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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

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

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C.




Price 25 cents




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 man­
power 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.




m




Contents
Chapter I. Summary of findings______________________________________________________________________
Labor mobility____________________________________________________________________________________
Employment opportunities of older workers____________________________________________________
Retirement and withdrawal from the labor force_______________________________________________
Chapter II. Labor mobility___________________________________________________________________________
Summary__________________________________________________________________________________________
Introduction_______________________________________________________________________________________
Patterns of labor mobility________________________________________________________________________
Trends in labor mobility_________________________________________________________________________
Effects of pensions on mobility__________________________________________________________________
Pension trends affecting mobility________________________________________________________________
Chapter III. Employment opportunities of older workers__________________________________________
Summary__________________________________________________________________________________________
Introduction_______________________________________________________________________________________
Unemployment of older workers_________________________________________________________________
Characteristics of unemployed older workers-----------------------------------------------------------------------------Discrimination against older workers-----------------------------------------------------------------------------------------Pension and insurance costs and hiring practices_______________________________________________
Effect of pension plans on hires and separations of older workers_____________________________
Chapter IV . Retirement and withdrawal from the labor force_____________________________________
Summary__________________________________________________________________________________________
Aged workers in the labor force---------------------------------------------------------------------------------------------------Relation of pensions to retirement_______________________________________________________________
Involuntary retirement___________________________________________________________________________
Tables:
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
2.10.
2.11.
2.12.
2.13.
2.14.
2.15.
3.1.
4.1.
4.2.
4.3.
4.4.
4.5.
4.6.

Workers who changed jobs as percent of all persons who worked, 1955 and 1961____
Number of jobs left per 100 persons who worked during 1961, by reason forleaving
job, age, and sex________________________________________________________________________
Annual turnover rates, by age and sex, seven areas, 1955-------------------------------------------Separations of workers by length of service and age, seven areas, 1955----------------------Separation rates, by age and length of service---------------------------------------------------------------Percent of job shifts in 1961 involving change of major occupation group, by
occupation group of job left___________________________________________________________
Percent of job shifts in 1961 involving change of industry group, by industry of job
left_______________________________________________________________________________________
Turnover rates in manufacturing, annual averages, 19 4 8 -6 1 __________________________
Number of voluntary and involuntary job shifts per 100 persons who worked,
1955 and 1961__________________________________________________________________________
Reason for leaving job, by occupation: Distribution of jobs left in 1961 and 1955,
by major occupation group____________________________________________________________
Hires and separation rates, by industry, age, and pension coverage, 1955, six
areas_____________________________________________________________________________________
Annual separation and hire rates, by size of establishment, age, and pension
coverage, 1955, six areas_______________________________________________________________
Annual quit rates, by industry, age, and pension coverage, 1955, six areas___________
Annual quit rates, by size of establishment, age, and pension coverage, 1955, six
areas_____________________________________________________________________________________
Likelihood of workers of given age and length of service having vested pension
rights, 124 large company plans-----------------------------------------------------------------------------------Unemployment rates of men, by age, 19 48 -6 1---------------------------------------------------------------Percent of population in the labor force, by sex and age, 1940 -6 1____________________
Employment by occupation groups of aged men and all men, and changes in
employment, 1952 and 1961______________________________________________________________
Employment of aged men, by major occupation groups, 1952 and 1961______________
Percent of aged men with part-time and full-time jobs, 1 9 50 -6 0---------------------------------Normal, compulsory, and automatic retirement ages in 300 pension plans under
collective bargaining, late 1958-----------------------------------------------------------------------------------------Normal and compulsory retirement ages in coventional plans, 1956-59 and 1 9 53 -5 5— _




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y




Private Pension Plans and Manpower Policy
Chapter I. Summary of Findings
This paper reviews the effects of corporate pen­
sions on various aspects of manpower policy, in­
cluding labor mobility, the employment opportuni­
ties of older workers, and retirement and with­
drawal 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 ob­
stacles to the movement of workers between jobs
may be considered aspects of the Nation's man­
power 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 nondiscrimi­
nation 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. Ob­
viously, 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 distri­
bution of labor. In a period of rapid change such
as the present when new processes are being intro­
duced, 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 in­
creasing 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.

1

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. More­
over, 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 dif­
ference is often cited as evidence that pensions
reduce labor mobility. However, firms with pen­
sion 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 individ­
ual 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 de­
pends partly on the extent to which the individ­
uals 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 immobi­
lizing 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,

2



there are other more important factors than pen­
sions 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 em­
ployees 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

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 in­
come from public retirement programs, have
served to induce voluntary retirement and with­
drawal 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 re­
tirement 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 ex­
ception to all workers reaching a specified age) are
less desirable than flexibly administered “ com­
pulsory” systems which permit exceptions.
From the point of view of manpower policy, the
desirability of retirement and the resulting re­
duction in the labor force depends chiefly on the
level of demand for labor. In wartime when man­
power is severely limited, the appropriate man­
power 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 occu­
pations 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 in­
fluencing the incentive for aged workers to remain
in the labor force. One example of such a change
is the recent adoption of early retirement pro­
visions 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 flexi­
bility in meeting manpower problems.
The
OASDI system does provide flexibility in the re­
gard 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 bar­
gaining are provisions for early retirement at em­
ployer’s request included in certain recent bar­
gaining agreements which provide twice the normal
private pension from the time the employee re­
tires until he becomes eligible for OASDI benefits.

3
673173— 63------- 2




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, typi­
cally exhibit low turnover. In Japan, the “life­
time 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 ad­
justments 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 in­
adequate 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 de­
sirable levels.
The frequency of job changing commonly is
inversely related to age, although length of service,
4



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 attach­
ment 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 down­
trend 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 non­
pension 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 55-64year age group.
Lower separation rates in firms with pensions do
not prove that pensions are the cause of the lower

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, multi­
employer 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 in­
clude 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 re­
spect 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 accumula­
ted unvested pension benefits which he would for­
feit 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 num­
ber 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 con­
cern of this study. Changes in the structure of
demand and in the techniques of production call
for increased employment in some industries, oc­
cupations, and areas and reductions elsewhere.
A highly immobile labor force does not adjust
rapidly to changing demand for labor. Thus, in­
adequate 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.
5

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 inade­
quate 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 unemploy­
ment 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 avail­
ability 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 mo­
bile, but farmers infrequently change jobs. Con­
struction workers frequently work for several
employers during the course of the year, but usu­
ally retain considerable attachment to the indus­
6



try 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 under­
stated 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 in­
dustry 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 de­
mand. 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 in­
dustries 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.

T a ble 2.1. W o r k e r s W ho C h a n g ed J obs
of A ll P e r so n s W ho W o r k e d , 1955

P ercent
1961

i as
and

1961

1955

Age
M a le

F e m a le

M a le

F e m a le

------------

1 1 .0

8 .6

12.5

8 .7

14-17 y e a r s __________________________
18-19 y e a r s ____________________
___
20 -2 4 y e a r s _____
_____________
25-3 4 y e a r s ______
__ _______
35-4 4 y e a r s ________
_
- ___ _
45-54 y e a r s ____ _____
__________
55-6 4 y e a r s ________________ _______
_______
_ __
65 y e a r s a n d o v e r

8 .9
2 3 .5
2 4 .4
1 4 .9
1 0 .2
7 .1
4 .0
3 .4

5 .8
2 2 .2
16 .3
10 .6
7 .2
5 .2
4 .1
1 .9

12.9
2 7 .4
2 7 .8
1 6 .0
1 0 .2
1 0 .0
5 .6
3 .4

10 .8
2 0 .8
1 4 .9
9 .3
7 .8
5 .4
4 .3
1 .9

T o t a l , 14 y e a r s a n d o v e r

* 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 volun­
tarily by men 45 to 64 years old. The total num­
ber 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 in­
voluntary reasons is higher for older men.
The Seven City Study conducted in 1955-56
by the Bureau of Employment Security in coop­
eration 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 charac­
teristics 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 estab­
lished 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, pre­
sumably 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 free­
dom from punching the timeclock. Voluntary
mobility of long-service employees is impeded by
T a b l e 2.2. N u m b e r of J obs L eft p e r 100 P e r s o n s W ho
W o r k e d D u r in g 1961, b y R e a so n f o r L e a v in g J o b ,
A ge, an d Se x
Reason for leaving job
Age and sex

Improve­ Termi­
ment in nation of Other
tempo­ reasons
status
rary job

Total

Eco­
nomic

Total, 14 years and over____

16.4

5.3

5.3

2.1

3.7

Male, 14 years and over........
14-17 years____________
18-24 years.....................
25-44 years____________
45-64 years____________
65 years and over______

18.1
15.2
42.8
19.6
8.9
6.7

6.8
2.8
13.0
7.6
4.6
2.8

6.1
3.0
14.0
7.9
2.1
.9

2.0
4.7
5.3
1.5
.9
1.4

3.2
4.7
10.4
2.6
1.3
1.7

Female, 14 years and over...
14-17 years____________
18-24 years____________
25-44 years_____ _______
45-64 years____________
65 years and over______

13.7
9.9
30.8
13.3
7.2
3.9

2.8
1.4
5.5
2.8
2.1
.7

4.1
1.4
9.4
4.2
2.3
.1

2.3
3.2
5.4
1.8
1.3
2.2

4.4
3.9
10.6
4.5
1.6
.9

Source: Preliminary data from a forthcoming BLS study of job mobility
of workers in 1961.

7

the worker’s recognition that these privileges
will be lost and, in a new job, these accompani­
ments 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 im­
portant by recognition of the difficulty of finding
a new job and by the realization that once em­
ployed, 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
Men

Women

Age
Separations

Hires

Separations

Hires

Total New Total Quits Total New Total Quits
Total.......................... .
Under 45 years___
45-64 years............
65 years and over..

60
70
39
36

49
60
30
27

54
61
38
57

21
26
10
13

61
72
35
26

53
63
28
21

54
64
32
48

30
37
14
18

Detroit.........................
Under 45 years___
45-64 years.............
65 years and over..

40
52
18
12

34
46
14
7

33
41
18
50

17
23
6
13

50
60
20
20

45
55
16
17

37
43
18
40

21
25
9
13

Los Angeles.................
Under 45 years----45-64 years........... .
65 years and over..

84
93
65
71

71
81
52
52

79
84
69
82

28
33
17
19

77
86
52
45

69
79
45
33

74
83
48
79

39
47
19
31

M ia m i...................... .
Under 45 years___
45-64 years_______
65 years and over..

112
117
86
91

76
82
50
51

108
114
82
102

43
48
25
16

123
127
96
88

87
92
63
51

137
118
87
66

62
70
38
16

Minneapolis-St. Paul.
Under 45 years___
45-64 years.............
65 years and o v e r-

54
59
30
27

47
52
25
23

47
50
28
47

19
23
7
10

52
63
26
27

46
56
20
14

46
54
21
39

30
36
11
15

Philadelphia...............
Under 45 years___
45-64 years...........
65 years and over..

25
30
10
8

18
22
7
5

20
23
8
22

7
10
3
3

35
45
14
9

27
36
11
5

26
35
8
29

15
21
4
6

Seattle..........................
Under 45 years___
45-64 years............
65 years and over..

98
101
86
79

74
75
65
60

89
89
81
106

28
34
15
15

82
91
46
57

60
68
30
24

76
84
43
68

43
52
20
12

Worcester.....................
Under 45 years___
45-64 y ears..........
65 years and over..

44
50
21
20

34
40
14
11

34
38
15
32

15
18
6
6

50
63
26
20

41
53
21
3

45
58
22
22

29
37
12
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.

8



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 dis­
charged 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 em­
ployees 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 pro­
ductive, 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 separa­
tions 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 in­
cluded in the sample had less than 1 year of

6 Bureau of Old-Age and Survivors Insurance, Division of Program Analy­
sis, “ Incidence of Employer Change,” Analytical Note No. 80, April 18,
1956.

T able

2.4. S e p a r a t io n s of W o r k e r s b y L e n g t h
S e r v ic e a n d A g e , S e v e n A r e a s , 1955

of

[Percent]
Length of .service (in years)
Age
T ota l

L ess
th a n 1

1 -4

5 -9

10-14

15 a n d
over

A l l a g e s................................................

1 00 .0

6 9 .8

2 2 .1

4 .6

L6

1 .8

U n d e r 25 y e a r s
_______________
2 5 -3 4 y e a r s ............... ........ .................
3 5 -4 4 y e a r s .........................................
4 5 -5 4 y e a r s ________________ _____
5 5 -6 4 y e a r s ________________ _____
65 y e a r s a n d o v e r ............................

100 .0
1 0 0 .0
100 .0
1 00 .0
100 .0
100 .0

7 5 .9
6 9 .4
6 9 .5
6 9 .7
6 5 .2
4 0 .5

2 2 .9
2 4 .3
2 2 .2
1 9 .2
1 8 .6
1 3 .4

1 .2
5 .3
5 .4
5 .9
7 .1
9 .2

.9
1 .8
2 .1
3 .7
1 1 .9

.1
1 .1
3 .0
5 .4
2 5 .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 pat­
tern of declining separation rates varying with
length of service (holding age constant) than with
age (holding length of service constant).8

Occupation. Most jobseekers confine their search
to local labor markets. This geographical limita­
tion of job search often requires that the job
changer change either his industry or his oc­
cupation 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 ex­
perienced workers into the licensed professions
or unionized crafts is likely to be small, and a
large proportion of the new recruits for such oc­
cupations will come from schools and on-the-job
training programs rather than from other oc­
cupations. Job changers in such occupations are
likely to restrict themselves to changes within
the occupational group. Workers highly at­
tached 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 occu­
pation while professional workers and craftsmen
were less likely to shift to a different occupation.
T a b l e 2.5. S e p a r a t io n R a t e s , b y A ge
S e r v ic e




L ength

of

[Separations per 100 employees]
Length of service (in years)
Age

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 fre­
quency 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.

and

Total

Less
thanl

All ages................ ...................

54

150

33

11

8

7

Under 25 years_____________
25-34 years........ ......................
35-44 years.................. ............
45-54 years............................ .
55-64 years................ ..............
65 years and over.....................

95
60
47
39
31
57

134
146
150
173
160
225

48
31
28
25
27
39

24
13
9
10
10
27

8
7
5
7
34

7
4
4
4
36

1-4

5-9

10-14 15 and
over

S ource : Derived from unpublished tabulations furnished by the Bureau
of Employment Security.

9

T a b l e 2.6. P e r c e n t of J ob S hifts in 1961 I n v o l v in g
C h a n g e of M a jo r O ccu p a tio n G r o u p , b y O c c u p a tio n
G r o u p of J ob L eft
Job shifts in 1961
Major occupation group of job left

All occupations............... ...........................
Professional, technical, and kindred
workers_____ ____ _____ ____ _________
Farmers and farm managers______ ______
Managers, officials, and proprietors, ex­
cept farm ................................................
Clerical and kindred workers....................
Sales workers______________ ______ ____
Craftsmen, foremen, and kindred workers.
Operatives and kindred workers................
Private household workers_____________
Service workers, except private householdFarm laborers and foremen_____________
Laborers, except farm and mine-------------

Percent
of job
Num­ Percent of
shifts to
ber
persons
different
(thou­ with work occupation
sands) experience
10,869
811
50

8.9
1.8

436
1,457
859
1,678
2,238
181
1,302
645
1,212

5.5
12.2
15.6
18.1
16.6
5.3
16.2
15.0
27.3

47.2

13.5

30.8
(9
65.6
39.1
59.1
32.7
47.5
93.9
49.2
52.4
58.4

i Figures not shown where base is less than 100,000.
S ource : 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 charac­
terized 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.1
0

Trends in Labor Mobility
Recent changes in mobility have been con­
ditioned 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
1 For an analysis of these relationships in 1956, see Robert M. Shaw,
0
“ The Nature of Industries with High and Low Quit Rates,” Employment
and Earnings, September 1957.

10




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 manu­
facturing quit rates, which have heretofore been
the only statistical series of comparable observa­
tions. 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 a b l e 2.7. P e r c e n t of J ob S hifts in 1961 I n v o l v in g
C h a n g e of I n d u st r y G r o u p , b y I n d u st r y of J ob
L eft
Job shifts in 1961
Industry group of job left

Num­
ber

Percent of Percent of
persons
job shifts
with work to different
experience industry

Total............................ ............................... 10,869

13.5

61.7

793
708

1 .6
0

57.2
52.5

Agriculture------- ------------------------------Wage and salary workers------ ----------Self-employed and unpaid family
workers............. _............._................

25.5

85

1.8

Nonagricultural industries_____________ 10,076
9,729
Wage and salary workers___________
159
_
Forestry, fisheries, and mining_
Construction___________________ 1,555
,2 2
Manufacturing_________________ 2 2
1,249
Durable goods_____________
973
Nondurable goods__________
Transportation,
and
public
451
utilities........ ...............................
Trade_____ ____________________ 2,512
382
Wholesale__________________
2,130
Retail____ _________________
Service industries_______________ 2,544
Finance, insurance, and real
391
estate___________ ____ ____
343
Business and repair services..
Private households2....... ........
248
Personal services, except pri­
433
vate households...................
356
Educational services...............
773
Other services......................
286
Public administration...................

13.8
15.1
20.4
38.0

Self-employed and unpaid family
workers........................ — ................

347

1 .2
2
12.4
11
.8
1 .0
0

(9
62.1
61.1
62.9
41.0
61.7
60.0
64.0

19.3
15.5

2 .1
0
1 .6
2

69.4
60.1
84.8
55.7
70.2

12.7
23.3
6.3

70.3
83.1
2 90.7

20.2

66.0

4.2

90.5

8.7
14.4
7.7

62.4
63.8
78.3

1 Figures not shown where base is less than 100,000.
2 Domestic service work in private households for several different em­
ployers is not counted among the job shifts.
Source: Preliminary data from a forthcoming BLS study of job mobility
of workers in 1961.

T a b l e 2.8. T u r n o v e r R a t es in M a n u f a c t u r in g ,
A n n u a l A v e r a g e s , 1948-61

Year

Turnover rates per 100 employees in
manufacturing 1
Separa­
tions
5.4
5.0
4.1
5.3
4.9
5.1
4.1
3.9
4.2
4.2
4.1
4.1
4.3
4.0

1948____ ____ ________
1949..............................
1950____ ____________
1951...................- ........
1952....... ......................
1953....... - ...................
1954____ ____________
1955_________________
1956_________________
1957__________ ______
1958_________________
1959____________ ____
1960_________________
1961____________ ____

Quits Accessions

3.4
1.9
2.3
2.9

2.8
2.8
1.4
1.9
1.9

1.6
1.1

1.5
1.3

1.2

5.4
4.3
5.3
5.3
5.4
4.8
3.6
4.5
4.2
3.6
3.6
4.2
3.8
4.1

New
hires
(>)
(»)
(*)
4.1
4.1
3.6
1.9
3.0

2.8
2.2
1.7
2.6
2.2
2.2

Unemploy­
ment rate *

3.8
5.9
5.3
3.3
3.1
2.9
5.6
4.4
4.2
4.3

6.8
5.5
5.6
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.1 During the
1
postwar period, with which this analysis is pri­
marily concerned, it is likely that only the develop­
ment 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 cor­
porations were prevalent during both the war
and immediate prewar period. During the post­
war 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 manu­
facturing 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 Indus­
trial Feudalism," American Economic Review, December 1958; Joseph Shister,
“ Labor Mobility: Some Institutional Aspects," Industrial Relations Re­
search 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 down­
trend 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 over­
all 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 “ im­
provement 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 a b l e 2.9. N u m b e r of V o l u n t a r y a n d I n v o l u n t a r y
J ob S hifts p e r 100 P e r so n s W ho W o r k e d , 1955 a n d
1961
Reason for leaving job
Age and sex

Improvement
in status
1961

1955

Economic

1961

1955

Male, 14 years and over............... .............
14 to 17 years......................................
18 to 24 years............................ ...........
25 to 44 years....................... ................
45 to 64 years............................ .......
65 years and over_______ ___________

6.1
3.0
14.0
7.9
2.1
.9

7.8
5.7
18.6
9.1
4.1
.7

6.8
2.8
13.0
7.6
4.6
2.8

5.3
2.7
11.1
5.6
4.0
1.5

Female, 14 years and over.................. ......
14 to 17 years............................ ...........
18 to 24 years.................... ...................
25 to 44 years______________________
45 to 64 years________ _____________
65 years and over _______ ____

4.1
1.4
9.4
4.2
2.3
.1

4.8
5.7
10.5
4.3
2.6
.8

2.8
1.4
5.5
2.8
2.1
.7

2.3
2.3
3.0
2.3
2.1
.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
673173— 63

3




T a b l e 2.10. R e a s o n

for

L e a v in g J o b ,

by

O c c u p a t io n : D ist r ib u t io n
O c cu p atio n G r o u p

of

J obs L eft

in

1961

and

1955,

by

M

a jo r

Reason for leaving job
1961

1955

Major occupation group of job left
Economic

Termina­
Improve­
ment in tion of tem­
status
porary job

Other

Economic

Termina­
Improve­
ment in tion of tem­
status
porary job

Other

Total______________________________________________________

32.1

32.6

12.9

22.5

23.5

37.6

17.9

20.9

Professional, technical, and kindred workers__________________
Farmers and farm managers_________________________________
Managers, officials, and proprietors, except farm_______________

21.7

34.8

16.1

27.4

15.9
18.5
35.8
15.4
12.7
29.2
31.4

33.3
38.5
41.6
38.3
51.8
37.9
40.0
43.8
40.0

18.8
30.2

33.4

33.9

32.0
12.7
10.4
31.1
23.4
15.2
18.7
27.6
28.8
16.1
15.4

mp.ripa! and kindred workers

_

.

.

.

Rales workers_______________________________________________
Craftsmen, foremen, and kindred workers_____________________
Operatives and kindred workers_____________________________
Private household workers___________________________________
Service workers, except private household_____________________
Farm laborers and foremen .

__

_ .

...

Laborers, except farm and mine______________________________

(9

36.0
16.9
18.4
56.2
38.5
27.0
19.2
13.2
46.9

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

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 opera­
tive 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 regard­
ing 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 in­
creasing prevalence of pensions may have been
responsible.

(9

37.3
36.2
47.3
28.7
34.7
31.0
33.6
18.4
23.6

(9

6.9
14.9
14.0
3.9
7.4
11.5

1 .8
0

53.5
9.2

(9

19.8
31.9
20.3

1 .2
1

19.4
30.5
36.4
15.0
20.3

1 .1
0
17.2
1 .0
0

21.0

1 .1
2
15.1
1 .0
2

17.6
9.9
18.6
13.9
52.8
17.3

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.

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 in­
dependent 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.1
2

Robert Tilove writes:

Effects of Pensions on Mobility

. . . 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

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

^ “ Social and Economic Consequences of the Pension Drive,” Handbook
on Pensions (National Industrial Conference Board, Inc., Studies in Person­
nel Policy No. 103, 1950), p. 85.

12



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.1
3

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.

The possible effects of pensions on mobility
may be summarized briefly:

importance to different workers will vary with the char­
acteristics and attitudes of the workers.

^ 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).

and

S e p a r a t io n R a t e s ,

by

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 im­

mobilizing 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

1 Robert Tilove, Pension Funds and Economic Freedom (Fund for the
1
Republic, New York, 1959), p. 23.

T a b l e 2.11. H ir e

Pensions

are but one component of total compensation, and their

therefore should be no more subject to criticism.

I n d u st r y , A g e ,

and

P e n s io n

C o v e r a g e , 1955,1 S ix A r e a s 2

Annual hires and separations per 100 employees
Industry division and pension class
A ll ages

A ll I ndustries
Pension:
Hires........... ......................................... .......................................................
Separations_____________________________________________________
N o pension:
Hires......... .......... ........................................................................................
Separations.......................................................... ...................... .............
C onstruction
Pension:
Hires______ __________ __________________________________________
Separations_____________________________________________________
N o pension:
Hires................ ............................ ............ ................................ .................
Separations.____ _______ _____________ __________________ ______
M anufacturing
Pension:
Hires................ ................................ ...........................................................
Separations__________________ ____________________________ ____ _
N o pension:
Hires________________________________ _______________ __________
Separations........................................................ .......... .............. .............
T ransportation , C ommunication ,

an d

W holesale and R etail T rade
Pension:
Hires......... ..................... .......... .......... .............. ........................................
Separations_____________________________________________________
N o pension:
Hires________________________ _______________________ __________
Separations_____________________________________________________
and

35 to 44
years

45 to 54
years

55 to 64
years

65 years
and older

37
34

91
74

42
39

30
29

18
18

12
13

11
50

67
62

115
92

81
74

62
58

53
51

38
37

31
50

97
98

194
173

107
134

108
104

84
65

72
71

48
99

146
136

135
113

186
173

143
136

139
132

144
148

157
170

30
27

83
64

39
34

24
27

15
14

9
10

8
49

53
46

115
81

64
59

47
41

34
30

25
20

14
36

25
25

57
41

29
29

28
29

10
12

5
8

7
70

34
22

32
23

45
41

50
40

20
16

2
4

3
1

60
55

125
106

63
62

49
46

28
28

21
15

8
26

68
65

123
104

86
81

54
56

42
44

34
36

19
38

29
29

52
48

30
31

18
25

12
7

4
6

7
79

96
83

135
120

118
101

91
76

84
70

49
38

34
49

65
62

179
157

70
63

60
61

34
36

41
38

44
68

67
69

111
106

65
59

60
63

78
84

49
52

50
67

R eal E state

Pension:
Hires............................................................ ........... - ...............................
Separations.......... ....................................................................... ...........
N o pension:
Hires......................... .......... ............ .......... ................................................
Separations................... .......... ...................................................................
Services
Pension:
Hires....... ....................................................................................................
Separations................................................................ .............................. .
N o pension:
Hires......... ..................................................................................................
Separations.................................................................................................

1
In establishments with 50 workers or more covered by State unemploy­
ment insurance laws or by the Railroad Retirement Act. Years ending June
1955, except Los Angeles (March 1955) and Seattle (December 1955).




25 to 34
years

U tilities

Pension:
Hires.................................. ................................................. .......................
Separations______________________________________________ ______
N o pension:
Hires___________________________________________________ _______
Separations_____________________________ ■
_______ ____ __________

F inance , I nsurance ,

Under 25
years

2
Detroit, Los Angeles, Minneapolis-St. Paul, Philadelphia, Seattle, and
Worcester.
Source : Derived from unpublished tabulations furnished by the Bureau
of Employment Security.

13

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.

T a b le 2.12. A n n u a l S e p a r a t io n a n d H ir e R a t e s , b y
S iz e of E sta b l is h m e n t , A g e , a n d P e n s io n C o v e r a g e ,
1955,1 Six A r e a s 2

Workers under 45
years:
Pension:
Hires....... ......
Separations__
No pension:
Hires..............
Separations. __

55
51

60
53

43
37

44
38

44
40

47
42

93
86

82
72

75
62

51
52

4

80
71

Turnover and Pension Status. There is little data
on the effect of pension coverage on labor mobility.
Herbert S. Parnes of Ohio State University inter­
viewed 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.1
4
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:

Workers 45-64 years:
Pension:
Hires_______
Separations...
No pension:
Hires_______
Separations...

25
25

24
23

16
13

14
15

12
12

16
16

64
66

48
44

30
22

26
32

A nnu al turnover rates by pension plan coverage and age o f
worker (per 100 employed), six areas
Pension plan
Age

All ages______
Under 45 y e a r s .___
45 years and o v e r ._
4 5 -6 4 years____

1

No pension plan

Hires

Separa­
tions

Hires

37
47
16
16

34
42
18
16

67
80
45
47

Separa­
tions

62
71
46
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 separa­
tions 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 classi­
fied by major industry division (table 2.11).
14



Hires and separations per 100 employees
Pension class and
age

Number of employees in establishments
5099

100499

500999

1,0004,999

5,000
and
over

Total

47
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 employ­
ees 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 in­
dustry 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.

44 years old in construction and for workers under
25 years old in service industries and in trans­
portation. 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 a b l e 2.13. A n n u a l Q u it K a t e s , b y I n d u s t r y , A g e ,
an d P e n s io n C o v e r a g e , 1955,1 Six A r e a s
Quits per 100 employees
Industry division
and pension class

Under 25 to
34
25
years years

35 to
44
years

45 to
54
years

55 to
64
years

65
years All
and ages2
older

All industries: 1
Pension________
No pension.........

41
47

22
34

14
22

6
16

3
12

9
11

17
24

Construction:
Pension..............
No pension.........

38
21

36
24

23
21

11
21

5
18

11
9

27
20

Manufacturing:
Pension..... .........
No pension.........

38
43

21
34

12
19

5
11

2
9

8
10

14
23

Transportation, com­
munication, and
public utilities:
Pension...............
No pension.........

31
7

16
24

15
12

2
5

8
2

6

13
9

Wholesale and retail
trade:
Pension...............
No pension.........

51
60

30
47

20
30

10
21

4
17

6
12

25
35

Finance, insurance,
and real estate:
Pension_________
No pension.........

37
90

24
59

16
48

4
22

3
19

22
16

21
49

Service:
Pension............... .
No pension_____

70
46

19
29

15
22

6
28

6
13

18
16

18
26

1 See footnote 1, table 2.11.
3 See footnote 2, table 2.11.
S ource : Derived from unpublished tabulations furnished by the Bureau
of Employment Security.




T a b l e 2.14. A n n u a l Q uit R a t e s , b y S iz e of E sta b l ish ­
m e n t , A g e , an d P e n s io n C o v e r a g e , 1955,1 Six A r e a s 2
Quits per 100 employees
Number of employees in establishments

Pension class and age

1,0004,999

5,000
and over

Total

Workers under 45
years
Pension--------------

No pension

Workers 45-64 years:
Pension...............
No pension______

50-99

100-499

500-999

23
33

29
39

27
33

21
39

20
22

23

5
15

6
21

7
14

3
12

4
7

4

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 satis­
factory work situations. Firms in seasonal in­
dustries 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 non­
pension 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
15

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 accom­
modate necessary employment shifts even in pen­
sion 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
com m on;1 (2) early retirement and disability
5
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. Sim­
ilarly, 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 col­
lectively bargained plans were relatively new,
only one-fourth of the 300 plans studied by the
Bureau of Labor Statistics included vesting pro­
visions, while in late 1958 almost six-tenth of the
300 plans included vesting.1 Vesting was more
6
common in single-employer plans than in multi­
employer plans. The trend toward vesting ob­
served 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.1 The likelihood of
7
16



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 con­
trasted 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.1 The trend toward more liberal
8
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 liberali­
zation, except in those plans which face serious
financial difficulties. These considerations sug­
gest 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.
1 Bureau of Labor Statistics, Pension Plans Under Collective Bargaining
6
(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.

2.15. L ik e l ih o o d of W o r k e r s of G iv e n A ge
a n d L e n g t h of S e r v ic e H a v in g V e sted P e n s io n
R ig h t s , 124 L a r g e C o m p a n y P l a n s

T able

Age

Length of service
(in years)

Under 30.........
30-39............ . .

1947-49

1950-52

1953-55

Less than 5________
5-9___________ ____

0.2
.8

0.1
2.2

0.02
1.8

0.02
1.9

Less than 5
5-9....... .....................
10-14.........................

.2
1.3
4.0

.l
2.6
6.7

.02
2.3
5.7

. 02
2.3
6.3

40-44................ Less than fi
5-9....... ................... .
10-14.........................
15-19.........................

.2
1.3
5.4
7.5

2.6
7.4
9.8

45-49....... ........ Less than 5 _______
5-9......................... .
10-14........................
15-19______________
20 or more_________

.2
1.3
6.9
9.3
13.1

2.6
8.5
11.1
18.4

/P.ss than 5
50-54................ T
5-9.............. ............
10-14........................
15-19....... ..................
20 or more.................

.2
1.4
7.2
9.8
18.3

T^.ss than 5
5-9............ ................
10-14......... .............. .
15-19....... ..................
20 or more_________

60 and over___ Less than 5________
5-9________ _______
10-14_______ ______
15-19_______ ______
20 or more................

55-59...........—

1956-59

0
2.3
25.5
26.9

0
2.3
30.6
38.4

.02
2.3
31.0
32.6
34.9

.02
2.3
35.6
43.9
47.4

2.7
8.8
12.0
20.2

.02
2.5
31.7
34.6
37.8

.02
2.6
37,2
46.7
50.8

2.2
9.5
12.5
21.3

1.1
3.7
12.0
15.5
25.0

2.6
34.2
38.2
42.7

.3
2.9
40.0
49.9
55.0

10.8
12.0
20.1
25.0
36.1

1.5
4.1
23.1
29.5
41.5

2.0
4.5
37.7
43.4
51.2

1.9
4.5
42.0
59.6
82.3

1.0

.1

.1

.1

.1

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 sim­
ilarly situated workers with unvested pensions.
The provision of vesting with 10 or more years of
required service can probably do much to de­
crease the immobilizing effects of pensions on the
age and service groups for whom pensions are
likely to have the most significance. Never­
theless, 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 chang­
ing jobs, since job-security provisions are uncom­
mon in this group. As pointed out in the section
on occupational mobility, managerial and profes­
sional 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 retire­
ment provisions are included in pension plans, the
minimum age is often 55 years or 60 years. Occa­
sionally, 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 con­
tribution 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.1
9
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 favor­
able to workers as long as retirement is at his op­
tion. 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 pen­
sion plans are negotiated by a union with a
number of employers or with an employer's
17

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 in­
clude vesting less frequently than do other
collectively bargained plans.
It might appear that the relatively high fre­
quency of industry shifts in job changes discussed
in the section on industry mobility patterns might
limit the pension protection provided by multi­
employer 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.2 These
0
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 con­
structed, benefits all workers, since it assures them of a pen­
sion 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.

18



In industries where workers show high attach­
ment, multiemployer plans can provide substantial
protection of pension benefits and such plans need
not reduce interfirm or interarea mobility, al­
though 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 nat­
urally 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 pro­
vides protection of pension credits which is often
superior to vesting. As pointed out above, rela­
tively few single-employer plans provide vesting
before age 40 and 10 years of service, but multi­
employer plans permit young workers with short
service to keep their pension credits when they
move to other employers who are members of the
plan.3
0
3 Bureau of Labor Statistics, Multiemvloyer Pension Plans Under Collective
0
Bargaining (BLS Bulletin 1326,1962), table 3, p. 98.

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 unemploy­
ment during a given year. Employers usually
rate their older workers highly in terms of steadi­
ness 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 unem­
ployment 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 unemploy­
ment tend to be unemployed for longer periods
than younger workers. It is lengthy unemploy­
ment 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 three-




fourths. Restrictions were especially common in
professional, managerial, and clerical jobs. Em­
ployers 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 pen­
sion 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 em­
ployment.2 Corporate pensions are related to the
1
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 reluc­
tant to hire workers who will shortly be retired
without a full pension.
Older workers faced serious employment prob­
lems long before pensions were common. During
the 1920? few older workers were protected by
s,
seniority provisions against layoff; hence many
2 By “ older workers” is meant workers 45 years and older largely as a
1
matter of statistical convenience. Age problems in getting and retaining
jobs begin at different ages in different occupations.

19

T a b l e 3.1. U n e m p l o y m e n t R a t e s
1 9 4 8 -6 1 1

of

M en,

by

these older workers from the labor market, and (2) taking
steps to assure the continued usefulness of these age
groups as productive workers.2
2

A ge,

[Annual averages]
Percent of civilian labor force unemployed by age in years
Year

1961....... .........
1960.................
1959.................
1958.................
1957.................
1956.................
1955.................
1954.................
1953.................
1952.................
1951.................
1950.................
1949_________
1948.................

14
and
over
6.5
5.4
5.3
6.8
3.8
3.5
3.9
4.9
2.4
2.4
2.6
4.9
5.5
3.3

14
to
19

20
to
24

15.8
14.0
13.2
15.2
11.3
9.6
9.9
11.2
6.8
7.6
7.0
11.0
11.9
8.3

10.7
8.9
8.7
12.7
7.8
6.3
7.0
9.8
4.3
4.0
3.5
7.7
9.9
6.3

25
to
34
5.7
4.8
4.7
6.5
3.3
2.9
3.0
4.4
1.9
1.8
2.0
4.2
4.7
2.5

35
to
44
4.6
3.8
3.7
5.1
2.8
2.3
2.8
3.7
1.7
1.7
1.7
3.3
3.8
2.1

45
to
54
4.9
4.1
4.1
5.3
3.3
2.7
3.0
3.9
1.9
1.8
2.1
3.9
3.9
2.3

55
to
64
5.7
4.6
4.5
5.5
3.5
3.2
4.1
4.9
2.4
2.1
2.5
4.7
4.9
2.8

65
and
over
5.5
4.2
4.8
5.2
3.4
3.3
3.7
4.2
2.0
2.1
3.3
4.6
4.9
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 pro­
vided by union-negotiated seniority provisions
also spread to nonunion firms.
The unemployment problems of older workers
in the 1930’s disappeared during the high employ­
ment 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 assump­
tion 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. Unem­
ployment 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 retire­
ment 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 consider­
ations, 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

20



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 promi­
nence. Older jobseekers tended to be unemployed
for lengthy periods, frequently exhausted their
unemployment benefits, and posed special prob­
lems 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 un­
employed. 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 col­
lective 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.2
3
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.2 Bureau of Labor
4
Statistics studies of productivity show that for
pieceworkers in four footwear factories and in
2 “ Employment Problems of the Older Worker,” Monthly Labor Review,
2
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 (McGraw“
Hill, March 1958), pp. 85-96.

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.2
5

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 unemploy­
ment 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 pro­
portion of those who are exposed to unemployment.5
*
2 Bureau of Labor Statistics, Job Performance and Age: A Study in
5
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 regres­
sion 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 unemploy­
ment 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:
Standard
error of
regression
Regression
Intercept
coefficient
coefficient
coefficient
Regression age
14 to 19................ - ......... .
20 to 24____ ____ _________
25 to 34________ __________
45 to 54................... .............
55 to 64_____ _____________
65 and over____ _____ ____




2.98
.37
.37
.30
.71
1.25

2.55
2.38
1.33
1.00
1.05
.86

0.22
.15
.04
.04
.08
.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 unem­
ployment, in weeks, 1961
Age

14
18
25
45
65

All ages__
__ _______ ____
to 17________________________ ____
to 24________________________ ____
to 44________________________ ____
to 64____
_
_
_
____
____
and over____ _ _ _

Men

16.
9.
13.
16.
20.
30.

9
1
1
8
9
4

Women

13.
6.
11.
13.
16.

5
9
1
8
1

_.

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

14
18
20
25
35
45
65

____
All a g e s _ _ __ _
to 17________________________ ____
to 19________________________ ____
to 24________________________ ____
to 34________________________ ____
to 44________________________ ____
to 64________________________ ____
a n d over___
_____ __
_ .____

Men

18.
19.
33.
34.
20.
15.
14.
10.

4
3
0
8
1
3
4
8

Women

15. 3
13. 7
29. 9
19. 5
16. 2
14. 5
12. 5
8 .3

From the foregoing data it may be concluded
that relatively few older workers are unemployed
during the year, but once employed their unem­
ployment 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 be­
cause 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 un­
employment rate of men 35 to 44 for the period
1948-62, the observations show very close linear
relationships 2 (charts 3.1-3.6). Hence, while un6
21

Relation o f Unemployment Rates for Men o f D ifferent Ages
to Unemployment Rates o f Men 35-44
Unemployment rate

Unemployment rate

of men 14-19

of men 20-24

Unemployment rate
o f men 25-34

Unemployment rate

Unemployment rate

Unemployment rate

o f men 55-64

of men 65 and over

Unemployment rate of men 35-44

22



of men 45-54

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 work­
ers are proportionately higher in years of low un­
employment, the unemployment rates are rela­
tively 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 tem­
porary 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, espe­
cially 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 dif­
ficult 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 experi­
ence of older workers often contribute to their
difficulties in finding suitable work. A study of
work applicants at public employment offices con­
ducted as part of the Seven City Study in 1956
2 Bureau of Employment Security, Older Worker Adjustment to Labor
7
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.2
7
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 un­
employed 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)
Occupation group

All occupations_________________
Professional and technical_____________
Farmers and farm managers___________
Managers, officials, and proprietors___
Clerical and kindred workers__________
Sales workers___________________________
Craftsmen and foremen________________
Operatives_______________________________
Service workers_________________________
Farm laborers and foremen____________
Laborers, except farm and mine_______

25 to 44
years

45 years
and older

5. 1

5. 2

1. 7
.5
1. 6
3. 4
2. 9
5. 2
8. 0
5. 9
6. 8
14. 6

2. 0
.4
1. 6
4. 0
3. 6
7. 3
7. 6
6. 4
7. 7
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 re­
tired 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 diffi­
cult to justify special efforts to find jobs for pen­
sioners when other qualified unemployed persons
are seeking work.
23

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 con­
ducted 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.2 Similar
8
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 oc­
cupations, and in this study, unskilled jobs were
also more frequently restricted than other kinds
of jobs. The frequency of upper age limits ap­
peared 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 estab­
lishments 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 Se­
curity, 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 pro­
duction standards (22 percent of all reasons);
(2) inability to meet physical requirements (21
124




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 per­
cent). No other reason provided more than 4
percent of the responses.2
9
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 open­
ings 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.3 Age prefer­
0
ences 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
2 Bureau of Employment Security, Workers are Young Longer, a report of
8
the Findings and Implications of the Public Employment Service Studies of
Older Workers in Five Cities, third printing, 1953.
2 Bureau of Employment Security, Counseling and Placement Services for
9
Older Workers (BES Bulletin E152,1956),pp. 28-60.
so Ibid.

of the State laws exclude small employers and
farm, domestic service, and noncommercial em­
ployment. 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 discrimina­
ting in referral or service to older workers.3
1
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 prefer­
ences were found in only 24 percent of the job
orders in Worcester, Mass, (where age discrimina­
tion was prohibited), but age restrictions or
preferences in other cities were found in 34 to 79
percent of the job openings.3
2
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 insur­
ance 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. M ost 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
3 Bureau of Labor Standards, Division of State Services, “ Brief Summary
1
of State Laws Against Discrimination in Employment: Older Workers,’ '
Fact Sheet No. 6-B, June 1962.
3 Bureau of Employment Security, Counseling and Placement Services for
2
Older Workers, op. cit.
33 Margaret S. Gordon, “ The Older Worker and Hiring Practices,”
Monthly Labor Review, November 1959, p. 1201.
3 For a more detailed discussion of these points, see Bureau of Employ
4
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
3
4
A number of factors tend to operate together.
A firm which is willing to pay the higher pension
costs which are associated with involuntary re­
tirement 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 re­
tirement 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 men­
tioned 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 depend­
ents 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 un­
likely 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.3
1
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

tributions specified contributions as either rates
per period of time worked or as percentages of
payroll.3 In multiemployer plans, at least, the
5
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 multiem­
ployer 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 influ­
ence 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 reason­
able 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 ap­
pears 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 195659, 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.3 To finance the expected
6
cost of such a benefit, the employer must con­
tribute 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
26



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

25___________________
30___________________
35___________________
40___________________
45___________________
50___________________
55___________________
60___________________

Monthly pension

$100.
87.
75.
62.
50.
37.
25.
12.

00
50
00
50
00
50
00
50

Annual charge

$158. 87
171. 92
187. 07
197. 69
218. 92
243. 87
269. 32
299. 58

Obviously there are differences in cost of pen­
sions for new entrants of different ages. How­
ever, 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 per­
centage 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 im­
possible to estimate the cost of pensions under
such plans without detailed assumptions con­
cerning the worker’s future compensation. Never­
3 Bureau of Labor Statistics, Multiemployer Pension Plans Under Cob
5
lective Bargaining (BLS Bulletin 1326, 1962), p. 11.
3 1960 Study of Industrial Retirement Plans (New York, Bankers Trust
6
Co., 1960), p. 19.

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 turn­
over 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, pen­
sion 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.

Effect of Pension Plans on Hires and Separations
of Older Workers
Previous sections have indicated that pension
plans may adversely affect employment oppor­
tunities for older workers by leading to the estab­
lishment 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 pen­
sions, 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 pen­
sions and for those without pensions (chapter II).
As pointed out in chapter II, no significant con­
clusions 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 con­
siderably. 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
3 Bureau of Employment Security, Older Worker Adjustment to Labor
7
Market Practices, op. cit., p. 4.




without pension plans, contrasted to 14 percent in jobs
with this advantage.3
7

27

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.3
8

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 pen­
sions on the job opportunities of older workers
are concentrated in the 65 years and older group.
It is clear that firms with pension plans infre­
quently 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:
3 Ibid., p. 68.
8

28



Percent of employees 45
to 64 years old
Industry

All industries____________________
Construction____________________________
Manufacturing, total___________________
Durable____________________________
Nondurable________________________
Transportation, communication, and
public utilities________________________
Trade____________________________________
Finance, insurance, and real estate____
Service___________________________________

Pension

No pension

31
40
32
31
34

32
32
31
30
33

30
31
26
40

42
31
31
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 propor­
tions. In all industries, however, the proportions
of workers 65 years and older in firms with pen­
sions were considerably lower than the correspond­
ing 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 propor­
tionate 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 con­
cluded that practices associated with pension plans
are a major cause of the older worker problem.

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 occu­
pations 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-employ­
ment 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 reduc­
ing 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 retire­
ment 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 with­
drawal 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 some­
what more than half of the workers in large
negotiated plans and in about four-fifths of the




large nonnegotiated plans. Involuntary retire­
ment 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 involun­
tary 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 indus­
tries 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, involun­
tary 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 retire­
ment 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 involun­
tary retirement lies in the pear future.
From the point of view of manpower policy, the
desirability of retirement and the resulting reduc­
tion 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
29

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 occupa­
tions 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 in­
fluencing 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 flexi­
bility in meeting manpower problems. While
special provisions applying to the needs of partic­
ular 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 Auto­
mobile 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
30



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.3
9
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
3 For a discussion of labor force trends since 1890, see Gertrude Bancroft,
9
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).

T a b l e 4.1. P e r c e n t

of

P o p u l a tio n

in t h e

L abor F orce,

by

Se x

and

A g e , 1940-61

[Annual averages]
Male
Years

1961______________
1960______________
1959______________
1958______________
1957______________
1956....... ..................
1955______________
1954______________
1953______________
1952______________
1951______________
1950____________
1949__________
1948__________ _
1947______________
1946______________
1945______________
1944______________
1940______________

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

80.3
80.1
80.5
82.1
82.7
83.7
83.6
83.9
84.4
84.6
84.8
84.4
84.5
84.6
84.4
83.7
88.0
89.7
83.9

44.6
46.3
46.7
47.4
49.7
51.4
49.5
49.3
50.9
51.9
53.7
53.2
53.6
54.3
54.2
53.7
64.9
70.0
44.2

89.8
88.9
88.6
89.5
89.8
90.8
90.8
91.5
92.2
92.0
91.0
89.0
87.7
85.6
84.8
82.3
95.5
98.5
96.1

97.6
96.4
96.3
97.3
97.3
97.4
97.7
97.5
97.6
97.7
97.1
96 2
95.9
96.0
95.8
94.2
97.0
99.0
98.1

97.7
96.5
96.6
98.0
97.9
98.0
98.1
98.1
98.2
97.9
97.6
97.6
98.0
98.0
98.0
97.3
98.2
99.0
98.5

95.6
94.5
94.6
96.3
96.4
96.6
96.5
96.5
96.6
96.2
96.0
95.8
95.6
95.8
95.5
96.1
96.6
97.1
95.5

87.3
85.4
85.9
87.8
87.5
88.5
87.9
88.7
87.9
87.5
87.2
87.0
87.5
89.5
89.6
89.6
91.4
92.1
87.2

31.7
32.3
33.4
35.6
37.5
40.0
39.6
40.5
41.6
42.6
44.9
45.8
46.9
46.8
47.8
48.5
52.1
52.2
45.0

36.9
36.4
35.8
36.0
35.9
35.9
34.8
33.7
33.6
33.9
33.8
33.1
32.4
31.9
31.0
31.1
36.2
36.8
28.2

29.9
30.2
29.1
29.1
30.6
31.9
29.9
29.8
30.5
31.5
32.1
31.5
32.5
32.5
31.6
32.3
40.0
42.0
23.3

47.1
46.0
44.9
46.4
46.0
46.4
46.0
45.3
44.5
44.8
46.6
46.1
45.0
45.3
44.9
46.3
54.1
55.0
49.5

36.4
35.9
35.2
35.6
35.6
35.4
34.9
34.5
34.1
35.5
35.4
34.0
33.5
33.2
32.0
32.9
38.9
39.0
35.2

43.8
43.2
43.1
43.4
43.3
43.1
41.6
41.3
41.3
40.5
39.8
39.1
38.1
36.9
36.3
36.2
39.8
40.5
28.8

50.1
49.4
48.6
47.9
46.5
45.5
43.8
41.2
40.4
40.1
39.7
38.0
35.9
35.0
32.7
31.5
35.2
35.8
24.3

37.9
36.8
36.2
35.2
34.5
34.9
32.5
30.1
29.1
28.7
27.6
27.0
25.3
24.3
24.3
23.6
26.5
25.4
18.7

65
years
and
older
10.7
10.5
9.9
10.3
10.5
10.9
10.6
9.3
10.0
9.1
8.9
9.7
9.6
9.1
8.1
8.4
9.6
9.8
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 oppor­
tunities 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 re­
tirement 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 tech­
nical, 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.
4 Bureau of Labor Statistics, Educational Attainment of Workers, 1959,
1
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 dispro­
portionately 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 occupa­
tions (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.4
0
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.4
1
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
31

T a b l e 4.2. E m p l o y m e n t

by

O c cu p atio n G r o u p s

of

1952

A ged M e n
a n d 1961

and

A ll M e n ,

and

C hang es

in

E m ploym ent,

[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

T otal1
...................................... .........................................

42,349

44,318

1,979

4.7

2,351

2,071

-280

-1 1.9

Professional and technical..................... ............... ..........
Farmers....... .............. ........................ ............ ...................
Managers.......................... .................................. ................

3,137
3,688
5,089

4,955
2,581
6,003

1,818
-1,107
914

58.0
-3 0.0
18.0

118
495
235

185
423
399

67
-7 2
164

56.8
-14.5
69.8

Clerical............................ ...................................................
Sales.................................. ..................................................
Craftsmen..... .....................................................................

2,798
2,247
8,478

3,120
2,737
8,407

322
490
-7 1

11.5
21.8
-.8

118
95
400

118
138
259

0
43
-141

0
45.3
-3 5.2

Operatives............................................................................
Service..................................... ...........................................
Farm laborers......................................................................
Other laborers.....................................................................

8,817
2,585
1, 780
3,730

8,441
2,992
1,685
3,397

-376
407
-9 5
-333

-4 .3
15.7
-5 .3
-8 .9

283
259
95
259

165
233
74
111

-118
-2 6
-2 1
-148

-4 1.7
-1 0.0
-22.1
-57.1

1 Detail will not add to total because of rounding.
Source : Derived from Peter O. Steiner and Robert Dorfman, The Eco­

nomic Status of the Aged (Berkeley, University of California Press, 1957),

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.4
2
The increased importance of voluntary part-time
work for aged men underlines the growing impor­
tance 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 work­
ers to retire voluntarily; and (2) involuntary re­
tirement 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 retire­
ment. 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 in­
comes of $5,000 or more found retirement satis­
factory.4 Between 1954 and 1958, almost four3
fifths of the men retiring from the Eastman Kodak
32



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.

Co. (which has a generous pension plan) retired at
age 65 or earlier, although later retirement was
permitted.4 The need for income appeared to be
4
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.4 Obvi­
5
ously, corporate pensions play an important role
in inducing retirement by providing necessary
income.
In most pension plans, 65 is the normal retire­
ment age; i.e., the age at which retiring workers
receive full pensions. The selection of this partic­
ular 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 in­
tended to permit unemployed men or partially
disabled men to retire earlier by providing retire­
ment income. Similar provisions for earlier re­
tirement are included in many private pension
plans. Early retirement clearly increases the flexi­
bility of private pension plans in meeting the needs
of aging workers. Many private pension plans
provide for retirement before age 62 and allow in­
4 Bureau of Labor Statistics, Labor Force and Employment in 1961, Special
2
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.
4 John J. Corson and John W. McConnell, Economic Needs of Older People
3
(New York, Twentieth Century Fund, 1956), p. 47.
4 Marion B. Folsom, “ Goals in Governmental and Private Plans for Social
4
Security,” Address given on the 25th Anniversary of the Social Security Act,
Washington, D.C., Aug. 15, 1960, p. 16.
4 National Committee on the Aging, “ Work Attitudes at Age 65“ (New
5
York, 1959), p. 5.

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 retire­
ment 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 pen­
sions 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 retire­
ment 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 a b le 4.3. E m pl o ym e n t of A ged M e n , b y M a jo r
O ccu p a tio n G r o u p s , 1952 a n d 1961
Percent of employed men
Occupation group

14 years and older
1952

1961

65 years and older
1952

1961

Total employed............................

100

100

100

100

Professional and technical______
Farmers and farm managers........
Managers and proprietors............

7
9
12

11
6
14

5
21
10

9
20
19

Clerical and related......................
Sales workers................................
Craftsmen and foremen...............

6
6
19

7
6
19

5
4
17

6
7
13

Operatives,...................................
Service..........................................
Farm laborers...............................
Other laborers...............................

21
6
4
9

19
7
4
8

12
11
4
11

8
11
4
5

Source : See table 4.2.




T a b le 4.4 P e r c e n t of A ged M e n W ith P a r t - T im e
F ull - T im e J o b s , 1950-60

Year

Percent of
aged men
with work
during the
year

and

Percent of all aged men with—
Part-time jobs
Total

Full-time jobs

50-52 1-49 Total
weeks weeks

50-52 1-49
weeks weeks

1960......................

43.1

16.6

6.7

9.9

26.6

16.8

9.8

1959.....................
1958____________
1957.....................
1956............... ___ _
1955_______ _____

42.4
43.4
47.3
46.4
48.1

14.6
15.0
15.1
14.5
12.7

5.8
6.6
6.3
5.9
5.5

8.8
8.4
8.8
8.6
7.2

27.8
28.4
32.2
31.9
35.4

18.0
18.5
21.5
22.5
24.5

9.8
9.9
10.7
9.4
10.9

1954_____ ______
1953____________
1952____________
1951____________
1950........ ............

45.9
48.2
50.3
51.1
49.3

11.6
14.8
11.3
11.3
11.6

4.3
3.8
4.5
4.1

7.3
11.0
6.8
7.2

34.3
33.4
39.0
39.8
37.7

23.3
24.6
26.0
28.0
25.8

11.0
8.8
13.0
11.8
11.9

0)

(0

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 com­
pulsory 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 collec­
tively bargained plans, retirements under com­
pulsory 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 in­
voluntary 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.
33

Of the 179 plans with involuntary retirement,
compulsory retirement was found in 109, auto­
matic 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 retire­
ment; 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.4
6
The Bankers Trust Co. studies of pension
plans found that 83 percent of the large con­
ventional (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.4
7
Involuntary retirement is found chiefly in
single-employer plans, and is more often included
in nonnegotiated than in negotiated singleT a b l e 4.5. N o r m a l , C o m p u l so r y , a n d A utom atic R e ­
t ir e m e n t A ges in 300 P e n s io n P l a n s U n d e r C ollec ­
t iv 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 retire­
ment provisions_____
Age 55_______________
Age 60__
_ _ ___
Age 65__ _ ______ ____
Age 66______ ___ _ __
Age 67_________
_
Age 68_____ ______
Age 69
Age 70.
_ _
Age 74
Age 75_._ __________
Other 2______
______

300

4,909.8

127

1,927.9

70

919.8

1
15
282

3.0
579.6
4, 289.2

82

1.006.9

24
2
4
17

170.0
19.7
21.8
169.9

1

7.8

22
1

453.4
85.0

1

35
1
8
1

888.1
1.0
28.0
3.9

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.

34



employer plans. Despite the opposition of many
union leaders to involuntary retirement, a sub­
stantial 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:4
8
Number of employees

1 0 0 -1 9 9 __________________________________
2 0 0 -4 9 9 __________________________________
5 0 0 -9 9 9 __________________________________
1,000 or m o re ___________________________

Percent of firms with
involuntary retirement

54
65
80
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 auto­
matic retirement (or almost one-half of the 52
plans with automatic retirement and without com­
pulsory 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 work­
ers 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.

T a b l e 4.6. N orm al a n d C o m p u l so r y R e t ir e m e n t A ges
in C o n v e n t io n a l P l a n s , 1956-59 a n d 1953-55
Retirement age (men) 1
Normal

Compulsory

60____________________
65____________________
65_ _________________
65____________________
65____________________
______
67
68____________________
70
_____

Percent
1956-59,
new plans

None_________________
None______ _ ______
65____________________
68____________________
70____________________
67. _ _________________
68____________________
70__ ________________

4
13
72
2
2
7

1953-55,
new plans

6
74
5
8

2
3
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. Involun­
tary 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.
E m ployer Attitudes.
Opinion concerning the de­
sirability of involuntary or flexible retirement
differs among employers. Some firms vigorously
resist efforts of unions to remove involuntary
provisions from negotiated pension plans, occa­
sionally even accepting a strike rather than giving
in, while other firms do not want involuntary
retirement.4 Margaret S. Gordon found in a
9
survey of retirement practices in the San Fran­
cisco Bay region that employers frequently gave
the following reasons for adopting involuntary
retirement:
< For example, see Melvin K. Bers, Union Policy and the Older Worker,
9
op. cit., pp. 71-74.
5 Paraphrased from Margaret S. Gordon, “ The Older Worker and Retire0
ment 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 employ­
ment 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 retire­
ment.5
0

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.5 *
1

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 employ­
ment 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

35

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.5 The
2
United Automobile Workers have opposed in­
voluntary retirement practices, although the
automobile pattern includes compulsory retire­
ment at age 68.5
3
Despite union opposition to involuntary retire­
ment 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 at­
tractive. 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 Longshore­
men's and Warehousemen's Union pension plan.5
4
The problems of unemployment in the auto­
mobile 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 retire­
ment 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
36



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." 5
5
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.5
6

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 retire­
ment 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. W e 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 Com­
mission urged that either flexible retirement
policies be adopted or the involuntary retirement
age be increased.5
7
The informed consensus appears to urge recon­
sideration 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.
* Ibid.
3
m Ibid., p. 80.
5 Special Staff on Aging, U.S. Department of Health, Education, and
5
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

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 retire­
ment 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.6 In the 1951 survey of
8
pensioners previously referred to, 45 percent of all
pensioners were compelled to retire by their
employer on account of age. Involuntary retire­
ment 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).6 Since the higher income
9
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 compul­
sory 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 qualifi­
cation, and only 12 percent thought that there
should not be a fixed retirement age.*0 A survey
6
9
5
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.6
1
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.
5 Corson and McConnell, op. cit., p. 75.
9
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.
6 Governor’s Commission Report, op. cit., p. 115. Permission was granted
2
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 adminis­
tered 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.6
2
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 involun­
tary 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 retire­
ment 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 some­
what 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.
37
U.S. GOVERNMENT PRINTING 0 F F I C E : I 9 6 3