of workers in industries where 

employment is casual or seasonal, and these 

rates are naturally very high. For these workers, 

there is a slight tendency for separation rates to 

increase with increasing age and to reach a peak 

in the 45- to 54-year age group. In the 1- to 

4-year length-of-service group, the differences in 

separation rates associated with age are small 

(except for those under 25 years old, or 65 years 

and older), and the same observation applies to 

the longer length-of-service groups. Certainly, 

the figures demonstrate a far more definite pattern of declining separation rates varying with 

length of service (holding age constant) than with 

age (holding length of service constant).8

7 Because the type of separation is not available, it cannot be concluded 

that all or most of this job changing is voluntary. The decrease in the frequency of voluntary reasons for job changing with increasing age in the survey 

cited in table 2.2 suggests that a smaller proportion of the separations of older 

workers with short service is voluntary.

s In a similar analysis, Lloyd George Reynolds observed that voluntary 

separation rates of workers decreased slightly with increasing age when 

length of service was held constant. The Structure of Labor Markets (New 

York, Harper, 1951), p. 21.

9 Bureau of Labor Statistics, Occupational Mobility of Scientists (BLS 

Bulletin 1121,1953), p. 4.

Occupation. Most jobseekers confine their search 

to local labor markets. This geographical limitation of job search often requires that the job 

changer change either his industry or his occupation or both if he is to find a suitable job. 

Occupational attachment naturally varies with 

the amount of specialized training required in 

the occupation. Occupational mobility of experienced workers into the licensed professions 

or unionized crafts is likely to be small, and a 

large proportion of the new recruits for such occupations will come from schools and on-the-job 

training programs rather than from other occupations. Job changers in such occupations are 

likely to restrict themselves to changes within 

the occupational group. Workers highly attached to their occupations may exhibit high 

geographical mobility, however, as is evidenced 

by the high frequency of such changes in a sample 

of scientists studied by the Bureau of Labor 

Statistics.9

Mobility differs among occupations (table 

2.6). Only 9 job shifts were completed per 100 

workers in professional and technical occupations, 

but there were 16 job shifts per 100 sales workers, 

and 27 job shifts per 100 laborers. The rates 

of job leaving by workers among managers, 

officials, and proprietors and farmers were quite 

low. In part, this reflects the high average ages 

of people in these occupation groups.

Almost half the job shifts involved a change to 

a different occupation. This varied considerably 

according to occupation. Shifts by managers, 

officials and proprietors, laborers and sales workers 

were more than likely to involve a different occupation while professional workers and craftsmen 

were less likely to shift to a different occupation.

T able 2.5. Separation R ates, b y A ge and L ength of

Service

[Separations per 100 employees]

Length of service (in years)

Age

Total Less

thanl

1-4 5-9 10-14 15 and 

over

All ages................ ................... 54 150 33 11 8 7

Under 25 years_____________ 95 134 48 24

25-34 years........ ...................... 60 146 31 13 8 7

35-44 years.................. ............ 47 150 28 9 7 4

45-54 years............................ . 39 173 25 10 5 4

55-64 years................ .............. 31 160 27 10 7 4

65 years and over..................... 57 225 39 27 34 36

Source: Derived from unpublished tabulations furnished by the Bureau

of Employment Security.

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T able 2.6. P ercent of J ob Shifts in 1961 I n volvin g

C han g e of M ajor Occupation G ro u p, b y Occupation

G roup of J ob L eft

Major occupation group of job left

Job shifts in 1961

Percent 

of job 

shifts to 

different 

occupation

Number

(thousands)

Percent of 

persons 

with work 

experience

All occupations............... ........................... 10,869 13.5 47.2

Professional, technical, and kindred

workers_____ ____ _____ ____ _________ 811 8.9 30.8

Farmers and farm managers____________ 50 1.8 (9 Managers, officials, and proprietors, except farm................................................ 436 5.5 65.6

Clerical and kindred workers.................... 1,457 12.2 39.1

Sales workers______________ ______ ____ 859 15.6 59.1

Craftsmen, foremen, and kindred workers. 1,678 18.1 32.7

Operatives and kindred workers................ 2,238 16.6 47.5

Private household workers_____________ 181 5.3 93.9

Service workers, except private household- 1,302 16.2 49.2

Farm laborers and foremen_____________ 645 15.0 52.4

Laborers, except farm and mine------------- 1,212 27.3 58.4

i Figures not shown where base is less than 100,000.

Source: Preliminary data from a forthcoming BLS study of job mobility 

of workers in 1961.

Industry. In contrast to occupational moves, 

movement of workers between industries is seldom 

the result of career development. Job changes 

resulting from layoff often lead to industry changes 

because of the worker’s attachment to a locality. 

Shifts from one industry to a different industry 

are more common than occupational shifts. About 

three-fifths of the job shifts in all industries in 1961 

were to jobs in a new industry (table 2.7), while 

only one-half of the job shifts involved changes 

in major occupation group.

Quit rates for a more detailed classification 

within manufacturing industries vary inversely 

with gross hourly earnings. Industries characterized by relatively high earnings generally have 

low quit rates. Industries with relatively small 

proportions of production workers and relatively 

small proportions of female employees also have 

somewhat lower quit rates on the average.10

Trends in Labor Mobility

Recent changes in mobility have been conditioned by changes in economic conditions. 

Occupational mobility during the depression 

decade of the 1930’s was markedly lower than 

during the prosperous decade of the 1940’s. 

Manufacturing quit rates were low during the 

1930’s but high in the prosperous 1920’s and 

1940’s. Judging by these rates, there has been a

10 For an analysis of these relationships in 1956, see Robert M. Shaw, 

“ The Nature of Industries with High and Low Quit Rates,” Employment

and Earnings, September 1957.

long-term down-trend in mobility, but it is subject 

to reversal during periods of marked prosperity.

Most of the discussion of trends in labor mobility 

has of necessity centered on trends in manufacturing quit rates, which have heretofore been 

the only statistical series of comparable observations. Evaluation of trends in manufacturing 

quit rates must include consideration of the level 

of unemployment. Even when this factor is 

taken into account, however, it appears that quit 

rates during the relatively prosperous years of 

1951-53 and 1955-57 did not approximate the 

very high quit rates of the World War II period.

The downtrend in the quit rate has been 

explained in terms of the following influences :

1. Growth of unions

2. Development of seniority provisions

3. Development of fringe benefits (especially pensions)

4. Government and supplementary unemployment

benefits

5. Growth of large corporations

6. Aging of the labor force

7. Stability of manufacturing employment

T able 2.7. P ercent of J ob Shifts in 1961 I n volvin g

C h ang e of I ndu stry G ro u p, b y I ndu stry of J ob

L eft

Job shifts in 1961

Industry group of job left

Number

Percent of 

persons 

with work 

experience

Percent of 

job shifts 

to different 

industry

Total............................ ............................... 10,869 13.5 61.7

Agriculture------- ------------------------------- 793 10.6 57.2

Wage and salary workers----------------- 708 25.5 52.5

Self-employed and unpaid family 

workers............. _............._................ 85 1.8 (9

Nonagricultural industries_____________ 10,076 13.8 62.1

Wage and salary workers___________ 9,729 15.1 61.1

Forestry, fisheries, and mining__ 159 20.4 62.9

Construction___________________ 1,555 38.0 41.0

Manufacturing_________________ 2,222 12.2 61.7

Durable goods_____________ 1,249 12.4 60.0

Nondurable goods__________ 973 11.8 64.0

Transportation, and public 

utilities........ ............................... 451 10.0 69.4

Trade_____ ____________________ 2,512 19.3 60.1

Wholesale__________________ 382 15.5 84.8

Retail_____________________ 2,130 20.1 55.7

Service industries_______________ 2,544 12.6 70.2

Finance, insurance, and real 

estate___________ ____ ____ 391 12.7 70.3

Business and repair services.. 343 23.3 83.1

Private households2............... 248 6.3 2 90.7

Personal services, except private households................... 433 20.2 66.0

Educational services............... 356 8.7 62.4

Other services...................... 773 14.4 63.8

Public administration................... 286 7.7 78.3

Self-employed and unpaid family 

workers........................ — ................ 347 4.2 90.5

1 Figures not shown where base is less than 100,000.

2 Domestic service work in private households for several different employers is not counted among the job shifts.

Source: Preliminary data from a forthcoming BLS study of job mobility

of workers in 1961.

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T able 2.8. T u rn o ver R ates in M an u factu rin g,

A nnual A v e r a g e s, 1948-61

Year

Turnover rates per 100 employees in 

manufacturing 1

Unemployment rate *

Separations

Quits Accessions New

hires

1948________ ________ 5.4 3.4 5.4 (>) 3.8

1949.............................. 5.0 1.9 4.3 (») 5.9

1950________________ 4.1 2.3 5.3 (*) 5.3

1951...................- ........ 5.3 2.9 5.3 4.1 3.3

1952....... ...................... 4.9 2.8 5.4 4.1 3.1

1953....... - ................... 5.1 2.8 4.8 3.6 2.9

1954________________ 4.1 1.4 3.6 1.9 5.6

1955_________________ 3.9 1.9 4.5 3.0 4.4

1956_________________ 4.2 1.9 4.2 2.8 4.2

1957__________ ______ 4.2 1.6 3.6 2.2 4.3

1958_________________ 4.1 1.1 3.6 1.7 6.8

1959____________ ____ 4.1 1.5 4.2 2.6 5.5

1960_________________ 4.3 1.3 3.8 2.2 5.6

1961____________ ____ 4.0 1.2 4.1 2.2 6.7

1 Bureau of Labor Statistics.

2 Percent of civilian labor force unemployed. 

* Not available before 1951.

Each of these factors undoubtedly has played 

a role in the decline, but no one of the factors 

explains the downtrend over the entire period for 

which turnover data is available.11 During the 

postwar period, with which this analysis is primarily concerned, it is likely that only the development of fringe benefits, aging of the labor force, 

and stability of manufacturing employment could 

have had much influence. Unions, seniority 

practices, unemployment benefits, and large corporations were prevalent during both the war 

and immediate prewar period. During the postwar period it can scarcely be said that there has 

been enough of an increase in prevalence of these 

factors to have had much influence on the quit 

rate.

The relative stability of employment in manufacturing over the period 1946-50, and over 

the period 1953-62 has probably played the major 

role in the downtrend of the quit rate over this 

period. When accession rates are low, relatively 

few highly mobile younger workers and shortservice workers enter manufacturing, so that quits 

of younger workers fall off also, and consequently 

total quits decrease.

These relationships are shown in turnover data 

for the period 1948-61 (table 2.8). In years of

ii Some of the principal articles discussing the downtrend in mobility 

are Ewan Clague, “ Long-Term Trends in Quit Rates," Employment and

Earnings, December 1956; Arthur M. Ross, “ Do We Have a New Industrial Feudalism," American Economic Review, December 1958; Joseph Shister, 

“ Labor Mobility: Some Institutional Aspects," Industrial Relations Research Association, Proceedings, 1950; Paul F. Brissenden, “ Labor Mobility 

and Employee Benefits," Labor Law Journal, November 1955.

high unemployment, such as 1949, 1958, and 1961, 

both the quit rates and the new hire rates are 

relatively low; while in prosperous years, such as 

1951 and 1955, both quit rates and new hire rates 

are relatively high. Even so, the quit rate in 

1949 (a recession year) is as high as the quit 

rate in any year after 1953. Apparently the 

quit rate in manufacturing has shown a downtrend in recent years, as has the new hire rate.

Comparison of data on labor mobility in 1961 

with data relating to 1955 provides some evidence 

of the nature of changes in mobility patterns in 

periods of differing economic conditions. The 

year 1955 was a year of relatively high prosperity 

(unemployment rate—4.4 percent) compared with 

1961 (unemployment rate—6.7 percent).

As expected, sharp differences are clearly 

evident in the mobility patterns of the 2 years. 

In general, voluntary job changing was sharply 

reduced in the latter year while job shifts for 

economic reasons were substantially higher. The 

net effect of these two forces was a drop in overall mobility rates except for women workers 

18-34.

In the older age groups, the 1961 data show 

sharper changes for men than for women. The 

number of voluntary job shifts in 1961 for “ improvement in status” of men 45-64 was only 

about half the rate of 1955. The decline for 

women in these age groups was relatively slight 

(table 2.9).

T able 2.9. N u m ber of V oluntary and I nvolu n tary

J ob Shifts pe r 100 P erson s W ho W o rk ed, 1955 and

1961

Reason for leaving job

Age and sex Improvement 

in status

Economic

1961 1955 1961 1955

Male, 14 years and over............... ............. 6.1 7.8 6.8 5.3

14 to 17 years...................................... 3.0 5.7 2.8 2.7

18 to 24 years............................ ........... 14.0 18.6 13.0 11.1

25 to 44 years....................... ................ 7.9 9.1 7.6 5.6

45 to 64 years............................ ....... 2.1 4.1 4.6 4.0

65 years and over_______ ___________ .9 .7 2.8 1.5

Female, 14 years and over.................. ...... 4.1 4.8 2.8 2.3

14 to 17 years............................ ........... 1.4 5.7 1.4 2.3

18 to 24 years....................................... 9.4 10.5 5.5 3.0

25 to 44 years______________________ 4.2 4.3 2.8 2.3

45 to 64 years________ _____________ 2.3 2.6 2.1 2.1

65 years and over _______ ____ .1 .8 .7 .3

Source: Bureau of the Census, Current Population Reports, Labor Force

Series P-50, No. 70, February 1957, and preliminary data from a forthcoming 

BLS study of job mobility of workers in 1961.

11

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T able 2.10. R eason for L e a v in g J ob, b y Oc cu patio n : D istribu tion of J obs L eft in 1961 and 1955, b y M ajo r

Occupation G roup

Reason for leaving job

Major occupation group of job left

1961 1955

Economic

Improvement in 

status

Termination of temporary job

Other Economic

Improvement in 

status

Termination of temporary job

Other

Total______________________________________________________ 32.1 32.6 12.9 22.5 23.5 37.6 17.9 20.9

Professional, technical, and kindred workers__________________ 21.7 34.8 16.1 27.4 15.9 33.3 18.8 32.0

Farmers and farm managers_________________________________ (9

36.0

(9

37.3

(9

6.9

(9

19.8

18.5 38.5 30.2 12.7

Managers, officials, and proprietors, except farm_______________ 35.8 41.6 12.1 10.4

mp.ripa! and kindred workers _ . . . 16.9 36.2 14.9 31.9 15.4 38.3 15.1 31.1

Rales workers_______________________________________________ 18.4 47.3 14.0 20.3 12.7 51.8 12.0 23.4

Craftsmen, foremen, and kindred workers_____________________ 56.2 28.7 3.9 11.2 29.2 37.9 17.6 15.2

Operatives and kindred workers_____________________________ 38.5 34.7 7.4 19.4 31.4 40.0 9.9 18.7

Private household workers___________________________________ 27.0 31.0 11.5 30.5 10.1 43.8 18.6 27.6

Service workers, except private household_____________________ 19.2 33.6 10.8 36.4 17.2 40.0 13.9 28.8

Farm laborers and foremen . __ _ . ... 13.2 18.4 53.5 15.0 10.0 21.0 52.8 16.1

Laborers, except farm and mine______________________________ 46.9 23.6 9.2 20.3 33.4 33.9 17.3 15.4

1 Percent not shown where base is less than 100,000. Source: Bureau of the Census, Current Population Reports, Labor Force

Series P-50, No. 70, February 1957, and preliminary data from a forthcoming 

BLS study of job mobility of workers in 1961.

Changes in the level of economic activity 

between 1955 and 1961 increased the proportion 

of job changes due to economic reasons. About 

29 percent of craftsmen, foremen, and kindred 

workers who changed jobs, did so for economic 

reasons during 1955 compared with 56 percent 

in 1961. An increase also occurred in the operative group—from 31 percent in 1955 to 38 percent 

in 1961 (table 2.10). The proportion of job 

changes for economic reasons among nonfarm 

laborers also increased from 33 percent to 47 

percent during this period.

The lower level of economic activity in 1961 

compared to 1955 prevents any conclusion regarding a trend in recent years from being more than 

suggestive. The decline in job changing for 

reasons of improvement of status and the increase 

in job changing for economic reasons between 

1955 and 1961 is almost certainly attributable to 

the relatively high level of unemployment in 1961. 

While the sharp drop in voluntary job changing 

for men 45 to 64 points up the difficulties which 

older workers experience in shifting to better jobs, 

it is impossible to indicate to what extent the increasing prevalence of pensions may have been 

responsible.

Effects of Pensions on Mobility

Pensions are only one of the influences which tie 

workers more closely to their jobs with increasing 

age and length of service. Identification of the

effect attributable to pensions alone, and not to 

seniority provisions, age composition of the work 

force, size of firm, wages, or industry is almost 

impossible because firms with pensions frequently 

are large firms and often have high wages, strict 

seniority provisions, and are older firms with 

relatively large numbers of older workers. The 

classification of firms into pension and nonpension 

groups and the comparison of total separation and 

hire rates therefore throws little light on the independent effect of pensions on turnover.

Despite the paucity of supporting data, many 

writers assert that pensions do reduce mobility 

independently of other influences, although they 

recognize that pensions are closely related to other 

labor market institutions which reduce labor 

mobility. Clark Kerr writes:

Private pension plans, except where they provide full

and immediate vesting of both the employee’s and firm’s

contribution, retard such movement. They tend to tie

the worker to the company while employed; and hold

him in a company-attached labor pool when unemployed.12

Robert Tilove writes:

. . . the conclusion seems inescapable that most private

pension plans, in the form in which they commonly

exist today, exercise a restraining influence on labor

mobility. They often involve forfeiting accrued pension

benefits upon any shift in employment; and they inhibit

^ “ Social and Economic Consequences of the Pension Drive,” Handbook

on Pensions (National Industrial Conference Board, Inc., Studies in Personnel Policy No. 103, 1950), p. 85.

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hiring in the upper ages, either because pension costs are

thought to be greater or because the older worker may

be reluctant to take a job on which he may not have a

sufficient prospect of accruing pension rights.13

The possible effects of pensions on mobility 

may be summarized briefly:

^ T . Rigid maximum hiring ages are often found in

firms with pension plans; by reducing the opportunity

for older workers to change jobs, such practices may

inhibit mobility (this problem is dealt with in chapter

III).

11 Robert Tilove, Pension Funds and Economic Freedom (Fund for the 

Republic, New York, 1959), p. 23.

2. The expectation of additional pension benefits to

be earned in the future may induce workers to continue

their present jobs rather than to change to another

firm which does not offer pension coverage. Pensions

are but one component of total compensation, and their

importance to different workers will vary with the characteristics and attitudes of the workers. Older workers

may be especially reluctant to move from a job with

pension coverage to an uncovered job, even if benefits

earned by completed service are fully vested. The immobilizing effects of benefits to be earned in the future

do not appear to differ in substance from the immobilizing

effects of higher wages or better working conditions, and

therefore should be no more subject to criticism.

T able 2.11. H ir e and Separatio n R ates, b y I ndustry, A ge, and P en sion C o v e r a g e , 1955,1 Six A r e a s 2

Annual hires and separations per 100 employees

Industry division and pension class

All ages Under 25 

years

25 to 34 

years

35 to 44 

years

45 to 54 

years

55 to 64 

years

65 years 

and older

All Industries

Pension:

Hires.................................................... ....................................................... 37 91 42 30 18 12 11

Separations_____________________________________________________ 34 74 39 29 18 13 50

N o pension:

Hires................... ........................................................................................ 67 115 81 62 53 38 31

Separations.......................................................... ...................... ............. 62 92 74 58 51 37 50

C onstruction

Pension:

Hires________________ __________________________________________ 97 194 107 108 84 72 48

Separations_____________________________________________________ 98 173 134 104 65 71 99

N o pension:

Hires................ ............................ ............ ................................ ................. 146 135 186 143 139 144 157

Separations.____ _______ _____________ __________________ ______ 136 113 173 136 132 148 170

M anufacturing

Pension:

Hires................ ................................ ........................................................... 30 83 39 24 15 9 8

Separations__________________ ____________________________ ____ _ 27 64 34 27 14 10 49

No pension:

Hires________________________________ _______________ __________ 53 115 64 47 34 25 14

Separations........................................................ .......... ........................... 46 81 59 41 30 20 36

T ransportation, C ommunication, and U tilities

Pension:

Hires.................................. ................................................. ....................... 25 57 29 28 10 5 7

Separations______________________________________________ ______ 25 41 29 29 12 8 70

No pension:

Hires___________________________________________________ _______ 34 32 45 50 20 2 3

Separations_____________________________ _______ ____ __________ 22 23 41 40 16 4 1

W holesale and R etail T rade

Pension:

Hires.............................. .......... .......... ...................................................... 60 125 63 49 28 21 8

Separations_____________________________________________________ 55 106 62 46 28 15 26

N o pension:

Hires________________________ _______________________ __________ 68 123 86 54 42 34 19

Separations_____________________________________________________ 65 104 81 56 44 36 38

Finance, Insurance, and R eal E state

Pension:

Hires............................................................ ........... - ............................... 29 52 30 18 12 4 7

Separations.......... ....................................................................... ........... 29 48 31 25 7 6 79

No pension:

Hires......................... .......... ............ .......... ................................................ 96 135 118 91 84 49 34

Separations................... .......... ................................................................... 83 120 101 76 70 38 49

Services

Pension:

Hires....... .................................................................................................... 65 179 70 60 34 41 44

Separations................................................................ .............................. . 62 157 63 61 36 38 68

N o pension:

Hires........................................................................................................... 67 111 65 60 78 49 50

Separations................................................................................................. 69 106 59 63 84 52 67

1 In establishments with 50 workers or more covered by State unemployment insurance laws or by the Railroad Retirement Act. Years ending June 

1955, except Los Angeles (March 1955) and Seattle (December 1955).

2 Detroit, Los Angeles, Minneapolis-St. Paul, Philadelphia, Seattle, and 

Worcester.

Source: Derived from unpublished tabulations furnished by the Bureau

of Employment Security.

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3. Unvested benefits may be a large part of the employee’s

wealth, and thereby may make job changing extremely

costly to him. The greater the length of service, the

larger will the benefits be; hence, unvested pensions tend

to reduce the mobility of workers with long service (who

are usually older workers) much more than that of shortservice workers. Even multiemployer plans which allow

workers to keep their benefits while shifting among firms

within the plan may tie employees closely to the industry

and union which control the pension plan. These plans

seldom include vesting (other than early retirement

which is often accompanied by restrictions on other

employment) and usually require long periods of covered

employment for receipt of benefits.

Turnover and Pension Status. There is little data 

on the effect of pension coverage on labor mobility. 

Herbert S. Parnes of Ohio State University interviewed matched samples of workers in plants 

with and without pension plans and concluded 

that pensions reduce labor mobility slightly, but 

that seniority provisions are far more important 

in reducing mobility.14

The most comprehensive data dealing in the 

turnover rates for firms with and without pensions 

comes from the Seven City Study conducted in 

1956 by the Bureau of Employment Security. 

Annual turnover data for 1955 were collected for 

establishments of 50 or more employees classified 

by pension plan coverage. Results are shown 

below:

Annual turnover rates by pension plan coverage and age of

worker (per 100 employed), six areas1

Pension plan No pension plan

Age Hires

Separations Hires

Separations

All ages______ 37 34 67 62

Under 45 y e a r s .___ 47 42 80 71

45 years and over._ 16 18 45 46

45-64 years____ 16 16 47 46

1 Bureau of Employment Security, Older Worker Adjustment to Labor

Market Practices, op. cit., p. 66.

Firms with pension plans had lower turnover 

than other firms and total employment in these 

firms increased by 3 percent, compared to 5 

percent in the nonpension firms. Separation rates 

for workers 45 years and older were higher than 

hiring rates in both groups of firms, but the excess 

was accounted for by the more frequent separations of workers 65 years and older in both groups 

of firms.

A similar pattern of lower turnover rates in 

firms with pensions persists when firms are classified by major industry division (table 2.11).

T able 2.12. A nnual Separation and H ir e R ates, by

Size of E stablishm ent, A ge, and P ension C o v e r a g e ,

1955,1 Six A r e a s 2

Hires and separations per 100 employees

Pension class and Number of employees in establishments

age

50-

99

100-

499

500-

999

1,000-

4,999

5,000

and

over

Total

Workers under 45 

years:

Pension:

Hires....... ...... 55 60 43 44 44 47

Separations__ 51 53 37 38 40 42

No pension:

Hires.............. 93 82 75 51 4 80

Separations. __ 86 72 62 52 71

Workers 45-64 years: 

Pension:

Hires_______ 25 24 16 14 12 16

Separations... 25 23 13 15 12 16

No pension:

Hires_______ 64 48 30 26 47

Separations... 66 44 22 32 46

1 See footnote 1, table 2.11.

2 See footnote 2, table 2.11.

Source: Derived from unpublished tabulations furnished by the Bureau 

of Employment Security.

Firms with pensions had lower turnover in most 

age brackets in all industry divisions. Hiring and 

separation rates are nearly equal in size for each 

age, industry, and pension class except for workers 

65 years and older. Thus there is no noticeable 

tendency for firms with pensions to separate more 

older workers than they hire.

The ratio of the separation rate in nonpension 

firms to the rate in pension firms appears to 

increase with increasing age in most industries, 

being particularly high for workers 45 years and 

older. For workers 55 to 64 years old, the ratio 

of separation rates ranges from about 1.4 in 

services to 6.3 in finance, insurance, and real 

estate (ignoring transportation, communication, 

and utilities, in which the ratio is 0.5). The 

sharper decrease in separation rates in firms with 

pensions would be expected if pensions made an 

important contribution to lower turnover.

When firms are classified by number of employees it is found that firms with pensions have lower 

turnover rates than firms without pensions in each 

size-of-firm and age class (table 2.12). Turnover 

rates generally are inversely related to size of firm.

The same patterns prevail in quit rates for 

pension and nonpension firms classified by industry division (table 2.13). The quit rates are 

actually higher in pension firms for workers 25 to

m Unpublished study to be published in 1962.

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44 years old in construction and for workers under 

25 years old in service industries and in transportation. On the whole, however, pension firms 

have lower quit rates than nonpension firms.

Quit rates by age for pension firms classified by 

size of firm also are lower than the quit rates of 

similarly classified nonpension firms (table 2.14). 

The quit rates are inversely related to size of firm.

These data do not prove that pensions reduce 

mobility, but they clearly demonstrate that firms 

with pensions have lower turnover and lower quit 

rates, independently of industry or of size of firm, 

although the lower mobility of workers in pension 

firms cannot be laid to pensions alone. There are 

three major reasons that pensions may not be the 

principal immobilizing influence in firms with 

pensions.

First, characteristics other than industry or 

size of firm which affect mobility may differ 

between pension and nonpension firms. Pensions 

are more common in high wage firms; hence, 

pension firms probably have higher wages than 

nonpension firms. Pensions are also much more 

common in unionized firms, and such firms are

T able 2.13. A nnual Q uit K ates, b y I ndu stry, A ge,

and P ension C o v e r a g e , 1955,1 Six A reas

Quits per 100 employees

Industry division 

and pension class

All industries: 1

Pension________

No pension.........

Construction:

Pension..............

No pension.........

Manufacturing:

Pension..............

No pension.........

Transportation, communication, and 

public utilities:

Pension...............

No pension.........

Wholesale and retail 

trade:

Pension...............

No pension.........

Finance, insurance, 

and real estate:

Pension_________

No pension.........

Service:

Pension................

No pension_____

Under

25

years

25 to 

34

years

35 to 

44

years

45 to 

54

years

55 to 

64

years

65

years

and

older

All

ages2

41 22 14 6 3 9 17

47 34 22 16 12 11 24

38 36 23 11 5 11 27

21 24 21 21 18 9 20

38 21 12 5 2 8 14

43 34 19 11 9 10 23

31 16 15 2 8 6 13

7 24 12 5 2 9

51 30 20 10 4 6 25

60 47 30 21 17 12 35

37 24 16 4 3 22 21

90 59 48 22 19 16 49

70 19 15 6 6 18 18

46 29 22 28 13 16 26

1 See footnote 1, table 2.11.

3 See footnote 2, table 2.11.

Source: Derived from unpublished tabulations furnished by the Bureau

of Employment Security.

T able 2.14. A nn ual Q uit R ates, b y Size of E stablishm ent, A ge, and P ension C o v e r a g e , 1955,1 Six A r e a s2

Quits per 100 employees

Pension class and age Number of employees in establishments

Total 50-99 100-499 500-999 1,000-

4,999

5,000 

and over

Workers under 45

years

Pension-------------- 23 29 27 21 20 23

No pension 33 39 33 39 22

Workers 45-64 years:

Pension............... 5 6 7 3 4 4

No pension______ 15 21 14 12 7

1 See footnote 1, table 2.11.

2 See footnote 2, table 2.11.

Source: Derived from unpublished tabulations furnished by the Bureau 

of Employment Security.

likely to have strict seniority rules and effective 

grievance procedures which minimize the necessity 

of workers changing jobs in order to obtain satisfactory work situations. Firms in seasonal industries are less likely to have pension plans than 

firms with fairly steady year-round employment; 

hence, the nonpension firms probably include most 

of the seasonal firms which characteristically have 

high labor turnover. In other words, pension 

firms are likely to offer better compensation, 

working conditions, and job security than nonpension firms, and might be expected to have 

lower turnover regardless of the effect of pensions 

in holding workers.

Second, pension firms have lower accession 

rates than nonpension firms. It was shown above 

that about 70 percent of workers separated in 

1955 had less than 1 year of service. If the 

patterns of separation of pension firms and of 

nonpension firms are similar to those of all firms, 

then the lower accession rates of pension firms 

would mean that fewer short-service workers who 

are prone to quit or are frequently discharged are 

employed. The lower accession rates of pension 

firms may be a result of lower separation rates 

induced by pensions, but they are also related to 

the lower rate of growth of employment in firms 

with pensions.

Third, pension firms have lower separation and 

quit rates in most age groups in all industry and 

size-of-firm classes although the differences are 

largest for older age groups. Since the effect of 

pensions on the mobility of young workers is 

probably quite small, this finding suggests that it 

is factors other than pensions which account for

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much of the lower mobility of workers in firms 

with pensions.

Turnover among young workers is quite high 

in pension firms, and quit rates in pension firms in 

most industries drop below 10 percent only after 

age 45. The willingness of workers under 45 to 

quit jobs is probably sufficiently high to accommodate necessary employment shifts even in pension firms. In short, the immobilizing effects of 

pensions which might be significant for manpower 

policy are likely to be important principally for 

older workers who are also likely to be long-service 

workers; for it is older workers who stand to lose 

large unvested benefits, are close to retirement, 

and face special difficulties in finding new jobs.

Pension Trends Affecting Mobility

Three recent developments in pension plans may 

have had the effect of reducing the immobilizing 

effects of pensions: (1) vesting has become more 

common;15 (2) early retirement and disability 

retirement are being provided in an increasing 

number of plans; and (3) collectively bargained 

multiemployer plans have grown in importance. 

Whatever effect pension plans have in reducing 

mobility would be mitigated by any of these three 

developments.

Vesting. In establishing a pension plan, an 

employer is likely to concern himself initially 

with pensioning long-service employees only. Similarly, a collectively bargained plan is likely 

to serve the organizational goals both of companies 

and unions if benefits are restricted to workers 

with long service. In the early years of a pension 

plan, uncertainties related to the cost and security 

of the plan will usually dictate a conservative 

policy in paying benefits. In 1952, when collectively bargained plans were relatively new, 

only one-fourth of the 300 plans studied by the 

Bureau of Labor Statistics included vesting provisions, while in late 1958 almost six-tenth of the 

300 plans included vesting.16 Vesting was more 

common in single-employer plans than in multiemployer plans. The trend toward vesting observed in the Bureau of Labor Statistics study 

is also shown by Daniel M. Holland's analysis of 

the likelihood of vesting in 124 large company 

plans included in four studies of pensions conducted 

by the Bankers Trust Co.17 The likelihood of

vesting for workers with 10 or more years of 

service has increased steadily over the 1947-59 

period. In the 1956-59 period, for instance, the 

likelihood of vesting of workers 55 to 59 years old 

with 20 or more years of service was 55.0 contrasted to 21.3 in the 1947-49 period (table 2.15). 

The likelihood of vesting is quite small for workers 

with less than 10 years of service, regardless of age. 

It is clear from table 2.15 that 10 years is the 

shortest length of service which is common, and 

the low likelihood of vesting for workers 30 to 

39 years old with 10 years of service suggests 

that attainment of age 40 is also a common 

requirement.

Both Holland's sample and the Bureau of 

Labor Statistics sample show changes in vesting 

in long-established plans and are, therefore, 

unlikely to be representative samples of all 

current plans. An analysis of several surveys of 

new or amended pension plans showed little 

evidence of a trend toward more liberal vesting 

provisions.18 The trend toward more liberal 

vesting in established plans and the absence of 

such a trend in new plans reflects the reluctance 

of plan authorities to provide liberal vesting 

initially. It seems likely that once a given 

vesting provision is established in a plan, any 

further change will be in the direction of liberalization, except in those plans which face serious 

financial difficulties. These considerations suggest that vesting provisions will become more 

liberal and more common as plans mature.

How significant is the trend toward vesting 

for labor mobility? It was pointed out above 

that the immobilizing effects of pensions are

is If employment earns the employee a right to a future pension or earns 

a right to a cash refund of both the employee's contribution (if any) and the 

employer's contributions, the pension is said to be vested. Vesting may be 

graded or full. If the pension rights are such that the employee receives 

a pension at retirement which accurately reflects the pension benefit 

formula, vesting is said to be full; if the benefits are less than the 

actuarial value of the service or earnings, vesting is said to be graded. If 

pension rights are vested as soon as they are earned, vesting is said to be 

immediate. If rights become vested only after a minimum number of years 

of service or after the attainment of a certain age, vesting is said to be deferred.

16 Bureau of Labor Statistics, Pension Plans Under Collective Bargaining

(BLS Bulletin 1259,1959), p. 4.

n By likelihood is meant the proportion of workers in these plans with 

given age and service who would have a vested pension. The likelihood 

is computed in this instance by weighting the vesting provisions of the plan 

by the number of workers of all ages and lengths of service included in the 

plan. Thus if 50 percent of the workers covered by the 124 plans were in 

plans which provided vesting at age 40 with 10 years of service, the likelihood 

for this age and service class would be 50.

is Thirty-ninth Annual Report of the National Bureau of Economic Research, 

Inc. (New York, 1959), table 22, p. 66.

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T able 2.15. Likelih ood of W o rk ers of G iv e n A ge

and L ength of Se rvice H avin g V ested P ension

R ights, 124 L arge C om pan y Plans

Age Length of service 

(in years)

1947-49 1950-52 1953-55 1956-59

Under 30......... Less than 5________ 0.2 0.1 0.02 0.02

5-9___________ ____ .8 2.2 1.8 1.9

30-39.............. Less than 5 .2 . l .02 . 02

5-9....... ..................... 1.3 2.6 2.3 2.3

10-14......................... 4.0 6.7 5.7 6.3

40-44................ Less than fi .2 .1 0 0

5-9.......................... . 1.3 2.6 2.3 2.3

10-14......................... 5.4 7.4 25.5 30.6

15-19......................... 7.5 9.8 26.9 38.4

45-49....... ........ Less than 5 _______ .2 .1 .02 .02

5-9......................... . 1.3 2.6 2.3 2.3

10-14........................ 6.9 8.5 31.0 35.6

15-19______________ 9.3 11.1 32.6 43.9

20 or more_________ 13.1 18.4 34.9 47.4

50-54................ T/P.ss than 5 .2 .1 .02 .02

5-9.............. ............ 1.4 2.7 2.5 2.6

10-14........................ 7.2 8.8 31.7 37,2

15-19....... .................. 9.8 12.0 34.6 46.7

20 or more................. 18.3 20.2 37.8 50.8

55-59...........— T^.ss than 5 1.0 1.1 .1 .3

5-9............ ................ 2.2 3.7 2.6 2.9

10-14....................... . 9.5 12.0 34.2 40.0

15-19....... .................. 12.5 15.5 38.2 49.9

20 or more_________ 21.3 25.0 42.7 55.0

60 and over___ Less than 5________ 10.8 1.5 2.0 1.9

5-9________ _______ 12.0 4.1 4.5 4.5

10-14_______ ______ 20.1 23.1 37.7 42.0

15-19_______ ______ 25.0 29.5 43.4 59.6

20 or more................ 36.1 41.5 51.2 82.3

Source: Daniel M. Holland, “ The Pension Structure,” in A Respect for

Facts, Fortieth Annual Report of the National Bureau of Economic Research, 

Inc. (New York, 1860), p. 45.

likely to be most important for older workers 

with long service. Workers with vested pensions 

do not stand to lose benefits, so their reluctance 

to change jobs is perhaps less than that of similarly situated workers with unvested pensions. 

The provision of vesting with 10 or more years of 

required service can probably do much to decrease the immobilizing effects of pensions on the 

age and service groups for whom pensions are 

likely to have the most significance. Nevertheless, the propensity of long-service workers 

to change jobs is quite low even in nonpension 

firms. It is unlikely, therefore, that even liberal 

vesting provisions requiring attainment of age 

35 or 40 and as little as 5 years of service would 

do much to increase the total amount of job changing 

of workers with vested pensions. If the independent 

effect of pensions in reducing mobility is small, 

then the effect of vesting in increasing mobility 

is also likely to be small.

However, the increase in mobility which results 

from the spread of vesting may be quite significant

« Bureau of Labor Statistics, Pension Plans Under Collective Bargainingt

op. cit., pp. 11 and 12.

for senior white-collar workers to whom unvested 

pensions may be important reasons for not changing jobs, since job-security provisions are uncommon in this group. As pointed out in the section 

on occupational mobility, managerial and professional workers appear to exhibit low job mobility.

Early Retirement. Many plans which make no 

other provision for vesting provide for retirement 

before the normal retirement age (usually age 65) 

at the option of the employee, sometimes with the 

employer's approval. In one or two instances, 

early retirement is at the option of the employer. 

The service required for early retirement is often 

lengthy, as much as 30 years. When early retirement provisions are included in pension plans, the 

minimum age is often 55 years or 60 years. Occasionally, early retirement is accompanied by a 

larger pension between retirement age and age 65 

when the worker becomes eligible for OASDI (or 

age 62 for women, and for men since 1961), and 

many plans permit income equalization options.

Early retirement may make an important contribution to decreasing the immobilizing effects of 

pensions, since early retirement makes it possible 

for the worker who is only a few years away from 

normal retirement age to leave his job without 

forfeiting his pension.

Early retirement provisions have undoubtedly 

become more common in the past few years. Of 

300 collectively bargained plans in force in 1958, 

218 included early retirement, and only 71 did not 

provide for either vesting or early retirement.19

Early retirement nearly always results in the 

worker receiving a smaller pension than he would 

receive if he worked to the normal retirement age. 

For some industries, however, the results are favorable to workers as long as retirement is at his option. Early retirement may permit a worker to 

quit a heavy job and find a new light job at which 

he may be able to work for several years past the 

normal retirement age.

Disability retirement provisions are unlikely to 

have much effect on mobility, since disability 

standards are usually quite restrictive. The 

worker who draws a disability pension, however, 

does have his pension rights protected.

Multiemployer Plans. Most multiemployer pension plans are negotiated by a union with a 

number of employers or with an employer's

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association and cover workers in one industry 

either nationally or in some area. Such plans 

provide a limited degree of pension portability. 

As long as workers shift between employers who 

are members of such plans, the workers’ pension 

rights are protected. Multiemployer plans include vesting less frequently than do other 

collectively bargained plans.

It might appear that the relatively high frequency of industry shifts in job changes discussed 

in the section on industry mobility patterns might 

limit the pension protection provided by multiemployer plans to a small proportion of job 

changers who remain in their original industry 

of attachment. The frequency of industry change 

in the national data is probably irrelevant for 

most multiemployer plans, however, since they 

are concentrated in industries to which workers 

show strong attachment. In 1960, for instance, 

about 23 percent of the workers covered under 

multiemployer plans were employed in apparel 

and other finished textiles industries; about 20 

percent were in contract construction; and 15 

percent were in motor transportation.20 These 

plans frequently cover a large proportion of the 

jobs in a given industry. Illustrating this point, 

the trustees of the Electrical Workers Pension 

Fund (IBEW) reported:

The very nature of electrical construction work often

makes changing from job to job and traveling from city to

city imperative. Thus our National Plan as it is constructed, benefits all workers, since it assures them of a pension no matter where they go nor how often they are

called upon to change jobs. The fact that a worker is not

restricted to one area because of pension considerations

is definitely an advantage to him in job opportunities and

it is a boon to the contractors who must have trained

electricians on the job wherever they are located.

In industries where workers show high attachment, multiemployer plans can provide substantial 

protection of pension benefits and such plans need 

not reduce interfirm or interarea mobility, although they perhaps restrict interindustry and 

occupational mobility. Even these immobilizing 

effects are likely to be small if the plans provide 

that workers can continue membership in the plan 

by making contributions after ceasing to work 

in covered employment. Such provisions are not 

common, although the IBEW plan mentioned 

above allows workers to continue membership in 

the fund after leaving covered employment.

There is some tendency for several plans in the 

same industry which are established by a single 

international union to provide reciprocal transfer 

of credits or to merge into a single plan. The 

coordinated plans or single plans which result naturally provide additional protection of pension 

benefits for covered workers who change jobs.

The immobilizing effects of multiemployer plans 

are probably much smaller than the effects of 

unvested single-employer plans. Nevertheless, 

portability of pension credits among employers 

in the same industry is an inferior substitute for 

vesting in many industries. In others, it provides protection of pension credits which is often 

superior to vesting. As pointed out above, relatively few single-employer plans provide vesting 

before age 40 and 10 years of service, but multiemployer plans permit young workers with short 

service to keep their pension credits when they 

move to other employers who are members of the 

plan. 30

30 Bureau of Labor Statistics, Multiemvloyer Pension Plans Under Collective

Bargaining (BLS Bulletin 1326,1962), table 3, p. 98.

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Chapter HI. Employment Opportunities of Older Workers

Summary

Older workers have long faced difficulties in 

finding employment, although these problems are 

less severe during periods of high employment. 

The growth of seniority rules has strengthened the 

position of older workers, and relatively few older 

workers with long service experience unemployment during a given year. Employers usually 

rate their older workers highly in terms of steadiness and output, and there is no evidence that the 

output of older workers in general is significantly 

lower than that of younger workers.

Younger workers usually have higher unemployment rates than do older workers, and larger 

proportions of younger workers than older workers 

experience unemployment during a given year. 

Those older workers who experience unemployment tend to be unemployed for longer periods 

than younger workers. It is lengthy unemployment of older workers that gives the older worker 

problem its special importance for public policy. 

The unemployment rates of older workers are 

less sensitive to changes in the general level of 

unemployment than the rates of younger workers, 

and the unemployment rates of older workers 

have not worsened relative to the general level 

of unemployment in recent years; hence the 

unemployment problem of older workers is 

probably related more to personal characteristics 

of unemployed older workers and to discriminatory 

practices which bar many jobs to older workers 

than to cyclical influences.

In 1956, unemployed older workers were more 

frequently skilled and had somewhat higher past 

earnings than younger jobseekers, but they had 

less formal education and were more frequently 

physically handicapped. In 1961, about threefourths of the unemployed older workers were last 

employed in industrial occupations. Aged men 

who are seeking full-time work after being retired 

from their regular jobs find extreme difficulty in 

getting jobs.

Many firms impose maximum age limits in 

hiring and thereby close important parts of the 

job market to older jobseekers. Studies in 1950 

and 1956 showed that the proportion of job orders 

filed with public employment offices including 

maximum ages ranged from one-fourth to threefourths. Restrictions were especially common in 

professional, managerial, and clerical jobs. Employers frequently mentioned higher pension costs 

and closeness to involuntary retirement age as 

reasons for not hiring older workers, but the desire 

to promote from within (often imposed by seniority 

rules) and a conscious policy of keeping the work 

force young are perhaps more important reasons.

The importance of pension costs in the hiring 

decision depends on the provisions of the pension 

plan. Multiemployer plans nearly always have 

fixed contributions, so that there is no additional 

cost to the employer of hiring an older worker. 

The additional costs of older workers to firms with 

fixed benefit plans depend on the mortality and 

turnover experience of the firm. Fixed benefit 

per year of service plans probably have higher 

additional costs for older workers than percentage 

of compensation plans, but the additional cost for 

a 45-year-old worker compared to a 35-year-old 

worker would seldom exceed 1 percent of total 

compensation for the average employee.

Despite the reluctance of some firms with pension plans to hire older workers, it appears that as 

a group, firms with pensions hire as many 45- to 

64-year-olds as they separate; thus the presence 

of maximum hiring ages associated with pension 

plans does not appear to have had unfavorable 

effects on the employment opportunities of these 

older workers.

Introduction

Many unemployed older workers have difficulty 

in finding jobs even during periods of high employment.21 Corporate pensions are related to the 

older worker problem because many firms with 

pensions have maximum hiring ages which are 

rigidly enforced. It is said that pension costs are 

higher for older entrants and that firms are reluctant to hire workers who will shortly be retired 

without a full pension.

Older workers faced serious employment problems long before pensions were common. During 

the 1920?s, few older workers were protected by 

seniority provisions against layoff; hence many

21 By “ older workers” is meant workers 45 years and older largely as a

matter of statistical convenience. Age problems in getting and retaining 

jobs begin at different ages in different occupations.

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T a b le 3.1. U n em plo ym en t R ates of M e n , b y A ge,

1 9 4 8 -6 1 1

[Annual averages]

Percent of civilian labor force unemployed by age in years

Year 14

and

over

14

to

19

20

to

24

25

to

34

35

to

44

45

to

54

55

to

64

65

and

over

1961....... ......... 6.5 15.8 10.7 5.7 4.6 4.9 5.7 5.5

1960................. 5.4 14.0 8.9 4.8 3.8 4.1 4.6 4.2

1959................. 5.3 13.2 8.7 4.7 3.7 4.1 4.5 4.8

1958................. 6.8 15.2 12.7 6.5 5.1 5.3 5.5 5.2

1957................. 3.8 11.3 7.8 3.3 2.8 3.3 3.5 3.4

1956................. 3.5 9.6 6.3 2.9 2.3 2.7 3.2 3.3

1955................. 3.9 9.9 7.0 3.0 2.8 3.0 4.1 3.7

1954................. 4.9 11.2 9.8 4.4 3.7 3.9 4.9 4.2

1953................. 2.4 6.8 4.3 1.9 1.7 1.9 2.4 2.0

1952................. 2.4 7.6 4.0 1.8 1.7 1.8 2.1 2.1

1951................. 2.6 7.0 3.5 2.0 1.7 2.1 2.5 3.3

1950................. 4.9 11.0 7.7 4.2 3.3 3.9 4.7 4.6

1949_________ 5.5 11.9 9.9 4.7 3.8 3.9 4.9 4.9

1948................. 3.3 8.3 6.3 2.5 2.1 2.3 2.8 3.0

1 Old definition of unemployment for 1956 and earlier years. 

Soubce: Bureau of the Census and Bureau of Labor Statistics.

suffered unemployment. The growth of unions 

and collective bargaining during the 1930’s and 

1940’s led to the more widespread adoption of 

seniority practices, providing greater security to 

employed older workers. The job security provided by union-negotiated seniority provisions 

also spread to nonunion firms.

The unemployment problems of older workers 

in the 1930’s disappeared during the high employment years of World War II and the immediate 

postwar period. Ewan Clague, writing in 1947, 

predicted that—

The problem of the older worker will rise when the

first postwar recession in business occurs. A deep and

prolonged depression need not be envisaged; the assumption may be made that not more than 5 million persons

would be out of work at any one time and that the business

setback would not last more than a year or two. Unemployment of that dimension would undoubtedly emphasize

the difficulties of the older worker in industry. It would

bring to the fore again the issue of adequate old-age retirement benefits and the question of the suitable retirement

age. If this were the whole problem, the lessons would

be simply that older workers can and do get jobs in full

prosperity periods, but they are the chief sufferers in

business depressions; and that special legislative considerations, therefore, should be given to them under social

security . . .

Meantime, the first business recession will cause deep

concern as to the impact of unemployment on the older

workers. In succeeding periods of recovery and prosperity

this type of unemployment will not disappear, but will

remain as an increasingly stubborn and difficult question.

The growing numbers of the aged will speedily convert

this into a national problem of the greatest importance.

The decision will then have to be made between (1)

lowering the retirement age and attempting to remove

these older workers from the labor market, and (2) taking

steps to assure the continued usefulness of these age

groups as productive workers.22

These predictions have been borne out. The 

1948-49 recession gave impetus to the 1950 

revisions of the Social Security Act and to the 

unions’ drive for negotiated pensions. During 

the 1950’s, interest in older workers and their 

problems grew. Research by government and 

private groups sought solutions to the older worker 

problem. The three recessions of the postKorean period brought the problem into prominence. Older jobseekers tended to be unemployed 

for lengthy periods, frequently exhausted their 

unemployment benefits, and posed special problems in declining industries and depressed areas.

The older worker problem has two aspects:

(1) keeping older workers on the job; and (2) 

getting older workers jobs if they become unemployed. Most of the recent concern over the 

older worker problem has concentrated on the 

problems of getting a job, but obviously this 

problem would be less severe if older workers 

were more successful at holding jobs.

Older workers usually have the job security 

which arises from seniority provisions in collective bargaining, favorable employer attitudes, 

and satisfactory performance records. Older 

workers are usually the principal beneficiaries 

of seniority rules, and collective bargaining 

provides ways of tailoring jobs to the abilities 

of older workers, as well as protecting their 

transfer rights in instances of departmental 

shutdowns or plant transfers.23

A survey of employer attitudes showed that a 

majority of employers thought that older workers 

were superior to younger workers in terms of 

“ steadiness” and output, but that older workers 

were more difficult to train. A majority also 

thought that older workers were absent less often 

than younger workers, but that they tended to 

be absent for longer periods.24 Bureau of Labor 

Statistics studies of productivity show that for 

pieceworkers in four footwear factories and in

22 “ Employment Problems of the Older Worker,” Monthly Labor Review,

December 1947, pp. 661-663.

2* Unions usually oppose variation in pay rates for older workers, but 

stress job changes to meet the problems of failing ability. See Melvin K. 

Bers, Union Policy and the Older Worker (Berkeley, Institute of Industrial 

Relations, University of California, 1957), pp. 34-46. See also, Bureau of 

Labor Statistics, Older Workers Under Collective Bargaining, Part I (BLS 

Bulletin 1199-1,1956), pp. 13-25.

*4“ The Older Worker,” Factory Management and Maintenance (McGrawHill, March 1958), pp. 85-96.

20

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four clothing factories, older workers had slightly 

lower average output.

Older office workers had about the same output 

as younger workers. A Canadian study showed 

that older retail sales workers had slightly higher 

output than younger workers. In all of these 

studies, however, variability was high in each 

age class, so that age was not an important 

variable in explaining differences in worker 

productivity.25

Unemployment of Older Workers

Unemployment rates for men commonly are 

highest for workers in the younger age groups, 

decrease sharply and are lowest for men 35 to 44 

years old, then increase slowly with increasing 

age. In 1961, for instance, the unemployment 

rate was 10.7 percent for men 20 to 24 years old, 

4.6 percent for men 35 to 44 years old, and 5.7 for 

men 55 to 64 years old (table 3.1). The unemployment rate of men 65 years and older is usually 

little higher than that of men 45 to 54 to 64 years 

old, but the rate is computed on a labor force 

made up in large part of farmers and self-employed 

managers and proprietors whose unemployment 

rates are very low. Thus the unemployment rates 

of aged men understate unemployment as a proportion of those who are exposed to unemployment. *5

25 Bureau of Labor Statistics, Job Performance and Age: A Study in

Measurement (BLS Bulletin 1203, 1956) and Comparative Job Performance

by Age: Office Workers (BLS Bulletin 1273, I960); and Age and Performance

in Retail Trade (Economics and Research Branch, Department of Labour, 

Ottawa, Canada, 1959).

2« In the regression of the unemployment rate of men 55 to 64 years old on 

the unemployment rate of men 35 to 44 years old, the intercept shows the 

hypothetical unemployment rate of men 55 to 64 years old which would be 

associated with the absence of unemployment of men 35 to 44, and the regression coefficient shows the average change in the unemployment rate of men

55 to 64 years old which is associated with a 1 percentage point increase in 

the unemployment rate of men 35 to 44 years old.

The regression coefficients for the older age groups are close to 1, and this 

suggests that recessions cause about the same absolute changes in unemployment rates for the older age groups. Since the intercept coefficients for the 

older age groups are greater than zero, however, the unemployment rates of 

the older age groups increase proportionately less with recession than does 

the rate of men 35 to 44 years old.

It may be observed from charts 3.4-3.6 that the observations of more recent 

years do not fall disproportionately above the regression lines. There is no 

trend in the unemployment rates of older men once account is taken of the 

variation in unemployment rates of men 35 to 44 years old.

Regression coefficients are shown below:

Regression age

Intercept

coefficient

Regression

coefficient

Standard

error of

regression

coefficient

14 to 19................ - .......... 2.98 2.55 0.22

20 to 24____ ____ _________ .37 2.38 .15

25 to 34________ __________ .37 1.33 .04

45 to 54................... ............. .30 1.00 .04

55 to 64_____ _____________ .71 1.05 .08

65 and over____ _____ ____ 1.25 .86 .10

The increase in unemployment rates for age 

groups older than 45 years is related to the greater 

duration of unemployment among unemployed 

older men. In 1961, for example, the average 

duration of unemployment increased regularly 

with age:

Average duration of unemployment, in weeks, 1961

Age Men Women

All ages__ __ _______ ____ 16. 9 13. 5

14 to 17________________________ ____ 9. 1 6. 9

18 to 24________________________ ____ 13. 1 11. 1

25 to 44________________________ ____ 16. 8 13. 8

45 to 64____ _ _ _ ____ 20. 9 16. 1

65 and over____ _ _ _ ____ 30. 4 _.

The greater average duration of unemployment 

of older workers is the principal characteristic of 

such workers that makes the older worker problem 

of major public concern. Relatively few older 

workers are unemployed in the course of the year. 

In 1960, for instance, the proportion of persons 

in the labor force at some time during the year 

who were unemployed at any time during the year 

decreased with age after age 20:

Percentage of persons in labor

force in 1960 with

unemployment

Age Men Women

All ages__ __ _ ____ 18. 4 15. 3

14 to 17________________________ ____ 19. 3 13. 7

18 to 19________________________ ____ 33. 0 29. 9

20 to 24________________________ ____ 34. 8 19. 5

25 to 34________________________ ____ 20. 1 16. 2

35 to 44________________________ ____ 15. 3 14. 5

45 to 64________________________ ____ 14. 4 12. 5

65 an d over___ _____ __ _ .____ 10. 8 8 .3

From the foregoing data it may be concluded 

that relatively few older workers are unemployed 

during the year, but once employed their unemployment tends to be of longer duration. When 

older workers are displaced, it is usually because 

they are laid off or discharged. Older workers 

tend to be unemployed longer on the average because they are unemployed predominantly because 

of economic reasons, rather than voluntarily and 

because fewer opportunities for employment are 

open to them.

The unemployment rates for men of different 

ages tend to respond in similar fashion to economic 

changes. When the unemployment rates of men 

in various age groups are plotted against the unemployment rate of men 35 to 44 for the period 

1948-62, the observations show very close linear 

relationships 26 (charts 3.1-3.6). Hence, while un21

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Relation of Unemployment Rates for Men of Different Ages 

to Unemployment Rates of Men 35-44

Unemployment rate

of men 14-19

Unemployment rate

of men 25-34

Unemployment rate

of men 55-64

Unemployment rate of men 35-44

Unemployment rate

of men 20-24

Unemployment rate

of men 45-54

Unemployment rate

of men 65 and over

22

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employment of older men has grown more severe 

as unemployment has increased in recent years, 

it does not seem to have grown worse relative to the

general level of unemployment. Unemployment 

rates of older workers and the rate of workers 35 

to 44 years old change by about the same absolute 

amounts with fluctuations in the level of economic 

activity. Since unemployment rates of older workers are proportionately higher in years of low unemployment, the unemployment rates are relatively less sensitive to recession and recovery than 

are the rates of younger workers. Understanding 

the behavior of unemployment of older workers 

depends primarily on understanding the reasons 

that the unemployment of older workers is higher 

than that of the prime age groups even during 

periods of prosperity. Two principal reasons are 

usually mentioned—special characteristics of older 

workers which disqualify them for the jobs which 

are available, and discrimination against qualified 

older workers.

Characteristics of Unemployed Older Workers

Like any other group of people, older jobseekers 

are diverse. Some older jobseekers are on temporary layoff, and can expect to be recalled when 

employment increases. These face no special 

problems, although they may have difficulty in 

finding temporary work. Seniority systems and 

pensions are likely to hold these workers closely 

to the firm even though they are on layoff, especially if other regular jobs are closed to older 

workers.

The displaced older worker who cannot expect 

to return to his regular job may face more difficult problems. He often restricts his job search 

to the local labor market area. If employment 

in the area or in his industry of attachment is 

declining, the displaced older worker may not be 

able to find any job. Workers displaced from 

high-wage jobs may find it impossible to get 

comparable jobs even if they are willing to move. 

Consequently, many displaced workers in their 

fifties and sixties withdraw from the labor force.

The personal characteristics and work experience of older workers often contribute to their 

difficulties in finding suitable work. A study of 

work applicants at public employment offices conducted as part of the Seven City Study in 1956

27 Bureau of Employment Security, Older Worker Adjustment to Labor

Market Practices (BES Bulletin R151, 1956).

found that 30 percent of the jobseekers were 45 

to 64 years old, while 10 percent were 65 years 

and older. In contrast, a matched sample of 

employed workers included 32 percent 45 to 64 

years old and only 3 percent 65 years and older. 

About two-fifths of the older jobseekers were last 

employed in manufacturing. The older jobseekers 

had on the average higher skills and higher past 

earnings than those under 45 years, but had less 

formal education and were more frequently 

physically handicapped.27

In 1961, 70 percent of the unemployed older 

men were last employed in industrial occupations 

(craftsmen and foremen, operatives, nonfarm 

laborers), compared to 74 percent of the unemployed men 25 to 44 years old. There were 

only slight differences in the unemployment rates 

of labor force groups of different ages in various 

occupations in 1961:

Unemployed as percent

of experienced civilian

labor force in occupations

group (men)

25 to 44 45 years

Occupation group years and older

All occupations_________________ 5. 1 5. 2

Professional and technical_____________ 1. 7 2. 0

Farmers and farm managers___________ .5 .4

Managers, officials, and proprietors___ 1. 6 1. 6

Clerical and kindred workers__________ 3. 4 4. 0

Sales workers___________________________ 2. 9 3. 6

Craftsmen and foremen________________ 5. 2 7. 3

Operatives_______________________________ 8. 0 7. 6

Service workers_________________________ 5. 9 6. 4

Farm laborers and foremen____________ 6. 8 7. 7

Laborers, except farm and mine_______ 14. 6 13. 7

Source: Employment and Earnings, June 1962, table SA-37, p. 90.

Some aged workers retire while they are still 

capable of working, and many of these remain 

attached to the labor force. Retired workers 

often seek part-time or seasonal jobs in order to 

keep their earnings under the maximum allowed 

for OASDI benefits, but some seek full-time 

jobs at their customary rates of pay. Firms 

which do not impose rigid age limits in hiring are 

usually reluctant to hire workers who have retired and are receiving sizable pensions, and with 

two-fifths of the private work force covered by 

pensions, relatively few jobs are open to the aged 

retired workers, even if they are in good health 

and are fully qualified. Indeed, it may be difficult to justify special efforts to find jobs for pensioners when other qualified unemployed persons 

are seeking work.

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Discrimination Against Older Workers

Many firms refuse to hire older workers and 

impose rigid maximum age limits in hiring and 

thereby close important parts of the labor 

market to older workers. In 1950, a study conducted by State employment services found that 

72 percent of the job orders placed with the public 

employment service in Columbus, Ohio, and 52 

percent of those in Houston, Tex., specified 

maximum hiring ages. In Lancaster, Pa., 60 

percent of the job openings, and in New York 

City, 25 percent of the job openings included 

upper age limits. The proportions of job orders 

and job openings with age restrictions were 

commonly higher in professional and managerial 

and clerical jobs and job orders, and somewhat 

lower in other occupation groups.28 Similar 

results were found in the Seven City Study 

conducted by State employment security agencies 

and the Bureau of Employment Security in 1956. 

More than one-half of the job openings in the 

seven cities specified upper age limits of less than 

55 years, and in 20 percent of the openings, the 

age specified was less than 35 years. Again, 

managerial and professional and clerical jobs 

were more frequently restricted than other occupations, and in this study, unskilled jobs were 

also more frequently restricted than other kinds 

of jobs. The frequency of upper age limits appeared to increase with size of establishments. 

Slightly more than one-half of the job openings 

in firms with fewer than 20 employees specified 

maximum ages, and the proportion increased 

until almost four-fifths of the job openings in 

establishments with 1,000 or more employees 

specified age limits. Very often, however, the 

age limits specified by establishments in the 

largest size group were higher than those of establishments in the 100- to 999-employee class. Of 

the largest establishments, 19 percent of the age 

specifications were for ages above 54 years. 

According to the Bureau of Employment Security, the greater frequency of age limits in 

large firms was “ presumably due to pension and 

insurance plans.”

The reasons most frequently given for not 

hiring older workers in the Seven City Study 

included (1) Inability to maintain normal production standards (22 percent of all reasons);

(2) inability to meet physical requirements (21

percent); (3) inflexibility (13 percent); (4) pension 

and insurance costs (10 percent); (5) too close 

to compulsory retirement age (in the usage of this 

report, involuntary retirement age) (7 percent); 

and (6) simply prefer younger workers (5 percent). No other reason provided more than 4 

percent of the responses.29

Reasons mentioned by employers for not 

hiring older workers are not necessarily the most 

important reasons for such practices. Probably 

most firms prefer to fill vacancies with qualified 

workers who are already employed. Indeed, 

in many firms seniority rules provide that workers 

may bid on openings in order of seniority. In 

such firms, job openings are predominately openings at entry grades, usually requiring little 

experience and carrying relatively low pay. 

Since many older jobseekers are accustomed to 

the advantages and pay which came with seniority 

in the firm they left, jobs at entry grades may 

not be acceptable, even if the older jobseeker is 

acceptable to employers.

Finally, many firms have a definite policy of 

“keeping the firm young” or at least preventing 

the average age of the work force from rising any 

more than necessary. Firms which are not 

expanding rapidly normally will encounter the 

problem of an aging work force, and pensions 

are often adopted to induce retirement of aged 

workers. Under such circumstances, the hiring 

of older workers goes against the firm’s welldefined policy.

Despite the frequency of age limitations, there 

is evidence that employers are likely to relax age 

limits if qualified applicants are referred, although 

employers are especially reluctant to relax age 

limits associated with pension plans.30 Age preferences or restrictions are also found much less 

frequently in States which have enacted legislation 

to bar hiring discrimination based on age.

As of June 1962, laws prohibiting discrimination 

against older workers were in force in 15 States, 

including New York, California, Pennsylvania, 

Ohio, Massachusetts, and New Jersey. These 

laws forbid discrimination against workers of 

specified ages in most industries, although some

28 Bureau of Employment Security, Workers are Young Longer, a report of 

the Findings and Implications of the Public Employment Service Studies of 

Older Workers in Five Cities, third printing, 1953.

29 Bureau of Employment Security, Counseling and Placement Services for

Older Workers (BES Bulletin E152,1956),pp. 28-60.

so Ibid.

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of the State laws exclude small employers and 

farm, domestic service, and noncommercial employment. Most of the laws apply to workers 

between the ages of 40 or 45 to 60 or 65 years, 

although New Jersey’s law applies to workers 21 

years and older, and New York’s law has been 

interpreted to apply to discrimination based on 

“ overage,” regardless of the worker’s chronological 

age. Among the employment practices outlawed 

are refusal to hire, discrimination in pay or 

working conditions, and discharge of workers on 

account of age alone. Employment agencies and 

labor unions are also restrained from discriminating in referral or service to older workers.31

The effectiveness of the State laws against age 

discrimination is difficult to judge. Enforcement 

varies between the States, of course, but even in 

the States with strong laws which are vigorously 

enforced (such as New York and Pennsylvania), 

few cases have been sustained against employers. 

The laws are probably effective in eliminating or 

reducing the employer’s reluctance to consider 

older workers. In 1956, for instance, age preferences were found in only 24 percent of the job 

orders in Worcester, Mass, (where age discrimination was prohibited), but age restrictions or 

preferences in other cities were found in 34 to 79 

percent of the job openings.32

What relation is there between pension plans 

and the imposition of maximum hiring ages? It 

was previously noted that about 10 percent of 

reasons offered by employers for not hiring older 

workers were related to higher pension and insurance costs, and 7 percent were due to closeness to 

involuntary retirement ages. The relationship 

between pension plans and maximum hiring ages 

is illustrated by a survey of San Francisco area 

firms which found—

Virtually all the firms with rigid upper age limits in

hiring had pension plans, all accompanied by compulsory

retirement provisions. Most of the companies with less

rigid age limitations in hiring had pension plans, but

some of the plans were not accompanied by compulsory

retirement provisions, and in fact, a majority of these

firms did not have compulsory retirement. Some of the

31 Bureau of Labor Standards, Division of State Services, “ Brief Summary 

of State Laws Against Discrimination in Employment: Older Workers,’' 

Fact Sheet No. 6-B, June 1962.

32 Bureau of Employment Security, Counseling and Placement Services for

Older Workers, op. cit.

3 3 Margaret S. Gordon, “ The Older Worker and Hiring Practices,” 

Monthly Labor Review, November 1959, p. 1201.

34 For a more detailed discussion of these points, see Bureau of Employ 

ment Security, Pension Costs in Relation to the Hiring of Older Worker (BES 

Bulletin E150, 1956), pp. 19-21.

firms with no upper age limits in hiring had pension

plans, but almost none had compulsory retirement.

In this study, it also appeared that both policies 

were more often found together in older firms 

and in firms which were not unionized.33 34

A number of factors tend to operate together. 

A firm which is willing to pay the higher pension 

costs which are associated with involuntary retirement probably considers that its aging work 

force constitutes a serious problem. In such an 

instance, it would scarcely be rational to hire 

additional older workers whose involuntary retirement in a few years would only cause higher 

pension costs. It is true, of course, that a firm 

with an aging work force is unlikely to hire older 

workers whether it has a pension plan or not; 

hence, the independent impact of pension plans 

on hiring practices is difficult, if not impossible, 

to determine.

Pension and Insurance Costs and Hiring Practices

Pension and insurance costs have been mentioned as one reason for employers’ reluctance to 

hire older workers. Certain issues need only 

brief consideration. Insurance costs (including 

workmen’s compensation, group medical and 

hospital insurance, and life insurance), taken as 

a whole, are unlikely to differ very much between 

older entrants and younger entrants. If dependents are covered by hospitalization and medical 

care, the smaller number of maternity benefits 

and the smaller number of younger children of 

the older entrants may offset their slightly higher 

morbidity. Group life insurance rates reflect the 

mortality experience of the covered group, so 

that a marked increase in the average age of the 

covered group would lead to higher mortality 

and perforce to higher insurance costs. Unless 

the number of older workers hired is a substantial 

fraction of coverage, however, the costs are unlikely to increase significantly with the selective 

hiring of older workers. Workmen’s compensation 

costs also depend on experience. There is no 

reason to believe that injuries are either more 

frequent or more severe for older workers than 

for younger workers.31

Money-purchase pension plans are also free 

from higher costs for older entrants. In a study 

of multiemployer plans in 1960, for instance, the 

Bureau of Labor Statistics found that all but 8 

of the 611 plans which required employer con25

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tributions specified contributions as either rates 

per period of time worked or as percentages of 

payroll.35 In multiemployer plans, at least, the 

age of the worker has no direct effect on the 

employer's pension costs.

It is obvious, however, that the hiring of older 

workers does increase the cost to the multiemployer plan of providing retirement benefits on 

either a flat benefit or a flat benefit per year of 

service formula. If benefits are held constant, 

then contributions would have to be increased. 

For the individual employer who is a member of a 

multiemployer plan and who is faced with the 

decision to hire an older worker, however, this 

potential contribution increase is insignificant. 

Multiemployer plans are commonly found in 

industries where unions have considerable influence on hiring; hence, the employer may not be 

able to discriminate between workers of different 

ages if he wishes.

Single-employer money-purchase plans (in which 

the contribution rate is fixed and the benefit 

variable) clearly have employer costs which are 

no different for new entrants of different ages. 

For single-employer plans, however, moneypurchase plans have probably been becoming 

less common, because the benefits from such 

plans weight early years and contributions more 

heavily, hence benefits sometimes lack a reasonable relationship to the earnings of the years 

immediately preceding retirement.

The costs of pensions for older entrants are 

relevant in plans of the definite benefit type in 

which contributions are variable. In negotiated 

single-employer plans (pattern plans), there appears to be a trend toward flat benefits for each 

year of covered service. In the Bankers Trust 

Co. study of plans adopted or amended in 1956- 

59, 87 percent of such pattern plans had some 

form of flat benefit per year of covered service, 

often $2 or $2.50 benefit per month for each year 

of covered service.36 To finance the expected 

cost of such a benefit, the employer must contribute more for a year close to retirement than for 

a year more distant from retirement.

An example of the annual charges of a plan 

providing a benefit of $2.50 per month for each 

year of covered service is given below under the 

following assumptions:

(1) Two and one-half percent interest rate (a 

higher rate would make the annual charges

lower and increase the percentage difference 

between younger and older workers).

(2) 1951 Group Annuity Mortality Table 

(which assumes decreases in mortality below that 

experienced by group annuitants in the base 

period of the study on which the table is based).

(3) No turnover (turnover would increase the 

relative difference in costs and lower total costs 

but it is partially offset if the plan is vested).

Annual charges for a flat benefit of $2.50 per month at age 65 for each year

of covered service

Age of entry Monthly pension Annual charge

25___________________ $100. 00 $158. 87

30___________________ 87. 50 171. 92

35___________________ 75. 00 187. 07

40___________________ 62. 50 197. 69

45___________________ 50. 00 218. 92

50___________________ 37. 50 243. 87

55___________________ 25. 00 269. 32

60___________________ 12. 50 299. 58

Obviously there are differences in cost of pensions for new entrants of different ages. However, the additional pension cost of hiring a worker 

35 years old compared to a worker 45 years old 

would be only $32 (in this example), or less than 

1 percent of annual compensation for an average 

factory worker. Considering the wide variation 

in worker productivity that exists within a single 

job and the uncertainties attached to hiring new 

workers, it does not appear that such a difference 

should be considered very significant. If in the 

foregoing example a higher interest rate and 

normal turnover had been assumed, this would 

increase the proportion which the older worker’s 

costs bear to younger worker’s costs. However, 

turnover savings in the plan might be large 

enough to reduce the differential costs in absolute 

terms and so make the difference less as a percentage of total compensation.

In contrast to the flat benefit per year of service 

benefit formula common in negotiated plans, 

nonnegotiated plans usually base benefits on 

compensation, especially compensation during 

the entire period of credited service. It is impossible to estimate the cost of pensions under 

such plans without detailed assumptions concerning the worker’s future compensation. Never35 Bureau of Labor Statistics, Multiemployer Pension Plans Under Cob

lective Bargaining (BLS Bulletin 1326, 1962), p. 11.

36 1960 Study of Industrial Retirement Plans (New York, Bankers Trust 

Co., 1960), p. 19.

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theless, the pension costs accruing from a given 

month’s compensation will be higher for an older 

worker than for a younger worker, since for the 

latter, a smaller sum at compound interest will 

suffice to buy the annuity earned by the credited 

compensation. Again, interest rates and turnover are important considerations.

Thus, it appears that for an employer in a 

multiemployer plan the additional pension cost 

of hiring an older worker is irrelevant, while for 

most employers with single-employer plans, pension charges will be higher for older entrants than 

for younger entrants. The specific difference in 

costs of hiring will vary with the actual mortality 

and turnover experienced by the plans.

How significant are the additional pension costs 

of hiring older workers? For most workers in low 

or middle paid brackets, the additional annual 

costs are likely to be a very small percentage of 

annual compensation. Pension costs are but one 

of the variables which should be considered in the 

hiring decision. If older workers have lower 

turnover costs to the firm, these costs should also 

be considered. It was pointed out in chapter II 

that older workers generally have lower separation 

rates than young workers, and this is often thought 

to be an important offset to their higher pension 

costs. The lower turnover rates of older workers 

may or may not be significant, however. Newly 

hired older workers may have higher turnover 

rates than newly hired young workers, although 

this may be a characteristic of the temporary jobs 

for which they are often hired. The degree to 

which the older worker has lower turnover costs 

and other costs (such as insurance or absenteeism) 

will depend on the experience of the individual 

firm. In view of the complexity of the problems 

and the difficulty of generalizing, it does not seem 

justified to say, as many do, that additional 

pension costs of older workers are not or should 

not be significant to employers. It must be 

remembered, however, that hiring is subject to 

great uncertainty, and the decision to exclude 

arbitrarily workers past a certain age because their 

pensions would cost a cent or so more an hour may 

rob the firm of the opportunity to hire valuable 

workers.

37 Bureau of Employment Security, Older Worker Adjustment to Labor

Market Practices, op. cit., p. 4.

Effect of Pension Plans on Hires and Separations

of Older Workers

Previous sections have indicated that pension 

plans may adversely affect employment opportunities for older workers by leading to the establishment of maximum hiring ages and by raising 

the cost of placing older workers on the payroll.

Almost certainly there are individual situations 

in which pension plans have had such adverse 

effects. The problem is to ascertain, if possible, 

whether these results have been so widespread 

that total employment opportunities for older 

workers have been affected.

Only fragmentary evidence is available on this 

point.

While firms with pensions hire proportionately 

fewer older workers than do firms without pensions, it is also true that firms with pensions 

separate proportionately fewer older workers than 

do firms without pensions. Data from the 1956 

study by the Bureau of Employment Security 

and State employment security agencies show that 

older worker separation rates are about equal to 

older worker hiring rates both for firms with pensions and for those without pensions (chapter II). 

As pointed out in chapter II, no significant conclusions for mobility can be drawn from these 

facts since the composition of the two groups of 

firms by industry and by size of firm differs considerably. For present purposes, however, it is 

important to note that firms with pensions hired 

16 workers aged 45 to 64 per hundred workers of 

the same ages per year, which was the same as the 

separation rate for the same age group. Thus 

there was no tendency observable from these data 

for firms with pensions to force more older people 

into the labor market than they hired from it. 

This study considerably weakens any presumption 

that private pensions are detrimental to older 

jobseekers as a group.

The following conclusion drawn by the Bureau 

of Employment Security must be interpreted with 

care:

The older worker is more likely to be hired for a job

which is not covered by a private pension plan than one

in which he will have coverage. Workers 45 years and

older account for 25 percent of the hires in employment

without pension plans, contrasted to 14 percent in jobs

with this advantage.37

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The implications of this conclusion are modified 

considerably, if it is accompanied by the following 

statement:

The older worker is more likely to be looking for a job

because he was separated from a firm without pension

coverage than because he was separated from a firm with

pension coverage. Workers 45 years and older account

for 27 percent of the separations in employment without

pension plans, contrasted with 18 percent in jobs with

this advantage.38

The conclusion is modified even more if workers 

65 years and older are excluded from consideration. 

There is no difference between hire rates and 

separation rates of workers 45 to 64 for firms 

with pension plans. About 3 percent of the 

separations from firms with pension plans are 

workers 65 years and older, but only 0.6 percent 

of the new hires are workers in this age group. 

In firms without pensions, about 3 percent of 

both hires and separations consisted of aged 

workers. Hence, the detrimental effects of pensions on the job opportunities of older workers 

are concentrated in the 65 years and older group. 

It is clear that firms with pension plans infrequently hire workers who are 65 years and older.

Additional information bearing on this question 

is available in the age composition of employment 

of industries by pension plan coverage in 1956:

38 Ibid., p. 68.

Percent of employees 45

to 64 years old

Industry Pension No pension

All industries____________________ 31 32

Construction____________________________ 40 32

Manufacturing, total___________________ 32 31

Durable____________________________ 31 30

Nondurable________________________ 34 33

Transportation, communication, and

public utilities________________________ 30 42

Trade____________________________________ 31 31

Finance, insurance, and real estate____ 26 31

Service___________________________________ 40 32

Source: Bureau of Employment Security, Older Worker Adjustment to

Labor Market Practices, op. cit., table X X II, p. 255.

Overall, there is little difference between the 

proportions of older workers employed, and in 

few industries is there much difference in proportions. In all industries, however, the proportions 

of workers 65 years and older in firms with pensions were considerably lower than the corresponding proportions in firms without pensions.

The limited evidence available indicates that 

while pension plans may have contributed to 

blocking employment opportunities for individual 

older workers, it does not seem that firms with 

pension plans are failing to employ their proportionate share of workers 45 to 64 years old. The 

impact of pension plans on the unemployment of 

older workers is probably to increase the severity 

of the problem somewhat, but it cannot be concluded that practices associated with pension plans 

are a major cause of the older worker problem.

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Chapter IV. Retirement and Withdrawal From the Labor Force

Summary

The proportion of men 65 years and older in the 

labor force has been declining steadily since 1890, 

but the decrease has been particularly sharp since 

1950. Less than a third of the aged men were in 

the labor force in 1961.

Employed aged men are concentrated in certain 

types of occupations and industries. Occupations 

in which the employment of all men has expanded 

greatly over the past decade have also shown 

increases in employment for aged men, but occupations in which total employment was stable or 

contracting have been marked by sharp reductions 

in the number of employed aged men. Employed 

aged men are heavily concentrated in farming 

(despite the decline in number of aged farmers) 

and managerial occupations, where self-employment is common, and are proportionately much 

less important in the industrial occupations. The 

trend toward retirement has also been marked by 

an increasing proportion of all aged men employed 

at part-time jobs which provide additional income 

to supplement retirement pensions.

The most important factor in stimulating 

increased retirement for older workers and reducing their participation in the labor force has been 

the growth of available retirement income through 

the public and private systems. The central 

position of retirement income in inducing retirement is shown by the fact that pensioners with 

large pensions are more likely to be satisfied with 

retirement than those with small pensions. The 

need for income is the usual reason given by older 

workers who want to continue work beyond age 65.

Private pensions, as a major supplement to 

income from public retirement programs, have 

served to induce voluntary retirement and withdrawal from the labor force. At the same time, 

it has been asserted that through the practice of 

involuntary retirement, private pensions have 

also had the effect of forcing into retirement many 

who still wish to work and who remain capable of 

contributing effectively to the national output.

Involuntary retirement provisions are included 

in single employer pension plans covering somewhat more than half of the workers in large 

negotiated plans and in about four-fifths of the

large nonnegotiated plans. Involuntary retirement rules usually apply to workers at age 65 in 

nonnegotiated plans, but the age is often 68 or 70 

years in negotiated plans. Multiemployer plans 

seldom have involuntary retirement.

Employers who favor involuntary retirement 

usually stress the usefulness of such rules in 

removing aging workers whose efficiency is 

decreasing and in opening opportunities for 

promotion of younger workers. Employers who 

oppose involuntary retirement stress either the 

costs of such provisions or the inappropriateness 

of age as a criterion for separation. The age 

composition of their own work forces and the 

available labor supply are probably influential in 

disposing employers to favor or to oppose involuntary retirement in their firms.

Union leaders’ attitudes toward involuntary 

retirement are also conditioned by their specific 

needs. Although usually opposed to involuntary 

retirement in principle, leaders of* unions in industries suffering heavy unemployment often view 

retirement of aged workers as an equitable way 

to ease the unemployment problems of the union 

membership.

Opinions of observers not directly involved in 

the negotiation or conduct of pension plans 

usually favor a flexible retirement age or urge 

that the age of involuntary retirement be raised.

The effect of involuntary retirement is difficult 

to determine. According to a 1952 study, involuntary retirement rules were the original reason for 

leaving the labor force of about 13 percent of the 

retired men in 1952, although few of these men 

were interested in working. Involuntary retirement is more common as a reason for retirement 

among men receiving larger pensions. On the 

whole, there appears to be little dissatisfaction 

with retirement among those involuntarily retired, 

or among those older workers for whom involuntary retirement lies in the pear future.

From the point of view of manpower policy, the 

desirability of retirement and the resulting reduction in the labor force depends chiefly on the level 

of demand for labor. In wartime when manpower 

is severely limited, the appropriate manpower 

policy is to induce older workers to remain active 

workers. With unemployment at more normal

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levels, retirement serves the interest of manpower 

policy by permitting many aged workers who are 

partially disabled or for whom work is especially 

burdensome to withdraw from the labor force, 

thereby opening greater opportunities for other 

employed and unemployed workers. In occupations and industries in which unemployment is 

especially severe, retirement reduces the level of 

unemployment and facilitates the employment 

adjustments essential in a rapidly changing 

economy.

Changes in retirement programs, both public 

and private, will have manpower effects by making 

retirement more or less desirable and thus influencing the incentive for aged workers to 

remain in the labor force. One example of such 

a change is the recent adoption of early retirement 

provisions in both public and private programs. 

It is yet too soon to evaluate the effect of the 

recent change permitting early retirement at 

age 62 under the OASDI program.

The decentralized nature of private pension 

systems provides an important element of flexibility in meeting manpower problems. While 

special provisions applying to the needs of particular industries have been adopted in the public 

retirement programs of some countries, such 

measures would be difficult to justify in the 

OASDI system, in which uniformity of retirement 

age and benefit schedules for all covered workers 

is a well-established principle. Private pensions 

are well suited to meet such problems, since the 

content of the plans may be varied to meet the 

special needs of an industry or firm. Illustrative 

of the flexibility inherent in pensions negotiated 

through decentralized collective bargaining, are 

provisions for early retirement at employer’s 

request included in many of the United Automobile Workers agreements which provide twice 

the normal pension from the time the employee 

retires until he becomes eligible for OASDI 

benefits.

Aged Workers in the Labor Force

Nearly all men between the ages of 25 and 64 

years work or look for work during the year, but 

women, young people, and aged people (persons 

65 years and older) are less frequently in the labor 

force. The proportion of aged men in the labor 

force decreased from about two-thirds in 1890 to

less than one-third in 1961. The rate of decrease 

has been particularly rapid since 1950. Since 

1890, the proportion of women in the labor force 

has increased steadily, while the proportion of 

young people has fallen off somewhat as high 

school and college attendance became more 

common.

Public and private pensions played no part in 

the decline in labor force participation of aged 

men before 1940. Most of this earlier decline is 

attributable to rising levels of income, to the 

shift from rural to urban patterns of living, and 

to mass unemployment during the 1930’s which 

caused many aged men to cease looking for 

work.39

Wartime labor demands kept many aged men 

at work, and their labor force rate increased 

during the war. With peace, however, labor 

force participation of aged men resumed its 

decline (table 4.1). In 1950 when OASDI benefits 

were being received by 1.8 million retired workers 

(mostly men), and private pensioners numbered 

about 450,000, 46 percent of men 65 years and 

older were in the labor force. By 1960, the 

number of aged workers receiving OASDI benefits 

increased to 8.1 million, and approximately 1.8 

million people (mostly aged men) received private 

pensions. The labor force rate of aged men had 

fallen to 32 percent.

The improvements in OASDI benefits, coverage, 

and eligibility since 1950 now make retirement 

income available to practically all workers in 

private industry reaching age 65. Many men 

eligible for private pensions or the pensions 

provided by the Railroad Retirement Act and by 

Federal, State, and local governments often 

receive sufficient income to finance a comfortable 

retirement. The ready availability of retirement 

income has probably been the most important 

influence leading to the recent reduction in the 

labor force participation rate of aged men. The 

middle or lower income worker receiving OASDI 

benefits and a supplemental private pension will 

frequently have a retirement income greater than 

one-half of his preretirement earnings. Because 

of the favorable tax treatment of OASDI benefits

39 For a discussion of labor force trends since 1890, see Gertrude Bancroft, 

The American Labor Force (New York, Wiley, 1958); Clarence D. Long, 

The Labor Force Under Changing Income and Employment (Princeton, 

Princeton University Press, 1958); and John C. Durand, The Labor Force in

the United States, 1890-1960 (New York, Social Science Research Council, 

1948).

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T a b l e 4.1. P ercent of P opulation in the L ab o r F orce, by Se x and A ge, 1940-61

[Annual averages]

Years

Male Female

14

years

and

older

14 to 

19

years

20 to 

24

years

25 to 

34

years

35 to 

44

years

45 to 

54

years

55 to 

64

years

65

years

and

older

14

years

and

older

14 to 

19

years

20 to 

24

years

25 to 

34

years

35 to 

44

years

45 to 

54

years

55 to 

64

years

65

years

and

older

1961______________ 80.3 44.6 89.8 97.6 97.7 95.6 87.3 31.7 36.9 29.9 47.1 36.4 43.8 50.1 37.9 10.7

1960______________ 80.1 46.3 88.9 96.4 96.5 94.5 85.4 32.3 36.4 30.2 46.0 35.9 43.2 49.4 36.8 10.5

1959______________ 80.5 46.7 88.6 96.3 96.6 94.6 85.9 33.4 35.8 29.1 44.9 35.2 43.1 48.6 36.2 9.9

1958______________ 82.1 47.4 89.5 97.3 98.0 96.3 87.8 35.6 36.0 29.1 46.4 35.6 43.4 47.9 35.2 10.3

1957______________ 82.7 49.7 89.8 97.3 97.9 96.4 87.5 37.5 35.9 30.6 46.0 35.6 43.3 46.5 34.5 10.5

1956....... .................. 83.7 51.4 90.8 97.4 98.0 96.6 88.5 40.0 35.9 31.9 46.4 35.4 43.1 45.5 34.9 10.9

1955______________ 83.6 49.5 90.8 97.7 98.1 96.5 87.9 39.6 34.8 29.9 46.0 34.9 41.6 43.8 32.5 10.6

1954______________ 83.9 49.3 91.5 97.5 98.1 96.5 88.7 40.5 33.7 29.8 45.3 34.5 41.3 41.2 30.1 9.3

1953______________ 84.4 50.9 92.2 97.6 98.2 96.6 87.9 41.6 33.6 30.5 44.5 34.1 41.3 40.4 29.1 10.0

1952______________ 84.6 51.9 92.0 97.7 97.9 96.2 87.5 42.6 33.9 31.5 44.8 35.5 40.5 40.1 28.7 9.1

1951______________ 84.8 53.7 91.0 97.1 97.6 96.0 87.2 44.9 33.8 32.1 46.6 35.4 39.8 39.7 27.6 8.9

1950____________ 84.4 53.2 89.0 96 2 97.6 95.8 87.0 45.8 33.1 31.5 46.1 34.0 39.1 38.0 27.0 9.7

1949__________ 84.5 53.6 87.7 95.9 98.0 95.6 87.5 46.9 32.4 32.5 45.0 33.5 38.1 35.9 25.3 9.6

1948__________ _ 84.6 54.3 85.6 96.0 98.0 95.8 89.5 46.8 31.9 32.5 45.3 33.2 36.9 35.0 24.3 9.1

1947______________ 84.4 54.2 84.8 95.8 98.0 95.5 89.6 47.8 31.0 31.6 44.9 32.0 36.3 32.7 24.3 8.1

1946______________ 83.7 53.7 82.3 94.2 97.3 96.1 89.6 48.5 31.1 32.3 46.3 32.9 36.2 31.5 23.6 8.4

1945______________ 88.0 64.9 95.5 97.0 98.2 96.6 91.4 52.1 36.2 40.0 54.1 38.9 39.8 35.2 26.5 9.6

1944______________ 89.7 70.0 98.5 99.0 99.0 97.1 92.1 52.2 36.8 42.0 55.0 39.0 40.5 35.8 25.4 9.8

1940______________ 83.9 44.2 96.1 98.1 98.5 95.5 87.2 45.0 28.2 23.3 49.5 35.2 28.8 24.3 18.7 7.4

Source: Bureau of Labor Statistics and Bureau of tbe Census.

and double exemptions for persons 65 and over, 

the after-tax income of the retired married worker 

is sometimes as large as his preretirement income.

The proportion of aged men who remain in the 

labor force also depends on the opportunity to 

continue work. Unemployed aged workers who 

might prefer to work may retire because they are 

unable to find suitable jobs. The postwar period 

has been marked by relatively high employment, 

despite four recessions, and relatively few aged 

workers have suffered unemployment previous 

to retirement. Nevertheless, employment opportunities for aged men have been diminishing and 

undoubtedly this has effected the propensity of 

aged men to continue seeking work.

The effect of employment opportunity on retirement is also shown by the relation of the 

changes in the number of aged men employed in 

various occupations to the changes in the number 

of all men employed. In professional and technical, managerial, and sales occupations, in which 

the number of employed men has increased 

sharply since 1952, the number of aged men has 

also increased; while in the industrial occupations, 

more than one-half of the decline in employment 

of all men is accounted for by the drop in the 

number of employed aged men (table 4.2).

Peter O. Steiner and Robert Dorfman, The Economic Status of the Aged

(Berkeley, University of California Press, 1957), table 4.3, p. 41.

41 Bureau of Labor Statistics, Educational Attainment of Workers, 1959, 

Special Labor Force Report No. 1, Reprint 2333 (1960) from Monthly Labor

Review, February 1960, table E, p. A-9.

Employed aged men are concentrated disproportionately in occupations where self-employment 

is common. In 1961, about two-fifths of the 

employed aged men were farmers or managers, 

while only one-fifth were in the industrial occupations (craftsmen and foremen, operatives, and 

nonfarm laborers). This represents a considerable 

change from 1952, when larger proportions of the 

employed aged were in industrial occupations, 

(table 4.3). Labor force data from a study of 

aged men conducted in 1952 show considerable 

variation between different occupation groups. 

About two-thirds of the aged men, whose lifetime 

occupation was in professional and technical work, 

were in the labor force, but only one-third of the 

aged men whose lifetime industrial occupations 

were in the labor force.40

Labor force participation of aged men is also 

related to educational attainment. About threefifths of the aged men with 5 years or more of 

college were in the labor force in March 1959, 

while only one-fourth of those with 4 or fewer 

years of school were in the labor force.41

An important labor force trend associated with 

pensions has been the tendency of retired workers 

to seek part-time employment to supplement 

their pensions. The proportion of all aged men 

who worked primarily at part-time jobs during 

the year increased from 12 percent in 1950 to 17 

percent in 1960, and the proportion of aged men 

who worked primarily at full-time jobs decreased 

from 38 percent to 27 percent (table 4.4). Some

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T able 4.2. E m ploym ent b y Occupation G roups of A ged M en and All M e n , and C hang es in E m ploym en t,

1952 and 1961

[Number in thousands]

Occupation group

Men, 14 years and older Increase or decrease (—) Men, 65 years and older Increase or decrease (—)

1952 1961 Number Percent 1952 1961 Number Percent

Total1...................................... ......................................... 42,349 44,318 1,979 4.7 2,351 2,071 -280 -11.9

Professional and technical.................................... .......... 3,137 4,955 1,818 58.0 118 185 67 56.8

Farmers....... .............. ........................ ............ ................... 3,688 2,581 -1,107 -30.0 495 423 -72 -14.5

Managers.......................... .................................. ................ 5,089 6,003 914 18.0 235 399 164 69.8

Clerical............................ ................................................... 2,798 3,120 322 11.5 118 118 0 0

Sales.................................................................................... 2,247 2,737 490 21.8 95 138 43 45.3

Craftsmen..... ..................................................................... 8,478 8,407 -71 - .8 400 259 -141 -35.2

Operatives............................................................................ 8,817 8,441 -376 -4 .3 283 165 -118 -41.7

Service..................................... ........................................... 2,585 2,992 407 15.7 259 233 -26 -10.0

Farm laborers...................................................................... 1, 780 1,685 -95 -5 .3 95 74 -21 -22.1

Other laborers..................................................................... 3,730 3,397 -333 -8 .9 259 111 -148 -57.1

1 Detail will not add to total because of rounding.

Source: Derived from Peter O. Steiner and Robert Dorfman, The Economic Status of the Aged (Berkeley, University of California Press, 1957),

table 4.4, p. 42; and Bureau of Labor Statistics, Labor Force and Employment

in 1961, Special Labor Porce Report No. 23, Reprint 2395 (1962) from Monthly

Labor Review, June 1962, tables C-6 and C-8, pp. A-23 and A-25.

of this change is probably attributable to workers 

who shifted from a full-time schedule to a parttime schedule without changing jobs. Aged men 

who work part time usually prefer part-time 

work. In 1961, 35 percent of the aged men at 

work in the average week in non agricultural 

industries worked part time, and four-fifths of 

these usually worked part time because they did 

not prefer or could not accept full-time work.42 

The increased importance of voluntary part-time 

work for aged men underlines the growing importance of pensions as the primary source of income 

for aged men, and the increasingly supplementary 

role of earnings.

Relation of Pensions to Retirement

Corporate pensions may induce retirement by 

two effects: (1) pensions provide income which, 

together with OASDI benefits, enable some workers to retire voluntarily; and (2) involuntary retirement practices often found in pension plans 

require some aged workers to retire who would 

otherwise continue work.

Income. The provision of retirement income by 

pensions has a major effect on voluntary retirement. A 1951 study of pensioners found that 

about two-fifths of those with incomes of less than 

$1,000 regarded retirement as satisfactory, while 

almost three-fourths of the pensioners with incomes of $5,000 or more found retirement satisfactory.43 Between 1954 and 1958, almost fourfifths of the men retiring from the Eastman Kodak

Co. (which has a generous pension plan) retired at 

age 65 or earlier, although later retirement was 

permitted.44 The need for income appeared to be 

the principal reason for men 64 years old wanting to 

continue work after age 65 in a survey of firms 

which had varying retirement policies.45 Obviously, corporate pensions play an important role 

in inducing retirement by providing necessary 

income.

In most pension plans, 65 is the normal retirement age; i.e., the age at which retiring workers 

receive full pensions. The selection of this particular age follows the precedent established by the 

public retirement system— 65 is also the normal 

retirement age for OASDI. Retirement at age 62 

for men was adopted in the 1961 social security 

amendment, following earlier adoption of the 

same age for women. This amendment was intended to permit unemployed men or partially 

disabled men to retire earlier by providing retirement income. Similar provisions for earlier retirement are included in many private pension 

plans. Early retirement clearly increases the flexibility of private pension plans in meeting the needs 

of aging workers. Many private pension plans 

provide for retirement before age 62 and allow in42 Bureau of Labor Statistics, Labor Force and Employment in 1961, Special 

Labor Force Report No. 23, Reprint 2395 (1962) from Monthly Labor Review, 

June 1962, tables C-6 and C-8, pp. A-23 and A-25.

43 John J. Corson and John W. McConnell, Economic Needs of Older People

(New York, Twentieth Century Fund, 1956), p. 47.

44 Marion B. Folsom, “ Goals in Governmental and Private Plans for Social 

Security,” Address given on the 25th Anniversary of the Social Security Act, 

Washington, D.C., Aug. 15, 1960, p. 16.

45 National Committee on the Aging, “ Work Attitudes at Age 65“ (New 

York, 1959), p. 5.

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come equalization options which provide larger 

pensions during the period between the worker’s 

retirement from the company and the time at 

which the worker becomes eligible for OASDI.

Although early retirement is usually at the 

worker’s request, retiring from a company may 

simply be the beginning of a search for another 

job. Few private pension plans provide early 

retirement benefits which are adequate to provide 

for comfortable retirement, especially if retirement takes place several years before the worker 

is eligible for OASDI benefits. Although a large, 

but unknown, number of workers receive early 

retirement benefits from private pensions, there 

is little evidence that the spread of private pensions with early retirement has led many men 

55 to 64 years old to withdraw from the labor 

force. The labor force rate of men 60 to 64 years 

old, for whom early retirement provisions are 

most significent, has edged down in the past 

few years, but no steady trend is observable. 

Nevertheless, the early retirement in OASDI 

has not yet shown its full effect, and early retirement accompanied by withdrawal from the labor 

force may become more common in the next 

few years.

Involuntary Retirement

Many pension plans specify that workers must 

retire at a given age (often 65, 68, or 70 years) 

without exception. Such rules are here termed 

automatic retirement, following the practice of the 

Bureau of Labor Statistics. Whenever exceptions 

may be made at the discretion of management,

T able 4.3. E mployment of A ged M e n , b y M ajor

Occupation G ro u ps, 1952 and 1961

Percent of employed men

Occupation group 14 years and older 65 years and older

1952 1961 1952 1961

Total employed............................ 100 100 100 100

Professional and technical______ 7 11 5 9

Farmers and farm managers........ 9 6 21 20

Managers and proprietors............ 12 14 10 19

Clerical and related...................... 6 7 5 6

Sales workers................................ 6 6 4 7

Craftsmen and foremen............... 19 19 17 13

Operatives,................................... 21 19 12 8

Service.......................................... 6 7 11 11

Farm laborers............................... 4 4 4 4

Other laborers............................... 9 8 11 5

Source: See table 4.2.

T able 4.4 P ercent of A ged M en W ith P art-T im e and

F ull-T im e J obs, 1950-60

Year

Percent of 

aged men 

with work 

during the 

year

Percent of all aged men with—

Part-time jobs Full-time jobs

Total 50-52

weeks

1-49

weeks

Total 50-52

weeks

1-49

weeks

1960...................... 43.1 16.6 6.7 9.9 26.6 16.8 9.8

1959..................... 42.4 14.6 5.8 8.8 27.8 18.0 9.8

1958____________ 43.4 15.0 6.6 8.4 28.4 18.5 9.9

1957..................... 47.3 15.1 6.3 8.8 32.2 21.5 10.7

1956............... ___ _ 46.4 14.5 5.9 8.6 31.9 22.5 9.4

1955____________ 48.1 12.7 5.5 7.2 35.4 24.5 10.9

1954_____ ______ 45.9 11.6 4.3 7.3 34.3 23.3 11.0

1953____________ 48.2 14.8 3.8 11.0 33.4 24.6 8.8

1952____________ 50.3 11.3 4.5 6.8 39.0 26.0 13.0

1951____________ 51.1 11.3 4.1 7.2 39.8 28.0 11.8

1950.................... 49.3 11.6 0) (0 37.7 25.8 11.9

1 Not available.

Source: Derived from Bureau of the Census, Current Population Reports, 

Labor Force, Series P-50, Nos. 43, Mar. 13, 1953; 48, Nov. 30, 1953; 54, Aug. 

4, 1954; 68, .Tune 1956; 77, November 1957; 86, September 1958; and 91, June 

30,1959, and Bureau of Labor Statistics, Work Experience of the Population

in 1959, Special Labor Force Report No. 11, Reprint 2360 (1961) from Monthly

Labor Review, December 1960; and Work Experience of the Population in

I960, Special Labor Force ReportNo. 19, Reprint 2381 (1962) from the Monthly

Labor Review, December 1961.

the rules will be termed compulsory retirement• 

The frequency with which exceptions to compulsory retirement rules are made varies among 

firms, of course, and sometimes compulsory 

retirement may be enforced as rigidly as if the 

firm had automatic retirement. In many collectively bargained plans, retirements under compulsory retirement rules are made subject to the 

grievance and arbitration machinery established 

under the contract. In firms with workers on 

layoff, even voluntary retirement rules may be 

virtually automatic in practice because of worker 

opinion favoring retirement of those who are 

eligible. If compulsory retirement is administered 

with latitude and with attention to the desires 

and abilities of the aged workers, or if there is no 

involuntary retirement age, the firm will be said 

to havoflexible retirement.

The Bureau of Labor Statistics studied 300 

collectively bargained pension plans covering 4.9 

million workers in late 1958, and found that involuntary retirement provisions were included 

in 179 plans covering about 2.7 million workers. 

Among the plans studied, involuntary retirement 

was found in all of the plans covering the chemical, 

products of petroleum, and electric and gas utility 

industries, and in most of the transportation 

plans. Involuntary retirement was found in none 

of the plans in construction and apparel and in 

few of the primary metals industry plans studied.

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Of the 179 plans with involuntary retirement, 

compulsory retirement was found in 109, automatic retirement (without earlier compulsory 

retirement) in 52 plans, and compulsory and 

automatic retirement at different ages in 18 plans.

Involuntary retirement was found in about 

one-half of the 249 noncontributory plans but in 

more than nine-tenths of the 51 contributory 

plans. Of the 231 single-employer plans, about 

one-half (covering more than two-thirds of the 

3 million workers) included involuntary retirement; of the 69 multiemployer plans, about oneseventh (covering one-fourth of the 1.9 million 

workers) included involuntary retirement.

Compared to a similar study in 1952, there was 

little evidence of any significant change in the 

prevalence of involuntary retirement provisions.46

The Bankers Trust Co. studies of pension 

plans found that 83 percent of the large conventional (usually nonnegotiated) plans adopted 

or amended in 1956-59 included involuntary 

retirement provisions, while 94 percent of such 

plans in the 1953-55 period included involuntary 

retirement. Single-employer negotiated plans 

showed an opposite trend, with 72 percent of the 

new or amended plans in the later period having 

involuntary retirement in contrast to 67 percent 

of the 1953-55 plans.47

Involuntary retirement is found chiefly in 

single-employer plans, and is more often included 

in nonnegotiated than in negotiated singleT able 4.5. N orm al, C om pulsory, and A utomatic R etirem en t A ges in 300 P ension Plans U n der C ollectiv e B a r g a in in g , L ate 1958

[Workers in thousands]

Age i

Normal

retirement

Compulsory

retirement

Automatic

retirement

Plans Workers Plans Workers Plans Workers

All plans with retirement provisions_____ 300 4,909.8 127 1,927.9 70 919.8

Age 55_______________ 1 3.0

Age 60__ _ _ ___ 15 579.6

Age 65__ _ ______ ____ 282 4, 289.2 82 1.006.9 24 170.0

Age 66______ ___ _ __ 2 19.7

Age 67_________ _ 4 21.8

Age 68_____ ______ 35 888.1 17 169.9

Age 69 1 1.0

Age 70. _ _ 1 7.8 8 28.0 22 453.4

Age 74 1 85.0

Age 75_._ __________ 1 3.9

Other 2______ ______ 1 30.2

1 An earlier normal, compulsory, or automatic retirement age for women 

was provided in some plans.

2 Normal retirement benefit provided when age plus years of service equal 

80.

Source: Bureau of Labor Statistics, Pension Plans Under Collective

Bargaining (BLS Bulletin 1259, 1959), p. 23.

employer plans. Despite the opposition of many 

union leaders to involuntary retirement, a substantial majority of single-employer negotiated 

plans include involuntary retirement, and there 

does not appear to be any significant trend 

toward elimination of such provisions.

Involuntary retirement is more frequently in 

large than in small firms. A 1955 study by the 

National Industrial Conference Board found that 

58 percent of the plans of firms with fewer than 

1,000 employees had involuntary retirement, 

while 90 percent of the plans in firms with more 

than 1,000 employees had such provisions. A 

study of California pension plans found the 

following relation between size of firm and the 

presence of involuntary retirement provisions:48

Percent of firms with

Number of employees involuntary retirement

100-199__________________________________ 54

200-499__________________________________ 65

500-999__________________________________ 80

1,000 or m ore___________________________ 69

Involuntary Retirement Age. The age at which 

involuntary retirement is required in pension plans 

varies among firms. In the BLS sample of 300 

collectively bargained pension plans in late 1958, 

it was found that in no instance was involuntary 

retirement found at an age below 65. About twothirds of the 127 plans with one-half of the 1.9 

million workers subject to compulsory retirement 

had age 65 as the compulsory retirement age. 

Age 68 was the next most common, but one fairly 

small plan had a compulsory retirement age of 

75. Almost two-fifths of the 70 plans with automatic retirement (or almost one-half of the 52 

plans with automatic retirement and without compulsory retirement at an earlier age) specified age 

65 as the automatic retirement age. Of the 70 

plans with automatic retirement, 22 plans with 

almost one-half of the 9 million workers subject 

to automatic retirement specified age 70 as the 

automatic retirement age (table 4.5).

It is apparent that relatively few of the workers covered in the plans studied are forced from 

their jobs at age 65 because of automatic retire-

« Bureau of Labor Statistics, Pension Plans Under Collective Bargaining

(BLS Bulletin 1259,1959), p. 20.

u a Study of Industrial Retirement Plans, 1960 (New York, Bankers Trust 

Company, 1960), pp. 11-12.

Governor’s Commission on the Employment and Retirement Problems 

of Older Workers, Recommendations and Report of the Employment and

Retirement of Older Workers, 1960, p. 11.

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T able 4.6. N ormal and C om pulsory R etirem en t A ges

in C onventional Pla n s, 1956-59 and 1953-55

Retirement age (men) 1 Percent

Normal Compulsory 1956-59, 

new plans

1953-55, 

new plans

60____________________ None_________________ 4

65____________________ None______ _ ______ 13 6

65_ _________________ 65____________________ 72 74

65____________________ 68____________________ 2 5

65____________________ 70____________________ 2 8

67 ______ 67. _ _________________ 2

68____________________ 68____________________ 7 3

70 _____ 70__ ________________ 2

i Retirement ages for women are occasionally lower.

Source: 1960 Study of Industrial Retirement Plans (New York, Bankers 

Trust Co., 1960), p. 12.

ment, and if compulsory retirement provisions 

are administered with much flexibility, relatively 

few are forced out by these provisions. Involuntary retirement at ages 68 or 70 is clearly of much 

less importance in compelling retirement than it 

would be if it were entirely concentrated at age 65.

Nonnegotiated plans typically have compulsory 

or automatic retirement, and in most instances 

specify age 65 as the involuntary retirement age 

(table 4.6). Only 4 percent of the new plans 

adopted in 1956-59 and studied by the Bankers 

Trust Co. have a compulsory retirement age higher 

than the normal retirement age. Conventional 

plans are much more uniform in their approach 

to involuntary retirement than are negotiated 

plans. However, the plans studied by the 

Bankers Trust are all large plans, and smaller 

conventional plans probably include involuntary 

retirement less often than do larger plans.

Em ployer Attitudes. Opinion concerning the desirability of involuntary or flexible retirement 

differs among employers. Some firms vigorously 

resist efforts of unions to remove involuntary 

provisions from negotiated pension plans, occasionally even accepting a strike rather than giving 

in, while other firms do not want involuntary 

retirement.49 Margaret S. Gordon found in a 

survey of retirement practices in the San Francisco Bay region that employers frequently gave 

the following reasons for adopting involuntary 

retirement:

<9 For example, see Melvin K. Bers, Union Policy and the Older Worker, 

op. cit., pp. 71-74.

50 Paraphrased from Margaret S. Gordon, “ The Older Worker and Retirement Practices,” Monthly Labor Review, June 1960, p. 581.

fii Paraphrased from Governor’s Commission, Report, op. cit., p. 119.

1. A uniform retirement policy avoids discrimination

among employees.

2. An involuntary retirement policy improves employment and promotional opportunities for younger workers.

3. Older workers are less productive or less flexible.

4. An involuntary retirement policy reduces uncertainty

and thereby encourages older workers to plan for retirement.50

Employers favoring flexible retirement stress 

the following reasons:

1. Age alone is not an appropriate basis for separation.

2. The firm loses the services of desirable workers if

involuntary retirement is practiced.

3. Flexible retirement reduces pension costs since

some workers delay receipt of their pensions and continue

work.

4. Employee morale is improved by flexible retirement.51 *

The diversity of employer practice in the 

matter of involuntary retirement is probably 

related to the kind of work which is performed and 

to the conditions of labor supply in the industry. 

During World War II, for instance, some firms 

abandoned involuntary retirement rules of long 

standing, but resumed them when the labor 

shortage subsided.

Attitudes toward retirement practices are 

strongly influenced by the desire of employers to 

provide an orderly method of removing aged 

workers from their payrolls. The operation of 

seniority rules and the tendency of older employees 

to stay on the job naturally leads to an increasing 

proportion of older workers in any firm’s work 

force unless the firm’s employment is expanding 

rapidly. Thus the firm may find itself operating 

with reduced efficiency both through decreasing 

efficiency of workers as they age and by losing 

the more able younger workers whose promotion 

opportunities have been blocked. A principal 

advantage of a pension plan is that it provides a 

way of separating overage employees from employment without facing public disapproval or lengthy 

grievances. Rapidly expanding firms are unlikely 

to face these problems, especially if the firm is in 

an area of rapidly expanding population where 

the proportion of older jobseekers is low.

Union Attitudes. Union leaders often view the 

retirement provisions of a pension agreement as 

one means of meeting the needs of diverse groups 

of the rank and file. Industries with heavy 

employment impose special problems for union

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leadership, since the older workers usually have 

high seniority and may be eligible for early 

retirement, while younger members with low 

seniority may be on layoff.

As a principle, union leaders have nearly 

always opposed involuntary retirement, viewing 

it as an arbitrary limitation on the worker's 

right to his job. The Steelworkers, for instance, 

opposed the return to involuntary retirement by 

the United States Steel Co. after World War II, 

and in the 1949 pension negotiations won the 

right to joint determination in instances when 

the company requests a worker to retire.52 The 

United Automobile Workers have opposed involuntary retirement practices, although the 

automobile pattern includes compulsory retirement at age 68.53

Despite union opposition to involuntary retirement as a principle, however, unemployment in 

particular industries often leads to more receptive 

attitudes toward involuntary retirement or to 

efforts to make voluntary retirement more attractive. Pensions have made up a large part 

of the packages negotiated in many industries 

during the past decade, and union members who 

are not near the retirement age may be expected 

to apply pressure for retirement practices which 

would reduce the competition for jobs. In some 

unions this has already occurred. Automatic 

retirement (for workers eligible for pensions) was 

included at the union's request in the Pacific 

Maritime Association-International Longshoremen's and Warehousemen's Union pension plan.54

The problems of unemployment in the automobile industry have led unions and management 

to negotiate a provision for “involuntary early 

retirement," which provides that workers between 

ages 60 and 65 retired at the employer's request 

or under mutually satisfactory conditions shall 

receive a double retirement benefit of $5.60 per 

month for each year of service until the worker 

becomes eligible for OASDI, at which time the 

benefit reverts to the normal benefit formula of 

$2.80 per month for each year of service.

Other Opinions. Opposition to involuntary retirement is often found in the recommendations of 

study groups concerned with the problems of 

aging. The policy statement on employment 

security and retirement of the 1961 White House 

Conference on Aging urged employers to review

their retirement policies “for the purpose of 

finding ways and means of achieving greater 

flexibility in the range of time of retirement. . . " 

While urging flexible retirement, however, the 

Conference opposed legislation “ . . . limiting 

the independent determination of the time of 

retirement." 55

The Committee on Economic Needs of Older 

People, appointed by the Twentieth Century 

Fund, urged that employers and unions should 

consider—

Substituting for requirements that workers retire at a

fixed age methods to distinguish those who should be

retired because of the decline in their working capacities—

physical, mental, or both.56

The California commission charged with making 

recommendations concerning the employment and 

retirement of older workers criticized involuntary 

retirement as follows:

. . . the fact that age 65 has long been regarded as the

usual retirement is neither a necessary nor a sufficient

reason for perpetuating the practice of compelling retirement at age 65. It is true that a uniform and immutable

rule that every employee in a given enterprise must retire

at age 65 has the virtue of certainty; but to say that a

rule is socially desirable because it avoids discrimination

is to oversimplify the facts. We have ample evidence to

prove that all persons within a given enterprise who reach

the chronological age of 65 are not the same in respect to

working abilities, health, or preparation for retirement.

Continuing, and pointing out that especially 

difficult personnel problems may arise where 

retirement is completely voluntary, the Commission urged that either flexible retirement 

policies be adopted or the involuntary retirement 

age be increased.57

The informed consensus appears to urge reconsideration by concerned parties of the practice of 

involuntary retirement, but few observers urge 

the intervention of government to prohibit 

involuntary retirement at age 65 or higher.

Effects of Involuntary Retirement. The effect of 

involuntary retirement practices associated with

w Bers, Union Policy and the Older Worker, op. cit., p. 74.

*3 Ibid. 

m Ibid., p. 80.

55 Special Staff on Aging, U.S. Department of Health, Education, and 

Welfare, The Nation and Its Older People (Washington, April 1961), pp. 

144-145.

fie Corson and McConnell, op. cit., p. 476.

Governor’s Commission, op. cit., pp. 11-1 i

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pension plans in forcing retirement is difficult to 

assess. In April 1952, a survey of a national 

sample of the aged found that 13 percent of the 

aged men who were not in the labor force had been 

compelled to retire because of involuntary retirement systems. Only 1 percent of aged men were 

in the labor force after being compelled to retire 

(12 percent of all men retired under compulsory 

systems). Of those retired under retirement 

systems who considered themselves well enough 

to work and were not working, only one-third 

were interested in work.68 In the 1951 survey of 

pensioners previously referred to, 45 percent of all 

pensioners were compelled to retire by their 

employer on account of age. Involuntary retirement appears to be the predominant reason for 

retirement among those pensioners with incomes 

of $2,000 a year or more (about 65 percent of all 

reasons), while it was less important for pensioners 

with retirement incomes of less than $1,000 (46 

percent of reasons).69 Since the higher income 

pensioners also tended to be more satisfied with 

retirement than the lower income pensioners, it 

seems likely that there is not much resentment of 

pensioners against firms which practice compulsory retirement. This is supported by two other 

surveys. A survey of industrial workers in the 

San Francisco Bay region found that 42 percent 

of the employed men 50 years and older accepted 

the idea of a fixed retirement age without qualification, and only 12 percent thought that there 

should not be a fixed retirement age.* 5960 A survey 

of workers 64 years old found that three-fifths of 

the workers both in firms without automatic 

retirement and in firms with automatic retirement 

at age 68 or above wanted to continue work, while 

only two-fifths of those in firms with automatic 

retirement at age 65 wanted to continue work.61

From this evidence, it appears that although 

involuntary retirement probably does induce 

some workers to retire who might otherwise 

continue work for several years, many workers 

who are compelled to retire would probably retire 

shortly anyway. At any point in time, many

s8 Peter O. Steiner and Robert Dorfman, The Economic Status of the Aged, 

op. cit., pp. 48-49.

59 Corson and McConnell, op. cit., p. 75.

6° G. Hamilton Crook and Martin Heinstein, The Older Worker in Industry

(Berkeley, Institute of Industrial Relations, University of California, 1958), 

p. 50.

6! National Committee on the Aging, op. cit., p. 4.

62 Governor’s Commission Report, op. cit., p. 115. Permission was granted 

infrequently in 25 percent, and very rarely in 53 percent.

aged men who originally retired because they 

were compelled to are no longer willing to work, 

either because of illness or because they are 

now satisfied with retirement. The likelihood 

of the involuntarily retired worker withdrawing 

from the labor force is enhanced by the fact 

that he is separated from a job in which he usually 

has had long tenure, and at the same time is 

provided a pension which often enables him to 

maintain his standard of living fairly well.

The spread of involuntary retirement would 

have fewer consequences for labor force trends if 

compulsory retirement provisions were administered with considerable latitude, since automatic 

retirement rules are much less frequent than 

compulsory retirement rules. There is little 

information available on this question, but the 

California pension study suggests in only onefifth of the plans with compulsory retirement is 

permission to continue work granted frequently.62 

If this represents practices across the Nation, 

then in many instances compulsory retirement 

and automatic retirement have equivalent effects 

in compelling the vast majority of covered workers 

to retire at the involuntary retirement age.

Much of the future growth in pension coverage 

will be concentrated in smaller firms, where 

coverage is not now very high. Many smaller 

firms will be included in multiemployer plans, in 

which involuntary retirement provisions cover 

only one-fourth of the workers. Small firms with 

their own plans are less likely to include involuntary retirement than are large firms, perhaps 

because of the higher pension costs required by 

involuntary retirement rules. Moreover, those 

small firms which do include involuntary retirement will probably administer compulsory rules 

with somewhat more flexibility than can be 

expected from a large firm.

The foregoing comments suggest that the 

spread of pension coverage to a larger proportion 

of the private work force will be accompanied 

by the spread of involuntary retirement, but 

that the proportion of older workers subject to 

involuntary retirement may increase at a somewhat lower rate. The spread of involuntary 

retirement and the much wider availability of 

retirement income made possible by private 

pensions will probably serve to continue the 

downtrend in labor force participation of aged 

men in the immediate future.

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U.S. GOVERNMENT PRINTING 0F FICE:I963

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