Age and Inequality: Diverse Pathways Through Later Life

Age and Inequality

Social Inequality Series Marta Tienda and David B. Crusky, Series Editors

Age and Inequality: Diverse Pathways Through Later Life, Angela M. O'Rand and John C. Henretta Children, Schools, and Inequality, Doris R. Entwisle and Karl Len Alexander Rational Choice Theory and Large-Scale Data Analysis, edited by Hans-Peter Blossfeld and Gerald Prein Generating Social Stratification: Toward a New Research Agenda, edited by Alan C. Kerckhoff Social Stratification: Class, Race, and Gender in Sociological Perspective, edited by David B. Grusky

Age and Inequality Diverse Pathways Through Later Life

Angela M. O'Rand John C. Henretta

"---»--" A Member ot the Perseus Books Group

Sock! Inequality Series

All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Copyright © 1999 by Westview Press, A Member of the Perseus Books Group Published in 1999 in the United States of America by Westview Press, 5500 Central Avenue, Boulder, Colorado 80301-2877, and in the United Kingdom by Westview Press, 12 Hid's Copse Road, Cumnor Hill, Oxford OX2 9JJ Find us on the World Wide Web at www.westviewpress.com Library of Congress Cataloging-in-Publication Data O'Rand, Angela M. Age and Inequality ; diverse pathways through later life / Angela M. O'Rand, John C. Henretta. p. cm. — (Social inequality series) Includes bibliographical references and index. ISBN 0-8133-1906-4 (he)—0-8133-9812-6 (pb) 1. Aged—United States—Economic conditions. 2. Equality—United States. I. Henretta, John C. II. Title. III. Series. HQ1064.U50665 1999 305.26'0973—-dc21

99-30973 CIP

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984.

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Contents List of Tables and Figures

1

vii

Introduction

1

Cohorts, Inequality, and Social Change

5

Inequality and Aging: Stratification over the Life Course, 8 Theories of Intracohort Heterogeneity and Inequality, 9 Economic Inequality Across Countries and Between Age-Groups, 11 Aging Cohorts and Economic Inequality, 16 Employment Institutions and Inequality in Old Age, 27 State Policies, Inequality, and Aging, 29 Conclusion, 31 2

Pathways to Inequality: Intracohort Differentiation over the Life Course

33

Aging and Social Theory: Linkages Between Work and Retirement, 34 Research on Linkages Across the Life Course, 36 An Overview of Income Sources, 42 Cohort Trends in Women's Lives and Intracohort Differentiation, 55 Implications for Intracohort Variation in the Life Course, 62 Poverty, 64 Conclusion, 69 3

Asynchronous Lives: The Normal Life Course and Its Variations

71

The Age Integration of Lives, 71 The Resilience of Gender Structure, 74 Family Pathways: The Breadwinner and Role-Sharing Models, 79 v

Contents

VI

Asynchronous Lives, 85 Studies of Asynchronous Lives and Inequality, 87 Family-Work Pathways to Retirement, 91 Conclusion, 96 4

Pathways to Retirement: The Timing of Retirement

99

Earlier and More Universal Exit, 105 Institutional Structure and Segmentation of Work Exit, 117 Alternate Institutional Pathways Producing Early Exit, 120 The Intersection of Social Structure and Individual Trajectories, 123 Conclusion, 129 5

Labor Markets and Occupational Welfare in the United States

131

From Wage Inequality to Pension Inequality, 133 Employee Benefits as Decentralized Occupational Welfare, 137 Defined Benefit and Defined Contribution Pension Plans, 146 The Private-Public Linkages in Occupational Welfare, 154 Conclusion, 157 6

U.S. Labor Force Participation Trends in Comparative Perspective

158

Changing Patterns of Late-Life Labor Force Participation, 159 Changing Patterns of Employment, 165 Social Policy and Early Exit, 169 Future Changes, 176 The Shifting Life Course, 181 Conclusion, 184 7

Aging in the Welfare State: Strategic Cross-National Comparisons of Life Course Variability and Inequality

186

The Origins of Welfare States, 187 Comparative Pathways to Variability and Inequality, 195 Aged Inequality, 200 Conclusion, 205 8

Conclusion: The Future of the Age-Structured Life Course

207

The Deinstitutionalization of the Life Course? 208 Aging Populations and Social Policies, 212 References Index

219 243

Tables and Figures Tables

1.1

Trends in earnings and income inequality

13

2.1 2.2 2.3

Aggregate income from each income source Median net worth and home ownership after age 70 Poverty rates for persons 65 and over

43 53 67

3.1

Benefits payable to couples with identical earnings

82

7.1 7.2

Comparative pathways to inequality Within decile aggregate income composition of the aged in three countries

188 201

Figures

1.1 1.2 1.3 1.4

Synthetic cohorts: Women's labor force participation Synthetic cohorts: Men's labor force participation Female/Male weekly hours Female/Male pension income ratios

19 20 24 26

2.1

Percentage with pension participation on current job, by gender Percentage with pension participation on current job, by race Monthly pension income by marital status Poverty status of individuals by age

48 49 52 66

2.2 2.3 2.4 3.1 3.2 3.3

4.1 4.2

Types of social structure Percentage of women aged 60+ with non-Social Security survivors' benefits Primary source of non-Social Security survivors' benefits for women aged 60+ Percentage of men in the labor force by age Percentage of women in the labor force by age

73 97 98 107 108 VII

VIII

4.3 4.4 4.5

5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 6.1 6.2 6.3 6.4

Tables nnd Figures

Women's labor force participation by birth cohort Percentage evaluating health as excellent or very good, by education Percentage evaluating health as excellent or very good, by race and ethnicity Male/Female decile earnings and pension distribution cutpoints Female/Male earnings and pension income decile outpoint ratios Industry pension participation rates Occupational rates of women's pension participation Industry rates of health insurance coverage Establishment size and benefit coverage rates Distributions of defined benefit and defined contribution plans Distribution of private pension plans by industry Men's labor force participation at ages 60-64 in the United States and four European Union countries Men's and women's labor force participation rates at ages 65+ in the United States and four European Union couiitries Women's labor force participation at ages 60-64 in the United States and four European Union countries Percentage of population aged 65 and over: 1994 estimates and 2020 projections

110 127 128

134 136 141 143 144 145 149 152

160 162 164 178

/ returned, and saw under the sun, that the race is not to tlie swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favor to men of skill; but time and chance happeneth to them all. Ecclesiastes 9:11

If thou hast gathered nothing in thy youth, how canst thou find any thing in thine age? Apocrypha Ecclesiasticus 25:3

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Age and Inequality

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Introduction

This volume examines the structural and individual processes that differentiate the life course of men and women and yield patterns of inequality in adulthood and old age. Demographic, economic, and political trends have led to the increased differentiation of the life course of men and women. Processes of age structuring and gender structuring of the life course have produced mixed patterns of uniformity and diversity in life transition schedules. Meanwhile age structures and gender structures are themselves being transformed by global processes associated with population aging, economic restructuring, and welfare state reorganization. Master trends in the United States and other industrial countries have developed, and they include the following: (1) an increase in inequality within and across age-groups; (2) the shortening of men's work lives; (3) the lengthening of women's work lives; (4) diverse family arrangements and schedules; (5) earlier retirement of some segments of the workforce; (6) the synchronization of joint retirement among older couples; and (7) the feminization of poverty into late life. These patterns are observable across societies, with some systematic variations. Our primary focus is on changes in life course patterns over recent decades in the United States. However, strategic comparisons of the United States with other Western countries are also presented. Chapter 1 introduces these master trends. Aging and inequality are interrelated in complex ways. On the one hand, age is a relatively enduring principle of stratification in developed countries. Age serves to allocate differential government resources to the young and the old. It is also an efficient mechanism for setting timetables in the workplace. Access to employee benefits that include pensions, disability insurance, and some kinds of health insurance are frequently tied to age. Age is also highly correlated with entry into and exit from major life statuses related to schooling, work, family formation, and dissolution, empty nest, and retirement. On the other hand, recent decades are notable for the decreasing importance of age for the conduct of more and more social roles. The age at which marriage, full-time work, childbearing, and retirement begin, and J

2

Introduction

at which schooling, the work career, marriage, childbearing, and family care giving end, have become more variable. Historical circumstances have introduced succeeding cohorts to changing life conditions and new uncertainties, leading to a loosening of the association between age and social roles. Increased variability in the life course is also associated with increased economic inequality. Diverse life pathways have different economic implications for later life. Some studies suggest that inequality is an inevitable outcome of social aging and the differentiation of cohorts over time. What is being debated is whether, and under what circumstances, individuals in the same cohort become more unequal. The United States exhibits among the highest levels of inequality across the age span, including perhaps the highest relative inequality among the elderly when compared to other nations. In addition, an apparent surge in economic inequality worldwide has attracted the recent attention of many scholars who are concerned with how inequality is produced over the life course over cycles of prosperity, stagnation, and decline. Chapter 2 examines pathways to inequality within aging cohorts. The interplay of employment, family, and state welfare institutions is central to the production of variability and inequality in the structure of the life course and in late-life outcomes. Earnings over the work career are the strongest predictors of economic status in retirement, both for retired workers and for their spouses and survivors. Social Security arid pension income account for over four-fifths of the median income of retired households. Accordingly, labor force behavior and workplace institutions are critical components of aging and inequality. In addition, public sector institutions such as old age insurance and monetary and in-kind transfers serve to offset inequalities stemming from the workplace for workers and their families. The product of the interaction among these institutional spheres includes complex patterns of inequality and processes of status maintenance, status leveling, and cumulative advantage. Chapter 3 examines specific processes that link family and work in the production of inequality over the life course. Families and work careers are not rigid structures, but dynamic processes. Families are changing configurations of interdependency that require the coordination of different life schedules and the management of changing individual and family needs. Diverse patterns of family formation and breakup within and between cohorts produce additional complexity in the scheduling of mid-life and late-life transitions such as work and retirement, respectively. Together, these factors create complex family pathways that covary with employment pathways to produce variability and inequality. Public policies associated with welfare benefits and income taxation differentially support or penalize family arrangements and work career pat-

Introduction

3

terns in ways that facilitate inequality. Traditional "breadwinner" families receive more support in employment and welfare policies, although changing social roles in the family are challenging these institutions. The implications of the interdependence among family, workplace, and state are especially significant for women, who are more likely to face a longer time in old age alone with higher risks for poverty. Chapter 4 closely examines complex pathways through later life, including the heterogeneity of pathways to retirement. Retirement has become a common feature of life in industrial societies. Traditional pathways through work and pension acquisition have contributed to its universality. Yet alternative pathways to retirement are also institutionalized and contribute to the heterogeneity of the retirement transition. The intersection of individual biographies with alternative institutional arrangements that include unemployment, disability, and family status— as well as pensions derived from employment—allocates individuals within cohorts along different pathways from work to retirement and from dependence on earnings to dependence on different transfer programs. The scheduling of these transitions increases variability and inequality in old age. Chapter 5 focuses on the U.S. occupational welfare system. The U.S. welfare system is market centered, highly decentralized, and increasingly individualized. New forms of occupational welfare are placing more responsibilities on workers and fewer on employers arid public sector programs. The individualization of pensions, health insurance, and other life course support programs is introducing new risks to income maintenance and new sources of inequality in old age. The final chapters examine inequality and aging in a comparative perspective. Important similarities are apparent among Western countries in the shifting pattern of the life course, especially in the trend toward early retirement. Chapter 6 compares the labor force participation patterns of older men and women in the United States over the past three decades with those in other countries, particularly the United Kingdom, France, Germany, and Sweden. Changing population structures and employment opportunities have created similar schedules of early labor exit, including retirement for men and women alike. But these schedules are regulated by different institutional arrangements among employment and state institutions. Chapter 7 presents a general framework for comparing the bases of variability and inequality of United States with other countries. The interplay of employment, family, arid state welfare institutions is central to the production of variability and inequality in the structure of the life course and in late-life outcomes. The interconnectedness of educational, employment, family, and welfare systems constrains the level of variability and

4

Introduction

degree of inequality across countries. The United States is distinguished by the loose coupling of these institutional sectors and by a relatively weak welfare institution. Sweden and Germany, on the other hand, have stronger welfare systems and lower levels of life course variability and inequality, although they differ in the interrelationship between family (and gender) structure and other institutions for reinforcement of the coherence of the life course. These three countries provide a strategic comparison of the institutional sources of life course organization and latelife inequality. Chapter 8 concludes with a consideration of the future of the age-structured life course. Aging and inequality in the twenty-first century will be marked by the strong imprint of the baby boom generation in the United States. Proposals to extend the working life by delaying eligibility for full retirement benefits until age seventy and to move to more individualized retirement savings accounts tied to the market have countervailing implications. Changing institutional arrangements are responsive to the increased longevity and physical and mental viability of aging populations. However, global processes are introducing more obstacles to economic well-being over the lifetime and in old age for some segments of the population.

1 Cohorts, Inequality, and Social Change

Historical circumstances have exposed succeeding cohorts over this century to changing life conditions, new uncertainties, chances, and turning points. These historical changes have produced cohort-based variations in life course patterns and outcomes. Increased opportunities for higher education, improved economic prospects for wider segments of the population, and continuously extended life expectancy in the United States and other advanced industrial societies have proceeded throughout this century. Yet succeeding cohorts have not benefited equally by these trends, within and across national boundaries. The complex interplay of structural and individual factors has produced variable experiences under conditions of historical change that have yielded uneven consequences and divergent fortunes. This situation is dramatically illustrated by the case of the so-called baby boom cohort of the United States, a demographic category that is often, and erroneously, treated as a homogeneous population. The U.S. baby boom cohort, born between 1946 and 1960, has begun "turning 50" in the late 1990s. Its members arrive at this transition after having begun their lives during a time of unprecedented general prosperity and educational opportunity in the first decade and a half following World War II and then maturing through periods that have vacillated between relative prosperity and economic uncertainty. The 1990s have presented them with more of the same: recession followed by economic boom. On average, the baby boom cohort as a whole is relatively prosperous in historical terms. Its relative prosperity is inherited from a nearly century-long trend of rising economic well-being, albeit with a few interruptions precipitated by depressions, recessions, and wars. Accordingly, 5

6

Cohorts, Inequality, and Social Change

this cohort has participated in a master trend of this century. Its experiences have been both ordinary and exceptional. The size of the baby boom cohort relative to earlier and later cohorts has given the age structure of the United States a distinctive though changing shape over the years. As the baby boomers have aged, they have been numerically and institutionally significant for American society. As children in the 1950s they required expanded residential, health, educational, and cultural institutions. In the 1960s their numbers empowered them to resist traditional sources of authority associated with the family and the state and to participate with some effect in the new "status politics" of that era. In the 1970s and 1980s they crowded labor markets and courtrooms. As they turn 50 in the 1990s, they are inspiring extensive projections and debate on their prospective impact on the stock market and on the public retirement system that was designed a decade before their birth for a different population. The cohort concept, as well as the baby boom cohort as a historical case, provokes commonsense expectations of similarity, common experience, and shared fate. Yet as members of the baby boom cohort turn 50, they are sociologically interesting not only because of their similarities but also because of their differences. First, those turning 50 at the end of the twentieth century are the vanguard of this cohort. As such, they have experienced the post-World War II period differently than their younger counterparts. Those born before the mid-1950s compose the Vietnam War generation, whereas those born closer to 1960 have been far less directly exposed to war. Alternatively, those born earlier in the cohort entered the labor market before globally driven changes in the workplace began to introduce new uncertainties into the employment relationship; they completed their education and entered their work career ahead of restructuring, downsizing, arid economic reorganization. Meanwhile the later born women and men of the baby boom initiated their work careers in the midst of a turbulent labor market. In effect, the intersections of historical changes with the early life transitions of sequential segments of the baby boom cohort have made their respective aging experiences different. Second, cohort members turning 50 in the late 1990s reflect considerable diversity among themselves. The accumulation of life experiences, achievements, and disappointments has moved individuals within baby boom segments along different pathways that present them with a mix of expectations of the future. One aspect of within-cohort diversity is economic inequality. Variations in educational achievement, labor force participation, labor market opportunities, family formation and dissolution patterns, pension and asset accumulation, and health trajectories—all of which are cumulative and interrelated over time—produce diverse life chances with unequal outcomes in middle and late life. Economic in-

Cohorts, Inequality, and Social Change

7

equality is pervasive among baby boomers and, in the 1990s, appears to have increased (Gottschalk and Smeeding 1997). The cohort concept and the baby boom case also provoke a strong image of "agency," implying that cohorts are somehow exogenous to the institutional and historical contexts that actually produce and condition them. However, social institutions define the partitions and the boundaries of the "normal life course" within cohorts. Youth, adulthood and old age are socially constructed categories. Their boundaries are drawn and redrawn by changing institutional arrangements. Age-related roles are temporally organized by educational schedules, employment rules and timetables, family life cycles, and state welfare regimes. Cohorts and the socially diverse subgroups that constitute them—gender groups, racial and ethnic groups, and economic status groups—are constructed and reconstructed by history and social structure and cannot be reduced to a set of fixed demographic traits (Elder 1994). On the other hand, socially produced cohorts do make history. As succeeding cohorts face changing historical conditions their aggregate responses exert pressures for institutional change (Riley 1998; Riley, Kahn and Foner 1994). Riley (1987) aptly illustrates this point in the case of women's rising labor force participation patterns over this century. Women began entering the labor force in large numbers in periods during which this behavior did not conform to gender role expectations and was not encouraged by workplace structures nor by the norms regulating the family division of labor. Nevertheless, participation rates continued to climb. Today, normative expectations have changed with regard to gender roles and the reasons why women do not work have become perhaps more intriguing and problematic than in previous times (Bianchi 1995). Accordingly, historical changes and chance events interact with the institutions that shape the normal life course through individuals' day-today decisions and behaviors over their lives. This interaction produces diversity and variability; subgroups deviate from the normal life course in the scheduling of their lives in education, work, and family domains. Hence, at any time in the aging of a cohort, people are in different places in life. The cumulative patterns of life send people down different pathways. Chance events or constraints can interrupt or deflect them from previous paths. Passages between significant statuses, across temporal or chronological boundaries, and through historical periods bring into focus how lives are shaped and reshaped at social interfaces (Elder 1994). Biography produces diversity within the boundaries of institutional arrangements (Kohli 1988). The example of the baby boom cohort illuminates the theoretical and empirical value of examining variability and inequality between and

8

Cohorts, Inequality, and Social Change

within cohorts. Several theories have emerged in American sociology to explain these patterns. These theories are introduced in the next section of this chapter and are integrated with analyses in later chapters. Those of particular interest to this book explain the processes by which variability and inequality develop within a cohort over time (i.e., with age) and produce diverse pathways through later life. The rest of this chapter introduces major cohort trends and historical processes that underlie the relationship between inequality and aging and that are considered in greater detail in later chapters. First, the level of economic inequality in the United States will be compared with other developed countries. Economic inequality, as it is reflected in earnings, income, and pensions, will be emphasized because these sources of inequality stem from the market, which is the major source of inequality in modern societies. Second, intercohort trends in gender inequality will be reviewed. The long-term upward trend of women's labor force participation has reorganized the life course of women and men alike and has contributed to increased within-cohort heterogeneity with implications for inequality within and across cohorts. Third, the organization of labor markets and employment relationships directly influences the distribution of economic rewards. In recent years, significant changes in these institutions have provided the conditions for increased inequality by deinstitutionalizing the long-term employment contract and individualizing pension savings. Finally, the role of public policies and state structures in producing economic equality will be introduced. The remaining chapters of the book will examine these major processes and trends in more detail, especially as they bear upon intracohort patterns of variability and inequality. Inequality and Aging: Stratification over the Life Course

The baby boom cohort provides a useful introduction to the study of aging and inequality because it provokes overblown images of homogeneity and agency. It has also inspired a body of work that tests the Easterlin effect (Easterlin 1961; 1987), the paradigmatically appealing hypothesis that has been critically reviewed by Pampel and Peters (1995). The Easterlin effect posits that cohort size is the major determinant of potential income. Larger cohorts face higher competitive pressures for limited resources and rewards. This basic inverse relationship influences cohorts' expectations regarding their future standard of living and thus motivates age-specific behaviors, including lower fertility and higher labor force participation, that affect the normal life course. Accordingly, the demographic characteristics of cohorts, especially relative cohort size, shape the life chances of individuals over and above other

Cohorts, Inequality, and Social Change

9

social forces including family, educational, workplace, and government institutions. The Easterlin effect has been tested on a wide array of age-specific behaviors ranging from educational attainment to consumption behavior, divorce, and crime rates. The evidence has been mixed—except for a robust relationship between cohort size and fertility observed between 1960 and 1980. The mixed results stem from the countering effects of two interrelated factors: social and historical contexts that attenuate or otherwise condition the influence of cohort characteristics and diverse pathways that emerge within cohorts and differentiate lives over time (Pampel and Peters 1995). Inequalities within cohorts more often exceed those between cohorts and stem from the interaction among structural conditions, individual agency, and chance. Structural conditions include dominant institutional factors such as the distribution of educational and employment opportunities and family roles and historical circumstances related to government policy changes or economic cycles. Agency stems from the day-to-day choices made by cohort members as they face normal life transitions such as marriage, educational completion, job entry, or retirement. Structural conditions and agency also affect the patterns by which cohort members encounter and manage probabilistic life events and life course risks such as illness, divorce, or unemployment. Status characteristics such as social class, gender, and race also serve to stratify chances and fortunes even further within cohorts, net of their relative sizes, since these characteristics interact with institutional structures to produce inequality over the life span, from birth to death.

Theories of Intracohort Heterogeneity and Inequality

The idea of intracohort differentiation conditioned by social structure and time (Dannefer 1987; 1988a; 1988b; Maddox 1987) has generated three major alternative hypotheses of intracohort heterogeneity that have become as paradigmatically compelling as the Easterlin effect. The status maintenance hypothesis posits that over time status effects are preserved across social transitions and status episodes in the life course. Resources and rewards obtained early in the life course, particularly in the transition from education to work, have persistent effects over time and serve to maintain individuals' relative status within cohorts. Educational attainment influences placement in the labor market, which in turn anchors future earnings trajectories and asset accumulation. Consequently, economic status in later life, such as at the time of retirement, is a linear function of earlier status achievement. In this vein, Henretta and Campbell (1976) find that the effects of education and occupation on income remain the same before and after the retirement transition among men.

10

Cohorts, Inequality, and Social Change

Educational and occupational status also influence other cumulative patterns of the life course such as marriage, which, in turn, has subsequent economic consequences for couples and individuals alike. Assortative mating in the marriage market is influenced by the joint employment and occupational status of women and men (Oppenheimer 1988; 1994). Educational homophily adds to the socioeconomic effects of individual educational attainment. Over time, economic inequality between married and unmarried individuals is maintained, if not accentuated (Oppenheimer 1994; Blau 1998). This pattern has been observed across industrial societies (Blossfeld 1995a). The hypothesis of cumulative advantage predicts increasing inequality within cohorts on the basis of initial advantage or disadvantage (Crystal and Shea 1990; Dannefer and Sell 1988; Dannefer 1991). Contrary to predictions from status maintenance theory that inequality among individuals within a cohort remains relatively constant over the life course, the cumulative advantage hypothesis predicts that economic transitions, such as the one from work to retirement, are critical temporal thresholds which increase relative inequality (Crystal and Shea 1990). The majority of studies focused on this hypothesis take cross-sectional approaches and report strong trends in inequality by age. Using three waves of the 1984 panel of the U.S. Census Bureau's Survey of Income and Plan Participation, Crystal and Shea (1990) report that income inequality increases with age. After age 44, income dispersion increases steadily. Inequality after age 64 is the highest for all ages. The Gini coefficient (which represents the percentage of the age-group that would have to change for income to be equal) for the age-group over 64 (Gini = .41) is 21 percent higher than that for the age-group between 35 and 44 (Gini = .34). Crystal and Shea (1990) look closely at the income distribution of the oldest age-group in their study. The lowest quintile (lowest 20 percent) of the income distribution is composed of women (71 percent), the widowed (51 percent), those living alone (58 percent), those with an elementary education (53 percent), and those in poor health (34 percent). They conclude that early advantage or disadvantage and early educational achievement patterns initiate pathways leading to late-life status. These pathways diverge in the employment system, in which cumulative advantage processes predominate. Workers with more resources (education, experience, skills) gain higher rewards (wages, benefits, higher skills); workers with fewer resources experience diminished value and status in the employment system. In a comparative cross-sectional study, Easterlin, Mucanovich, and Crimmins (1993) track income inequality across five-year age cohorts using two Current Population Surveys—1964 and 1985. They report similar patterns of increased income inequality with age. Gini coefficients for the oldest age-groups in 1964 and 1985 (aged 55 to 59) are higher than all other groups. This cross-sectional approach is limited in determining the

Cohorts, Inequality, and Social Change

11

mechanisms that produce inequality, but it nevertheless lends partial evidence for the cumulative disadvantage hypothesis. In Chapter 2, these limitations are explored further. Pampel and Hardy (1994a) find support for both the status maintenance and the cumulative advantage hypotheses in their study of a panel of older men followed between 1966 and 1981 (National Longitudinal Survey of Older Men). The effects of background status variables (race, education, and occupational status) remain significant in predicting market, transfer, and total family income among these men. But increases in inequality are nevertheless observed. Although status variables persist in their effects, market and private pension income distributions within educational groups become more unequal with age. Since this study ends with 1981, the effects of market changes in the 1980s cannot be compared. The status leveling or redistribution hypothesis predicts a reduction in relative inequality following the receipt of public transfers at retirement. In most industrial countries, inequality among the elderly is less than among the younger and adult populations largely because of the leveling influences of state policies. The status leveling hypothesis assumes that the stratification effects of the market are attenuated by the transition to income from other sources than earnings. Since retirement is defined by the change in income source from earnings to annuities from Social Security and accumulated assets and since the progressive redistributive structure of Social Security benefits serves to offset prior market inequalities, the leveling of income inequality among older age-groups is predicted (Crystal and Shea 1990). Although these three hypotheses offer predictions about the relative emergence and persistence of economic inequality as an outcome within cohorts, they also specify the intracohort process producing these outcomes. The increased differentiation in the characteristics of lives within cohorts is a cumulative process in which structure, agency, and chance interact over time. Early life transitions and status attainments influence—but do not completely determine—later ones. Timing and circumstances interact over time to move individuals along different pathways at different tempos. At any one time in the aging of a cohort, variations in status and economic inequalities are results of the interplay of social structures and individual biographies. Chapter 2 will examine the relative utility of these competing hypotheses in a more detailed review of the mechanisms producing inequality with age. Economic Inequality Across Countries and Between Age-Groups

The status maintenance, cumulative advantage, and redistributive hypotheses in life course research will reappear in later chapters of this book to identify inequality as a critical element of the aging process. But

12

Cohorts, Inequality, and Social Change

like the concept of cohort, the concept of inequality lends itself to alternative though equally legitimate definitions and measurements. Recent economic trends have stimulated considerable research on the arguable rise of inequality in the United States and elsewhere. Striking declines in wage equality in the United States and the United Kingdom and growing levels of sustained unemployment in continental Europe during the 1980s have generated much scholarship and debate on the origins and implications of these phenomena (Levy and Murnane 1992). Skill-biased technological change and a changing industrial mix (specifically the shift away from manufacturing and towards service employment in advanced countries) appear to have produced wage stagnation or unemployment or both in relative proportions across countries. In states with more active labor market policies and extensive welfare regimes, a mix of wage controls, unemployment benefits, and mandated job and family benefits constrains the level of income inequality. But in the United States and the United Kingdom, less active labor market intervention and less extensive provisions for the unemployed result in lower rates of unemployment but higher income inequality. However, in spite of differences of opinion on specific issues of measurement and the substitutability of wage inequality and unemployment in these comparisons, the evidence is sufficiently weighty, consistent, and persuasive on two matters: (1) economic inequality varies systematically across agegroups in cross-section and in cohorts over time and (2) income inequality has increased over recent years, especially in less regulated market economies like the United States. The post-World War II period has been divided by Frank Levy (1987; Levy and Murnane 1992) into two distinct economic periods. The first was the twenty-seven-year period from the end of the war until 1973 during which men's inflation-adjusted wages grew between 2.5 arid 3.0 percent per year. The second, between 1973 and the 1990-1991 recession, brought an average stagnation but also a widening distribution of wages. Since the recession and during a period applauded as one of unprecedented productivity, wage inequality has continued to grow. Levy (1998) attributes these recent trends to an acceleration in the U.S. economy's demand for skills and to a shift in power "away from the average worker" and "toward the shareholder." Until 1980, economists repeatedly identified a strikingly stable U.S. distribution in family income. Gini coefficients of family income—the average income difference between all pairs of families divided by mean income which yields a range from 0.0 (perfect equality) to 1.0 (perfect inequality)—changed little between 1949 and 1979. However, beginning in 1975 and sharply increasing after 1979, a reversal in this stable or slightly fluctuating trend occurred in the direction of higher inequality, measured

Cohorts, Inequality, and Social Change

13

as a jump in the Gini coefficient from a low of .348 in 1969 to .401 hi 1989 (Danziger and Gottschalk 1993, 7). A substantive interpretation of these measurements is that the distribution of family income reversed direction from a more widely shared base in 1969 to a narrower one in 1989. In 1989, families at the twentieth percentile received a 5 percent lower real income than in 1969, whereas families at the eightieth percentile were receiving a 19 percent higher real income. The trend toward increased economic inequality has been observed across advanced societies, but the increase in the dispersion of both individual earnings and disposable household income in the United States appears larger than almost all other countries. Table 1.1 is taken from Gottschalk, Gustafsson, and Palmer (1997, table 1.1) and summarizes the results from several different national studies of levels and trends in earnings and income inequality. Low, moderate, and high levels of inequality are based on Gini coefficients in the ranges of .20-.25, .26-.30, and .30 and over, respectively. Generally, earnings and income inequality have increased the most in the major market economies of Japan, the United Kingdom, and the United States, where public social protections are weakest. Countries with more centralized labor markets (Finland,

TABLE 1.1 Countries

Trends in Earnings and Income Inequality Among Selected Earnings Inequality

Australia Canada Czech Republic Finland France West Germany East Germany Greece Hungary Ireland Israel

Japan Netherlands Sweden U.K. U.S.

Income inequality

Level

Trend, 1983-1990

Level

Trend, 1983-199

High .Moderate Very low Low Moderate Moderate n.a. n.a. Very low High High n.a. Low Low High High

(+) Moderate (+) Moderate (+) Very high (+) Moderate (+) Slight (+) Slight n.a. n.a. (+) Very high No change (+) Very high n.a. (+) Slight (+) Low (+) High (+) High

High Moderate n.a. Low Moderate Moderate Low n.a. Low High High High Moderate Low Moderate High

(+) Moderate (+) Low n.a. No change (+) Slight (+) Slight (+) Very high (+) Moderate (+) Very high (-) Slight (+) Slight (+) Moderate Moderate (+) Moderate (+) High (+) High

SOURCE: Table taken from Gottschalk, Gustafsson, and Palmer 1997, table 1.1.

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Cohorts, Inequality, and Social Change

Germany, the Netherlands, and Sweden) or more extensive income protection policies (France and Canada) have lower levels of and trends in inequality. Finally, Eastern European countries appeared to have had the lowest levels but greatest change in inequality in the 1980s. However, the political and economic transformations occurring by the end of 1980s have rendered more current comparisons of this kind difficult. Important distinctions between earnings arid income inequality have been observed across many studies replicating the general findings summarized in Table 1.1. Earnings are market outcomes: more centralized markets lead to higher equality of the wage distribution and less centralized markets produce greater wage dispersion. Of course, more centralized markets often benefit from supportive governmental policies related to taxation and transfer payments that indirectly influence wage distributions; in these instances state policies are influenced by strong labor representation and influence in the government as well as in the market. Income, on the other hand, is derived directly from multiple sources, including the market, the state, and the family or household. In a recent review of these studies, Gottschalk and Smeeding (1997) summarize recurrent findings across countries in patterns of earnings and income inequality. First, almost all industrialized countries experienced increased earnings and income inequality during the 1980s. Wage inequality among prime aged males increased in all countries except Germany and Italy. Household income inequality did not change as dramatically as earnings inequality across countries, but the inequality in men's earnings largely accounted for changes in income inequality. Second, the largest increases in earnings and income inequality occurred in the United States and the United Kingdom and the smallest in the Nordic countries. Third, although women's labor force participation, hours, and wages increased in almost all countries in the 1980s, wide differences between men's and women's earnings existed across societies at any given time. Modest increases in the association between husbands' and wives' earnings across countries contributed further to income inequality. And fourth, differences in the demand for and supply of skilled workers across countries accounted in large measure for differences in wage returns to education and experience. The rise of unemployment rates among the least skilled in some countries with more centralized wage constraints limited wage inequality in those countries. The relative position of the United States in the level of inequality among the population aged 65 years and older matches its rank in general earnings and income inequality. Findings from the Luxembourg Income Study (LIS), a database established in 1983 that contains social and economic data from household surveys and administrative records drawn from different countries in Europe and North America, indicate

Cohorts, Inequality, and Social Change

15

that the aged income and wealth distributions of the United States are among the most unequal of all. In addition, although the United States has among the wealthiest groups of aged married couples, it also has among the most impoverished older single women in developed countries. Finally, although in most countries inequality among the aged is significantly less than that among the nonaged, in the United States this is not the case, especially in recent years (see Atkinson, Rainwater, and Smeeding 1995; Smeeding 1997). Smeeding, Torrey, and Rainwater (1993) provide documentation for aged inequality from the LIS. TTiey compare eight countries (Australia, Canada, France, Germany, Netherlands, Sweden, the United Kingdom, and the United States) between 1979 and 1987 (with some variation in dates of measurement across countries). They examine several indicators of economic inequality, including age-related family income distributions, poverty levels, and wealth distributions. In nearly all comparisons, the United States is an "outlier," insofar as it persistently tends to exhibit higher levels of inequality. For example, Gini coefficients of household disposable personal income (adjusted for differences in family size and structure) reveal the highest values across years in the United States for all age-groups between 25 and 75+ and the largest increases across agegroups between 1979 and 1986. Gini coefficients for those aged 25-54 increase from .30 to .34 over the period, and for those aged 65-74 increase from .34 to .36 over the period. Other countries in the comparison (witli the exception of France among those aged 55-64 over the period) have lower Gini coefficients for all age-groups at each observation and either decrease or increase less in the levels of inequality (Smeeding, Torrey, and Rainwater 1993, table 3). Comparisons of poverty among nonaged and aged households also serve to distinguish the United States from other countries. Although tlie U.S. poverty rates tend to decline across groups over the period, they are nevertheless higher across period and across groups: over 13 percent of nonaged U.S. households are at 40 percent of median income across tlie period, a level more than twice that of all other countries with the exception of Canada. Elderly U.S. couples fall over the period from 8 to 6 percent poor using the same 40 percent of median income threshold, but they remain between two and six times more likely to be poor than their counterparts in other countries. Finally, single elderly women in the United States drop from 21.5 percent to 17.6 percent poor; by the late 1980s single elderly women in the other seven countries have less than a 4 percent chance of being poor (Smeeding, Torrey, and Rainwater 1993, table 6). Finally, economic inequality in the United States is distinctive when financial wealth is compared across countries. Wealth usually refers to

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assets minus debts or similar measures of potential income. Smeeding, Torrey, and Rainwater (1993) calculate the ratio of liquid wealth (i.e., property income from stocks, bonds, savings, and rent divided by .05) to adjusted disposable personal income across these eight countries in the late 1980s. They find the highest overall ratio of liquid wealth to income among the aged in the United States, but the ratio for U.S. elderly who do not exceed 50 percent of median family income falls sigiiificantly below that found in most other countries. In effect, the United States is a study in extremes: the elderly share higher average wealth, but greater income and wealth inequality and higher risks for poverty than most of their counterparts in other advanced industrial countries. All in all, the explanations for national variations in aged inequality are complex and varied. These variations ultimately reflect differences in labor market structures, welfare regimes, and family systems that regulate life-course processes of social mobility, status maintenance, and cumulative advantage. They also represent intercohort differences resulting from changing opportunity structures for earnings from employment, savings for retirement, and the changing composition of the labor force. Suffice it to say, distributional differences across these countries are readily observed and raise important questions about what these outcomes mean and how they have come about. The remainder of this chapter addresses these general questions about the processes producing aged inequality in the United States and elsewhere and how important differences in market and state policies bear upon education, work, and family pathways over the life course. Aging Cohorts and Economic Inequality

Age stratification theory suggests that age, cohort, and period have interacted in complex ways to produce relatively higher income coupled with relatively higher income inequality in the United States, when compared to earlier years in the post-World War II period. Different U.S. cohorts have shared the two periods characterized by Levy (1987) earlier, and they have been affected differently by them as a result of encountering these times at different stages of their lives and with different educational and experiential resources, Strong period effects have produced growing inequality. But other studies reveal age-, cohort-, and gender-specific patterns embedded in these general distributions. A cross-sectional study of income inequality in 1964 and 1987 using the Current Population Surveys for these two years and examining five-year birth cohorts born between 1915 and 1964 reports two cohort patterns identifiable during Levy's two periods (Easterlin, Mucanovich, and Crimmins 1993). First, age-group specific Gini co-

Cohorts, Inequality, and Social Change

/-

efficients of mean adult incomes show that inequality is higher in 1987 than in 1964 for all age-groups below age 55-59, although inequality below age 45 is generally higher than after age 45. Second, the cohort analyses demonstrate that whereas succeeding cohorts are initially more economically advantaged than their predecessors, postwar birth cohorts' income trajectories improve at lower rates as they age than earlier cohorts' trajectories. The slopes of baby boom trajectories reveal steeper increases in income through the mid-1970s and flatter trajectories afterward that coincide with the economically more depressed and uncertain 1980s. A related study using the 1989 Current Population Survey replicated some of these results, pointing to an average relative income advantage among baby boomers when compared to their age counterparts twentyfive years earlier (those 35-44 in 1964) (Easterlin, Schaeffer, and Macunovich 1993). This study reports that baby boomers aged 35-44 in 1989 had 73 percent higher incomes than their counterparts in the mid-1960s. But this study identified only the earlier portion of the baby boom cohort (born between 1946 and 1955 according to the study), and other scholars suggest that the fortunes of later baby boomers have not been the same (Radner 1995 1998). A more recent study by Crystal and Johnson (1998) replicates the pattern of higher relative income of baby boomers when compared to earlier cohorts at similar ages but supports the argument that the baby boom's fortunes are highly differentiated and unequal. This study employs the National Longitudinal Studies of Mature and Young Women, conducted between 1967 and 1992, and the Current Population Surveys (March files) between 1980 and 1991 to compare cohort differences in family income and pension coverage. The longitudinal studies follow two cohorts of women: one cohort aged 30-44 in 1967 and the second, 14-24 in 1968. Among its major findings is that within-cohort differences in formal education stratify baby boom earnings and pension savings outcomes. Only the most highly educated group of "leading edge" baby boomers (those born by 1954) can be expected with any certainty to fare better than preboom cohorts. Other portions of this cohort, including those less educated and those born after 1955, have more uncertain futures that are contingent on events such as business cycles, wage growth or decline, and labor market shifts that can deflect or enhance their work careers and their wage and retirement savings trajectories. Individual circumstances in their lives, such as illness, disability, or marital dissolution can differentiate them further. The relative contributions of women's labor participation and earnings to family income before and after retirement are also subject to within-cohort variation, according to this study (Crystal and Johnson 1998).

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Cohorts, Inequality, and Social Change

Among "leading edge" boomers, couples will be more likely to receive retirement benefits based solely on husbands' earnings because wives in this cohort earned less than half of their husbands' earnings on average, and even less during their childbearing years. Those in later boomer groups have been confronted by the two-pronged phenomenon during the 1980s of wage stagnation in husbands' earnings and increased pension coverage of women versus men. But the latter trend does not compensate for the former, since women's lower average earnings translate directly into lower pension benefits.

Age and Gender Inequality

The history of labor force participation by women in the U.S. economy is not a simple upward slope of women's integration into the economy earlier in their lives. Rather it is a complex sequence of cohort compositional shifts moving through a changing opportunity structure in the workplace. The fundamental and persistent paradox is that whereas women's labor force participation rates have accelerated, their integration into the economy—if we can measure the latter in terms of wage parity, occupational integration, and pension coverage based on their work—has been slow. Women's average annual participation rates reached over 70 percent in 1995, after having increased 10 percentage points every decade since 1950 (Goldin 1990). Perhaps the single most important component of this change was a compositional one: married women's as opposed to single women's increased labor force rates have been the stronger driving force in the postwar period. Not surprisingly, one consequence of this pattern is greater gender parity within married couple families (Blau 1998), a pattern of inequality that appears to carry over into retirement populations (see table 1.2 in Smeeding 1997). Figures 1.1 and 1.2 present the labor force participation rates of selected synthetic cohorts of women and men, respectively, observed between 1965 and 1995 using the matched files of the March Current Population Surveys. The 25-29-year-old cohorts are selected in five-year intervals and followed every five years beginning in 1965 and ending in 1990. Thus, for example, the labor force participation rate of women aged 25-29 in 1965 is 40 percent; by the time they reach ages 40-44 their rate is 68 percent and remains at this level until ages 55-69, when it drops to 60 percent. Those 25-29 in 1975 begin at a rate of 56 percent that increases to nearly 80 percent by ages 40-44 and begins to drop. Similarly, men and women in the cohorts aged 70 and over are selected in the years between 1970 and 1995 and their participation rates are graphed. Thus, for example, women aged 70 or more in 1995 have labor force participation rates at ages 40-44 (in 1965) of 57 percent. Women aged 70 or over in 1985 have

^5

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Cohorts, Inequality, and Social Change

21

a labor force participation rate of 50 percent when they were 45-49. Synthetic cohort participation rates over thirty years are represented. These cohorts are selected to provide several comparisons. First, the difference between women's and men's cohort-specific labor force histories is readily obvious. Men's intercohort patterns displayed in Figure 1.2 are more similar across cohorts, with sharper drops in labor force participation evident after age 55, especially following 1980. Women's intercohort changes are substantial and reveal several patterns. First, younger women's (ages 25-29) initial cohort rates increase significantly every five years from 40 percent for the 1965 cohort to between 75 and 80 percent for the 1965 cohort to between 75 and 80 percent for the 1985 and 1990 cohorts. When followed into middle age ranges, successive younger cohorts continue to increase their participation rates over time until they reach their 50s, when rates begin to drop, although when compared to older cohorts depicted to the right in the graph their rates at ages 55-59 are higher (at 60 percent). Second, older women cohorts begin steep declines in their rates after age 55, although successive cohorts reveal higher relative rates between ages 55 and 69. These data corroborate the already well-documented countervailing trends in older women's labor participation: increasing rates across the age span, on the one hand, and declines in these rates after age 55, on the other. The data also show increased variability in the second pattern across cohorts as more women in recent cohorts stay in (or perhaps return to) the labor force beyond ages 55 and 60. We will explore these trends and their structural and life-course bases in greater detail in Chapters 2, 4, and 6. Historically, women have tended on average to retire early. The primary underlying explanation stems from gender earnings inequality. Earnings inequality operates to affect women's retirement timing and economic status in several ways. First, they tend to retire with their (historically older) husbands, whose lifetime earnings have yielded spousal benefits (50 percent of husband's retiree benefits) from Social Security that have exceeded those based on many women's own earnings records even after achieving more than minimum participation histories. As mentioned in the earlier reference to the Crystal arid Johnson study (1997), this pattern persists among early baby boomer cohorts. Second, women's lower preretirement earnings result in relatively higher replacement ratios for them; the ratio of retirement benefits to preretirement wages is higher for women and minorities, and it encourages labor exit. Both the wage gap and the pension gap between men and women are highly associated with occupational segregation (Blau 1998). A substantial literature exists on the conceptualization, measurement, and estimation of

22

Cohorts, Inequality, and Social Change

pay inequity across gender, racial, and ethnic groups (e.g., Oaxaca and Ransom 1994; Blau and Kahn 1996). Generally, pay inequity is examined by comparing the differential returns in earnings/wages to a set of observable covariates measured across status groups (gender and race groups); the residual differences in returns reflect the "unexplained" component of wage inequality that may result from discrimination. Individual-level or human capital variables and job-level or labor market variables, on average, yield lower returns in earnings/wages to women and nonwhite workers when compared to men and white workers. These differences are typically revealed by the direct comparisons of coefficients across groups, including comparisons using simulations of crossgroup coefficients. The human capital variables that produce wage inequality in general include education, experience or work history, part-time/full-time work, and job tenure. These variables interact with status group membership (gender, race) to produce different returns in earnings and wages across groups. Childbearing history also differentiates gender-based returns to work; each child costs women more than men in earnings and pension income as a result of gendered care-giving roles (Bianchi 1995; O'Rand and Landerman 1984). The labor market variables that differentiate earnings and wage returns for all groups include unionization, firm size, and industrial sector. Union coverage, large firm size, and location in core or monopolistic industrial sectors are associated with higher earnings and pension coverage. Labor market variables that specifically differentiate gender and racial groups tend to be occupation-, industry-, and firm-specific. Occupational segregation by gender and race across firms and industries has been determined across many studies to be the major structural basis of pay inequality (Jacobsen 1994; Jacobs and Steinberg 1990; Sorensen 1989). Hartmann and Treimann (1981) have estimated that occupational segregation specifically accounts for 35-40 percent of the wage gap between men and women. Other occupational characteristics with wage outcomes include occupation-contingent employment rates and part-time /partyear worker rates, and job content. The Dictionary of Occupational Titles has been used over two decades to measure the intrinsic features of jobs, such as skill requirements, cognitive complexity, responsibility, authority/autonomy, and physical hazards, that translate into wage structures. In general, skill/cognitive complexity and authority/autonomy attached to the job tend to be associated with higher workplace rewards. Recently, Paula England has identified another characteristic that she labels as "nurturance," or the extent to which the delivery of personal care to clients or customers is a prominent feature of a job; she finds that nur-

Cohorts, Inequality, and Social Change

23

turance negatively affects the wages of both women and men and thus influences wage inequality (England et al. 1994). Pension inequity has been studied far less than pay inequity, although recent approaches adopt similar decompositional methods as found in the pay inequity literature to estimate pension income gaps and their origins. This literature finds that differences in cash earnings are the primary source of male-female pension inequality (Lazear and Rosen 1987) and that labor market characteristics (such as unionization, firm size, occupational segregation, and industry) are more important than individual-level characteristics for producing gender-based pension inequality (e.g., Even and Macpherson 1990). From Wage Cap to Pension Cap

The earnings-to-pension income trajectory is a critical mechanism of variability in middle- to late-life labor force participation and in economic inequality. It is widely known that the ratio of female to male median earnings among full-time workers remained relatively constant for most of the postwar period at ratios between 0.56 and 0.60 until 1980, when the gap began to narrow rapidly (Goldin 1990). By 1994, the overall ratio had reached 0.72 (Blau 1998). However, the apparent trend toward equality reflected in these average changes actually masks multiple underlying sources of variability or dispersion. First, men's wages stagnated after 1980 with obvious effects on this ratio. Second, the overall ratio was heavily affected by age-specific wage-ratio changes, especially after 1980; younger workers' wages were more equal than older workers'. And third, inequalities among women workers within and across age-groups grew, a trend attributed by Blau (1998) to an acceleration in the stratifying effects of variable education levels, which have also increased inequality among male workers, particularly across racial groups (Farley 1988). Figure 1.3 exhibits age-specific female to male weekly wage ratios drawn from the matched files of the Current Population Survey (CPS) between 1970 and 1995. In 1970, all four age-groups are positioned within range of the constant wage gap observed since 1950—somewhere between 0.50 and 0.60. The youngest and the oldest age-groups displayhigher relative parity, probably reflecting the effects of more equal levels of work experience within these groups. After 1980, the wage ratios of the youngest age-groups march strongly upward achieving a level above 0.80 by 1995. Also after 1980, although all age-specific wage ratios increase across observation years, a stronger inverse relationship develops between wage ratios and age. The age-group situated at the median

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Cohorts, Inequality, and Social Change

25

overall female/male wage ratio of 0.72 in 1995 consists of women aged 35-44 in that year, born between 1951 and 1960. The "leading edge" of the baby boomer cohort falls among those in the adjacent age-group (ages 45-54) in 1995 (born between 1941 and 1950). They fall below the median wage ratio in 1995. Figure 1.4 presents a similar female to male comparison of pension income ratios drawn from the same data series. Pension income is measured as cash income from two annuities (employee pensions and Social Security). The general trend is toward a convergence of all age-groups in 1995 at ratios below 0.60. Wage ratios for 1995 (reported in Figure 1.3) for women and men aged 45-64 hover at 0.6. Pension income ratios for similar age categories in 1995 fall slightly below wage ratios. The relative transferability of wage ratios to pension ratios suggests a process of status maintenance—one in which wage inequality converts directly to pension income inequality. The 70+ age-group's relatively greater equality in 1980 is reduced by more than 20 percent over the period as it falls below the ceiling in 1995 along with other age-groups. Higher relative equality in the oldest agegroup in 1980 probably reflects two conditions characteristic of the period before the 1980s. First, in the early 1970s major adjustments to the Social Security system were enacted that had the eventual effect of cutting poverty rates among the elderly to less than half the levels observed in the 1960s. These changes introduced the expansion of old-age welfare and medical assistance to the poor and cost-of-living adjustments for all beneficiaries. Supplemental Security Income (SSI), a means-tested safetynet program to provide minimum benefits to elderly persons who did not meet service requirements, fell outside of the Social Security system during the employment years, or else received incomes significantly below poverty standards, began paying benefits in 1974. By 1980 older cohorts born in the first decade or two of this century were at far lower risk of poverty. Since these oldest age-groups are dominated by women, whose limited earnings histories placed them at risk of poverty, SSI and related legislation facilitated some equalization of income, including improved gender pension income ratios. Second, imtil the 1980s the proportion of the retiring workforce with pensions from their jobs was relatively small, with fewer than 40 percent of male workers in the late 1970s holding pensions and about half as many women workers. Those actually receiving benefits from employer pensions were below these coverage rates. Hence those receiving occupational pensions in earlier years are a highly selected group. Men's pension benefit rates and levels are still higher than women's today, although women's pension coverage rates on their jobs have increased while men's have decreased during the past decade (Woods 1989).

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Cohorts, Inequality, and Social Change

27

These patterns have been accompanied by a change in the types of pensions available to workers. The new pensions are much more individualized instruments for retirement saving that depend more on workers' volition and contributions than in the past. Thus by the 1990s men and women who retire with private pensions receive highly variable annuity levels. This variability produces more inequality. The variability in pathways to inequality in retirement through workplace structures are discussed in greater detail in Chapter 2 and Chapter 4. Changes in pensions are discussed further in Chapter 5. Figures 1.3 and 1.4 demonstrate how, in the aggregate, earnings inequality translates directly into pension income inequality when age-specific female/male ratios are compared over time. In this examination, gender inequality is maintained by way of the transferability of ratios of inequality between earnings and retirement income. However, among the oldest age-groups (70+), who tend to depend relatively more on transfer income (i.e., Social Security) than any other retirement group, the level of gender inequality appears to be increasing. Should this trend continue, the prospects for moderating inequality through Social Security among the oldest old may be at risk. As Chapter 4 and Chapter 5 will emphasize, it is important to remember that women's participation in pensions has increased dramatically over the past two decades from quite low levels in the 1970s. Pension inequality is, in large part, historically contingent on women's recent access to and participation in pensions and their shorter pension accumulation histories. Furthermore, the coincidence of women's shorter history of pension participation with a change in the types of pensions offered to them may be restricted only to the United States (and perhaps the United Kingdom). Women's entrance into the employment sector has contributed significantly to the variability in U.S. labor force participation patterns and retirement outcomes. Employment Institutions and Inequality in Old Age

The centrality of the marketplace and the employment institutions associated with it for the production of intercohort and intracohort inequality is well established. Market work constitutes the productive core of industrial societies. Institutional arrangements in the workplace stratify work roles and reward them differentially. F,ven in countries with centralized markets and highly redistributive welfare policies, inclusion in the core employment sector is the principal source of economic and social advantage (Kohli 1988; Kohli, Rein, Guillemard, and van Gunsteren 1991). Workers excluded from the formal market sector or those situated precariously at its margins experience cumulative disadvantage in the

28

Cohorts, Inequality, and Social Change

acquisition of income and wealth over a lifetime (Farley 1988; Crystal and Shea 1990). In the most conservative welfare states they may derive fewer benefits as a result of their lower market contributions. Workers with limited labor force participation over a lifetime are not only represented in lower earnings or wage categories, but they are also excluded from income protection structures that take diverse forms in the workplace, including seniority, tenure track, promotional ladders, union-protected job security, and major employee benefits such as pensions and disability and health insurance. However, as noted in the previous section on gender inequality, even full-time workers in formal employment sectors may have unequal access to these income maintenance protections over their work life depending on their industrial, organizational, and occupational locations (O'Rand 1986). The modern workplace is highly segmented and has undergone nearly continuous transformation in recent decades. Finally, even the most privileged sectors in the workplace have been shaken over the past two decades as globalization, plant closings, organizational restructuring, downsizing, mergers, and contracting out, as well as employers' growing preference for contingent workers, have become less extraordinary events and more akin to business as usual (Belous 1989; Doeringer 1991; Pfeffer and Baron 1988). The employment contract between worker and employer that was associated historically with manufacturing model of industrial relations and more recently with bureaucratized workplaces (Jacoby 1985) is being renegotiated or dismantled (Kalleberg 1996). The implications of these changes for income security and retirement savings are far-reaching. The loosening of workplace contracts has introduced more variability in the patterns of work careers and earnings acquisition, including increased job shifts and employer changes, early and flexible retirement arrangements, and increasing rates of self-employment (e.g. Doeringer 1991; Belous 1989; Henretta 1992). Chapter 2 and Chapter 4 examine the variability in employment pathways that these structural changes are producing and their implications for increasing individualization in the work career and patterns of aged inequality. New pension structures were among the first indications of this changing contract. The Employee Retirement Income Security Act of 1974, referred to as ERISA, was enacted to protect workers' employment pensions from mismanagement and malfeasance by employers. Employers were made liable for their pension promises. But this legislation coincided with new market uncertainties emanating from international oil crises, the competitive threat raised by Japanese and European enterprises, especially in the automobile industry, and the new realities of globalization. Among these new realities were cheaper offshore labor

Cohorts, Inequality, and Social Change

29

forces, just-in-time management systems that discouraged the maintenance of large inventories and related physical plants, and the greater integration of information technologies into the production, coordination, and distribution processes (Doeringer 1991). As Chapter 5 will show, these events encouraged the development of new pension instruments that relieved employers of pension liabilities by shifting more responsibly for pension saving to workers (Gustmann, Mitchell, and Steinmeier 1994). The major change in the retirement savings structure has been the rapid growth of individualized pension instruments that are largely represented by what are called defined contribution plans. These plans often supplement the traditional defined benefit plans in core industrial sectors, but they have become the exclusive plans provided by employers in the most rapidly growing sendee and communications industries and small firm sectors, in which much job creation has taken place over this period (Birch 1987). Worker-centered savings and investment plans are portable tax shelters that offer cash surrender a n d / o r loan options. They give the worker more control of retirement savings and investments, but they also require more worker knowledge and responsibility. These options make the defined contribution plans attractive for their availability to handle shortterm major expenses such as hospitalization, new home purchases, and college costs, but problematic as certain sources of retirement annuities when workers need them. Their portability encourages job mobility. Their accessibility as cash discourages long-term saving. The responsibility placed on workers to manage these plans is another source of their growing individualization. State Policies, Inequality, and Aging Welfare states are systems of statutory social protection that are more or less developed around market versus citizenship rights. A number of typologies and theories of the welfare state have developed over the past half century to describe the alternative forms taken by public and private structures for the allocation of social goods such as education, health care, and pension benefits and for the protection of vulnerable or "naturally" dependent populations. The earliest theories (Titmuss 1958) were based on the "logic of industrialism" thesis or the related "logic of capitalism" thesis, which generally posits that welfare structures are inevitable outgrowths of the market and hence are residual structures developed to preserve and reproduce market relations. Later theories have either revised or refuted earlier ones and have adopted a diverse array of institutional arguments for the development of these structures, including class coalitions (Esping-Andersen 1990), relative class power (Myles

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Cohorts, Inequality, and Social Change

1989), the social organization of production (Quadagno 1984), "structured polity" (Skocpol 1992), and patriarchy (Orloff 1993; Sainsbury 1996). Esping-Andersen's "three worlds of capitalism" and more recently developed feminist (patriarchy) theories (Sainsbury 1996; Orloff 1993) provide complementary conceptual frameworks in Chapter 7 for comparing basic differences between the United States and other countries in the level of special expenditures and the provision of welfare benefits. Esping-Andersen has empirically developed three ideal types of welfare structure: the liberal model based on market efficiency found in the United States; the conservative corporatist model based on status allegiances developed in Germany; and the social democratic (or citizenship) model of the Nordic countries. The relative emphasis of U.S. welfare policies on market-based welfare rights, means testing, particularistic needs assessment, and minimal levels of social insurance results in higher levels of economic inequality among older populations, including higher rates of poverty. Women's benefits stem largely from a "breadwinner" model of entitlements (Sainsbury 1996) that assigns them to derived benefits. The Social Security system's benefit structure is biased toward married couples with traditional gender roles (Burkhauser and Smeeding 1994). Dual career couples receive relatively less social protection than traditional breadwinner couples or dual-earner couples in which wives are secondary market workers (Gilbert 1994). Alternatively, conservative corporatist states like Germany allocate more generous non-market-based benefits to abate risks of falling into poverty. Gender-sensitive policies in Germany recognize family statuses such as motherhood as legitimate bases for social protection. Consequently, childbearing and care giving are less likely to present risks for falling into poverty over the life course in Germany. Finally, social democratic states like Sweden allocate benefits universally on the basis of citizenship and actively participate in the wage-setting process, reserved strictly for the private sector in the United States. Strong life-transition benefit systems, generous transfers to children, guarantees of employment, and the absence of tax and benefit penalties for part-time work make its gender-sensitive policies the most liberal in the world. All three systems are confronted in the 1990s with fiscal, economic, and political problems challenging current policies. Population aging and persistently high rates of unemployment provide the major sources of strain for European systems (Pampel 1998; Bosworth and Burtless 1998). In the United States, concerns are more prospective and related primarily to population aging (with concerns regarding the long-term care of the oldest old, particularly single aged women), the personal savings pat-

Cohorts, Inequality, and Social Change

31

terns of workers, and the looming exit from the labor force of the baby boom cohorts (Rappaport and Scheiber 1993). Meanwhile, global forces are driving the increase in economic inequality, especially in the United States. Conclusion

This chapter began with the simple idea that aging cohorts are not homogeneous. The sheer size and social impact of the baby boom cohort in the United States over the years has led to its popularization as a monolithic, homogeneous, and exogenous force on American society. But this characterization contradicts what life course and stratification theories have revealed about the process of social aging. Although cohort members may encounter similar institutional conditions and historical events as they age, they do not carry away the same experiences with these conditions and events. They do not share the same outcomes as a result of their experiences. They all do not end up in the same place. Over time cohort members lives' in industrial societies become differentiated. Hie process begins with socioeconomic origins and early educational attainment. The middle passages of life include the differential engagement of cohort members with family, state, and work institutions. Later life is the outcome of these cumulative processes. Along the way, the interplay of lives with social institutions produces variability and inequality. Three theories capture the distinctive but countervailing elements of these multilevel processes in industrial societies: status maintenance, cumulative advantage, and leveling. The first refers to patterns of stability of inequality within cohorts over time. Early inequalities persist on average in relatively stable ways into old age. Educational attainment is converted into wages. Wages are converted into assets and pension wealth. Thus gender and class inequality over the life course reflect strong status maintenance patterns. Cumulative advantage characterizes patterns of divergence or increased inequality over time. In market-centered societies advantages and disadvantages can be compounded over time, particularly at critical life transitions like retirement. Gender and class groups are differentially vulnerable to the loss of status or income over the life course resulting in variable risks for poverty. The sources of differential vulnerability are structural and biographical. Educational systems, workplace institutions, and state protective and redistributive policies stratify opportunities and constrain choices over individuals' lives, with cumulative effects. State institutions with welfare functions operate to offset (or level) these two patterns by redistributing resources from the more advantaged to the less advantaged, although the degree to which

12

Cohorts, Inequality, and Social Change

the state intervenes to ameliorate market-based and gender-based inequalities varies considerably across welfare regimes. The complex operation of all these processes are observable across societies, but they differ in their pervasiveness. The United States has among the wealthiest but also the most socially differentiated and economically unequal populations when compared to Europe and other North American coiuitries. Presently, as a surge in inequality appears to have spread to all market economies, U.S. cohorts—including the baby boom cohorts in the middle passage of life and their parents, who largely make up the retirement population—are among the most unequal. Labor market institutions, family patterns, and welfare policies in the United States interact in ways to increasingly differentiate and stratify cohorts along life pathways. The force of differentiation produces the increased individualization of the life course, a process whereby relatively universal experiences such as retirement occur under highly variable circumstances and on different schedules for different segments of the population. The liberal welfare regime in the United States demarcates it from other welfare regimes because it intervenes minimally in the marketplace. In the United States state policies are often asynchronous with market policies, with the effect of sorting lives into different tracks. Other countries have developed welfare systems that, for historical reasons, redistribute resources in different ways to offset potential and real inequalities that stem from the market and from dislocations and derailing life events that can deflect the life course at the individual level and contribute to increased relative inequality. Social democratic states like Sweden are much more equal as a result of stronger interventions in the market. Conservative corporatist states like Germany fall between the United States and Sweden in the level of inequality across the life course into old age. The remainder of this book will develop these themes further. Intracohort differentiation and inequality, segmented pathways, life course variation and asynchrony, and individualization are elements of social aging that achieve distinctive forms in the United States. Yet the United States and other Western countries face common challenges to the preservation of their respective systems. Population aging is a worldwide phenomenon pressing upon public policies that developed under very different demographic and historical circumstances. Globalized market forces are exerting pressures for individualization and privatization that directly oppose welfare structures and ideologies. All of these patterns are converging across countries to produce interesting times.

2 Pathways to Inequality: Intracohort Differentiation over the Life Course

Men and women wrho begin life similarly situated may end it in quite diverse circumstances. There is great human drama as individuals learn their destinies, particularly when life brings a major reversal. Stable trajectories in work, health, or family life can alter course in a moment. On a smaller scale, time and chance do indeed happen to us all—raising the question of continuity in individuals' lives as they age. The uncertainty of life is an inexhaustible topic for reflection, but a sociological approach to changing life course trajectories focuses instead on the role of social institutions in producing continuity or discontinuity over the life course. We pose the issue in this chapter as one of age-based intracohort differentiation produced by social institutions: What are the implications of a cohort's shift from a life stage in which the regime of daily life is dictated by work institutions to a stage dominated by retirement institutions? Does this shift produce continuity in individuals' lives or discontinuity and shifting patterns of inequality? By retirement institutions, we mean public and firm policies affecting income and other entitlements of the older population. Retirement institutions vary in the extent to which they use age or employment status as a trigger for entry; thus older people who are employed may be affected by some retirement institutions—for example, the age-based Medicare program—even while they are still employed. Both employment and retirement institutions vary over time, producing differences between cohorts in the experience of aging (see Chapter 1). Change that occurs between cohorts, making the experiences of each cohort distinct from earlier or later ones, is the standard topic of cohort 33

34

Pathways to Inequality: Intracohort Differentiation over the Life Course

analysis. There is equal conceptual interest in the pattern of within-cohort differentiation with aging. The importance of intracohort differentiation derives from its focus on the role of social structure—that is, institutional rules and process—in producing increasingly more or less equal outcomes as a cohort ages (Dannefer 1987; 1988b). Of course, changing employment and retirement institutions imply that intracohort change will itself vary among cohorts. In examining the implications of a cohort's shift from work institutions to retirement institutions, this chapter poses several questions: Are there identifiable processes associated with this shift that create divergent trajectories among cohort members and either accentuate or reduce inequality with aging? What patterns of inequality do we observe among the elderly? Do these patterns represent continuity from earlier life, accentuation of earlier inequality, or a late-life leveling? We begin by discussing the nature of the linkages across this life course division. Aging and Social Theory: Linkages Between Work and Retirement

Individual pathways become problematic across the work arid retirement phases of the life course because retirement means exit from employment and entry into retirement institutions. That is, the retirement transition involves major change in the primary institutional structure within which individuals lead their lives, and it is not immediately clear what might produce continuity in individual lives across these two structures. Just as sociologists have examined the linkages between the preparation and work phases of the life course that also involve a shift in institutional structures between school and work (e.g., the links between parental resources, individual investments in education, and important socioeconomic outcomes such as occupation and income), it is equally important to examine the strength of socioeconomic linkages between the work and retirement phases of life. Martin Kohli, in an important paper entitled "Aging as a Challenge for Social Theory" (1986), analyzes the issue in a particularly useful way. Though the boundary between work and retirement may have become less clear in recent years (see Chapter 4), over the longer term the development of retirement institutions has created retirement as a distinct stage of life. In this modern life course division into separate age-segregated education, work, and retirement stages, each life segment occurs within a distinct set of social institutions (Riley 1998). The two nonwork periods of the typical life course, education and retirement, have expanded. The retirement period, particularly, has expanded at both ends because of declining retirement age and declining mortality at advanced

Pathways to Inequality: Intracohort Differentiation over the Life Course

35

ages (Wise 1997). Yet beginning with nineteenth-century attempts to understand the nature of modern society, sociological theory has generally held that the most important institutional structures affecting individuals' lives arise from work institutions. The challenge to social theory is to conceptualize the role of work in modern social life, given the reduction in lifetime hours spent in employment. Is work still central in defining social position and meaning in life? For the study of aging, meeting this challenge requires conceptualizing the meaning and structure of retirement since retirement exists outside the sphere of production and employment and, unlike education, is not preparation for work. Kohli's solution is to argue that Western industrial societies remain "work societies" because, despite the nonwork character of retirement, work remains the central factor determining retirement economic and social status. Although the governing institutional structures may shift, the meaning and significance of retirement is created by the work phase of life, and a central task is understanding the intraindividual mechanisms linking the phases of the life course. Kohli suggests the linkage across the divisions of the life course may be found in the "biographical conception of class," a time-based view that focuses on linkages within individuals' lives and connects the work and retirement phases of life despite their separate institutional contexts. "Class" refers to much more than the individual's economic and social position. It implies an individual's self-concept and subjective understanding. The significance of this idea is that it focuses on intraindividual linkages across time as a central mechanism producing a type of continuity in individual lives between work and retirement phases. The result is not a perfect reproduction of the preretirement phase but continuity in individual lives. For example, two workers with similar current occupations (and incomes) may differ in their pension entitlements. After retirement, they will not have equal incomes (barring higher savings by the worker without a pension, a topic considered later). A woman's early pattern of employment and childbearing will affect both retirement timing and economic status after retirement. The result is not simple continuity of status because the sources and institutional rules governing income, as well as daily activities, change. But there are clear intraindividual links between work and retirement. At first glance, the idea that individuals are constrained by past events appears to be a commonsense view lacking profound theoretical significance. Yet Kohli argues that this approach is quite distinct from some traditional gerontological approaches which assume that old age is a break with the past—a new stage of life in which the distinction between work and nonwork determines interests and values. The implicit view is that retirement means abandonment of the commitment arid meaning created

36

Pathways to Inequality: Intracohort Differentiation over the Life Course

during the work phase of life because it means that a different set of institutional structures are immediately relevant. Kohli discusses two varieties of these older ideas. One focuses on economic interests, arguing that nonwork gives the elderly common economic interests in public programs. A second alternative approach focuses on cultural values instead of economic interests, arguing work versus nonwork is the central distinction shaping values and attitude. The view that shared leisure is an important element creating a "class" was pioneered early in the history of social gerontology by Arnold Rose (1960), who argued that older people in industrial societies had become increasingly separated from the institutions of employment and family that linked them to the social world of younger people. This isolation provides the opportunity to become more aware of their common interests, including shared economic interests, and perhaps to develop political movements based on them. Kohli concludes that public transfer programs and shared leisure do create some shared interests among the elderly, but these shared interests are understood and experienced by individuals in different ways; there are important links between past and present in the lives of individuals that shape the nature of aging. Hence, the emphasis on continuity and linkage across phases of life, despite the new institutional structure, defines a distinctive view of the nature of retirement. The concepts of continuity and linkage in individual lives forms the core critique of both traditional views that define old age as a new phase of life.

Research on Linkages Across the Life Course Status Maintenance, Status Leveling, or Cumulative Advantage?

The empirical literature addressing age-based changes in economic status also reflects the same distinction between views that focus on continuity and discontinuity across phases of the life course. The contrasting patterns of continuity and change between work and retirement phases are conceptualized by Henretta and Campbell (1976; 1978; Campbell and Henretta 1980) through the processes of status maintenance and status leveling. The view that there are strong links in the individual determinants of status between work and retirement is captured by the concept of relative status maintenance. Occupation and industry placement produce careers with higher income, greater pension wealth, and increased accumulation of other types of economic assets. Both pensions and accumulation of assets are important linking mechanisms that tie work and retirement together. That is, the factors that predict market success are equally strong

Pathways to Inequality: Intracohort Differentiation over the Life Course

37

in predicting retirement income. An alternative hypothesis, status leveling, holds that there are relatively weaker links between occupational attainments and income after retirement than before because public policy attenuates the link between life phases. The structure of public programs, such as Social Security retirement benefits and Medicare, minimizes the effects of past earning history on benefits. Hence, to the extent that these sources of income are important, resulting retirement income will bear less relationship to education and occupation than preretirement income. The leveling view parallels the description of older gerontological theory presented by Kohli (1986) in its contention that retirement is a new stage of life subject to its own unique rules. Status leveling does not argue there will be no link between early attainments and retirement income, only that it will be severely attenuated in old age. More recently. Crystal and Shea (1990) have presented a third conceptual possibility—"cumulative advantage." They argue that the shift from employment to retirement institutions means an increase in the relative importance of those income sources that are most unequal. Hence, they argue, the retirement transition is associated with increasing cohort differentiation. Varying conceptualizations of the work-retirement link create an important agenda for research: what are the processes and mechanisms that produce linkages between events across time, despite change in work status? Does the change in work status lead to status leveling, status maintenance, or cumulative advantage? Henretta and Campbell (1976) compare income attainment path models for the same cohort before and after most of its members have retired. Their results provide strong support for the relative status maintenance hypothesis. In examining repeated cross-sections of one cohort, they find that the link between education, occupation, cuid income is very similar before retirement and after. Hence, education and occupational attainments are as useful in predicting income during both periods. They conclude that the linkage across time between statuses is not attenuated by a shift from work to retirement institutions and suggest that the linkages may be found in Social Security, firm pensions, and individual savings (Henretta and Campbell 1976; 1978; Campbell and Henretta 1980). Pampel and Hardy (1994a), using more recent panel data, have confirmed the general similarity of education and occupation effects on income before and after retirement. Although the research on continuity of status effects generally indicates status maintenance, researchers who have examined inequality of income in retirement have generally concluded that inequality increases with age (in cross-sectional data). Hurd (1990) reviews estimates of inequality among the elderly and nonelderly for various years between 1973 and 1984 and shows greater inequality among the elderly, measured

38

Pathways to Inequality: Intracohort Differentiation over the Life Course

by the Gini index. This difference is stable over various adjustments in income. Crystal and Shea (1990) similarly argue that there is increasing inequality with age; hence there is a pattern of "cumulative advantage." They find that Supplemental Security Income (SSI) and Social Security tend to reduce inequality but this effect is not adequate to counterbalance the inequality produced by great disparities in asset income. These findings have been elaborated and partially challenged recently by an analysis that shows complex and shifting patterns of inequality. Radner (1995) examines inequality among the aged and nonaged between 1967 and 1992. He finds that inequality in the under-65 population, as measured by the Gini index, increased monotonically during the period; this increase in inequality is also generally reflected in the shares of income going to the bottom and top 20 percent of the population. Among elderly households, the overall effect of a more complex pattern of change is that there is less inequality among the elderly in 1992 than in 1967. But there is more inequality in 1992 than in 1979, findings also reflected in examining income shares. Until 1992, there is clearly more inequality among elderly households than among younger households. In 1992, an analysis of the Gini index suggests more inequality among the elderly, but an income share analysis does not yield a clear conclusion. Radner finds that elderly and nonelderly inequality levels appear to be converging for two reasons—the increase in inequality among nonaged households and the decline in aged inequality before 1979. Pampel and Hardy (1994b) address the seemingly conflicting findings that inequality is usually greater among the elderly and the relationship of income to background status characteristics is not affected by retirement. They find that inequality in total family income increases in panel data as the cohort moves from preretirement to postretirement sources of income. However, most of the increase in inequality occurs within status categories (i.e., within levels of education and occupation) and relatively little occurs between status categories. The within-group increase in inequality may be due to random, unexpected evexits, or it may result from variations in social structure. For example, firm pensions are correlated with education and ocaapation, thereby producing stability in the effects of these attainments on income. But pension variation within education or occupational groups might well produce more diverse within-group outcomes in postretirement income than in preretirement earnings. The overall conclusion is that the role of status background characteristics in differentiating the population is relatively stable across the work and retirement phases of the life course. This finding is partly due to the correlation of opportunities to accumulate resources for retirement through pensions and savings with education and occupation. However, it is equally important to consider the role of individual agency in creating a link between work and retirement.

Pathways to Inequality: Intracohort Differentiation over the Life Course

39

Individual Agency as a Link Between Work and Retirement

In economic theory, an important link between status in the work and retirement phases is active planning by the individual to spread lifetime income across years of work and nonwork. The standard life cycle framework widely used in studies of saving and consumption assumes that individuals consciously plan for the future in an attempt to spread their income over their expected lifetimes and keep the marginal utility of expenditure equal over time (Hurd 1990; Browning and Lusardi 1996). Saving in one period allows higher consumption later, though the resulting predicted behavior is quite complex. First, an attempt to maintain equal utility is consistent with different levels of expenditures at different times. Higher expenditures when children are young, for example, may be required to produce the same utility as lower expenditures when household size is smaller (Browing and Lusardi 1996). Consumption may also vary because it is not always possible to borrow against future income (Hurd 1990), and future consumption generally doesn't have as much present value as current consumption. Second, individuals may not wish to spend all their income because they wish to leave an inheritance or guard against unexpected events. Third, individuals with equal savings and lifetime income may consume at different rates because they expect to live for different periods of time. Fourth, unexpected events may foil the individual's plan. Despite these conditions, the economic view is that individuals actively plan and execute, and their general goal is to maintain their status over time. Critics of the model have argued that it ignores the limits to rationality inherent in human behavior. Individuals can't plan in the way the theory suggests; and, even if they could, they lack the self-control to execute the plan (Thaler 1990; 1994). Bernheim and Scholz (1993), for example, argue there are socially patterned differences in the learned skills required to make the complex long-term planning decisions. They find that the standard life cycle framework describes the behavior of college graduate households but not those with less schooling. Sociologists are likely to find this critique congenial. To the degree that individuals can't or don't plan, a sociological model in which exogenous factors—such as firm-based pension policies or parental status that affects the individual's education—become more important. In other words, if individuals have limited ability to plan forward, what happens to them—exogenous factors—not what they make happen, becomes more important. Still, sociological approaches often underplay the role of individual agency in creating or shaping outcomes. Attention to the life cycle model is a useful corrective. The applicability of the life cycle framework to the behavior of the elderly is a continuing topic of research. Hurd's (1990) review finds a range

40

Pathways to Inequality: Intracohort Differentiation over the Life Course

of behavior that is generally consistent with the model, but other research is inconsistent. For example, Bernheim, Skinner, and Weinberg (1997) find a sudden drop in consumption at the time of retirement and pre- and postretirement consumption patterns that they argue are not consistent with the range of factors usually considered in the life cycle framework. Despite the unsettled research issues, the life cycle framework has important implications for examining the link between status before and after retirement. First, it implies that researchers should define income in a way that combines current income and the potential lifetime income from assets (including human capital)—instead of examining realized income in any one year as has generally been the procedure in sociological research. There are a number of compelling reasons for developing a comprehensive measure of well-being instead of using current year's income only. A central mechanism through which individuals spread income across their lifetime is through the accumulation of assets. The current income realized from investments is not a good proxy at later ages because the annuity value of an asset is generally greater than realized income, particularly at later ages when assets need finance consumption over fewer years. Even if assets do not provide current income, they still add to well-being since they provide a source of potential income and, hence, material and psychological security. The limitation of the comprehensive measure combining income and the full annuity value of assets measure is that asset classes may have different social and personal meanings to their holders. For example, housing equity arising from home ownership has distinctive meanings separate from its monetary value (Henretta 1987). Either for social or economic reasons, older people are less likely to use housing equity to finance daily consumption (Hurd 1990; Venti and Wise 1990; 1991). Although there remain good reasons for using comprehensive income measures, they raise complex issues of which assets should be included, how they should be valued, the period over which assets should be apportioned, and the relation between the comprehensive measure and actual behavior (Radner 1990). The emphasis on spreading lifetime income, which for most persons is produced by earnings, over the entire life course very strongly implies a status maintenance outcome. Research confirms this expectation; for example, Burkhauser, Butler, and Wilkinson (1985) find a .70 correlation between pre- and postretirement comprehensive income. Yet there are also some findings in the life cycle framework that are consistent with what one might expect in either the leveling or cumulative advantage approaches. For example, Kotlikoff, Spivak, and Summers (1982) find that Social Security benefits raise the standard of living of the aged population above the level they could have financed through their lifetime economic resources. Since public programs benefit low earners more, a topic

Pathways to Inequality: Intracohort Differentiation over the Life Course

41

discussed later, this finding suggests the possibility of leveling. Hurd and Shoven (1985) use a comprehensive income measure that adds the implied insurance value of Medicare and Medicaid to examine comprehensive income distributions over time (but not within individuals). Overall, median and mean real incomes declined; however, Hurd and Shoven's results also show that the real income of those at the very bottom of the income distribution actually increased because of the very strong effect of Social Security, Supplemental Security Income (SSI), and Medicare benefits for persons at low income levels. For very low income persons, Social Security or SSI constitutes the most stable income source of their lifetime. As a result, aggregate declines in income were slightly greater for those with higher incomes, since Social Security makes a higher proportion of the wealth of the low income population. In examining changes between 1969 and 1979, they find a small trend toward equalization (for a similar result, see Burkhauser, Butler, and Wilkinson 1985). On the other hand, there are some results suggesting the possibility of cumulative advantage. Bernheim and Scholz's (1993) results, discussed above, indicate that more educated households accumulate more assets iii relation to income than do less educated households. This finding is consistent with earlier research showing that, controlling for long-term earnings, those with greater schooling have higher levels of assets (Henretta and Campbell 1978; Campbell and Henretta 1980; Kotlikoff, Spivak, £ind Summers 1982). That higher asset position may be produced by more actual saving out of current income (implying lower consumption while working) or greater investment skill. In the former case, cumulative advantage would have been financed by lower consumption earlier-—thereby tending to equalize total lifetime consumption between less and more educated households at the same income level. Still, these results for education suggest different pre- and postretirement consumption trajectories that conform to the cumulative advantage argument. Summary

Over 20 years of research on the linkage between the work and retirement life course phases allows some robust conclusions on inequality. First, there is a relatively strong correlation between rank ordering of workers before and after retirement, indicating that there is strong carryover of economic well-being over the phases of the life course. Income is highly correlated across the two periods, and the relation of income to status background characteristics such as education and occupation remains stable. The mechanisms producing this continuity involve either the effects of an exogenous social structure which provide different opportunities to those differently situated (as indexed by education and

42

Pathways to Inequality: Intracohort Differentiation over the Life Course

occupation) or individual agency through the mechanisms captured in the life cycle saving framework. Exogenous social structure and individual agency may also provide a combined mechanism. The argument that college graduates have a social environment more conducive to learning effective saving and investment skills provides one example. Second, there is good evidence for an increase in intracohort inequality after retirement, though the difference may be less now than in the past, and some research shows a leveling produced by public programs. Different results may stem from the sensitivity of the various methodologies used to particular aspects of the income distribution. The literature addressing inequality nearly always makes the point that public policy attenuates the linkage across life course phases while market mechanisms accentuate it. Government transfers (e.g., Social Security) tend to reduce inequality. Other types of wealth—pension wealth and financial or real assets—tend to either perpetuate or increase inequality. To examine this issue, we now turn to an analysis of income sources. An Overview of Income Sources Examining retirement income sources and the links those sources create between the work and retirement phases of the life course provides one way to examine status shifts. Social Security benefits are the most common income source for elderly (ages 65+) households—over 90 percent receive Social Security income, followed by 67 percent receiving income from assets, 30 percent with pension income from private employers and 14 percent with public employee pensions, and 22 percent with income from earnings. The distribution of these income sources varies by income level. The lowest 20 percent of money income recipient households rely on Social Security and, secondarily, assets and public assistance; upper income quintiles are more likely to receive pensions, asset income, and earnings (Grad 1996). Means-tested public assistance benefits such as Supplemental Security Income are received by 6 percent of elderly income units (Grad 1996; Bureau of the Census 1996); they are particularly important in the bottom quintile of income recipients, where they are received by 20 percent of households. Table 2.1 (derived from Grad 1996) presents the proportion of aggregate income from the various sources by marital status and income quintile. The table indicates great heterogeneity across marital status and income level. For both the married and unmarried, Social Security benefits are relatively less important at higher income levels, whereas pensions, assets, and earnings are more important aggregate income sources. Clearly, higher income elderly households have that position because of their asset holdings, pensions, and continued earnings.

TABLE 2.1 A g g r e g a t e I n c o m e from Each I n c o m e Source of Income U n i t s A g e d 65 and O v er, 1990, b y Marital Stat us a n d Income Quintile Married Couples

Total

Retirement i n c o m e : Social Security Railroad retirement Gov't employee pension Firm p e n s i o n s / a n n u i t i e s Asset Income: Earnings Public assistance Other

37.6 .6 8.7 10.6 16.6 22.9 .4 2.6

Income

Nonmai ried persons

Quintile

Total

1

2

3

4

5

Men

Women

82.1 .3 1.7 2.9 4.2 2.9 3.9 1.9

70.9 .6 4.1 7.9 7.2 7.1 .6 1.6

53.4 1.0 7.5 12.5 11.8 11.4 .3 2.0

36.5 1.4 11.2 14.1 15.8 18.7 .1 2.3

18.7 .1 10.0 10.0 22.7 35.3 0.0 3.3

41.7 .7 8.7 11.7 19.6 13.8 .9 2.9

52.4 .6 7.6 6.9 18.9 8.8 2.0 2.8

Income

Quintile

1

2

3

4

5

78.3 .6 .8 1.2 2.6 .5 14.3 1.8

85.1 .8 1.2 1.9 3.4 .8 5.2 1.7

78.3 1.3 3.2 4.9 6.6 2.8 1.1 1.9

56.6 .8 7.4 11.0 13.8 6.3 A 3.6

26.2 .4 11.9 10.4 30.3 17.4 .2 3.2

Quintile limits for married coi .iples: SI!5,040; 2:1,366; 29,!586; 44,801. For u nmarriei 1 persons: $6,239; 8,819; 12,324; 19 ,094. SOURCE: Derived from tables \ TL3 and Vn.5 in Susan G rad. 19% . Income of the Population 55 or Older, 1994. Was tungton, D.C.: Sjcial Seen rity Adir linistrat:ion.

^5

44

Pathways to Inequality: Intracohort Differentiation over the Life Course

lit addition to these general patterns, there are important differences across marital status. Unmarried households tend to be older than the married and are disproportionately female and widowed. They depend more on Social Security benefits arid means-tested public assistance and less on earnings compared to the married. Unmarried women receive less of their income from pensions. The incomes of unmarried households are generally very low. The bottom 60 percent of the unmarried have incomes that would fall in the lowest fifth of the married group. Overall, 80 percent of unmarried households have income lower than the bottom 40 percent of married households. It is not surprising, therefore, that the bottom three quintiles among the unmarried have aggregate income sources that are roughly similar to the bottom 20 percent of the married. The relative importance of income sources has changed somewhat over time. Earnings provide a smaller part of total income, and assets and pensions provide more. The picture is complex, however. The role of assets in aggregate income has fluctuated over time, and Reno (1993) suggests the fluctuation in the asset share of income is affected by interest rates that were very high in the mid-1980s. In addition she suggests that the long-term increasing role of assets may result from increasing numbers of lump sum distributions from retirement plans. Whereas Social Security income is widely distributed among the elderly, pension and asset income as well as earnings are somewhat more narrowly distributed among higher income elderly—indeed, their presence results in higher income. As noted, there are differences in income source by marital status and gender. To elaborate on the role of the main retirement income sources in maintenance of inequality, we discuss the specific characteristics of the different income sources in the following sections. Despite its importance, we do not discuss the role of earnings in producing inequality because it represents the outcome of work institutions, not retirement structures. Variation in retirement age is discussed in Chapter 4.

Public Transfers: Social Security, SSI, and Medicare

The structure of public transfers to the elderly reduces inequalities that would otherwise exist. Public transfers also provide incentives for retirement at certain ages, a topic discussed in Chapter 4. Here we discuss selected characteristics of a very complex system, focusing on those aspects that reduce inequality among older age-groups. The Social Security Bulletin Animal Statistical Supplement, which is published annually, is an excellent source for more extensive discussion of Social Security details. Our discussion focuses on the Social Security system today, but its role in reducing inequality among the elderly has probably increased com-

Pathways to Inequality: Intracohort Differentiation over the Life Course

45

pared to twenty-five years ago because of the more than 50 percent rise (Ippolito 1991) in Social Security benefits in the early 1970s. We discuss the effects of this increase on a reduction in elderly poverty levels in a later section of this chapter. Social Security provides retirement benefits to almost all retired workers. A worker today must have earnings covered by Social Security for ten years in order to qualify for benefits; in 1997, a worker received a year's credit for earnings of $2,680 during the year (Social Security Administration 1997, 28). The individual worker's benefit level is based on average monthly earnings over the worker's lifetime (in addition to age of retirement). Prior to computing average monthly earnings, earnings in earlier years are adjusted to allow for the general rise of earnings over time. For most retiring workers today, the benefit computation is based on the highest thirty-five years of earnings, regardless of when they occurred in the worker's life. Average adjusted monthly earnings are usee! to calculate the worker's "primary insurance amount" (PIA). The algorithm for this calculation is primarily responsible for the leveling effect of Social Security. For workers reaching age 62 in 1997, the PIA is the sum of A. 90 percent of the first $455 of average monthly earnings B. 32 percent of the next $2,286 of earnings C. 15 percent of monthly earnings above $2,741. The PIA is the worker's benefit that would be payable at age 65. Retirement before age 65 leads to a reduction in benefits—to 80 percent of PIA at age 62 (Social Security Administration 1997, 39, 60). To see the effect of this benefit formula on inequality, consider the following three cases. A worker whose average indexed monthly earnings equaled the average earnings in 1996 ($2,058) compared to workers who earned 75 percent and 150 percent of the average a m o u n t . The average worker retiring at 65 would receive $913 while the other two would receive $750 and $1,153 respectively (Social Security Administration 1997, 56). Although the high-income worker had twice the earnings (and paid twice the taxes) of the low-income worker, the resulting PIA is only 54 percent higher. Similarly, the higher income worker's earnings were 50 percent higher than the average worker's but the resulting PIA is 26 percent higher. In addition, there is also a special PIA for those workers with very low earnings but long labor force attachment, though the examples listed above are far above the level that would qualify for the low earnings adjustment. Medicare, which pays for hospital and physician bills, has an even greater equalizing effect. Hospital insurance is provided at age 65 to all

46

Pathways to Inequality: Intracohort Differentiation over the Life Course

those eligible for Social Security or Railroad Retirement benefits plus some other groups. Since all elderly receive the same coverage regardless of their previous earnings, the program produces greater equality. Coverage for physician services is optional, and those choosing it pay a monthly fee. Yet this program is heavily subsidized by general revenues (Social Security Administration 1997, 95-97). The overall effect of the Social Security retirement benefit system and Medicare is to dull the effect of earlier lifetime economic attainments. In addition to Social Security retirement benefits, Supplemental Security Income raises the relative income of very poor elderly. It replaced Old Age Assistance in 1974. It is a means-tested program; for an individual over age 65, living alone, and with no other income and no countable assets, SSI provided $484 per month in 1997 (Social Security Administration 1997, 78). States have the option of supplementing SSI payments. The research of Burkhauser, Butler, and Wilkinson (1985), Hurd and Shoven (1985), and Crystal and Shea (1990) all show the clear equalizing effect of these government programs. Their benefit structures blunt the effect of earlier careers; by design, they limit the extent of carryover of inequality across the work and retirement phases of the life course. If they provided the only sources of income for the elderly, the story would be a simple one of status leveling produced by conscious social policy. They do provide a floor on income and, as Hurd and Shoven (1985) suggest, may raise the well-being of those at the bottom of the income scale after retirement. Since leveling does not characterize the changes in overall inequality with retirement, we now turn to a discussion of income sources producing inequality. Pensions and Earlier Socioeconomic

Attainments

If government transfer programs have an important leveling effect, inequality arising from other sources must increase with age to produce the overall patterns discussed earlier. Pensions provide a particularly important instance of the effect of employment structures and individual careers on the continuation of inequality across the work and retirement phases of the life course. Discussion of pensions is more complex than Social Security, however. There are many firm- or industry-specific pension plans, each with different rules. In addition, there are very strong individual career effects on pensions. Finally, both the social structure of pensions and patterns of individual careers vary by cohort. Individuals pass through different firms' pension structures at different points in their lives and for different amounts of time; this intersection of diverse pension structures and individual lives results in a very complex set of outcomes. (Pension structures are discussed extensively in Chapter 5.)

Pathways to Inequality: Intracohort Differentiation over the Life Course

47

Social Security is also affected by cohort differences—for example, the large unexpected increase in benefits experienced by retirees in the early 1970s (Ippolito 1990)—and individual earnings histories affect benefit amounts. But with the exception of these increases, pensions have probably changed more in recent years. Figure 2.1 provides information on one important link between retirement status and earlier attainments: the relation between pension participation and education level. Pension participation indicates current inclusion in any type of employer-provided pension plan, including both defined contribution plans such as 401K plans and thrift plans as well as traditional defined benefit plans. Data are from the 1992 wave of the Health and Retirement Study (see Juster and Suzman 1995 for a description of the study) and include respondents aged 51-55 who are currently employed by public or private employers. The self-employed and those not currently working are omitted. The figure shows a very strong relationship between pension participation on the current job and education. Men with a college education or more have a participation rate of 85.6 percent compared to 73 percent for high school educated men; the comparable figures for women indicate a greater education gradient: 79.4 versus 60.5 percent. Older workers are more likely to participate than younger workers, and those working at ages 51-55 are a selected sample. Hence these results cannot be generalized to the entire U.S. adult population. Participation rates are lower but the education effect is similar, however, when all respondents, including the self-employed, the retired, and unemployed, are considered and pension coverage is defined more broadly to include pensions expected or being received from past jobs. Differences in pension coverage while working are later reflected in pension amount received. Even among those receiving a pension, college graduates have pension incomes 1.8 times higher than high school graduates (Short and Nelson 1991), possibly reflecting longer years of coverage, coverage on more jobs, and higher earnings that result in higher pensions. Figure 2.2 presents results from a comparison of current job pension participation by race from the same data. The two highest educational attainment categories, thirteen to fifteen years and sixteen years or more, are combined in this figure, which also combines men and women (providing a minimum of 144 observations in the smallest education by race category). Overall, blacks have lower pension coverage rates—65.3 percent compared to 70.4 percent for whites. There are two reasons for this lower coverage rate. As the figure indicates, whites have a higher level of coverage among high school graduates. In addition, a higher proportion of blacks (68 percent) than whites (54 percent) are located in the lower two education categories.

£

^5

50

Pathways to Inequality: Intracohort Differentiation over the Life Course

The analysis presented in this section has ignored the cohort issue. The data on pension amounts for current pension recipients and pension participation for current workers refer to different birth cohorts. Changes in pension coverage over time, discussed in Chapter 5, imply that pension coverage and vesting have changed for successive cohorts. There is some evidence that the education difference in pension coverage has increased over time (Reno 1993). Even in the face of declines in coverage, the socioeconomic differentia] in coverage has been maintained and, perhaps, increased. In sum, pension coverage and benefit levels favor those with higher levels of education. Pensions are a central mechanism linking earlier socioeconomic differences to retirement income level, thus creating important links across the retirement transition. Gender Differences in Pension Coverage and Income

Among current workers, women are less likely to be covered by pensions, as shown in Figure 2.1. One important reason, discussed earlier, is that pension coverage is correlated with earnings levels, and women are still in lower-wage jobs, even among women who work full-time (Korczyk 1993). Women are also more likely to be working part-time (Tilly 1991). The pension gender gap in Figure 2.1 may be unique to this cohort and earlier ones. As discussed below and in Chapter 5, evidence suggests the gap may not occur in younger cohorts. The gap partly reflects past patterns of early labor force participation which are quite different from more recent cohorts (see Chapter 1). There are intriguing age differences in the pension coverage gap between men and women. There are no differences at ages 25-29 in the 1987 Survey of Income and Program Participation (SIPP) data, but there are difference at later ages (Short and Nelson 1991). Reno's (1993) comparison of 1979 and 1988 Current Population Survey (CPS) data indicates a similar pattern. The lack of gender differences at younger ages may indicate a cohort pattern of change as the labor force participation of employed women becomes more similar to men's. Retirement income sources among today's older population reflect the large pension differences between men and women found in the past. Thirty-six percent of married men and 29 percent of unmarried men receive pensions from private employers; 14 and 12 percent, respectively, receive public employee pensions. Twelve percent of married women and 21 percent of unmarried women receive private employer pensions, and 7 and 9 percent, respectively, receive government employee pensions (Grad 1996). Among currently married persons, men are much more likely to receive pension income. Unmarried women, a group that in-

Pathways to Inequality: Intracohort Differentiation over the Life Course

51

eludes never married and divorced women who are more likely to have earned pensions than other women and widows who may be receiving a survivor's benefit, are also less likely than unmarried men to have pension income. Although married men are more likely to have pension income than unmarried men (see also Campbell and Henretta 1980), the opposite is true among women. Among men, either lower status characteristics associated with being unmarried lead to placement in jobs without pension coverage or men who are unmarried are less concerned with pension in choosing a job because they generally have fewer family responsibilities. Unmarried women are more likely than married women to receive pension income because they have always been more dependent on their own employment or are receiving a widow's benefit. In both cases, marital status has important effects on sources of income. Figure 2.3 (derived from Short and Nelson 1991) shows men's and women's pension amounts, by marital status, for those who are receiving a pension. Older widows have particularly low pension income, reflecting either a reduced survivor's pension or a loss of a pension with a husband's death. Changes in the law governing survivors' pensions are discussed later in this chapter. They occurred too late to affect many of the widows in these 1987 data. Women who never married receive higher pension income than other women, reflecting their higher level of lifetime labor force participation. It is likely that future cohorts of women retirees will have higher levels of pension receipt and income because of their increasing levels of coverage. (Yet this trend must also be viewed in light of the pension changes discussed in Chapter 5.) One important reason that today's working women will have higher levels of pension income when they retire is that they have higher lifetime levels of labor force participation. At each preretirement age they are more likely to be in the labor force and less likely to interrupt their work careers for child rearing. Although more women in recent cohorts have long-term labor force attachment, some women still follow the intermittent employment pattern that was more common in previous cohorts. This pattern creates a link between family events, pension attainment, and retirement that is unique to women.

Wealth

Accumulation

Wealth accumulation is a second central process linking work and retirement phases of the life course. Income from assets is broadly important to the economic well-being of the elderly. During the mid-1980s, the real nonhome assets of the elderly increased, though the increase was not broadly shared (Ryscavage 1992). During the early 1990s, however, the net worth of the elderly declined, even controlling for age within the

£

Pathways to Inequality: Intracohort Differentiation over the Life Course

53

elderly group (Eller and Fraser 1995). Assets are very unevenly distributed among the elderly population. Table 2.1 demonstrates the small role played by asset income among lower-income elderly and its important role at higher income levels. Some asset income may reflect lump sum settlement from pensions (Reno 1993). Bernheim and Scholz (1993) find a strong relationship between education and both saving and assets. College graduates had much higher levels of saving and nonhome assets in relation to income. These findings are consistent with earlier research showing lower assets in late life among those with less education, holding long-term income constant (Henretta and Campbell 1978; Campbell and Henretta 1980; Kotlikoff, Spivak, and Summers 1982). The strong relationship between education and median net worth among the current elderly is shown in Table 2.2, which presents data from the 1993-1994 Asset and Health Dynamics Among the Oldest Old Study (for a description of the study, see Soldo, Hurd, Rodgers, and Wallace 1997). Because the respondents to this study are older and have been

TABLE 2.2

Median Net Worth and Home Ownership After Age 70 Net Worth

Home Value

Nonhome Assets

Percentage Owners

By Marital Status and Age Married 70-79 80+ Single Man 70-79 80+ Single Woman 70-79 80+

152,000 110,500

70,000 55,000

60,000 35,800

89.5 82.7

88,100 47,000

38,000 8,000

25,000 16,000

66.9 53.7

65,999 40,500

35,000 12,000

11,200 6,700

65.1 54.3

5,000 31,000 47,000 118,000

62.9 74.4 79.8 82.0

30,000 1,000 255

74.4 56.1 55.4

By Education Less than high school High school Some college College or more

40,000 98,866 132,000 231,000

25,000 50,000 65,000 85,000

By Race and Ethnicity White Nonwhite Hispanic

100,000 25,000 20,000

50,000 9,000 10,000

SOURCE: Asset and Health Dynamics Among the Oldest Old Study, 1993-1994.

54

Pathways to Inequality: Intracohort Differentiation over the Life Course

affected by events that may lead to a spending of some assets, their asset levels reflect a complex mixture of processes. Still, there is a strong relationship between education and assets. The second panel of the table shows the median net worth of college graduates is 2.3 times that of high school graduates. Since there is a great deal of evidence that the elderly do not use their home equity to finance retirement, a topic discussed in the next section, the third data column presents median nonhome assets—total net worth minus home equity. The education differences are greater here; the nonhome assets of college graduates are 3.8 times those of high school graduates. The bottom panel of the table presents asset differences by race and ethnicity, factors also associated with opportunities to accumulate wealth dtiring the working years. Whites have much higher asset levels than blacks or Hispanics. The median nonhome assets of minority elderly are not substantively different from zero. The top panel of the table provides results by the cross classification of marital status and age. The highest asset positions belong to younger, married households. Single men and women have much lower asset positions. Those over age 80 also have fewer assets. These results reflect a number of complex processes. Survival as a married couple may be associated with characteristics that allowed greater asset accumulation. Those over age 80 belong to earlier cohorts that had lower income from which to save. The results for singles also reflect the effects of widowhood. More than eight out of ten single women in the sample are widowed, as are seven out of ten single men. Health care costs of the deceased spouse might be responsible for part of the marital status difference. About 8 percent of the single women and 17 percent of the single men are divorced, a factor associated with lower total assets net of income, particularly lower home equity and financial assets (Henretta and Campbell 1978; Campbell and Henretta 1980). The remainder, 10 percent of men and 6 percent of women, are never married persons. Home

Ownership

Home ownership is a particularly interesting component of assets for two reasons. First, home ownership is linked to events early in the life course. Marriage and the presence of children (Henretta 1987), as well as being white, results in early home purchase. Differences in home purchase rates at young ages (Henretta 1984) appear to be responsible for a portion of the large difference in net worth position between older blacks and whites (Henretta 1979). The trajectory may be disturbed by later divorce (Campbell and Henretta 1980), which reduces home equity, at least among men. Second, there is considerable evidence that the elderly do not use their home equity to finance consumption (Venti and Wise 1990;

Pathways to Inequality: Intracohort Differentiation over the Life Course

55

1991). There might be many reasons for this reluctance—wanting to leave something to children, not wanting to move, or not wanting to reduce housing quality. Third, home ownership is a very important contributor to the net worth of the elderly. The important role of home equity is illustrated in Table 2.2. In each row of the table, and particularly for single women, those with little education, and minorities, median nonhome assets are considerably lower than total net worth. Also, home ownership is broadly distributed among the elderly as shown in the last column of the table. The importance of housing in the wealth picture of most older persons has spurred attempts to develop ways for older persons to use some of this wealth during their lifetime. Venti and Wise note that even if the elderly wish to use their home equity for consumption, conversion would not provide much help to the elderly most in need. Consider, for example, minorities and single women over the age of 80. Almost all their assets are tied up in their homes. But the relatively low value of their homes (which reflects both home value and the proportion who own homes) limits the degree to which conversion of home equity would help. It is possible to convert partial home equity to cash using a reverse annuity mortgage, a financial instrument allowing the older homeowner to live in the house until death. The Federal National Mortgage Association (popularly known as Fannie Mae) began purchasing reverse mortgages in 1996 (Wall Street Journal 1995). This development is important because it creates a secondary market for reverse mortgages and creates a standard product. These two factors will make reverse mortgages more widely available. Results over the next several years will provide a better test of interest in home equity conversion than has occurred heretofore. Cohort Trends in Women's Lives and Intracohort Differentiation

During the last half century, more women in successive cohorts have been affected by employment-related social structures as lifetime labor force attachment has increased and employment has become less tied to marriage and fertility. The trends of increasing women's labor force participation and earlier retirement among men and women have led some observers (e.g., Paukert 1984) to argue that age, not gender, is becoming the primary factor now organizing the life course. In related developments, age-based family roles have become more diverse. Later age at marriage and decline in proportion who ever marry, the rise in divorce, and changing fertility patterns have created greater variety in life course family attachments. These family changes have proceeded at different rates. In some cases, such as age at marriage arid fertility levels, the

56

Pathways to Inequality: Intracohort Differentiation over the Life Course

direction of trends has reversed. The pace of change has been so rapid that women's cohort patterns are more distinct than men's. As a result, women's lives have changed in two conceptually important ways. First, they are more affected by employment institutions and less derivative of family institutions. Second, they have become more diverse. While we often overestimate the uniformity of family life in the past (Uhlenberg 1969; 1978), there is increasing evidence of an invertedU shaped pattern of heterogeneity in family characteristics for female cohorts bom in the first half of the twentieth century. Recent cohorts and those born early in the century have more diverse family lives than 1930s birth cohorts. Changing employment levels and increasing variability in family patterns have helped shape the pattern of intracohort differences between men and women. In the next section we examine ways in which the average pattern of women's lives has changed (or not changed) in successive cohorts through major transformation in tine twin domains of work and family, hi addition to examining changes in average pattern, we also address the issue of shifting intracohort heterogeneity. That is, have women's lives become more homogeneous or less? Finally, we trace the effects of the extensive change in the first half of women's lives— changes in early and midlife employment and childbearing patterns—on intracohort heterogeneity in later socioeconomic inequality.

Cohort Differences in Early and Midlife Labor Force Participation

Women's

Figure 1.1, discussed in the previous chapter, uses partial life course data on a number of different cohorts to trace cohort differences in women's labor force participation since 1965. In this figure, each successive young cohort exhibits a higher level of labor force participation at each age. In addition, the shape of the labor force trajectory suggests a changing relationship of employment with fertility. The earliest young cohort, women born between 1936 and 1940 and aged 25-29 in 1965, still exhibit some traces of the classic M-shaped pattern of labor force participation identified by Masnick and Bane (1980) for earlier cohorts. In cohorts earlier man the ones shown in Figure 1.1, labor force participation reached a first peak at age 20-24 and then declined in the childbearing and rearing years; it increased again in middle age and then declined with retirement. In the 1936-1940 cohort shown in Figure 1.1, the drop in labor force participation during childbearing has disappeared, though participation is low during the child rearing years. Participation levels increase steadily throughout the portion of the childbearing and rearing years shown and reach their peak in middle age. This attenuated M-shaped pattern disappears in successive cohorts so that there is no evidence of

Pathways to Inequality: Intracohort Differentiation over the Life Course

57

lower labor force participation when children are young. This cohort difference can also be described as a difference in historical periods—the most rapid growth in women's labor force participation in recent years has occurred among women with children under 6 and under 18 (DaVanzo and Rahman 1993). The cohort perspective is particularly valuable, however, because it demonstrates the different life course patterns of more recent women that will have major consequences for their incomes and preparation for retirement Although women's employment remains more family related than men's, the role of early family events has clearly declined over time. The large changes in labor force participation mean that women's labor force participation age profiles are becoming more similar to men's (Peracchi and Welch 1994). A comparison between Figures 1.1 and 1.2 shows the increasing similarity, albeit women's participation levels are lower than men's. Women and the Changing

Workplace

A number of other changes in employment have made men's and women's job patterns more similar as men's work has become less stable while women's employment has become more stable. These trends are currently small, but their effect has been to make men's and women's work more similar. First, between 1983 arid 1997, men's median current job tenure has declined while women's tenure has increased (Bureau of Labor Statistics 1997). It is possible that men's tenure has declined because men are moving to better jobs when unemployment is low; however, the years examined have included some with high as well as low unemployment, and the trend has been monotonic across the four measurements over these years. Second, between 1969 and 1989, the proportion of adult men working part-time increased slightly while adult women's part-time work remained approximately stable (Tilly 1991). Third, between 1972 and 1988 the proportion of pension-covered workers who were vested increased, but pension coverage for men declined while women's coverage increased (Reno 1993). The central reason for these changes is that the prevalence of internal labor markets (Osterman 1994)—also called age-structured employment (Henretta 1994b)—has peaked and may have declined slightly. These work arrangements are ones in which there are workplace rules producing nontransferable seniority-based entitlements such as pension rights, higher wages, and job security (Spilerman 1977). Two large economic changes have made employment less stable. First, the rapid pace of economic change and increased competition have reduced job security. Second, technological change and higher educational job requirements

58

Pathways to Inequality: Intracohort Differentiation over the Life Course

(which also means that the worker is more likely to pay the costs of training) both reduce the long-term relationship found in age-structured arrangements (Osterman 1994). In addition, changing pension regulation and an increase in small employers has meant that pension coverage has lagged. The change affects men more than women because men have traditionally been more likely to hold protected jobs. It is important not to overstate the extent of these trends. Most midlife men are still in protected employment (Osterman 1994) and, as shown earlier, a large percentage of midlife men participate in pensions on their current jobs. Finally, there has been a shift from manufacturing to service employment. Between 1975 and 1994, manufacturing employment in the United States remained stable at about 18 million while employment in service jobs increased from 53 to 91 million. One component of services, retail trade, increased from 13 to 21 million (Economic Report of the President 1995). Hence, as a proportion of employment, manufacturing has declined while services have increased. There is a great variety in service industries (Meisenheimer 1998), and there are many good jobs in service fields such as health care or engineering services. Yet the shift has probably reduced the quality of jobs available to the unskilled (Wilson 1996), and it has affected the difference between men and women. For men, the change in industrial distribution has likely meant a decline in job security and less pension coverage because manufacturing was more likely to offer both (particularly as it was organized in the past). Women have been overrepresented in services and hence have less to lose from industrial distribution changes. Because women are entering jobs previously held by men, their opportunities have remained stable or have improved despite change in employment opportunities. Continuing Employment Differences Between Men and Women

Although the changes just described are important, important differences remain between the work histories of men and women. Employed women are not a homogeneous group; there are differences in experience, continuity of work, and labor force attachment. This variation is greater than among men. Though career pattern differences may be declining, it is premature and oversimplified to conclude that men's and women's careers are rapidly becoming indistinguishable. First, men and women are segregated in different occupations. Data from the 1984 Survey of Income and Plan Participation indicate that among high school graduates men were in occupations that were 21 percent female and women were in occupations that were 68 percent female. Results for those with more and less education were roughly similar (Bureau of the Census 1987). Though occupational segregation has been declining, even

Pathways to Inequality: Intracohort Differentiation over the Life Course

59

in 1992 one-third of employed women were in six occupations (U.S. Department of Labor 1993). Second, women are more likely to experience interruptions in their work than men. Equally important are the reasons for the interruptions—men's periods of nonemployment tended to result from difficulty in finding work, whereas women's work careers were more likely to be interrupted by family considerations (Bureau of the Census 1987). Third, women's earnings are less than men's, as discussed in Chapter 1. Ironically, increasing women's labor force participation rates tend to slow increases in two other measures of labor force commitment—experience and continuity. Labor force experience and continuity of employment among employed women does not increase at the same rate as women's labor force participation because women newly drawn into the labor force include many who have not been employed previously. Hence, the process of increasing labor force participation implies a slow increase in the average labor force experience of employed women (Smith and Ward 1984). Even in cohorts who are in late middle age today, there will be considerable heterogeneity in lifetime labor force participation because of the large numbers of women entering the labor force in their 30s. In the four most recent cohorts shown in Figure 1.1, this variability is progressively declining. The data currently available suggest both higher levels of labor force participation and a smaller proportion of the cohort entering the labor force in their thirties. Although each successive cohort has higher and less variable lifetime labor force participation, it will be about thirty years before the cohorts of women entering the retirement years show markedly lower variability in lifetime labor force participation compared to today's retirees. And, even in recent cohorts, women's employment levels remain below men's, indicating continuing variability.

Reasons for Increasing Women's Labor Force Participation

Research has identified a number of causes for the increase in women's labor force participation. The most important are the grcwth in the demand for female labor and the long-term decline in fertility. Smith and Ward (1984) point out that women's labor force participation rates have been increasing since early in this century. They attribute this increase primarily to rising women's wages created by growth of clerical jobs. Growth of these jobs after 1910 created a new role for employed women, who previously had been limited to domestic service. Similar changes occurred in Canada (Jones, Marsden, and Tepperman 1990). Recent changes in employment structure have also added to the increasing demand for women in the labor force. As noted earlier, manufacturing employment has remained stable while service employment has grown. Since women

60

Pathways to Inequality: Intracohort Differentiation over the Life Course

are underrepresented in manufacturing and overrepresented in the growing service sector, the demand for women's labor continues to increase (Smith and Ward 1989). Therefore a major contributor to the increase in women's employment levels has been a set of important structural changes in the economy. A second contributor to rising labor force participation rates has been the secular decline in fertility. Fertility of cohorts of women has been declining since the nineteenth century (Rogers and O'Connell 1984) with the exception of the postwar baby boom. In recent years, total fertility—an estimate of the average number of children born to a women, derived from birth rates in a particular year—has hovered around 2.0 during the 1990s (Ventura, Martin, Curtin, and Matthews 1997). This decline in fertility has been accompanied by an increasing variability in childbearing patterns, a topic discussed later. Yet there is only a loose link between fertility and aggregate labor force participation, since even among cohorts who were mothers of the baby boom, labor force participation continued to increase but at a slower rate than before or after (Smith and Ward 1984). Researchers have pointed to a number of additional factors to account for increasing labor force participation among women. These include the declining wages of men, rising education (Smith and Ward 1984; Jones, Marsden, and Tepperman 1990), and a growing urban population (Smith and Ward 1984). Changing Family Rttterns and the Declining Centrality of Marriage

In addition to changes in employment, marital patterns have changed greatly. These changes are most usefully summarized by examining cohort marital status patterns. The proportion of surviving women who ever marry rose through this century, peaked in the 1938-1942 birth cohort, and has since declined. At the same time, the proportion of marriages ending in divorce has increased steadily for successive cohorts in this century, though some evidence suggests divorce peaked during the 1980s (Schoen and Weinick 1993). Increasing divorce balances a decline in marriages that end in early widowhood or death. Because of the changes in marriage probabilities and divorce, the 1948-1952 birth cohort—currently about 50 years old—will spend less of its lifetime in marriage, compared to cohorts born in the 1920s and 1930s (Schoen, Urton, Woodrow, and Baj 1985). The data on marriage indicate increasing diversity of patterns. That is, age tells us less about an individual's lifetime marital status in recent cohorts than in 1930s birth cohorts. Projection of lifetime experience for younger cohorts requires certain assumptions. Schoen et al. (1985) assume that rates in effect in 1980 will continue for the remainder of the cohort's life. More recent life tables for 1988 (Schoen

Pathways to Inequality: Intracohort Differentiation over the Life Course

61

and Weinek 1993) indicate that this assumption has been reasonable so far, except that the proportions ever marrying and the proportion marrying after a divorce have declined since 1980. If projections were being done with these more recent data, they would show higher levels of heterogeneity across the life course in recent cohorts. Viewing these patterns forward and backward from the position of women retiring in the early to middle 1990s—roughly the 1928-1932 birth cohort—women who generally retired in the early 1990s differ from earlier and later cohorts of women in that they have spent more of their lives married. Despite having higher divorce rates than earlier cohorts, the higher proportion marrying and earlier age of marriage increase time spent married. Today's younger cohorts are slightly less likely to marry and much more likely to divorce. And they are less likely to remarry after a divorce. Therefore, women retiring today have had relatively uniform marital patterns compared to greater diversity in cohorts before and after them.

Changing Fertility

There have been two important changes in fertility patterns. First, fertility peaked during the postwar baby boom and has declined since then. Examining the issue in cohort perspective, women born in the 1930s had the highest cohort fertility during this century. The 1930-1934 cohort had total fertility of nearly 3.1 children per woman (Rogers and O'Connell 1984). Earlier and later cohorts had lower fertility and, as noted, total fertility has been fairly stable at 2.0 during the first half of the 1990s. The age at childbearing and the proportion childless has also changed. In recent years, more births occur to women over age 30 and an increasing proportion of women aged 40-44 are childless (DaVanzo and Rahman 1993). These changes make recent cohorts similar to pre-baby boom cohorts. Cohorts born in the mid-1930s were more likely to have their first child by age 30 than earlier or later cohorts (O'Connell 1991), indicating greater diversity in family patterns before and after the baby boom. Equally important, patterns of childlessness have changed. Women born in the 1930-1934 cohort were very likely to have had children. About 10.4 percent of women in this cohort were childless (Rogers and O'Connell 1984), and childlessness declined further in the 1935-1939 cohort (O'Connell 1991). Women born in the 1930s were in their childbearing years during the postwar baby boom, and both earlier and later cohorts have had higher levels of childlessness. For example, among women in the 1946-1950 birth cohort, 16 percent were childless at ages 40^44; among the 1951-1955 birth cohort, 17.5 percent were childless (Bureau of the Census 1997).

62

Pathways to Inequality: Intracohort Differentiation over the Life Course Implications for Intracohort Variation in the Life Course

The overall effect of changes in marriage, divorce, and fertility is that cohorts born during the 1930s, the first of whom reached retirement age in the 1990s, have had the most uniform and regular family life course of women born this century, even though all the indicators of family characteristics have not changed at the same rate or in the same direction. The 1930s cohorts have spent the largest proportion of their lives married, even though nearly one-third of them have divorced. In addition, they have had the lowest rates of childlessness, the highest cohort fertility, and the highest proportions having a birth before age 30. With the exception of divorce, the indicators discussed show a U-shaped pattern of change during this century centered on the 1930s cohorts. The 1930s cohort employment patterns are midway between those of earlier and later cohorts. They show the M-shape that has attenuated in later cohorts and an agespecific labor force participation rate that is between earlier and later cohorts. Thus the overall picture of women's lives in successive cohorts is made complex by variation in the historical patterns of change in employment and family structure. Although some changes follow a monotonically increasing pattern, other changes are characterized by a U-shape that differentiates 1930s cohorts from earlier and later ones. Today, women entering retirement are more likely to be divorced or in second marriages than in the past. They have had highly variable lifetime labor force participation patterns, and most have had children. In the future, cohorts will progressively have higher levels of labor force participation, though as discussed earlier, new retiree cohorts will show high lifetime variability in labor force participation for many years. Increasing numbers will be divorced or in second marriages. More will be childless; among those with children, there will be more variation in mother's age at child's birth. Variation in these patterns constitute an important aspect of intracohort variability by themselves, but they also have implications for intracohort variation in socioeconomic status. There are no comprehensive data allowing examination of family change implications for women's socioeconomic status across the broad sweep of cohorts discussed in this section, but research has examined the effects of lifetime employment patterns, marriage and divorce, and childbearing on socioeconomic variation

Employment Patterns and Late-Life

Heterogeneity

As a result of greater lifetime labor force participation, increasing numbers of women now receive Social Security retirement benefits based at least partially on their own work records. This proportion has increased from 50.6 percent in 1970 to 62.6 percent in 1996. However, as women's

Pathways to Inequality: Intracohort Differentiation over the Life Course

63

labor force participation has increased, the pool of women who are eligible for benefits based on their own work records has become more heterogeneous. In this group, the proportion of women receiving benefits as workers only has declined while the proportion "dually entitled" has increased. Dual entitlement means that a woman could receive benefits based on her previous work, but her benefit as a wife (half her husband's benefit, ignoring early retirement reductions) or a widow (100 percent of her husband's benefit ignoring early receipt reductions) is greater (Ferron 1997). Although more women have worked in covered employment for the required ten years to qualify for some benefits based on their work, the patterns of their employment, and therefore their Social Security benefits, are highly variable. Smith and Ward (1984) show that the increase in women's labor force participation has meant a large change in lifetime experience among all women but a very small change among women in the labor force. The reason is the same as the Social Security retirement benefit finding. A cohort pattern of increasing labor force participation means mixing of women with extensive experience with women who have had much less. Paradoxically, the increasing levels of labor force participation to this point have increased variability in women's own earned benefits. Women's retirement is affected by the same workplace factors that affect men's retirement, such as pensions. Yet women differ from men in the effects of their fertility histories on life course employment and retirement income (O'Rand and Landerman 1984). Early events such as intermittent employment, part-time employment, and limited job choice are strongly related to lifetime home and childbearing responsibilities. The heterogeneity in women's careers carries over into their retirement patterns. Women with extensive early labor force participation retire earlier than women who enter employment after their childbearing years. This pattern affects both currently married and unmarried women (O'Rand and Henretta 1982a; O'Rand, Henretta, and Krecker 1992; Henretta, O'Rand, and Chan 1993). Early employment is also related to a higher standard of living for women in late life (Hofferth 1984). The pattern of early absence from the labor force for family reasons will persist for a considerable number of women in cohorts reaching retirement age over the next two decades, though the increase in childlessness and growing labor force participation among today's childbearing cohorts will eventually reduce the prevalence of this pattern. Family Formation and Breakup

Marital status plays a particularly important role in producing variation in the experience of women. One route of marital breakup, widowhood, is examined in the next section's discussion of poverty. Divorce in midlife

64

Pathways to Inequality: Intracohort Differentiation over the Life Course

also has important effects on economic well-being. Divorce is associated with a decline in the income to needs ratio—the ratio of income to the poverty level for the household of the size a woman lives in each year. However, divorce has different effects depending on other transitions. Women in empty nest households experience more decline in the income to needs ratio than do women with children still at home (Smith and Moen 1988). A central social policy issue is how retirement policy can accommodate women whose family commitments led to lower early labor force participation, thereby affecting their individual retirement income, but later become divorced. The rising divorce rate and the early labor force participation patterns of women now in their 40s and 50s suggests this issue will remain for at least the next two decades. Men retiring today receive higher pensions than women (Short and Nelson 1991), and the higher lifetime probability of divorce among older cohorts reduces the probability that a woman will reach retirement in a first marriage. Social policy has come part way in acknowledging the implications for retirement of the changed family status of older women. Since 1983, federal law has provided for splitting of accrued pension rights in the case of divorce (Goodfellow and Scheiber 1993). Social Security law has made fewer changes. Spouses are eligible for the spouse benefit at the regular retirement age if they were married ten years. Changes in 1977 reduced the length of the marriage needed to qualify for this treatment from twenty to ten years, and 1983 changes allowed women to receive benefits at Social Security retirement ages even if their former husbands were not retired (Social Security Administration 1997). Social Security has not provided for a splitting of accrued entitlements in the manner of occupational pensions.

Poverty

Until the early 1970s, poverty was widespread among the elderly because payment levels in Social Security were very low. With the large benefit increases that occurred in the early 1970s, poverty is now no more common among the old than among younger persons. As with other aspects of aging discussed in this chapter, there is significant intracohort variation. In this section, we discuss the general issue of poverty among the elderly and then focus on the amount and sources of intracohort variation. James Schulz (1985) makes the important point that the proportion of the elderly living in poverty is no longer an appropriate measure of the adequacy of their income. As retirement has become a normal and expected part of the life course, individuals expect to maintain their standard of living, not experience a decline to near poverty. Indeed, it is likely that

Pathways to Inequality: Intracohort Differentiation over the Life Course

65

the rise in retirement income has played a major part in making retirement part of the normal life course (see Chapter 4). In addition, a poverty measure throws away information about the well-being of the elderly by treating a quantitative concept as a dichotomy. Though the poverty measure is arbitrary and wastes information, it does provide a summary description of the state of the elderly popvilation and provides insight in the ways that marital status, gender, and race define important components of intracohort variation that persist and may increase with age. Historical

Overview

Figure 2.4 presents an overview of poverty rates in the U.S from 1966 to 1996 by age-group (based on Lamison-White 1997) and shows some wellknown results concerning poverty. First, poverty among children under age 18 and adults 18-64 declined to their low points in 1973 and have generally trended upward since then, particularly during the 1980s. Among those 65 and over, poverty declined sharply until 1975 and has continued to trend downward since then. In 1996, 10.8 percent of the elderly were below the poverty line compared to 11.4 percent of those 18-64 and 20.5 percent of children. Yet the elderly were more likely to be "near poor" (between 100 and 125 percent of the poverty threshold) than were younger people (Lamison-White 1997). Increases in poverty at ages under age 65 are usually explained either by changing jobs and unemployment levels or by the increasing proportion of female-headed families in the U.S. population. (See Sandefur and Tienda 1988 for a discussion of these different approaches.) In 1966, poverty rates were highest in the over-65 population. Poverty among the elderly dropped dramatically between 1970 and 1975 for reasons specific to them. Social Security benefits were increased about 50 percent in real terms over this period (Ippolito 1990), a change that delinked the elderly's trend from that of the remaining population. In addition, the establishment of need-based Supplemental Security Income for the elderly also reduced poverty (Burkhauser, Holden, and Feaster 1988). Since that time, elderly poverty rates have tended to decline further. The growing adequacy of firm pensions and individual savings probably account for declining poverty among the elderly since 1975. Age-based public policy did work to reduce elderly poverty; hence, the elderly have lower poverty rates today than the general population. Intracohort Variability in Poverty

The overall success in reducing poverty hides large amounts of heterogeneity in the elderly population as shown in Table 2.3, which examines

£

Pathways to Inequality: Intracohort Differentiation over the Life Course

67

TABLE 2.3 Poverty Rates for Persons 65 and Over in Common Household Arrangements, by Sex White Total Married Unrelated Individuals

Black

Hi:>panic

Men

Women

Men

Women

Men

Women

5.7 4.0 11.0

12.1 3.9 21.0

18.1 10.6 25.4

29.8 10.3 46.9

19.9 14.6 38.9

27.7 15.0 46.7

SOURCE: Leatha Lamison-White. 1997. Poverty in the United States: 1996. Current Population Reports, series P60-198. Washington: Government Printing Office. Table 2.

poverty rates by gender and race and ethnicity for two common household arrangements. Married couple households (which may have children living with them) are one type of family. Unrelated individuals are persons living alone or with non-relatives, though most live alone. Married couple families and unrelated persons include most, but not all, the total population; for example, an elderly person living with a child fits neither of these categories. The table shows major differences by living arrangements that affect women more strongly then men. Within each racial or ethnic group, those who live in married couple families have the lowest poverty rates and generally show small gender differences. Unrelated individuals have high poverty rates, particularly among women arid minority groups. Race and ethnicity also have strong effects; for each gender and living arrangement, minority groups have poverty rates more than twice those of whites. The very strong effect of household arrangements for older women has led analysts to focus on the effects of widowhood on women. In recent years, research has begun to answer the question of why older widows have high poverty rates First, both men and women who become widowed had lower income and wealth several years prior to widowhood. Second, the event of widowhood results in further loss, though the loss is less for men than for women (Hurd and Wise 1989; Zick and Smith 1991). The lower income and wealth of widows several years before the event may result from lower earnings (Zick and Smith 1991), or may result from poorer health's effect on the ability to save from a certain level of earnings (Hurd and Wise 1989). Some of the income and wealth loss that occurs at the time of widowhood probably results from expenses associated with the illness and death of the spouse, but the effects of widowhood are primarily determined by the institutional rides governing retirement benefits. While nonhousing bequeathable wealth—savings, for example—declines about 15 percent with widowhood, the largest declines are in Social Security wealth (39 percent) and pension wealth (63

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Pathways to Inequality: Intracohort Differentiation over the Life Course

percent) (Hurd 1990). Declines in Social Security income reflect the loss of the spouse's benefit for widows. Couples with one worker and a nonworking spouse are eligible for a spouse's benefit that is equal to 50 percent of the individual's benefit. After widowhood, the spouse's benefit is lost, reducing income by one-third. Social Security benefits the married more than standard household budgets suggest is required by two persons compared to one, and there have been a number of proposals to shift benefits from the time a couple is married to the time of widowhood. This issue is particularly important because reducing a couple's benefit by one dollar would allow a $1.45 increase in benefits to widows (Sandell and lams 1997). Pension income also declines substantially for widows (Hurd and Wise 1989). One reason is the loss of the pension if there is no survivor's option, as was often the case in the past. This situation may have changed because of changes in social policy. Prior to passage of the Employee Retirement Income Security Act in 1974, which required offering a survivor option, not all firm pensions offered survivor benefits (Schulz 1985). In addition, many workers declined such options (Schulz 1985), but legislation in 1984 required that both husband and wife decline the benefit (Hurd 1990). The effects of widowhood may depend on the measure of economic welfare used. Burkhauser, Holden, and Feaster (1988) found that there was little difference between widows whose husbands had pensions that ended with the husband's death or provided a survivor option. The explanation for this finding may lie in the economic status of women before widowhood—widowhood may precipitate poverty among women who had few economic resources. But among those whose husbands had pensions it may have little effect because of the higher level of resources (Hurd 1990; Choudhury and Leonesio 1997). In other words, the dichotomous nature of the poverty measure means that events that reduce economic status will only lead to poverty among those whose economic resources were limited already. In sum, successive cohorts of older persons are less likely to be poor, but within cohorts there is considerable variation. Intracohort differentiation comes from two sources: different lifetime careers and middle- or late-life events and the interaction between them (Choudhury and Leonesio 1997). The most important class of late-life events derives from family breakup—either through divorce or widowhood. There are clearly others, however—poor health (Choudhury and Leonesio 1997) or an unexpectedly early end to a job. Public policy also plays a role. The most important contributor to the declining poverty among the elderly was the 1970s rise in Social Security benefits. Yet Social Security is also an important contributor to intracohort variation because the structure of benefits advantages individuals when they are married at the cost of lower benefits during the time they are widowed. Hence poverty, as with most

Pathways to Inequality: Intracohort Differentiation over the Life Course

69

aspects of inequality among the aged, is produced by a complex interaction of early- and middle-life events, late-life events, and public policy. Conclusion

Kohli's conceptualization of the links between the work and retirement phases of life presented at the beginning of this chapter argues that there are important links between work and retirement phases of the life course in a broad range of areas, from self-concept to economic status. This chapter has traced the linkages in economic status between work and retirement. We defined three possibilities: the leveling of inequality, its maintenance, or its accentuation. In the end, these possibilities characterize components of economic status more clearly than they do the overall result. There is clearly a great deal of status maintenance as midlife attainments transmit their effects across the retirement transition. However, the components of income have quite different effects. Social Security and Medicare reduce inequality; through design they have relatively little variance in the benefits they provide regardless of previous earnings. Pensions and savings, however, tend to magnify the effects of earlier status. The reason is that they are more unequally distributed than earnings, which begin to drop in importance as an income source. These processes have two important results. Those at the bottom of the elderly's income distribution are probably better off absolutely than those at the bottom of the middle-aged income distribution. At the same time, there is more inequality as the income sources with the greatest inequality become more important. Thus, although status maintenance describes the overall result quite well, there are important aspects of inequality that would better be described as leveling and accentuation. With the exception of the leveling effect of Social Security, the resulting process indicates very important links between work and retirement phases of life. Intracohort differences among women and between women and men are strongly affected by early- and middle-life family commitments. Extensive change in lifetime marital, fertility, and employment patterns have made women's lives more diverse and will produce highly diverse outcomes for women in the future. Women's late-life status is affected by a complex combination of early- and middle-life socioeconomic and family attainments as well as late-life contingencies. Poverty provides one important example. The late-life event of widowhood produces poverty among women with limited resources. Although increasing variability in the lives of women produces variation in outcomes as they age, it does not alter the link between early and later events in individuals' lives.

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Pathways to Inequality: Intracohort Differentiation over the Life Course

The important point for this discussion is that there are two central elements to the production of intracohort variation. Life course work and family careers and public policy are the primary players. The vicissitudes of life—poor health, a lost job, widowhood, or divorce—are important and may have devastating effects. Yet their effects play out within the context of long-term careers and public programs.

3 Asynchronous Lives: The Normal Life Course and Its Variations

Long-term, cross-national trends—including population aging, higher educational attainment, and women's increased labor force participation over their lifetime—have generated speculation regarding the relative decline of the gender structuring and increase of the age structuring of the life course (Paukert 1984). The age-structuring hypothesis proposes that the life course of men and women is becoming increasingly uniform. Educational and workplace institutions are superceding family institutions in the timing and organization of life transitions, such as the transition into and out of the workplace. Increased rates of labor force participation by succeeding cohorts of women are associated with lower fertility rates, delayed marriage, and increased marital dissolution patterns. These trends represent a decrease in time over the life course spent in the family roles of childbearing and child rearing and an increase in time spent in the workplace. As such, men's and women's life courses are now more commonly anchored by age-graded educational schedules that regulate the transition to adulthood in the life course and by employment and public welfare institutions that shape work and family careers and final labor exits through the implementation of age-based rule structures and time-based role participation and tenure criteria. The Age Integration of Lives

Educational and market-based institutions have contributed to the triphasic organization of the life course. Matilda White Riley (Riley 1993a; 1993b; Riley and Riley 1994) terms this the age differentiated or 71

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Asynchronous Lives: The Normal Lite Course and Its Variations

age-segregated model of the life course (which is depicted in the left panel of Figure 3.1). The age-structuring hypothesis emanates from this model and argues that the normal life course is organized more along these lines rather than along separate, gendered pathways wherein women diverge as a result of their transitions into and out of reproductive and family roles. The first secular trend informing the age-structure hypothesis is population aging. The aging of the population in the United States and other advanced industrial countries (see Chapter 6) reflects general declines in fertility and increases in longevity (Bosworth and Burtless 1998; Uhlenberg 1992). The extension of life for men beyond the "productive" work years and for women beyond the "reproductive" childbearing/rearing years has made age an increasingly salient issue for public and private sector policies pertaining to health and welfare over people's lifetimes, especially those that pertain to income maintenance. The extension of adulthood beyond the productive-reproductive years has been paralleled by the extension of the adolescent or preadulthood phase, as work roles have become delayed due to educational regimes or limited occupational opportunities for young men and women (Kohli 1986; Sheppard 1991). As such, age is a fundamental criterion for allocating public and private rights and resources. Second, the relative expansion of educational opportunities to men and women across countries has been an independent basis for the integration of their life courses (Shavit and Blossfeld 1993). Education has affected gendered life course schedules in at least two ways. One effect has been to delay the transitions to more gendered roles, such as those associated with marriage, fertility, and care giving (Bianchi 1995). Educational regimes that extend secondary, postsecondary, and tertiary (vocational) programs to more of the population serve to standardize adolescent and young adult role schedules. Age ranges in late adolescence and young adulthood historically associated with the onset of fertility and family roles among women have served to separate them from—or to significantly delay their movement into—the marketplace. Expanded educational opportunities have delayed these schedules. The second effect has been to transfer cultural resources in the forms of general knowledge, specific skills, and tastes for learning to a wider segment of the population. This transfer does more than delay the transition to other roles; it establishes a foundation of cultural capital with cumulative effects on subsequent educational and occupational attainments (Blossfeld and Shavit 1993). The structure of educational systems varies widely across countries in the extent to which the education-to-work transition is tightly coupled via such mechanisms as apprenticeship and vocational education programs (see Kerckhoff 1996), but the increasingly

Asynchronous Lives: The Normal Life Course and Its Variations

AGE DIFFERENTIATED

73

AGE INTEGRATED

AGE

OLD

LEISURE

o I—.

H < U D Q

MIDDLE

YOUNG

c

—*

EDUCATION

FIGURE 3.1 Types of Social Structure SOURCE: Courtesy of Matilda White Riley. universal access to many forms of education has standardized early life transitions. Third, as noted in earlier chapters, the feminization of labor worldwide has proceeded as a relatively steady increase of women's labor force participation in all age-groups (Easterlin et ai. 1983). Goldin's (1990) economic history of gender-based wage inequality in the United States documents that in the first half of this century, women were clearly divided into two groups: those who worked relatively consistently over their lives, and those who never worked. Over the second half of this century, women's patterns have been more heterogeneous. Part-time and more diverse discontinuous work patterns developed after World War II. Changing family patterns among cohorts of women born in the two decades before the war contributed to these trends. As mentioned in Chapter 2, these cohorts of women spent more of tlieir lives

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Asynchronous Lives: The Normal Lite Course and Its Variations

married. The cohorts that have followed have resumed the consistent pattern of work Goldin (1990) identifies earlier in the century. Women have been going to work early in adult life at increasing rates and have sustained high levels of labor force participation patterns over their lifetime (Paukert 1984). The demand for female labor, stemming from the rise in clerical occupations and the growth of the service industries, attracted primarily younger women (under 25) in the United States until World War II, Then older women's (over 35) labor force participation rates grew more rapidly until the 1960s. The subsequent period has been dominated again by the labor force patterns of younger women, especially mothers of young children. Easterlin et al. (1983) argue that the relative "substitutability" of younger and older women in the service industries has permitted the shifting dominance of age-groups. In any case, across European countries and the United States between 60 and 85 percent of women work in the service sectors. Today over three-fourths of U.S. women aged 20-24 are in the labor force, reflecting an average annual growth rate in labor force participation between 1970 and 1989 of just under 1 percent. Older women also have sustained relatively high participation rates: whereas six out of ten women aged 45-54 have been in the labor force annually for nearly two decades, approximately four out of ten women aged 55-64 have participated as well (Goldin 1990; see Figure 1.1 in chapter 1). The growth of young and middle-aged women's labor force activity after the U.S. baby boom period of the 1950s stems from the conjunction of sectoral demand (Easterlin et al. 1983), the declining male wage (or "family wage" paid to male workers) (Kamerman and Kahn 1989), and changing family roles (Oppenheimer 1994). Families have become smaller and less traditional in the United States and throughout the wrorld (Goldscheider and Waite 1991; O'Rand and Agree 1993). These are outcomes of growing patterns of delayed marriage or nonmarriage, divorce, lower fertility, and dual-earner marriages (Fuchs 1988; Blau 1998)—all of which are highly correlated with labor force participation across nations and welfare regimes. The Resilience of Gender Structure

One ironic consequence of these long-term patterns is that whereas women's work rates have increased dramatically in recent decades, their relative well-being in the United States has declined. Fuchs (1988) has determined that women's wages have risen as a result of increased labor participation, but their increased responsibility for the economic and social maintenance of families, particularly children, has led to a loss of

Asynchronous Lives: The Normal Lite Course and Its Variations

75

leisure and access to goods and services relative to men. Hochschild's (1997) depiction of the "third shift" in women's lives is a telegraphic characterization of women's new time budgets: work time, household time, arid care-giving time inside and outside of the household preempt leisure time. As such, the increased importance of women's earnings for family income has been more compensatory for the economic maintenance of the family, and less supplementary for surplus or discretionary family income. Blau's (1998) most recent examination of trends in women's economic well-being further confirms these views. Gender and the Educational System

In spite of the effects of wider educational opportunities for standardizing life schedules, gender structure has been preserved and reproduced in the educational system and the workplace via processes of allocation, segregation, selection, and socialization. In the United States the wide availability of general education at the secondary and postsecondary levels has not resulted in the uniform acquisition of skills that translate into integrated occupational locations. Hout, Raftery, and Bell (1993) studied educational stratification in the United States between 1925 and 1989 and found relative female advantage at primary and secondary levels of education completion (young men from economically disadvantaged backgrounds drop out at higher rates than young women), and near equity in postsecondary patterns of completion. Yet educational tracking systems via public-private sectors and curricular differentiation (vocational vs. general education preparation) stratify by class and gender. Other studies identify consequential patterns of differentiation by gender via pathways of selection into academic majors and gendered vocational tracks, with long-term implications for job placement and occupational and earnings attainment. In secondary, postsecondary, and tertiary programs, gender segregation is prominent. Distributions of academic majors are bimodal by gender with science and engineering tracks predominantly male and humanities/social science tracks predominantly female (Wilson and Boldizar 1990). Vocational tracks are even more segregated, channeling trainees into gender-segregated trades like automobile maintenance and electrical and plumbing repair for men and nursing and cosmetology for women (U.S. Department of Education 1994). Persistent inequality in educational attainment extends across all industrialized societies (see Shavit and Blossfeld 1993). Selected comparisons of these differences are provided in Chapter 7. Economic models dominate the educational and occupational selfselection literature. Becker (1985) provides a starting point for this

76

Asynchronous Lives: The Normal Lite Course and Its Variations

perspective with his argument that it is rational for parents to invest more in their sons' than their daughters' education, since the life cycle payoff in earnings among sons is higher. Jacobs (1996) and other researchers criticize this view as, at best, cohort-centric—that is, as relevant to earlier cohorts in the middle of the century following more traditional views gender roles. One of the distinctive features of educational trends in the United States is the predominance of women in the secondary and postsecondary sectors. In 1992, women represented 53.1 percent of all enrolled college students; nearly two-thirds of women who graduated from high school in 1992 enrolled in college the following fall, compared to only 60 percent of men (Jacobs 1996). More recently, parity has been achieved in the progression to graduate (postbaccalaureate) and professional training (Goldin 1995). However, gender segregation is readily observed in educational institutions. For example, a persistent gender gap in education exists with respect to women's presence in top-tier universities. Hearn (1990) and Jacobs (1996) propose a number of contributing factors: the costs of attending top-tier institutions, the dominance of some of these institutions by large engineering programs, and the greater tendency of women to attend postsecondary institutions as part-time students. Their analyses suggest a pattern of cumulative disadvantage in college (subject) preparation and economic resources, including financial aid support for women. In short, educational structures differentially and cumulatively allocate gender groups along different tracks. Selection mechanisms also have operated to differentiate gender experiences and outcomes from education. Based on her study of college cohorts in the 1950s, Goldin (1995) argues that women's self-selection into college has been more motivated by marriage prospects than by human capital investment. Women's investments in college are investments in the marriage market, in which prospective gains are multiplied through marriage. Jacobs (1996) outlines the shortcoming of this argument. Social historians have determined that earlier generations of women college graduates in fact tended to delay marriage while in college. Similarly, the so-called Mrs degree may have had some empirical basis before the 1960s, but after that time considerable survey evidence supports the opposite argument: women's career motives and aspirations have grown more and more specific and predominant. But women's upward trends in educational attainment reflect much more than investment in the marriage market. Modell (1989) argues that succeeding cohorts of men and women alike over the twentieth century have entered adulthood with higher levels of material and cultural resources. Every decade of this century has ushered in fundamental changes in the transition to adulthood. The transition to adulthood

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77

(Hogan and Astone 1986) is the general umbrella concept that refers to the timing and sequencing of a set of events in late adolescence that includes the onset of sexual behavior, leaving high school, going to college, going to work, getting married, becoming a parent. Modell illustrates that these separate events have become more loosely coupled and reordered over time. These normative changes have come about as more young people at succeeding periods have wider cultural exposure outside of the constraints of family, including within the educational domain. Cultural exposure extends normative options and provides a broader range of life choices. Increasing volition in early life thus produces increased differentiation and individualization later. In short, intercohort trends link educational opportunities for wider sectors of the population to an increased deviation from gender-based role transitions in adolescence. The rise in women's labor force participation and the recent improvement in wage ratios among younger subgroups of women are economic outcomes of these general trends. Byproducts of women's attachment to the market include the rising material and cultural affluence for the U.S. middle class which is now anchored by the dual-earner family structure. In addition, Jacobs (1996) argues that education has become a general consumption item as much as a direct investment in human capital. As such, it is becoming a lifelong factor in the construction and reconstruction of the life course and is no longer restricted to the early years.

Gender Segregation in the Workplace

Gender segregation in the workplace follows from patterns of educational segregation and disadvantage, though recent trends point to improvements in occupational integration (Sorensen 1989; Jacobsen 1994; Jacobs and Steinberg 1990). The Gini coefficient of occupational segregation by gender in 1990 was .68, meaning that about two-thirds of women would have to change jobs in order for there to be occupational integration (Bianchi 1995). Over three-fourths of clerical and related administrative support positions were held by women in that year, although women's share of management positions doubled over the previous two decades (Bianchi 1995). Moreover, gender segregation persists across (and can be amplified by) other structural factors, including firm size (Goldin 1990), level of unionization (Krecker and O'Rand 1991), and industrial rates of part-time work (e.g., Drobnic and Wittig 1997). Part-time work itself is a gendered institution. Hakim (1997) has identified three features of part-time work patterns observable across countries over the past two decades. First, part-time work is growing faster than (and in some sectors is replacing) full-time work worldwide. The

78

Asynchronous Lives: The Normal Lite Course and Its Variations

increase in these work schedules over the past twenty years is evident across regulated and unregulated labor markets, associated with women and concentrated in lower wage (service) jobs (Rosenfeld and Birkelund 1995). Second, part-time work is one component of a broader trend toward nonstandardized and atypical work relationships associated with globalization processes and the related decline in the long-term employment contract discussed elsewhere in this book. Work schedules are becoming more diverse. Nonstandard work schedules are moving away from the (standard) fixed five-day/forty-hour hour per week schedule to work schedules that span day and night to accommodate a twenty-four-hour economy (Presser 1998). In 1991, only 32 percent of American workers followed me traditional schedule; dropping the forty-hour schedule criterion causes the percentage of workers with daytime schedules (working less than thirty-five hours or more than forty hours) to increase to a bare majority of 55 percent. When weekend and night schedules are taken into account, the diversity of work scheduling is unambiguous. Part-time work is a critical element of this diversifying schedule. Part-time jobs are almost exclusively filled by women worldwide, although in the United States they are less female concentrated than in Europe. In the United States about 25 percent of women are employed parttime at any given time, whereas in Europe almost half of all working women are in part-time or related nonstandard work. Country-specific percentages range from a low of 8 percent in Greece to much higher levels of 66 percent in the Netherlands, 44 percent in the United Kingdom, 41 percent in Sweden, and 33 percent in Germany (Blossfeld and Hakim 1997a; 1997b). As in the case of education, self-selection, labor market segmentation based on sex typing, and employer discrimination all operate to preserve the resilience of gender structure in the labor market. Self-selection (choice) results from lifelong socialization to gender roles and from immediate life circumstances or events that impinge upon educational arid work decisions. Family experiences become compounded by school experiences. These, in turn, influence gender-related occupational aspiration and preparation (England 1982; 1992). On average, women and men are as segregated in their educational preparation and career aspirations after they complete their education as before (Jacobs 1996).

Workplace Segregation and the Unequal Division of Household Labor

Cumulative socialization experiences also condition women and men to divide household and care-giving roles unequally, even when both

Asynchronous Lives: The Normal Lite Course and Its Variations

spouses wrork full-time (Kalleberg and Rosenfeld 1990). This division has consequences for the continuity, trajectories, and reward levels of their work careers. Although each child "costs" women in wages and pensions, children often signal higher rewards for men. Shelton and John (1996) suggest that the persistence of unequal household labor stems from a number of interrelated factors. Some are specific to marriages and Others stem from societal institutions that influence marriage generally. Among the marriage-specific factors are the relative economic dependence of women on their husbands, the relative marital power among spouses, and the gender ideology of couples that defines the norms regulating household roles. Wider institutional constraints on the division of household labor include such things as tax exemptions to support child care, employer-based benefits such as family leave, flextime, and worksite day care arrangements, and the availability of part-time work, which has countervailing effects. The effects of part-time work on the division of household labor are complex; they serve to penalize or to reward women by constraining them to secondary market roles contingent on household responsibilities or by permitting them to maintain a joint foothold in family maintenance and market participation. The following section of this chapter develops this argument more specifically. Labor market segmentation has its historical roots in the emergence of factory work and office work and in the structuration of internalized versus externalized labor pools (Jacobs 1990). Women and minorities in the private sector are more likely to fall outside or on the margins of protected (internalized) labor market structures with promotional ladders, income mainteniince benefits like pensions, health insurance, arid family leave, and continuing training opportunities inside and outside the employing organization (Kalleberg 1996; O'Rand 1986). Discrimination stems from the residual influence of stereotypes of worker skills and preferences for work held by employers (England 1982; 1992). The structure of these labor markets and their implications for women's late-life chances are discussed further in Chapter 4 and Chapter 5, which focus on the employment system and occupational welfare in the United States Family Pathways; The Breadwinner and Role-Sharing Models

The resilience of gender structure is maintained in the family or household as well as in the marketplace. The traditional family structure that has developed in tandem with market and state institutions in industrial societies has been labeled the male breadwinner mode] (Sainsbury 1996). This model represents the idealized family division of labor in which husbands are the primary wage earners and pension beneficiaries, and

79

80

Asynchronous Lives: The Normal Lite Course and Its Variations

wives are the primary unpaid caregivers who either do not participate in the labor market or participate only as intermittent, secondary, or marginal workers. As such, wives are dependent on their husbands for economic maintenance throughout the marriage—and even after the marriage in the case of widowhood. This structure has been sustained through the interplay of market, household, and state institutions represented, respectively, in the market wage system, the division of household work, and government policies that treat family members differently. The market wage system has its roots in the so-called family wage, which goes back to the late nineteenth century and early union efforts to increase worker wages and employers' efforts to stabilize the workforce and stave off unionization (May 1982; Jacoby 1985). Tine family wage was predicated on the assumption of the male breadwinner role. It is well illustrated by Henry Ford's introduction of the "five dollar day" in 1914, which was a conscious effort to improve production and achieve stability through profit sharing and family policy. He offered this bonus to married men who "should live with and take good care of their families" (Ford 1925, 129). Along with the wage offer, he also institutionalized "welfare work" within the firm by creating a personnel division ("Sociological Department") to look after the welfare of workers' families, including providing legal services for credit and mortgage assistance. Welfare work was recognized as a widespread practice among employers by a government report in 1916 which defined it as "anything for the comfort and improvement, intellectual and social, of the employees, over and above wages paid, which is not a necessity of the industry or required by law" (see Jacoby 1985, 49-52). The family wage and welfare work have persisted in various forms over most of the twentieth century in the United States. They have evolved as compensation packages to workers providing wages, benefits, and forms of job security (seniority, tenure) developed through management-union accords and in response to government taxation and social insurance policies (Cornfield 1990). These packages are unevenly distributed across labor markets and are highly associated with industrial and occupational sectors that are male dominated. Employee benefits evolved from "welfare work" (Jacoby 1985) before World War II into "hidden payrolls" during and after World War II that were developed in the context of wage controls. Federally imposed limitations on wages encouraged employers during the 1940s to develop "fringe benefits" for their favored workers that allowed them to skirt wage controls. By the mid-1950s, in an environment of growing union-management accords, tax legislation emerged to provide incentives to employers to offer selected fringe benefits, including pensions, to workers. These offers were most likely to be made to union-covered workers and to protected labor

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markets-—usually referred to as internal and occupational labor markets—composed of employees with long-term employment contracts and access to career ladders (Kalleberg 1996). The overwhelming majority of workers covered by protective fringe benefits were male (O'Rand 1986). By the 1990s long-term employment contracts and career ladders are disappearing for large segments of the labor force, just as the proportion of women in the labor force and across occupational sectors approach parity with men (Kalleberg 1996). Long-term arrangements are being replaced by contingent workforces, which consist of part-time or contract workers who are not usually eligible for extensive fringe benefits. The contingent workforce is heterogeneous. High-level contract workers, like accountants or computer software specialists, often negotiate generous arrangements that permit them to provide for their own pension and health care needs. Low-level workers are typically part-time service or clerical workers without market power and without benefits; the latter are more likely to be women (Drobnic and Wittig 1997). This segmentation of part-time work is gendered and congenial with both the traditional breadwinner model of the family and the occupational segregation system of the workplace. State and public structures also reward or otherwise reinforce these traditional family arrangements through taxation, social insurance, and public policies. Skocpol's (1992) historical analysis of the origins of the U.S. welfare system distinguishes collaterally developing "maternalist" and "paternalist" policies that have produced gendered public support structures; "mothers" and "soldiers" typify the categorization of sets of public policies earmarked for different groups based on their family or work roles. Achenbaum's (1986) history of the U.S. Social Security System from its establishment in the 1930s through the early 1980s depicts a sequence of amendments and extensions of the system that reinforces its contributory market base yet incrementally extends benefits to formally defined vulnerable populations outside of the market system (particularly dependents and survivors of workers, the infirm and disabled, and the poor). Social Security was enacted to protect retired workers; later extensions of the act were clearly designated for dependents and survivors of workers first, and then for indigent and marginalized persons who fell outside of the employment system. Hence the system has both reproduced the breadwinner model and provided an ameliorative or equalizing balance to the market's capacity to deliver "comfort and improvement" to workers and their families. In effect, incremental changes over the history of U.S. welfare policies have reinforced gender categories. Orloff (1996) further characterizes the U.S. welfare system as a two-track system of welfare in the United States—a contributory social insurance

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track for workers and a family-related, means-tested track for nonworkers and dependents—that is highly correlated with gender. Income and social security tax structures also reproduce this model, by penalizing nontraditional family arrangements and rewarding traditional structures (Sainsbury 1996). The adoption of the logic of community property after World War 11 changed the unit of taxation from the individual to the family. Following this logic, tax schedules were developed that privileged marriage in general, and single-earner or primary-secondary earner couples specifically; dual-worker (career) couples with more equal earnings were penalized. This structure persists. This income tax structure has been accompanied by similar privileging in the Social Security benefit system that favors spouses in traditional marriage relationships over single individuals and dual-career couples. Table 3.1 is taken from Burkhauser and Smeeding's (1994) calculations from the Social Security Administration Office of the Actuary, June 1994, benefits database. The table assumes that husbands and wives in both couples are age 65 in 1995 when they retire and that the workers began their earnings history at age 22. The one-earner couple example assumes that the husband has earned the taxable maximum over his career and that two-earner spouses have each earned one-half the taxable maximum. The latter assumption is a stringent one when considering the pervasive wage inequality in the market. However, the two ideal types of couples define the extremes of the benefit system and exemplify the breadwinner role ideology. They both pay the same amount in taxes, but (1) the one-earner couple receives higher benefits as retirees and (2) the survivor of the one-earner couple receives a higher benefit as widow.

TABLE 3.1 1994

Couple One earner Husband Wife Total Two earner Husband Wife Total

Benefits Payable to Couples with Identical Total Earnings Through

Average Lifetime Earnings

Social Seen rity Benefits Couple

Survivor

$60,600 — 60,600

$14,400 7,200 21,600

14,400

30,300 30,300 60,600

9,636 9,636 19,272

9,636

Survivor Benefit/ Couple Suririvor

2/3

1/2

SOURCE: Data from the Social Security Administration Office of the Actuary, June 1994, with calculations reported in Burkhauser and Smeeding 1994.

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Finally, the division of household work both defines and reproduces the breadwinner model of the family. Neoclassical theories of home economics argue that tine traditional family structure is functional in the division of labor, since it assigns complementary roles to the wage earner and caregiver (Becker 1985). The caregiver role consists of unpaid time allocated to household, family, and kin care. Research on changing allocations of market and home-work time reveals the persistence of the breadwinner model even in households with full-time worker couples. Among dualworker couples, women assume between two-thirds and fourth-fifths of all caregiving and housekeeping tasks (Shelton and John 1996). The level of household task sharing appears to vary according to the couples' earnings gap, level of education, and egalitarian attitudes (see Presser 1994). Smaller differences in earnings (as well as relatively equal higher earnings) are associated with more household task sharing. Similarly, a husband's higher education is related to more household work and a wife's higher education is related to less household work. Egalitarian attitudes toward joint role sharing among couples, which appear to be highly associated with educational level, also appear to influence the division of household labor above and beyond the effects of education and earnings. Finally, the most recent studies suggest that the spread of nonstandard work schedules may also affect the division of household work, above and beyond the effects of education, earnings, and gender role ideology. Presser's (1998) analysis of work and household task schedules reported in the 1991 Current Population Survey of 55,000 households finds that couples with nonstandard work schedules are constrained to share household tasks, including child care, more than those with standard schedules. These schedules confront problems with day care and night care that are not anticipated by traditional family or workplace institutions. In sum, the life courses of men and women are organized similarly by educational and labor force schedules. Resilient institutions attached to gender and family roles serve to differentiate men's arid women's experiences, although recent global trends are eroding these institutions. Succeeding cohorts across countries are confronted with new challenges and choices in the construction of their life course. These choices are constrained by educational and workplace opportunity structures. The breadwinner model of family structure, which continues to be reinforced by institutional arrangements emanating from the workplace and the state, is being challenged by the press of globalization processes and demographic changes related to population aging, educational attainment, and women's labor force participation. Alternative family models have spread in recent decades. Dual-earner couples, single-parent families, single persons, and cohabiting house-

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holds are growing faster than the traditional breadwinner unit. Unmarried-couple households tripled between 1960 and 1990; by 1990 twothirds of these households included children (Goldscheider and Waite 1991). Approximately six out of every ten married-couple families in the United States are dual earners—a 33 percent rise in only two decades. Together, dual-earner couples and unmarried couple households account for most households with children in the 1990s (Bianchi 1995). These alternative forms of family arrangements condition men's and women's patterns of market and household labor. Cross-national comparisons of family formation in industrial societies provide compelling evidence for the spread of the role-sharing model. Blossfeld (1995a) has compiled a number of studies from continental European countries, the United Kingdom, and the United States on changing gender roles. His principal hypothesis is that the increased educational attainment of women across countries has had a "liberating effect" on the timing of their entry into marriage and motherhood, on the division of labor in the household, and on their labor force attachment. He does not argue that the breadwinner model has been wholly superceded by rolesharing, but he notes the strong upward trend in the direction of the latter. The case of Sweden sets the standard of "liberation" by historically demonstrating the earliest trend away from traditional marriage immediately preceding and following World War II. Declines in marriage rates and fertility were earliest and steepest in Sweden. Blossfeld (1995a; 1995b) argues that economic factors were less important at this time and changing cultural values and religious traditions more important. Cultural values that emphasized egalitarianism and individual freedom in public life and secularization in private life encouraged processes of individualization that eroded gender structure. Over the following decades, state institutions have largely "sponsored" this liberation through generous day care and family leave policies, including the largest system of public day care facilities in the world (Sainsbury 1996). Other countries fall well below Sweden in this respect and reflect piecemeal approaches to supporting role sharing with integrative work and family policies (Kalleberg and Rosenfeld 1990). Germany lies at the opposite pole from Sweden. It adheres more closely to the breadwinner model, and its female labor force participation patterns, which are very low, reflect state policies that operate to keep women within the household. The United States is located between these two systems. These patterns receive more attention in Chapter 6 and Chapter 7. However, across countries a significant countervailing trend is notable—and highly relevant to the purposes of this study. An observation from Blossfeld's collection of cross-national studies (1995a; 1995b) is that although educational opportunities have expanded for men and women

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alike and have presented them with more individualized options for work and family formation, educational homogamy has also increased. Assortative marriage patterns pervade industrialized countries resulting in persistent social and economic inequality. Blau's (1998) recent study of trends in women's well-being over the past three decades (cited in Chapter 1) confirms these observations for the United States. She reports that differential educational advantages stratify women's fortunes in the marketplace and through homogamous marriage. Men's fortunes are also stratified. According to Oppenheimer (1994), the trends in women's labor force participation and marriage patterns operate to the disadvantage of less educated, underemployed, and unemployed men. Declining economic opportunities for subpopulations of men marginalize them in the workplace and constrain their marriageability. This is perhaps most starkly revealed among the urban poor in the United States (Wilson 1996). Thus men's and women's commensurate role investments in the workplace and the household are increasing and challenging the male-breadwinner model with an alternative role-sharing model. The role-sharing model indicates a decline in the gender structuring of the life course as women and men follow new pathways through work and family. It may also reflect the rise of the individualization of the life course, wherein men and women increasingly share universal experiences in education, work, and family, but not necessarily at the same time in their lives and with the same resources and rewards. Asynchronous Lives

Men's and women's lives are challenging the age-segregated paradigm of the life course based on age-graded, sequential roles over the life span in spite of the resilience of gender structure in the family and the workplace in the United States and other countries. In Figure 3.1, the age-integrated model of the life course in the second panel presents an alternative model. This model explicitly suggests that events and transitions within the domains of education, work, and leisure can occur independently of age; implicit in this model is the notion that family events are also independent of age and can occur and recur across the life span in a similar fashion (Riley and Riley 1993; 1994; Riley 1998). The model also proposes that as a result of age integration, roles across domains are more interdependent over time. Market time and domestic time are becoming more integrated and simultaneous over the life course, since men and women increasingly allocate equal shares of their lifetime to co-occurring, as opposed to sequentially arrayed, roles as workers, spouses, parents, students, and children. Market time and domestic time are thus less gender segregated and decreasingly age segregated.

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Nowhere is this more evident than in the labor force behavior of married women over the past four decades (Blau 1998; Goldin 1990) and, more recently, in the behavior of women with young children. Mothers with children under the age of 6 increased their labor force participation patterns between 1950 and 1995 by a factor of five (from 12 percent in 1950 to 62 percent in 1995) (Hayghe 1997). Bianchi (1995) argues that the latter shift reflects nothing short of a normative transformation: a change so fundamental that the right of young mothers to remain at home is no longer taken for granted. Rather, the pressures are to maintain these roles simultaneously. She reports that this change is spreading to other developed countries as well. Participation in multiple roles over time, simultaneously a n d / o r sequentially, is a fundamental source of variability and inequality in cohorts (O'Rand and Krecker 1990). The variability in the timing of transitions across these activities produces diversity in life scheduling and in social and economic outcomes over the life course. The timing and outcomes of events in one domain (say, education) influence transitions in other domains (family and work). With age, the possible array of sequences of timing and influence defies easy calculation and classification. Longitudinal studies of individuals moving through critical life transitions, such as from school to work, school to marriage, marriage to work, work to retirement, and so on, have uncovered such diversity in sequences that they appear to be "disordered" (Rindfuss, Swicegood, and Rosenfeld 1987). But closer examination of life course sequences is revealing that the variability observed is not so much "disordered" as it is asynchronous. Role domains are regulated by different timetables based less on age than on institutionalized status sequences and durations. Timetables introduce temporal contingencies that regulate the conduct of specific roles and that may be asynchronous with other role schedules and result in role conflicts or change. Instances of asynchronous timetables in the family and work domains abound, especially among women who have exhibited more heterogeneity in their management of multiple roles (Moen 1994). For example, since some women tend to enter their "careers" (or longest jobs) later in their lives than men as a result of earlier caregiving demands, their pension participation schedules tend to be delayed when compared to men's, leading some women to retire later from these jobs rather than earlier. Other women who enter their work career earlier and do not interrupt it for family obligations retire earlier (Ruhm 1990; O'Rand and Henretta 1982b; Henretta, Chan, and O'Rand 1993). The asynchronies involved in this example stem from multiple "clocks" that regulate life course transitions in work and family domains. Han and Moen (1998) study retirement in the same vein as "clocking

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out," that is, as a multiplex process governed by multiple institutional schedules and by the diverse "pacing" of individual biographies, which leads to variability in the timing of retirement. They argue that individual biographies intersect with institutional timetables and yield diversity in retirement. In Chapters 4 and Chapter 6, the institutional timetables embodied in public policies and in the employment sector will be explored in detail as they relate to retirement schedules and labor force participation patterns worldwide. Studies of Asynchronous Lives and Inequality

In the remainder of this chapter, we will review three patterns of variability in role transitions in middle and late life that illustrate age integration and the mutual contingency of roles across work and family domains. The areas include patterns of midlife reentry into education, marital dissolution associated with education, labor force participation, and family life cycle, and interdependent family-work pathways to retirement. Besides illustrating variability and asynchrony, these patterns also demonstrate how inequality emerges from the interaction of institutional and biographical clocks.

Education in Midlife

The first domain of interest is education. Two major assumptions in the stratification and life course literature are that in the United States, major transitions in education and training end early in adulthood and that postsecondary or postcollegial skills training is employer provided. But recent trends in aggregate patterns of job mobility in midlife appear to be correlated with midlife reentry into non-employer-provided formal education and vocational training for some groups (Elman and O'Rand 1998a, 1998b). Increases in job exit and job shift patterns among middleaged workers appear to be motivating more workers in this age-group to return to formal education or to some form of vocational training. Economic restructuring and technological changes calling for the upgrading of skill levels are among the structural conditions underlying these trends, which are also implicated in labor force participation patterns generally and in retirement scheduling specifically (see Chapters 6-7). Women have always constituted a substantial fraction of adults returning to (or continuing in) school. In 1991 over one-third of college students were over age 24. Women represented nearly two-thirds of those enrolled. But even older men and women were enrolled in substantial numbers that year. Elman and O'Rand (1998a) use adjacent October Supplements of the Current Population Surveys in 1990-1991 merged with the

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Dictionary of Occupational Titles and selected aggregate labor statistics to study midlife job shifts and educational reentry patterns among persons aged 45-61. The study finds that about 2 percent of these middle-aged and older workers participate in vocational training. The national estimate of the on-the-job training ever received across all age-groups is 10 percent; therefore the 2 percent figure is substantial. Women are more likely to reenter into both educational settings. Elman and O'Rand (1998a) observe significant relationships among gender, educational background, and entry into vocational training. Reentry increases with educational background up to grades thirteen to sixteen for both men and women and with women's reentry rates higher. However, men with backgrounds of grades seventeen or more are about twice as likely as women to return for training. These findings suggest a status maintenance process in which earlier educational attainment translates into continued education and training and later life. Multivariate logistic analyses controlling for occupational status, work-related skills (computer use), and industrial location provide support in this study for both the status maintenance and cumulative advantage processes. After controlling for the effects of earlier educational attainment, more highly skilled and advantaged workers are likely to reenter vocational training in midlife, thus increasing their market power relatively with age. Finally, besides gender, widowed status also increases the likelihood of retraining (Elman and O'Rand 1998a). Changes in family roles are linked to changes in work and educational roles over the life course and not only in early adulthood. Asynchronies develop over time and, in the case of educational reentry in midlife, demonstrate variations from the normal life course defined by the age-differentiated model in Figure 3.1. These results reveal the multiple contingencies of this exceptional midlife pattern. A change in multiple role participation precipitates educational reentry. In the case of women between the ages of 45 and 61, who are at a life stage usually associated with decreased household role demands, the onset of widowed status may similarly produce role changes in other domains—in this case a shift from work to further schooling. Educational reentry at midlife is an age-integrated role transition that, according to some sources (Office of Technology Assessment 1986), is expected to rise over the next few decades. Organizational restructuring and changing skill demands in the workplace provide incentives for later education, assuming local opportunity structures for retraining. Also, given rising levels of early educational achievement across successive cohorts and the triggering effects of changes in family roles related to marital dissolution through widowhood or divorce, this pattern may become more prevalent.

Asynchronous Lives: The Normal Lite Course and Its Variations

Marital Dissolution in Middle and Late Life

The case of marital dissolution in midlife provides a second example of life course variability, age integration, and relational and temporal contingency and asynehrony. In Chapter 2, trends in family patterns—especially the declining centrality of marriage over the life course—were reviewed iii the context of intercohort trends. Separation and divorce are more widespread events than midlife educational reentry. Between onehalf and two-thirds of all first marriages are likely to end in divorce or separation (Castro-Martin and Bumpass 1989). Although most divorces occur in the first few years after marriage, their temporal incidence varies considerably. The dissolution of marriages of longer duration among middle-aged populations provides the opportunity to examine several topics of interest to us here. First, the causes and consequences of divorce have implications for patterns of inequality. The major hypotheses predicting marital disruption center on the countervailing effects of two economic characteristics. The economic independence hypothesis predicts that, all else equal, women's relative economic independence, usually measured as wages arid market participation rates, will increase the risk of divorce. The economic status hypothesis, on the other hand, predicts that couples with higher levels of income and wealth are likely to lose more by divorce; therefore higher economic status measured as family income and net worth or homeownership will decrease the risk of divorce. Women tend to experience greater drops in relative economic status following divorce than men, especially in marriages of longer duration. Second, the examination of divorce in marriages of longer duration provides the opportunity to observe a nonnormative transition regulated by relational and temporal contingencies. Family development theory views the family as a changing configuration of interdependence among family members over time that is organized by processes of investment, commitment, and solidarity (Mattesich and Hill 1987; Aldous 1978). Longer marriages have survived earlier periods of higher risks for divorce and reflect partners' growing investment in children, property, and each other over time. One of the risks in the survival of marriages is maturing children. A U-curve of marital satisfaction over the marital career depicts a trajectory of marital satisfaction that begins at a positive level, declines with the appearance and maturing of children, and finally improves with the onset of empty nest. Accordingly, the survival of a marriage is, at least partially, a function of the interaction between the duration of a marriage and its configuration over time. Hiedemann, Suhomlinova, and O'Rand (1998) use the National Longitudinal Surveys of Mature Women between 1967 and 1989 to apply a

89

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family development perspective to midlife patterns of marital disruption. They use hazards models to examine three hypotheses. Two are summarized above as the economic independence and the economic status hypotheses; the first predicts an increase in the rate of divorce and the second predicts a decrease in the rate of divorce. The third hypothesis they examine predicts an increase in the rate of divorce with the onset of empty nest in marriages of shorter duration. The logic of the third hypothesis is drawn from family development theory, which argues that marriage is a duration-dependent process that is driven by the changing interdependence of marital partners over time. Hiedemann and colleagues find support for all three hypotheses. In the case of empty nest, the pattern that emerges can be summarized as follows. For couples married twenty years, the last child's departure from the household triples the risk of marital disruption. They also find that in marriages of this duration the youngest child's eighteenth birthday increases the risk of marital dissolution by 56 percent. However, for marriages that have lasted over thirty years, the youngest child's departure or eighteenth birthday decreases the risk of marital disruption. Divorce has especially deleterious effects on older women's economic security, if they spent limited time in the workforce or worked in jobs not covered by pensions and other income maintaining benefits. Access to former spouses' Social Security benefits legislated under the 1983 Amendments to the Social Security Act has not solved problems of income security for this group. The divorced wife's Social Security benefit is one-third of the Social Security income of the retired couple that includes her former spouse and his new spouse. Also, because most women gain access to health insurance through their husband's group insurance plans, they are doubly vulnerable to poverty or near poverty. Divorce £ind widowhood result in losses of income, assets, health insurance coverage, and quality of life. The risk of falling into poverty after divorce has been the subject of considerable research and controversy. Estimates of women's income loss after divorce range from 21 percent to over 70 percent. Recent conservative comparisons of income loss among divorced women who were followed in the Panel Study of Income Dynamics, who were married ten years or less and eighteen years or more respectively, suggest that women from longer marriages lose relatively more income. Across predivorce annual family income categories, divorcees from intermediate to high predivorce income categories experienced net losses from divorce, whereas those from the lowest income category (<$20,000) actually gained. Women married more than eighteen years with predivorce incomes of over $40,000 had the highest relative loss—58 percent (Hoffman and Duncan 1988). Thus divorce hurts women and especially older

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women with greater sustained dependence on their former husband's income. Their risks for poverty in old age are high. Social Security policy provides divorced older women with spouse entitlements to their former husband's retirement benefits, given that the marriage lasted ten years or longer. This policy serves to maintain these women's dependent status and their risks for poverty (Burkhauser, Duncan, and Hauser 1994). Earnings sharing proposals that have received much attention over the past two decades advocate that at the time of marriage, women's entitlement to their marital investments should be formally designated as an equal share of total family income in the form of earnings credits. Upon divorce, this share would be clearly established and would no longer be contingent on the former husband's subsequent work record or status. Family-Work Pathways to Retirement

Family development processes produce relational and temporal contingencies that also influence the patterns by which older individuals and couples retire. As Chapters 2, 4, and 5 make clear, workplace and retirement policy contingencies have strong regulatory effects on the timing of the retirement transition and on retirement income. However, family organization exerts independent influences on patterns of labor exit, especially for women whose lifetime family role of caregiving carries over into late life and affects their retirement patterns and economic status as well. This section will examine three major family pathways to retirement. The first pathway consists of worker couples' joint retirements. The second and third are the individual pathways of dependent spouses and survivors. Both parties among worker couples approach retirement with independent work career contingencies influencing their own and each other's retirement. Spouses without work careers or with limited work based on their own careers retire as derived beneficiaries. Finally, survivors (widows) who usually begin their retirement either as retired workers or as dependent spouses, move into new pathways that often reorient their lives. Among middle-aged populations dual-earner couples have been the modal family type since the early 1980s (Bianchi 1995; Goldin 1990). One consequence of this has been the increase of variously synchronized labor exit patterns in later life often referred to as "joint retirement." By joint retirement we mean the sequentially contingent rates at which couples follow each other or retire simultaneously from the workplace. Family development theory frames this phenomenon for us quite effectively. Dual-earner couples make up a particular configuration of interdependencies and investments, a special "family economy" of long

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Standing. As in the study of marital dissolution among marriages of longer duration discussed above (Hiedemann, Suhomlinov and O'Rand 1998), the retirement transition or pathway is conditioned by the history of the marital union and its evolving structure. The lifetime work transitions of wives are a major source of variation between families over time. In addition, later family formation or reformation through remarriage reconfigures social relations and temporal contingencies. Goode's (1960) classic essay on the theory of role strain emphasizes that the role relationships reflected in marriages are founded on early bargaining sequences or quasi-contractual arrangements that carry an enduring influence on subsequent role behaviors. Like other forms of social organization, marriages are path dependent—early role configurations tend to condition later ones. Until the past decade or so, marriages could more easily be categorized as following either gender-segregated or joint (gender-integrated) pathways in the adoption and maintenance of market and domestic roles. Couples who initiated their marriages as dual earners—and especially as dual-career couples—could thus be expected to approach retirement in ways consistent with early bargains. On the basis of this theory, Henretta, O'Rand, and Chan (1993) study the effect of joint role investments on the sequentially contiiigent rates at which couples follow each other into retirement. They use the 1982 Social Security New Beneficiary Study. Their major findings are consistent with family development theory. The rates at which husbands and wives follow each other into retirement are highly contingent on the mix of early market and domestic roles in the marriage. Wives who displayed longer attachments to the workplace during their child-rearing years follow their husbands more quickly into retirement than others. Similarly, husbands whose wives displayed higher joint market and domestic investments in the early years of their marriage follow their wives more quickly into retirement. A second analysis using the New Beneficiary Study applies the same theoretical model but adds variables that measure current household and family composition in greater detail in order to capture domestic role demands prior to retirement (O'Rand, Henretta, and Krecker 1992). Multinominal logistic regressions are applied to estimate the effects of early joint domestic and market role investments, current household and family composition, and workplace contingencies on the relative likelihood that couples will retire jointly in contrast to (1) both remaining at work, (2) only the wife remaining, or (3) only the husband remaining. The results show that early joint market and domestic role investments by wives are strongly associated with joint retirement, but that net of these early role effects, current household and family demands influence husbands and wives in opposite directions. For example, the presence of

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other related females in the household (either siblings or parents) strongly encourages wives, but not husbands, to leave their jobs. Relatedly, the smaller the size of the household, the higher the likelihood that wives will remain at work. Caregivers

Informal or unpaid caregiving is a feature of the breadwinner model of the family in industrial societies (Sainsbury 1996; Orloff 1996). The division of household labor has been most imequal in the case of child and kin care in the family. Women bear the overwhelming share of these responsibilities across families (Shelton and John 1996) and over the life course when childcare shifts to elder and spousal care for women (U.S. Department of Health and Human Services and the Administration on Aging 1998). Work and family histories are tightly intertwined in the lives of aging female cohorts whose capacities to accumulate assets and retirement savings are limited by their family roles as caregivers to the young and the old over their lifetime. About three-fourths of all informal caregivers are women. Although the average age of caregivers of the elderly has been estimated to be 57 years, roughly one-third of caregivers are over 65 (Pepper Commission 1990). The presence of other adults in older family households often introduces new caregiving demands. The "usual" caregiver for an older man has been identified as "his elderly wife who is in her 70s and in fair to poor health herself." The caregiver for an older woman is typically her adult, middle-aged daughter who confronts competing responsibilities from family and employment (Horowitz 1985). Both their roles as caregiver go uncredited in pension benefit calculations and tax schedules for retirees. In addition, their work careers often do not benefit by pension and health coverage, leaving them at high risk for poverty. Several studies have documented the average dollar loss in occupational pension and Social Security benefits from child care and other kin care (e.g., O'Rand and Landerman 1984). Calculations from more recent studies reveal that women incur higher costs when leaving jobs later in their lives to care for others who are often not their children, but their spouses, parents, or siblings. And women of low and moderate earnings pay the highest price in the depression of their benefits, especially when coupled with acceptance of early, reduced Social Security benefits (Kingson and O'Grady-LeShane 1993). Informal caregiving has also become an irreplaceable component of health care delivery in the United States. Estes, Swann, and their associates (1993) provide a critical account of the emergence of "the informalization of care" in the United States with the advent of managed health

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care over the past decade and a half. Paradoxically, managed care has brought about the simultaneous bureaucratization and informalization of health care. The bureaucratization has rationalized examination, diagnosis, and treatment practices and superceded the traditional discretionary practices of health professionals, including physicians, following a logic of efficiency. Informalization has resulted as patients moved out of formal care as quickly as possible and into the hands of family members or less skilled community caregivers. Data from the National Survey of Families and Households in 1987 and 1992 and the Informal Caregivers Survey, a component of the 1982 and 1992 Long Term Care Surveys of the Department of Health and Human Services, reveal the pervasiveness of informal caregiving across age-groups in the population and its consequences for women as both caregivers and care receivers over their lifetime (Department of Health and Human Services/Administration on Aging 1998). A summary of several findings includes the following. In 1992 approximately one-third of the U.S. population (52 million persons) were providing informal care to some (nonchild) family member or friend. The average age of all informal caregivers is 43 years. Adults in their 40s and 50s are twice as likely as those far younger (in their 20s) and those far older (in their 70s) to be providing unpaid caregiving. Up to age 70, women are far more likely to provide caregiving. Nearly two-thirds of all caregivers (men and women alike) are also employed. Most persons with functional disabilities live in the community and require daily assistance from informal caregivers. The growing burden of caregiving to the elderly is being carried by older women. Over one-third of caregivers are over the age of 65. The growing percentage of women over age 75 who are caregivers is particularly striking, since so many of these women themselves suffer from health decline and increased frailty. Longer life expectancy and delayed childbearing among younger cohorts suggest that an increasing proportion of women will be in the position of providing care to both children and elderly parents—and over sustained periods (Stone, Cafferata, and Sangl 1987). This prospect promises to introduce more asynchronies in the lives of aging cohorts, as these often unexpected or unplanned for responsibilities of uncertain duration introduce added contingencies to the normal life course. Dependent Spouses

Dependent spouses include wives whose lives are highly synchronized with their husbands' lives. Their retirement among past cohorts has been strictly scheduled by their husbands' labor force withdrawal, since they do not have independent sources of retirement income from their own work. They and their spouses are likely to be each other's caregivers in

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old age. And, given expected differential longevity, their dependency extends beyond their husbands' lives. In 1970, about half of women aged 62 or over received Social Security benefits based at least partially on their own work record. That is, they did not depend solely on their husbands' Social Security benefit. By 1996, slightly over 60 percent of women did not depend solely on a husband's benefit (Ferron 1997). Married women who never worked under covered employment are derived beneficiaries, entitled to 50 percent of a husband's benefit as wives. Women who have earned a benefit less than half of their husband's are dually entitled as workers and spouses. They receive a full benefit based on their own earnings plus the difference between their own retired-worker benefits and 50 percent of their husband's. Widows receive a benefit equal to the higher of their own earned benefit or their deceased husband's earned benefit. Women who retire on their own workers' benefits receive, on average, approximately three-fourths of men's benefits (Social Security Administration 1997). Meanwhile older women who have never worked or who retire on their husband's Social Security account as spouses on average receive higher benefits than women retired as workers because of their husband's higher income. The redistributive policy that accounts for this difference is captured, in part, by Table 3.1, which reveals the bias in benefit allocations in favor of traditional marriages. Survivors The death of a spouse or life partner is perhaps the most significant loss experienced in old age. It is a relational contingency in families with implications for economic inequality in old age that probably exceed those faced by midlife divorcees. This transition is experienced primarily by women, who vary greatly in age and economic circumstances. The survivor of the single-earner marriage receives 67 percent of the couple's total Social Security benefit, whereas the survivor of the twocareer marriage (in which spouses had equal earnings) receives 50 percent of the couple's total benefit. Both benefits have been the targets of criticism by policy analysts. Recent estimates suggest that a floor of 80 percent of the couple's combined benefit, rather than 67 percent, is currently consistent with poverty equivalence measures (Burkhauser, Duncan, and Hauser 1994). Current projections indicate also that the average survivor lives approximately seventeen years in this status. Over this period widows grow more and more dependent on Social Security as their principal—if not sole—source of income (Hurd and Wise 1994). Policy concerns over widowhood are not usually targeted at this nonmonolithic group, but at older widows who depend on Social Security and Social Security-based survivors' benefits exclusively. Survivors'

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benefits from non-Social Security sources receive less attention in part because they cover a minority of older women. Figure 3.2, which is based on the Matched Files of the March Current Population Surveys between 1989 and 1995, reveals the proportion of women aged 60 and over who receive any non-Social Security survivors' benefit. Dependency on survivors' benefits clearly increases with age, but it remained relatively stable over the 1990s with only a slight downward trend until 1995, when women aged 70+ show a large decline. Age-group shares are also relatively constant until the 1995 declines. The extent to which these declines reflect permanent decreases in women's derived beneficiary status and increases in their status as primary beneficiaries on their own Social Security accounts or as beneficiaries of Supplemental Security Income cannot be judged by these data. The mix of non-Social Security survivors' benefits that provide the primary sources of income to this group has also remained relatively homogeneous and stable over the period (see Figure 3.3). Occupational pensions (company plans) serve as the principal non-Social Security component of survivors' income packages. Over 40 percent of survivors' income comes from these plans. The addition of government and military and railroad pensions brings the total dependency on occupational welfare derived from spouse's work to between 65 and 70 percent over the period. Conclusion

In conclusion, gender structure and age structure have both persistent and diminishing influences on the organization of men's and women's lives. Market, state, and family organizations differentiate gender roles across life domains and apply timetables that regulate entry, duration, and exit patterns across roles. Educational institutions, family life cycles, and workplace career and retirement schedules have set the boundaries of the normal life course. These boundaries have produced two structures: one based on age and the other on gender. Yet long-term demographic shifts are eroding the boundaries set by gender and age and resetting the clocks that time the life course. Multiple role incumbency by individuals, as well as role sharing between couples, introduces asynchronies in the life course leading to increased differences between life courses. Asynchronies in work time and family time can lead to variations in lives that do not readily fit with age-differentiated role structures. Delayed marriage, midlife educational participation, divorce at empty nest, arid joint retirement are all life transitions that do not fit easily with the idealized model of a triphasic "normal life course." Instead, these patterns suggest that variations in the life course are increasing and producing more individualized and unequal lives.

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4 Pathways to Retirement: The Timing of Retirement

Retirement is now a common feature of the socially constructed life course in industrialized countries. Though decline in older workers' labor force participation rates appears to have halted in the United States, retirement today arrives earlier than in the past. It also occurs in very heterogeneous ways. Early and highly variable retirement form the twin themes of this chapter. Retirement is more common and occurs earlier as a result of two changes during the last half century. First, the development and increasing adequacy of institutionally supported retirement income has made retirement more widely available arid has changed its meaning. Although the earliest firm pensions began in the nineteenth century (Graebner 1980) and Social Security retirement benefits were first paid in 1940 (Altmeyer 1966), the development of adequate retirement income sources for large numbers of workers is much more recent. At the end of World War II, only 10 percent of industrial workers were covered by firm pension plans (Jacoby 1985);today two-thirds of all workers and over three-quarters of workers in manufacturing are covered (Short and Nelson 1991). Social Security benefits increased much faster than prices during the early 1970s (Hurd 1990; Ippolito 1990) and became a more important source of retirement wealth. Before the gradual development of these two income sources, older workers stayed in the labor force longer. When workers could no longer continue in their regular jobs, employers sometimes provided ad hoc arrangements involving reduced wages to adjust for lower productivity or moves to less demanding jobs (Graebner 1980; Ransom and Sutch 1986). Yet some workers did retire in the early part of this century; Carter and Sutch (1996) estimate that one-fifth of older men retired before death. Retirement was financed by moves into self-employment during the 99

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work career that allowed accumulation of assets (Carter and Sutch 1996), support from children (Costa 1998), money saved from their own income (Gratton 1996), and during some periods, receipt of Civil War pensions (Costa 1998). With the exception of the veteran's pensions, retirement in the nineteenth and early twentieth centuries was an ad hoc arrangement that was individually financed or based on individual arrangements with employers. Retirement differs today because it is more clearly defined by social institutions such as Social Security and occupational pensions and is more universally experienced. A second factor making retirement a more universal experience is reduction in the gender-based division of labor. The increasing levels of midlife labor force participation among successive cohorts of women mean that retirement institutions are relevant to more women than in the past, and labor force participation patterns are increasingly defined by age instead of gender (Paukert 1984). Through these changes, retirement has become a normal and expected part of the age-based life course. Still, retirement is not a uniform experience. For example, retirement is not a simple one-step transition from work to nonwork for a significant minority of older workers (e.g., Quinn and Kozy 1996). This minority switches to part-time work or exits the labor force only to reenter, usually within a year or so. Further, a significant minority of older workers exit work much earlier than they had expected because they lose their job, experience a serious health problem, or accept an early pension incentive offer. Such intracohort variation has always existed, but there is suggestive evidence of increasing heterogeneity in late-life work exit (e.g., Elder and Pavalko 1993; Hayward, Crimmins, and Wray 1994). Hence the boundary between work and retirement may have become less distinct for some older workers (Kohli and Rein 1991). Retirement marks a transition between work and nonwork and has two important effects on postretirement status. It transmits economic status across the boundary so that patterns of postretirement inequality mirror earlier ones. In addition, the process of retirement may create new patterns of inequality. We concluded in Chapter 2 that the evidence indicates strong continuity between pre- and postretirement status, but there is an increase in within-group variability. Variability in the way retirement occurs reflects earlier careers; in addition, the process has independent effects on retirement status. The uncertainty of career endings among persons similarly situated will have the qualitative effect of introducing some increased variability in the retirement process and postretirement economic status. For example, the uneven and unanticipated effect of societal changes, such as the relative decline in manufacturing industries that leads to the early retirement of some workers, and the ef-

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fects of individual events, such as poor health or family demands, may create inequality among persons whose preretirement status is similar. Discussion of retirement requires reconciliation of all the trends just discussed. One set of trends is associated with earlier retirement—the development of retirement income sources and the increasingly positive evaluation of retirement. The other trends are associated with heterogeneity in retirement—large but declining differences between men and women and variation in the timing and events surrounding retirement. The near universality of retirement makes it a central life course transition, and higher retirement incomes have made it a positive event for many. But outcomes are highly diverse. Retirement is not unique in this characteristic. Universal age-based events that occur early in life, such as school attendance, are key links between inequality in one generation and the next; the universal nature of the experience does not imply uniform results. Schooling transmits inequality from one generation to another, but it also introduces variance among persons with similar origins. Throughout the life course, age-based life course events crosscut social structural segmentation created by social and economic status, gender, and race. Hence, the challenge in studying retirement is understanding how increasingly universal age-based processes transmit, modify, and create social inequality. Contemporary Versus Developmental-Functional Approaches to Retirement

Contemporary retirement research views retirement as socially constructed. Employment and government institutions have created an agesegregated division of the life course with education, work, and retirement phases. This view of the dependence of retirement on social institutions contrasts sharply with early functional approaches to retirement that focused on universal processes in all societies. Functionalism assumes that societies must develop institutions to perform tasks essential to their survival, and the continued existence of a society gives proof that the task has been addressed adequately. For example, new cohorts must be socialized to assume positions in the adult world. Educational institutions provide some of these essential functions. By the same token, societies must develop mechanisms to move older persons out of positions of responsibility before physical decline interferes with their ability to perform their assigned tasks. The need to move older persons out of important positions stems from a biological, developmental imperative, and retirement institutions provide this function. The disengagement theory of aging (Gumming and Henry 1961), popular in the 1960s, took this

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functional approach, focusing on the need of societies to accommodate to individual developmental change by creating cohort succession mechanisms. In the functional-developmental perspective, the individual's development is the engine that gives rise to social structure, and retirement is a way societies adjust to the realities of individual development. Although there is an undeniable attractiveness to this view, it provides very limited insight. There are two central limitations to the functional explanation for retirement institutions. First, there is strong evidence that biological necessity—decline and death—is modified by social conditions. The longterm increase in longevity and physical health (Fogel and Costa 1997) and recent evidence of better health and less disability among successive cohorts in advanced age (Manton, Corder, and Stallard 1993; Crimmins 1996; Crimmins, Saito, and Reynolds 1997; Manton, Stallard, and Corder 1997) suggest that health cannot be treated as a completely exogenous factor. Hence, health as the engine driving retirement arrangements is not really a universal because it varies over time and place. Second, we can observe a broad range of retirement patterns across time and place. In recent years, retirement has occurred much earlier in the United States than in the past. Functional and development views have nothing to say regarding this variability which appears to be related to higher potential retirement income and a desire for leisure, not a decline in health (Fogel and Costa 1997). Individual development is clearly compatible with a broad range of retirement institutions. Defining

Retirement

Retirement refers to aspects of late-life separation from paid employment, though this separation may be conceptualized in a number of ways. Kohli and Rein (1991, 5) note that the research literature has variously defined retirement as "an event, a process, a role or status, or a phase of life." Event, process, and work role definitions directly address separation from employment institutions. In contrast, phase of life definitions (and a more general concept of social role or status) commonly address the organization of non-employment domains of daily life implied by work separation. The focus of this chapter is employment exit itself, and we therefore focus on actual employment separation. An entirely separate dimension of retirement definitions addresses the classification criteria used to describe separation from employment. These possible criteria include labor force participation (i.e., having a job or actively looking for work), criteria based on hours or weeks worked, self-defined retirement status, and pension or Social Security receipt (Foner and Schwab 1981).

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The conceptual tools used in the study of event histories, which focus on the time path of events, provide a way to integrate status, process, and event definitions. Event histories examine the time path of behavior. At any one time individuals occupy a particular retirement status, however defined, and over time events mark the shift from one state to another. The simplest definitions of retirement focus on the individual's status— retired or not retired—at one time, but these definitions are static because they measure only one piece of the time path. The most commonly used indicator of retirement in this static definition has been labor force participation: Persons in the labor force are considered nonretired, whereas older persons who are not in the labor force are considered retired. Alternatively, an analyst might include partial retirement in this categorization, based on hours worked or self-definition; or focus on the source of nonwork income to distinguish between retired, unemployed, and disabled states. Both hours-based and labor force participation definitions share the same underlying focus on objective work behavior. The income source and self-definition approaches are distinctive because they add an additional dimension to separation of employment; income source taps some elements of the pathway leading to labor force status (e.g., pension eligibility), ctnd self-definition adds a dimension of social and personal meaning to separation from employment. The static conceptualization of status, however measured, captures a central aspect of retirement, but it does not allow adequate complexity because some persons may reverse their retirement. More recently, retirement definitions have focused on the process of work exit—the succession of statuses and events that link midlife employment with late-life nonemployment and together define the complex pathway to filial exit from the labor force. For some individuals, the process of retirement involves only one event, that is, one exit from long-term employment A more general conceptualization, however, must allow for multiple events that link work and nonwork. There are two distinct process approaches in the literature. One approach examines the institutional events or mechanisms that create a "pathway" out of the labor force. Here, researchers distinguish between "retirement" and "work exit" (e.g., Casey and Laczko 1989; Kohli and Rein 1991). "Retirement" is usually reserved for a pathway consisting of a single event: regular exit sanctioned by traditional retirement institutions. For example, Atchley (1982) uses retirement to refer to an event structured by the institutions governing exit from a long-term career job. There are other institutional pathways out of the labor force, characterized by exit events such as job loss through workplace closing or receipt of disability benefits. Although these events may occur at any age, their occurrence at later ages often triggers a final work exit. To distinguish

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these diverse mechanisms from retirement, Kohli and his coauthors use "work exit" as a generic term to include all institutionally based events leading to cessation of employment and reserve "retirement" for entry into the old age public pension scheme (Kohli, Rein, Guillemard, and van Gunsteren 1991). Though their definition of retirement differs somewhat from Atchley's, their use of terms is similar in that both differentiate between "regular" exit sanctioned by traditional retirement institutions and the diverse other exit patterns available. Work exit, therefore, is the general process of labor force exit, whereas retirement is one institutionally sanctioned event that provides a work exit route or pathway. Though the distinction is very important, this particular use of terms is far from universally accepted. Most analysts continue to use retirement to refer to separation from employment regardless of the pathway followed even as they recognize the distinctiveness of different pathways leading to retirement. We follow this more common approach and use retirement and work exit as general terms indicating employment separation. Both Atchley (1982) and Kohli and Rein (1991) focus on institutionally based pathways, not individual behavior. That is, pathways are institutionally structured routes out of the labor force that may be discovered by examining state and workplace regulations concerning processes or events that create eligibility for various types of nonwork income or otherwise separate individuals from employment. These processes may be well anticipated ones like pension accumulation or they may be difficult to anticipate, like disability benefit eligibility. A somewhat different approach to defining retirement process focuses on empirical regularities in the sequence of statuses and events as defining pathways to exit (e.g., Spilerman 1977; Hogan and Astone 1986). The social structure producing regularities in behavioral pathways results from the rules of a complex set of institutions, arid the analyst can "discover" social structure by examining these empirical pathways. As discussed later in this chapter, individual behavioral pathways are not simple functions of institutional rules. Individuals may span several institutions over the course of their work lives, for example, they may work for different firms with different pension plans. The order in which they work for the firms may affect their pension accumulations. Job loss through the institutional event of a workplace closing may or may not be followed by a new job; the outcome will depend on the individual's characteristics, such as job skills or health. In addition, individual employment trajectories are affected by individuals' integration of events across domains, such as coordination of work and family roles. These are events in individual lives that have no single institutional referent. The limitations of available data and the complexity of analyzing a time path mean

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that much current research uses simple static measures of labor force attachment. Still, status at any one time is now usually viewed within a time-based conceptualization of retirement process in which a series of different states and events are produced by institutional rules and the contingencies of individual lives. The constituent states include, for example, pre-exit full-time work on a "career" job, one or more full- or parttime postcareer jobs, and complete cessation of employment. These states may occur in diverse orders and be repeated. They are linked together by events of exit, job changes, and return to work. This chapter utilizes both the institutional and individual approaches to an exit "pathway" linking events across the life course to understand the patterns of earlier work exit and growing diversity arising from social structure and individual trajectories. We begin with a discussion of the first of the two aspects of the contemporary picture: earlier and more nearly universal work exit. Earlier and More Universal Exit

Retirement has become an earlier and more universal event in the agebased life course in that a larger proportion of older persons are out of the labor force at earlier ages than in the past. To prepare for a discussion of the social structural changes supporting this development, we examine some conventional static measures of labor force participation. Persons who are employed, self-employed, or actively looking for work (i.e., unemployed) are considered to be "in the labor force." The proportion of the population of a particular age in the labor force is widely used to gauge age-specific work involvement. Labor force participation rates trace patterns at the aggregate level; they show a monotonic decline with age in the proportion of persons in the labor force indicating the strong net flow out of the labor force at older ages (Hurd 1990). Yet these patterns reflect the outcome of both exit and reentry into the labor force. Gendell and Siegel (1992) note that changes in cohort labor force participation rates indicate net withdrawal from the labor force (i.e., the net outcome of exit, reentry, and mortality) but do not identify the relative contributions of the different processes. Although there is a net decline in labor force participation with each year of increasing age, this net decline consists of a large flow out of the labor force and a partly compensating flow of past exiters who reenter. Moreover, labor force participation is only one criterion of employment separation. It does not measure complex patterns such as shifts from full-time to part-time jobs. Still, the long data series available and the existence of similar data for other countries make labor force participation a very useful trend indicator.

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Trends for Men in the United States

Figure 4.1 presents men's labor force participation rates taken from the Current Population Survey (CPS) for 1957-1997 (Bureau of Labor Statistics 1988; Employment ami Earnings 1993; 1998). The figure displays a separate line for each age-group over the forty-year period. The gentle downward slope in labor force participation among men under age 60 indicates the long-term decline in midlife labor force participation. This decline is quite noticeable among men aged 55-59, among whom labor force participation has dropped from about 90 percent to 80 percent. The slope is much steeper among men aged 60-64 and 65-69. The data allow several generalizations. First, declines have been greater at ages over 60 but have occurred at all ages. Second, declines for the oldest age-groups began earlier than those for younger workers. For men aged 65-69, large declines began between 1957 and 1962 and continued until about 1977. Important declines for men aged 60-64 began in 1967 and were greatest in the 1972-1977 period. Finally, the decline in labor force participation after age 60 appears to have stopped. Almost all the decline in these agegroups had occurred by 1982. Whereas the 60-64 age-group has experienced small further declines, older age-groups have had slight increases since 1982. These recent changes have been very small and shouldn't be overinterpreted. It is clear, however, that after major declines older men's participation rates have been stable for the past fifteen years. Trends for Women in the United States

The pattern of women's labor force participation, shown in Figure 4.2, looks very different from that of men because women's age profiles are a mixture of two trends: the secular increase in women's labor force participation and the trend toward earlier retirement. The increasing level of midlife labor force participation is clearly evident among women aged 45-49 and 50-54. There is a strong upward trend over the entire fortyyear period, and particularly since 1977. A similar pattern of increase, though somewhat weaker at older ages, characterizes women aged 55-59 and 60-64. In contrast, the best characterization of the pattern for women aged 65+ is near stability over the forty-year period. The different pattern of change observed for each age-group has produced a much stronger cross-sectional age gradient to women's labor force participation in 1997 than in earlier years. That is, the difference between the oldest age-group shown arid midlife women has grown. In the series of cross-sections, therefore, there are larger differences by age today than in the past. For example, the difference between a 50-54-yearold and a 65-69 year old is greater in 1997 than in 1962.

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To examine how these changes affect successive cohorts, Figure 4.3 presents the same data organized by cohort. The increasing level of women's labor force participation in Figure 4.2 hid the net exit pattern among women; the cohort organization of the data shows that one reason for higher levels of participation among older women is the rising level of midlife participation. Each successive cohort at age 45-49 has a higher level of participation, which then drops with age. Between the 1908-1912 and the 1923-1927 cohorts (women who attained age 60-64 between 1972 and 1987), net withdrawal at later ages speeds up. Each successive cohort's ratio of participation at age 60-64 to that at 50-54 declines monotonically. A slight increase in that ratio among the two most recent cohorts indicates the same end of the early retirement trend described for men. Using similar data from a different selection of years, Gendell and Siegel (1992) show that, adjusting for mortality, net withdrawal rates of women increased between 1950 and 1985. However, women's age-specific net withdrawal rates were slightly lower between 1985 and 1990 than between 1980 and 1985. These trends in men's and women's labor force participation indicate a great deal about the age-based structure of the life course. Employment is a central element differentiating the socially defined life stages of adolescence, adulthood, and old age (Kohli 1988). The long-term decline in men's participation at older ages indicates increasing age segregation of social life as advanced cige has become increasingly associated with nonwork. Higher levels of midlife participation among women, combined with retirement patterns that are becoming more similar to men's, indicate a decline in the distinctiveness of women's lifetime employment patterns compared to men's but an increasing role for age in women's lives. Hence age is beginning to rival gender as a determinant of life course patterns (Paukert 1984). The stability of older workers' labor force participation since the mid-1980s does not alter this conclusion in any material way, since employment remains age segregated and women's rising midlife participation suggests women's late-life patterns are converging with men's. Explanations for Declining Men's Labor Force Participation

There is broad agreement on the factors affecting individual retirement timing in any one period. Wealth—including pensions, Social Security, and individual saving—and health are the primary factors. In addition, the difficulties that older workers often encounter in seeking a new job mean that events such as plant closures or other events producing unemployment may lead to permanent labor force exit. Other factors, such as family characteristics arid events, and the availability of disability bene-

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fits also affect retirement timing. There is extensive research on the details of these effects, for example, how incentives in pension plans encourage or discourage retirement at particular ages. The prevalence of each of these factors may change over time through change in specific institutions or general social change. For example, the benefit level of Social Security has changed over the years (Ippolito 1990) and a broad range of changes have produced better health among older persons (Fogel and Costa 1997). Yet there is much less agreement on the cause of the long-term decline in men's labor force participation (Gustman, Mitchell, and Steinmeier 1995; Ruhm 1996). It is very likely that the long-term decline in participation and the recent leveling off results from a large number of factors. The slow decline in labor force participation before the earliest age of Social Security retirement benefits suggests that the structure of the workplace and public policies that are not universal in their application, such as disability benefits (Henretta and Lee 1996), have produced lower participation at early ages. After age 62, the effects of Social Security retirement benefits are likely to be important and produce faster decline in labor force participation (Casey 1989; Henretta 1992). The evidence is particularly strong for Social Security. For example, Ippolito (1990) links declining labor force participation to the large increase in Social Security benefits in the early 1970s; and other research has shown the real level of Social Security benefits explains an important part of cohort variability in labor force participation (Henretta and Lee 1996). Occupational pensions are likely to be important in both periods. The increase in the proportion receiving pensions (Reno 1993), the early retirement options they sometimes contain, and the strong incentives to retire at first eligibility that many defined benefit pensions contain (Wise 1997) may account for increased rates of decline at younger and older ages. Pensions are a particularly attractive explanation for declining labor force participation because the recent shift to defined contribution plans, described in Chapter 5, has reduced these age-specific incentives to retire and may have contributed to the leveling off of labor force participation. The reasons for the recent pattern of labor force participation are not well understood either (Quinn 1998). Speculation concerning causes of the recent leveling out in net exit includes possibilities such as workers' desire to keep employer-provided health insurance, the shift to defined contribution pensions that do not have specific age-based incentives to retire, changes in Social Security since 1980 that reduce penalties for continued employment, the abolition of mandatory retirement, changing cultural values concerning older workers, and low unemployment that provides more opportunities for older workers (Ruhm 1996; Quinn 1997; 1998).

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Heterogeneity in Exit Patterns

The lower levels of participation would send an unambiguous message of declining retirement age if individuals exited the labor force from a full-time job, never to return. In fact, this pattern does characterize the majority of any cohort. Yet for a minority, the first labor force exit is followed by a return and, perhaps, a second exit. We are just beginning to accumulate knowledge about these patterns, and the data suggest some "fuzzy" boundaries to the end of work careers, including late-career job shifts, returns to employment after exit from the labor force, and partial retirement. The finding of complexity in retirement parallels findings on other life course transitions such as the transition to adulthood—events such as finishing school, marrying, and having children occur in different orders and at different rates. Although there is no great controversy over the existence of complex patterns, there is disagreement about their prevalence and meaning. Most of the research on exit pattern heterogeneity utilizes data from the 1970s. Robert E. Hall's (1982) classic paper "The Importance of Lifetime Jobs in the American Economy" demonstrates that workers change jobs frequently when young, but large numbers settle into a long-term career job. Using 1978 data, Hall finds that nearly 40 percent of men aged 55-59 already have twenty years or more tenure with the current employer and estimates that nearly half will eventually attain that level on the current job. Considering workers of all ages, Hall finds no race difference but finds women are much less likely to reach twenty years' tenure. Although Hall's work indicates long job tenure among many older workers, it also indicates some heterogeneity in tenure. Hall's research does not directly address the question of whether workers finally exit the labor force from a long-term job. More recently, this issue has been addressed using panel data. Christopher Ruhm (1990) uses data from the Longitudinal Retirement History Study (LRHS) collected during the 1970s to examine the prevalence of "bridge" jobs—jobs that span the time between the end of a long-term job (a "career job") and self-defined retirement (Doeringer 1990; Ruhm 1990). Ruhm found that nearly 45 percent of workers retired from their longest job; more than half spent at least ten years and over two-thirds spent at least five years on their final preretirement job. Men, whites, and those with higher levels of schooling were more likely to retire from longer jobs using each of these criteria. Some of the heterogeneity in length of final job reflects lifetime patterns of job changing, not patterns specific to retirement. When bridge jobs are defined more narrowly to encompass a short-term transition to retirement—a job taken after age 55 and held less than five years—only about one in seven LRHS workers held a bridge job (Hurd 1993).

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A second variant pattern is return to the labor force after having exited. Ruhm (1990) finds that nearly one-fourth of men and one-fifth of women reentered the labor force after self-defined retirement, indicating a minority follow this return-to-work pattern. His findings were confirmed by Quinn, Burkhauser, and Myers (1990), who analyze job switching among those leaving long-term (ten or more years) full-time jobs after age 58. They find that nearly one-fourth of wage and salary workers had some later work experience. Most of those taking a new job did so immediately or within one year. Since most returns to work occur relatively quickly, the exit from the long-term job may not have represented "real" retirement. A third variant pattern is partial retirement and part-time work. Like bridge jobs, estimates of part-time work as a route out of the labor force are highly dependent on the definition used (Rust 1990; Hurd 1993). Typical estimates of the proportion of the LRHS male respondents observed to have an episode of part-time work between full-time work and retirement range from 15 percent (Quinn, Burkhauser, and Myers 1990) to 45 percent (Ruhm 1990), depending on whether partial retirement is defined by hours worked or self-defined status as well as other analysis details. Bridge jobs, return to work, and partial retirement overlap. Someone who returns to a part-time job six months after exiting a long-term job might fit in all three categories. Hence, summing the estimates of different exit patterns would greatly overcount the proportion of a cohort following these patterns. All three patterns indicate important patterns of heterogeneity, though estimates of the size of each pathway are highly dependent on definitions. Heterogeneity is made more complex by selfemployment. Older workers are more likely to be self-employed (Bregger 1996) because there is movement into self-employment at later ages and the self-employed work longer (Fuchs 1982). Self-employed individuals are more likely to move between full-time and part-time work (Quinn, Burkhauser, and Myers 1990). Are Variant Patterns Increasing?

The data source used in most U.S. research to date, the Longitudinal Retirement History Study, is not adequate to address the question of increasing variability because it examines only one cohort. But other research provides some suggestive evidence that more complex career ending patterns are more common in younger cohorts. Even this research, however, refers to cohorts that were retiring in the 1970s and early 1980s. Elder and Pavalko (1993) compare men's late-life work exit patterns in the 1900-1909 and 1910-1920 cohorts. Their data are drawn from the Terman study, which began in the 1920s and included high-

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ability children. Since the sample is highly selective, the results are best viewed as highly suggestive but not definitive. Elder and Pavalko find that the proportion of men retiring by permanent and abrupt exit declined between the two cohorts while the number of complete exits and later returns increased. Other research examines period change in return to work. The rate of return to the labor force increased between 1972 and 1980, a period that overlaps the LRHS data collection; however, most of increase in rate occurs before age 62 and rates of return do not differ significantly at age 65 and after (Hayward, Crimmins, and Wray 1994). These data indicate that men in secondary occupations were more likely to exit and reenter (Hayward, Grady, and McLaughlin 1988a; 1988b). Secondary occupations are ones with low wages, little increase in wages with seniority, and few training opportunities. Among women, the volume of exit and reentry increased over time, but there were no occupational differences. Contrary evidence is provided by Sum and Fogg (1990) in their analysis of March Current Population Survey data. In an analysis that is structured somewhat differently from Hayward and his colleagues, they find that reentry rates declined between 1974 and 1980 and remained at that level through 1988. Their analysis is based on return rates of persons with no paid employment in the previous calendar year as of March of the following year. The difference between findings in these two studies may arise from the different definitions used. Hayward and his collaborators compare January to January labor force participation to determine the rate of exit and reentry. Those who are out of the labor force in one January are composed of persons who have very recently left as well as those who have been out a long time. Sum and Fogg examine persons who have been out of the labor force for at least one year. If this definition is the source of the difference, the findings suggest mat returns after a very short period out of the labor force rose while reentry after a longer time declined. More Recent Data

Much of our knowledge of exit heterogeneity comes from the Longitudinal Retirement History Study dating from the 1970s. More recent panel data on retirement were not available until the Health and Retirement Study (HRS) (see Juster and Suzman 1995 for a description). The first wave of this study was conducted in 1992, and panel data from it will provide information on a more recent cohort's exit patterns. Beginning in 1998 additional cohorts are being added to the HRS so that it will eventually allow cohort comparisons. Quinn and Kozy (1996) use the first wave of the HRS data to examine the job situation of respondents in the HRS. Using these cross-sectional data, they estimate that 25 percent of

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men and 40 percent of women will have last worked on a bridge job (less than ten years' tenure or part-time) before age 62. Much of this difference in bridge jobs is accounted for by the earlier career, since higher proportions of women workers have never had a long-term career job. Fewer black and Hispanic workers have had long-term career jobs as well. Using data from 1984 through 1993, Herz (1995) finds employment rates of men under age 65 who are receiving pensions have increased, particularly in part-time work—a finding consistent with use of bridge jobs. She attributes the increase to several possible causes: the increase in job displacement among older workers, increased use of early retirement "windows" in which companies offer extra benefits to workers who retire early, and the decline in retiree health insurance coverage. Couch's (1998) analysis of the first wave of the HRS finds large declines in wages of reemployed displaced workers; but he also finds that displaced workers are less likely to have pension eligibility than nondisplaced workers. Hence displaced pension recipients who work part-time are only a small segment of displaced workers. In addition, the declines in older men's job tenure on the current job during the 1980s and 1990s (Bureau of Labor Statistics 1997), during a period in which men over age 55 have had stable labor force participation rates, suggests an increased amount of job changing in midlife. Older women's tenure has been stable or increased at ages under 65 (Bureau of Labor Statistics 1997).

The Significance of Heterogeneous Patterns

The research just reviewed leads to the conclusion that career endings are complex. These findings are important descriptions of behavior, but they become more important because they provide one piece of evidence of a changing social construction of the life course. The standard view of the life course is that it has become more dependent on the institutions of the welfare state (Mayer and Schoepflin 1989) or work (Kohli 1986; 1987). This view holds that heterogeneity in life course transitions has declined (Henretta 1992). One of the reasons we might be interested in the varieties of heterogeneous patterns, including returns to work, part-time work, and bridge jobs, is that they indicate the extent to which the life course is orderly and uniform. Given the view that the m o d e m life course has become increasingly characterized by clearly defined periods of education, work, and retirement because of institutional dependence, data that suggest unclear boundaries present an important challenge by suggesting a complex transition as well as a lack of a distinctiveness between the work and retirement life course phases. An increase in heterogeneous patterns may indicate weakening institutional control of the life course (Kohli and Rem 1991).

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The sociological view of an institutionally dependent life course is mirrored in the economic concept of labor market rigidities that limit individual choice. For example, Hurd (1993) argues that the structure of the workplace, including such factors as production technology, the culture of work organization, rules of pension plans, and state institutions, including the Social Security system, mean that workers are not free to vary hours or weeks of work. Since a voluntary reduction in hours usually requires changing jobs, usually to one with lower wages, relatively few workers will make such a choice. Hence, the institutional structure of employment tends to produce one-step shifts from employment to retirement. Do the data on exit heterogeneity constitute an important challenge to the concept of an institutionally dependent life course? The conventional answer is affirmative. Many of the variable patterns occur early, before the eligibility for Social Security retirement benefits. The evidence on bridge jobs and increasing returns to work generally refer to early events—before age 62 or 65. Variation in work patterns at these ages reflects behavior that is controlled by the highly variable institutions of the workplace. At later ages, when the incentives of the Social Security system affect all workers in highly similar ways, there is less heterogeneity in employment patterns. More generally, very different rules and processes affect exit before and after state retirement benefit eligibility ages (Casey 1989; Henretta 1992). Hence, the institutional life course may become less uniform to the extent that the more variable elements— workplace factors—become more important. Nonetheless, it is possible to make a quite credible argument that the evidence of heterogeneous career endings is not a consequential challenge to the institutionalized life course. Approximately three quarters of retirement episodes are a transition from full-time employment to complete exit (Rust 1990). And for each of the variant patterns discussed there is a range of prevalence estimates depending on assumptions. The prevalence of bridge jobs declines if the focus is on late, short-term jobs; a longer focus (e.g., defining a bridge job as any job after the longest job) may measure the lifetime career, not retirement (Hurd 1993; Quinn and Kozy 1996). A high estimate of partial retirement depends on using selfevaluated status instead of hours worked. Self-evaluated status taps elements of social meaning, not just actual behavior. Indeed, the higher proportion of the self-employed who work part-time and moves of older workers to self-employment suggest that the institutional structure of the workplace does inhibit part-time work by wage and salary workers (Hurd 1993). Returns to work occur quickly or not at all. As such, they do not constitute much of a challenge to the distinctiveness of work and retirement. They are, instead, a short-term interruption of a work career that has not yet run its course. The increase in returns to work before age

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65 and particularly before 62, together with the increase in the number of workers under age 65 who are receiving a pension and working may indicate that very early exits—sometimes involuntary—that may not have been "real" retirements. Whether or not such patterns are increasing, the evidence for heterogeneity should be seen in perspective. These variant patterns characterize a minority of the population. Although they indicate the complexity of individual contingencies, they may present only a limited challenge to the institutionally dependent life course.

Institutional Structure and Segmentation of Work Exit

Earlier exit and variability in retirement pathways are linked because early labor force exit is likely to be primarily influenced by the structure of the workplace. Older workers have very heterogeneous work situations, characterized by the growth patterns of the firm and industry in which they work and varying pension plans they have accumulated over their work lives, among other factors. In turn, these highly variable work situations produce highly variable patterns of early exit. Sheppard (1991) identifies regular and early pensions, job loss, and disability as the main routes out of the labor force, and we follow that division in our discussion. In addition to institutional factors, workplace characteristics and individual characteristics intersect, creating even more complex patterns of segmentation. We organize our discussion of segmented exit and its effects—earlier exit and more variable exit—around a consideration of pathways (Kohli and Rein 1991) or routes to exit created by the institutional structure of the workplace. We then elaborate the discussion by considering the way these institutional pathways are modified by individual contingencies— family events and health. The Traditional Retirement Pathway

Atchley's (1982) definition of retirement as a status accruing to older workers by virtue of long service to an employer constitutes the traditional retirement pathway—a route to work exit sanctioned by retirement institutions such as firm-based pensions. This pathway is sometimes characterized as an exit portal to an age structured career, that is, a career in which nontransferable seniority-based entitlements such as higher wages, pension rights, or job security increase with age (Spilerman 1977; Henretta 1994). As discussed earlier, most late-life work exits are final; but as with other pathways, exit via the retirement pathway from one job does not preclude later re-entry into the labor force.

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The concept of the retirement pathway is a useful construct because it characterizes the path followed by a majority of the older working population. Hall (1982) estimated that about half of men (and fewer women) would retire from a job of twenty years, but recent declines in job tenure suggest that this proportion is slightly lower today. Hence, not everyone finally exits from a very long-term job, though, of course, twenty years is a high standard for defining a "long-term" job. Approximately half of men and women aged 45-64 already have ten years' tenure on their current job (Bureau of Labor Statistics 1997), and many are likely to retire from these jobs; some of those with less than ten years will eventually attain that amount. A second aspect of the regular retirement pathway is provision of pensions. Data from the Survey of Income and Program Participation (SIPP) collected in 1987 indicate that, among those aged 50-59,63.4 of employed men and 50.8 percent of employed women are vested in pensions on their jobs (Short and Nelson 1991). The pension coverage figures are even higher in this age-group—74.4 percent for men and 65.9 percent for women. It is likely that most workers who are covered but not yet vested will retire after they become vested. Of course, they may not receive the pension immediately after leaving the job at which it was earned. By the pension measure somewhere between half and three-fourths of workers may exit via the retirement pathway because they will receive a pension eventually from an employer. As shown in Chapter 2, the availability of this pathway is related to education. The long service and pension criteria for defining the retirement pathway diverge because vesting in an employer pension does not require the twenty years of service we used as a criterion of long service. Vesting occurred after a maximum of ten years at the time the SIPP data discussed above; legislation effective in 1989, however, reduced this maximum to five years in most cases (Reno 1993). The relation of pensions to the traditional retirement pathway creates significant variability. Some defined benefit pension plans have benefit structures that encourage regular departure as early as age 55 (Wise 1997). The normal age for retirement reported by HRS respondents covered by a defined benefit plan averaged 61; early retirement age under the pension plan averaged 58, with a 5 percent benefit reduction for each year before the normal age (Gustman, Mitchell, and Steinmeier 1995). This very early departure through a retirement pathway may be followed by part-time work. Increasing numbers of pensioners under age 65, and particularly under age 62, are employed; and an increasing proportion under age 62 are in part-time work (Herz 1995). These pathways might be defined as bridge jobs or partial retirement even though the individual has followed a traditional retirement pathway, albeit at a young

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age. Hence the early movement of some workers out of the labor force at an early age through traditional pathways may be responsible for some of the heterogeneity in late-life patterns that has been observed. Firmbased pensions have highly variable incentive structures with some encouraging earlier and others later retirement; furthermore, the variability in individual careers with firms means that pension accumulation is variable even within the firm (Quinn, Burkhauser, and Myers 1990). The Changing Role of Pensions in the Traditional Pathway

Employer policies that reward longer tenure through things like promotion or job security help retain a trained workforce and increase the loyalty and motivation of workers (Henretta 1994b). In a sociological (Kohli 1986) or economic (Akerlof 1982; Bulow and Summers 1986) perspective, such incentive systems serve a social control function. The age structuring of employment encourages long-term loyalty. Incentives to remain with a long-term employer have the effect of discouraging late-career voluntary job changes, since older workers could not get a new job with equal rewards. A new employer is unlikely to give "credit" for seniority with an old employer since the system of seniority-based rewards is linked to a long-term bargain and is not based on seniority-linked increasing productivity (Osterman 1988; Yellen 1984). Pensions were once an integral part of the institutional rules that produced age structuring because defined benefit retirement plans often have strong incentives to remain with the company until a particular age and then retire (Wise 1997). In contrast, defined contribution plans lack such age-specific incentives; increase in wealth will encourage retirement but not at a particular age (Gustman, Mitchell, and Steinmeier 1995). The proportion of workers covered by defined benefit plans has been decreasing in recent years as defined contribution plans have become more common. In the sociological perspective, the more common use of defined contribution plans reduces age structuring (Henretta 1994b). Hence, one of the supports of the traditional age-structured retirement pathway is weaker.

The Traditional Retirement Pathway and the Organization of Employment

Pension-based exit via the retirement pathway and long-term relations between workers and employees are linked historically as well as logically. Historical research on work exit argues that the period before regularized retirement mechanisms was characterized by ad hoc arrangements. In the nineteenth century world of short-term commitments

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between employers and employees and lack of bureaucratic structures for determining wages, working conditions, and hiring and firing procedures, foremen in industrial firms had much greater control over the process (Jacoby 1985). The nonbureaucratic approaches to declining ability to work included such adjustments as shifts to less demanding work, lower wage rates for the same work, or a switch to piecework compensation (Graebner 1980; Anderson 1985; Ransom and Sutch 1986). Outside the firm, individuals made such arrangements through individual saving arrangements (Carter and Sutch 1996; Gratton 1996; Costa 1988). With more regularized employment, retirement replaced these arrangements and provided a depersonalized, bureaucratic solution to ending the regular career (Graebner 1980). The historical rise of the age-structured job suggests such arrangements may vary in prevalence by cohort, and indeed there is some evidence that the prevalence of such arrangements has peaked (Henretta 1994). Yet they remain common, and it is difficult to know what the future holds for the traditional retirement pathway. Changing pension structures, particularly the shift from defined benefit to defined contribution plans, the growing availability of lump sum distributions, shorter vesting schedules, and pressures on employer-provided employee health care (Burkhauser and Salisbury 1993; Herz 1995; Ruhm 1996) mean that the pension-based exit pathway is changing in ways that are hard to predict. Hence, the past does not provide a sure guide for future cohorts.

Alternate Institutional Pathways Producing Early Exit Early Pensions

The regular pension pathway shades into early pension cicceptance, since many occupational pensions now offer regular or early retirement at a relatively young age. In addition, some employers have offered additional incentives to retire early. The evidence is compelling that many employers are "downsizing" to meet competitive pressures by encouraging lifetime workers to exit early. During the 1980s and early 1990s, a large proportion of large employers used some type of incentive program to encourage workers to retire early (Meier 1986; General Accounting Office 1990; LaRock 1992). The programs are very diverse in their structure, and they may take the form of lump sum payments, monthly payments until Social Security retirement age, or a reduction in the early retirement penalty (Mutschler 1996). The business and general press continue to carry stories about government agencies and private firms that use these extra incentives to reduce segments of their workforce. The increasing use of narrowly targeted segments of employees (Mutschler 1996) and

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declining unemployment rates during the 1990s may have made these programs less common, but there are not good data that address this question. Employment in the U.S. economy is very dynamic, and specific firms and whole industries are constantly adjusting to technological and competitive changes. Hence, incentive programs are unlikely to disappear. Although such programs may not affect a large proportion of the workforce, they do produce some early retirements. Sheppard (1991) reports data from the 1982 New Beneficiary Study indicating that 61 percent of men exiting the labor force after age 55 and before age-62 Social Security retirement eligibility receive firm pensions, and 35 percent of women receive such pensions. Many of these retirements may have been at the regular or early ages included in the employer's pension plan, and we do not currently know how early retirement incentives fit into the bigger pension picture. Early retirement options segment the labor force because they are firm specific and are usually offered only to certain segments of employees. Some of the more convincing evidence for this fact comes from a case study of a German cigarette manufacturing firm by Martin Kohli and his coworkers (Kohli, Rosenow, and Wolf 1983). They find that early retirement offers are closely tied to the particular technology of the firm and the need of management to maintain a work force with a particular set of skills. Employees within one firm may use different technologies or processes; since technological change and competitive pressures within firms is uneven, not all employees will be similarly affected by a particular change. In recent years, employers have particularly targeted managerial and other salaried workers (Mutschler 1996).

Unemployment

Job creation, through new firm starts or growth of existing firms, and job destruction, through firm or workplace closing and contraction, are constant processes in the U.S. economy (Greene 1982; Birch 1987). Osterman (1988) argues that the pace of change has increased in recent years as a result of increasing technological change. There is evidence that these processes affect a segment of older workers. For example, Herz (1991) finds that 7.6 percent of workers aged 55-64 were displaced during the 1979-1983 period. Even in 1985-1989, a period of expansion in the U.S. economy, 6.5 percent of workers aged 55-64 lost their jobs. Although seniority has traditionally buffered older workers from the effects of unemployment, that is no longer true. During the recession of the early 1990s workers aged 55-64 were more likely to lose their jobs though a plant closing, elimination of a position, or layoff than younger workers (Herz 1995). The low unemployment rates of the 1990s will have made it less

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common at all ages, but unemployment remains a factor that segments the exit patterns of older workers. Of course, older workers who lose their jobs through unemployment do not necessarily leave the labor force or retire in any other sense. Moreover, some displaced workers are eligible for early or regular firm pensions (Osterman 1988; Sheppard 1991), a factor that makes it very difficult to distinguish between a pension-induced exit and a job loss (Jacobs, Kohli, and Rein 1991). Other research suggests, however, that displaced workers who remain unemployed or leave the labor force are less likely to be eligible to receive a pension compared to other workers their age (Couch 1998). Job losses that become final exits from the labor force impose an economic cost on workers. Data from the LRHS (reported by Hausman and Paquette 1987) indicate that more than eight of every ten workers aged 58-62 who lose their jobs do not find another. Food consumption drops about 30 percent among those who leave their last job involuntarily but only 10 percent among voluntary leavers. They also find that involuntary exits constituted 74 percent of last job exits before age 56, declining to 40 percent at age 61. Late-life unemployment is likely to produce final exit because of the limited substitute jobs available. The range of available jobs is reduced by the limited incentives for either workers or employers to undertake training for jobs given the short payback period for any investment (Hutchens 1988; Hurd 1993). The jobs that are readily available to older workers often carry wage levels lower than the lost job (Yellen 1984; Cohen and Zysman 1987; Hurd 1993), since the wages of many older workers reflect nontransferable seniority effects. In fact, older displaced workers who are subsequently reemployed earn considerably less than on the previous job (Couch 1998). The overall result is that late-life job losses may well signal a final labor force exit. Since older workers are less buffered from the effects of unemployment than in the past (Herz 1995), unemployment may be the portal through which increasing numbers of workers finally exit the labor force, though the importance of this path will vary depending on the overall unemployment trend.

Disability The disability pathway is created primarily by Social Security disability benefits. Nearly all workers under age 65 are covered by this program, and the age of new beneficiaries has been dropping. Slightly over half of those receiving new benefits are aged 50 and over (Social Security Administration 1997, 6.C2). At age 65, disability benefits automatically convert to retirement benefits. Nearly 90 percent of disability benefit terminations result from reaching age 65 or death (Social Security Adminis-

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tration 1997, 6.F2), indicating that the disability program tends to be a final exit from the labor force. The importance of this exit pathway can best be evaluated by examining the numbers of persons who eventually convert to retirement benefits. In 1996, 11 percent of those first receiving retirement benefits were converting from disability benefits (Social Security Administration 1997, 6.F2). Hence, roughly one-tenth of recent cohorts who survive to Social Security retirement ages utilize disability benefits as a final route out of the labor force. Receiving a disability benefit must be carefully distinguished from having a work limitation. Eligibility for disability benefits requires insured status under Social Security as well as meeting the disability criteria. Yet official rules do not adequately describe the complex social process requiring application and an administrative decision. Applications may vary because of changing levels of unemployment or different perceptions of the stringency of the process. Receiving benefits requires an administrative decision on eligibility. The proportion of applications approved as well as the number of awards per 1,000 workers has varied over time (Social Security Administration 1997, 6.C7). The large increase in recipients during the 1970s was followed by more rigorous requirements for both new awards and requalification of current recipients, which reduced the number of recipients through the early to mid-1980s (Burkhauser and Hirvonen 1989). Since that time both the proportion of applications approved and the awards per 1,000 insured workers have increased. Hence, there is not a simple link between ability to work and disability benefit receipt, and awards do not always differentiate well between those with greater and lesser impairment (Berkowitz, Johnson, and Murphy 1976). The individual health trajectory and the institutional disability pathway are not the same. The Intersection of Social Structure and Individual Trajectories

Individual work exit trajectories reflect the intersection of historically variable employment institutions with individual lives. There are at least three reasons that individual pathways are not fully captured by a description of institutional pathways. First, there is a great deal of heterogeneity in employment institutions within historical periods as well as across time. Allocation of individuals to specific jobs is determined by a complex process related to social class, race, gender, geographical location, and other individual characteristics (e.g., Spilerman 1977; Held 1986). Hence, these characteristics are associated with particular institutional pathways. For example, Chapter 2 presents evidence of the close link between education and pension coverage.

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A second factor related to the highly variable microlevel social structure faced by individuals is variation in individual progress through institutionally defined pathways. A particular path taken at one of the multiple potential branching points in a career can produce very different long-term outcomes (Spilerman 1977). The path taken may depend on individual characteristics such as ability or motivation, or it may result from exogenous factors. For example, a period of high unemployment may or may not affect a particular firm and will have different effects on persons who have previously taken different pathways in their career (Elder and O'Rand 1995). The underlying principle is that social structure consists of a web of separate institutions, each with its own rules. Individual lives cross these different institutions. Individuals make active choices among the options available to them and are progressively constrained by earlier choices. Hence, the individual pathway is more complex than any one institutional pathway. Firm pensions illustrate this process. Defined benefit pension benefits depend on the age at which one starts and stops employment with a firm (Salisbury 1993). A third factor producing variation in individual pathways is the intertwining of events across the multiple domains of an individual's life. There is extensive cross-domain influence in the trajectories individuals follow, particularly between work and family domains (see Chapter 3). Yet the family is structurally complex, since it ties together the interdependent life histories of its members (Elder 1978). Events in the lives of others—the illness of a spouse, child, or parent, or the retirement of a spouse—may have effects on more than one individtial because of the relationships between family members. Describing the social structural characteristics of retirement institutions is only a first step in understanding the pathways individuals follow. In the following section we will focus on two important individual trajectories—family and health— that are intertwined with employment patterns throughout life. Families and Women '$ Employment

Women's employment and retirement patterns provide a particularly good illustration of how individual trajectories are intertwined with institutional ones. Early and midlife patterns of women's employment are highly cohort dependent. Though recent young cohorts of women have maintained high levels of labor force participation throughout their childbearing and child-rearing years, the cohorts of women who have retired already have had careers in which participation rates increased through the childbearing and child-rearing ages. The pattern of increasing participation through midlife, in attenuated form, also characterizes cohorts born around 1950—women who will be retiring during the first and second decades of the twenty-first century.

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Among today's midlife cohorts, late entry to the labor force is one variant employment pattern. In addition, family obligations create an "inand-out" labor force participation pattern among some members of a cohort so that they enter and leave the labor force repeatedly over time. In the 1906-1911 cohort (the cohort included in the LRHS), 24 percent of women followed an "in-and-out" of the labor force pattern, 35 percent were usually in the labor force, and 41 percent were usually out of the labor force. Never married women were more likely to fall into the "usually in" pattern but there were few other marital status differences (O'Rand and Henretta 1982). More recent cohorts will have a different mixture of these patterns, though all three types are present. The late starts of many women in this cohort and their in-and-out patterns are also associated with their distribution across jobs and industries. Women who began employment in midlife, returned to employment after an absence for child rearing, or followed the in-and-out pattern in early or midlife, particularly, may prefer jobs that are not located in an age-structured employment career, since they do not penalize workers for intermittent work or a lack of experience. These jobs have been plentiful in recent years, primarily as relatively low-wage service jobs. The lifetime pattern of employment has important effects on women's retirement. Women with more extensive early and mid-life labor force participation exit earlier (O'Rand and Henretta 1982a; 1982b; O'Rand, Henretta, and Krecker 1992; Henretta, O'Rand, and Chan 1993). Hence, conditional on late-life employment, women with delayed or interrupted work careers delay their retirement. Proximal family factors also affect women's retirement. Husbands and wives coordinate their retirement timing (Clark, Johnson, and McDermed 1980; Henretta, O'Rand, and Chan 1993). Moreover, husband's current employment has a greater effect on wives with extensive early employment (Henretta, O'Rand, and Chan 1993) so that women whose work careers were delayed or interrupted by child rearing are less likely to coordinate sequentially with their husbands. Pension eligibility produces earlier retirement (Ippolito 1990) and earlier expected retirement (Honig 1998), and pensions are important contributors to economic status of the older population (Reno 1993). Hence, they are important links that both transmit inequality from work to retirement (Henretta and Campbell 1976) and modify it because of the heterogeneity in work careers. The combination of work trajectory factors affecting pension receipt is well illustrated by research on currently unmarried women in the Retirement History Study (O'Rand and Henretta 1982b). White women and those with more education are more likely to hold their last job in a favorable pension industry—that is, a job with relatively high pension coverage for workers. The timing of work and

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fertility in the early life course also affects industrial location. Women who entered the labor force for the first time after age 35—something only found among women with children—are more likely to have a job in an unfavorable industry. Although this pattern is not the most common one—about 15 percent of women in LRHS follow it—it has a strong effect in reducing pension coverage. Having a pension, in turn, allowed women to retire earlier. Women's interrupted midlife careers as well as their late starts reduce unmarried women's retirement income and have the same effect on couples as well (O'Rand and Henretta 1982a). Health Good health in middle and late life is unequally distributed and highly consequential. Health affects the capacity to enjoy life and is associated with greater wealth (Smith 1998) and income (Smith and Kington 1997). Although some health declines are not associated with earlier events, there is extensive evidence of socioeconomic differentials in health. Health both reflects earlier inequality and creates inequality as individuals spend their accumulated resources to address the problems it causes (Smith 1998). Figure 4.4 illustrates the strong education gradient in health; nearly 20 percent more college graduates than high school graduates rate their health as excellent or very good. Figure 4.5 presents parallel data by race and Hispanic ethnicity and shows large differences between whites, blacks, and Hispanics. These figures are illustrative; though self-evaluated health measures may be criticized for many reasons, these findings illustrate the consistent findings of a growing body of research using diverse methods and measures. Current research indicates strong connections between education, income, and mortality (Mare 1990; Wolfson, Rowe, Gentleman, and Tomiak 1993; Menchik 1993; Feinstein 1993) and morbidity (Kaplan and Keil 1993). Menchik (1993) finds that the mortality difference between blacks and whites is largely accounted for by socioeconomic differences. The standard difficulty in examining health and socioeconomic status outcomes is that the two factors are very likely to be related to each other over the life course. Environment and characteristics early in life create a pathway, including such things as diet, habits such as smoking and exercise, and preventive behavior, that are consequential for health (Mare 1990). Higher education may lead to more effectiveness in using the health care system, earlier attention to conditions, arid better chances of recovery (Feinstein 1993). Yet causation runs in the other direction as well; good health in early and middle life will produce higher education and earnings levels. Poor health will reduce earnings and asset levels

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because of the cost of illness and limits on the ability to work. Because education is fixed relatively early in life, it is usually seen as less contaminated by health selection effects than later measures of socioeconomic status such as income or assets (Mare 1990). That is, it is a better measure than later events that have a greater probability of being affected by poor health. Although this is undoubtedly true, there are some indications in the research literature that very early events may affect midlife health (Elo and Preston 1992; Kaplan and Keil 1993). The socioeconomic-health status nexus (Smith and Kington 1997) is very complex and difficult to disentangle, since there are links in both directions throughout life. In sum, health partly produces socioeconomic attainments and in turn is partly modified by them (Smith and Kington 1997; Smith 1998). It is a good example of an individual pathway that largely reflects earlier events but also adds additional variance within socioeconomic categories. The effect of health on retirement is widely accepted (e.g., Quinn, Burkhauser, and Myers 1990). Using the first wave of the Health and Retirement Study, Bound, Schoenbaum, and Waidmann (1995; 1996) find that education and health differences account for a large portion of the difference in labor force participation between black and white men and women aged 51-61. They also examine education differences; at these ages, about twice the proportion of high school graduates are out of the labor force compared to college graduates. They find that health accounts for essentially all the difference; if health were equated, men with lower education would have higher labor force participation (Bound, Schoenbaum, and Waidman 1995). Hence, health is a major mechanism transmitting the effects of education to labor force exit (subject to the caveat that lower levels of education may partly reflect poor early health). Conclusion

Labor force participation rates have declined, and exit from the labor force has become a more common feature of the life course. At the same time, there are important trends producing variability—stemming from both institutional and individual processes. This heterogeneity in exit has existed for a long time. Much of the data come from the 1970s and even the recent historical literature suggest important diversity in retirement outcomes at the beginning of this century. But there is suggestive evidence that institutional change is producing greater variability in institutional pathways. Variability also arises from individual pathways because individuals cross institutions over their lifetime, and they combine work and family domains at all times. Some of the variability in retirement patterns is related to inequality earlier in life. Pension coverage and

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health provide good examples of trajectories that are strongly related to earlier attainments and are central to the retirement process. In addition, some variation in retirement process exists within socioeconomic status groups through institutional mechanisms such as early retirement incentives or individual pathways that add great complexity. The overall effect is that the structure of retirement in the contemporary United States operates to create extensive heterogeneity in the pattern of career endings.

5 Labor Markets and Occupational Welfare in the United States Public and employer-provided pensions are core institutional elements of the occupational welfare system in the United States. Their life course effects, as reviewed in Chapters 2-4, include the definition of the retirement transition and its timing and the vectors of saving and asset accumulation that provide the sources of income after labor market participation has ended for workers and their dependents. Public pensions derived from the Social Security System play two important roles in social retirement. Historically, they have set the clock for the timing of retirement of the significant majority of older workers following age-based eligibility for reduced, full, and derived benefits, and they have served to redistribute revenues to the advantage of lower earnings groups, thus partially offsetting lifetime earnings inequalities. Employer-provided pensions from private and government-based employment have also set the clock for retirement timing, but only for that portion of the labor force with access to them. These instruments fueled the trend toward earlier retirement—retirement before Social Securitybased full benefit eligibility ages—during the post-World War II period (Barfield and Morgan 1969). As Chapter 2 has already established, unequal coverage by and participation in employer-provided pensions has had a countervailing effect to Social Security's redistributive function in the retired population: Employer-provided pensions separate economically secure retirees from those more dependent on public sources of income support (Duncan and Smith 1989). By the early 1990s, approximately one-third of persons aged 65 or over received benefits from private pensions, a figure double the rate of recipients in 1970 (Kinsella and Gist 1995). Employer-provided fringe benefits are components of compensation packages attached to earnings that serve to stratify the workforce 131

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(O'Rand 1986). They are rooted in a long history of so-called welfare work and employment contracts reviewed in Chapter 3. These packages vary widely and can include several types of pension-saving instruments, diverse health and disability insurance plans, and other fringe benefits such as vocational training and continuing education, vacations, paid leaves, child care, and kin care. Taken together, fringe benefits protect income. This general purpose defines their role as occupational welfare. Pensions are a form of deferred earnings to be drawn as retirement income, with the intended effect of maintaining income flow after work has ceased. Health and disability insurance also protect income by preserving income in the face of risks presented by unexpected illness or handicap that can limit work and drain finances. Other benefits are protective or welfare structures that provide for workers' well-being in the maintenance of their nonwork lives and, if relevant, their families' lives; paid and unpaid vacations, family leaves, and child care permit family maintenance with reduced threat from job and income loss (Kamerman and Kahn 1989). These benefits reinforce the disparities that arise out of earnings differentials, since their availability is highly correlated with earnings and since some workers have little or no access to them. Income disparities are accentuated by the unequal protection against life course risks (e.g., illness, accident, divorce, unemployment, disability, and poverty) that sustains a system of cumulative advantage above and beyond earnings inequality. The institutionalization of fringe benefits over the past half century has created vested interests in their preservation that have served to stave off the expansion of publicly based programs in health insurance and other areas of life course risk for the general population (Root 1985) and to perpetuate a terrain of contested claims by corporations, unions, and families over the provision of social welfare (Cornfield 1990). In this chapter, we will begin by examining some of the disparities produced when moving from earnings to pension income. Then we will consider the distribution of major elements of occupational welfare in the United States—particularly employer pensions, health insurance, unemployment compensation, and disability insurance—and their recent history. Arguably, recent changes in these institutions may be threatening income security in general and future retirement security specifically. Because these benefits are derived strictly from employment, are tied to a complicated and decentralized (plan-based and state-based) mix of rules of incumbency and duration, and are unevenly distributed across industries, occupations, and employing establishments, they segment and stratify workers and send them down different pathways to retirement and inequality.

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From Wage Inequality to Pension Inequality

As the status maintenance and cumulative advantage hypotheses respectively suggest, the transferability or accentuation of inequality that is observed when moving from earnings to employment-based pension income reveals the complexity of aging and inequality, especially between and within gender groups. Figures 5.1 and 5.2 are based on data taken from the first wave (1992) of the Health and Retirement Study (HRS) (see Juster and Suzman 1995). The first wave of HRS is a survey of men and women aged 51-61 in 1992 who will be followed over their late-life work and retirement trajectories. Earnings and pension income data are collected and permit the examination of earnings and pension income inequality within a ten-year birth cohort. Pension income is measured as income from employment-based pensions, including Social Security. Those who are already receiving retirement income at this time are a select group of persons from this cohort who are crossing the threshold to retirement early. However, the HRS is capturing them at the interface between work and retirement and providing a snapshot with generalizeable features. The figures report the decile cutpoints of men's and women's earnings and pension income distributions. Figure 5.1 reports the decile cutpoint distributions in dollar amounts; Figure 5.2 reports the female-to-male cutpoint ratios at each decile. The ratios reported do not deviate from expected levels of inequality between women and men already reported in the literature on wage and pension inequality (Blau 1998; Even and Macpherson 1990) and from Current Population Survey (CPS) data reported in Chapter 1. These decile breakdowns permit the examination of inequality across the income distributions. The figures reveal both within-gender and between-gender inequality. To examine within-gender inequality, the ratios of marginal to median decile cutpoints gauge the extent of inequality above and below the median (see Figure 5.1). For example, compare the 90th earnings decile cutpoint of men ($65,000) to the median (decile 5 = $30,000); the 90th/50th ratio is 2.167. Then compare the ratio of the median to the 10th decile ($30,000/$7,600); the ratio is 3.947. The ratios reflect the dispersion of earnings, which is greater below the median than above. Turning to the pension income distribution, which includes only those individuals who receive any pension income, the comparable ratios are 90th/50th = 2.549 and 50th/10th = 5.313. The ratios suggest that inequality in pension income is greater across the distribution and much greater below the median when compared to the earnings distribution. The examination of women's earnings and pension incomes reveals higher inequality across both distributions. The earnings comparisons

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are 90th/50th =2.312 and 50th/10th = 4.571, and the pension income comparisons are 90th/10th = 3.013 and 50th/10th = 5.371. Gender inequality is also revealed in these distributions. In Figure 5.2 the earnings and pension income decile outpoint distributions in Figure 5.1 are used to calculate decile cutpoint ratios between men's and women's income distributions. Median earnings inequality is 0.53, that is, women's median earnings in the HRS sample ages 51-61 in 1992 are 53 percent of men's. The highest income deciles reveal greater equality in earnings. Higher-earning women are more equal to their male counterparts than lower earning women. This finding in compatible with the wider wage inequality literature that suggests that women's earnings are highly stratified by level of education, full-time versus part-time status, and occupational location (Blau 1998). Pension income reveals a more variable pattern by decile, including more accentuated improvements in the highest deciles. The median level of pension income inequality is 0.562. Above the sixth decile, gender equality increases to a high of 0.72 at the 80th percentile of pension incomes. Clearly, women with higher earnings and women with higher pension incomes more closely approach parity with their male counterparts. But the pension income distribution points to an accentuation of this pattern—one which suggests that women who have vested in pensions and begin to receive them at early retirement ages are more like their male counterparts. This finding is not very surprising in light of what has been already documented regarding the levels of wages and salaries versus fringe benefits in traditional female occupations in the public sector (e.g., social workers, teachers, librarians, other government employees) and in the private sector (e.g., medical and health-related semiprofessionals and professionals, selected unionized skilled workers in manufacturing, communications, and finance/insurance industries). Although earnings have lower ceilings in even the most favorable female occupations, fringe benefits (including pensions) can be generous, especially for female employees in unionized and internal and occupational labor markets with long and continuous participation histories (O'Rand 1986; Currie 1993; Even and Macpherson 1990; Knoke 1994). Accordingly, processes of status maintenance, leveling, and cumulative advantage are intertwined in the transition from earnings to pensions. Earnings largely determine pension income. But pensions clearly discriminate among women with respect to their relative income advantage in retirement when compared to men. Women in pension-protected jobs over their careers have more resources in retirement. Men are also differentiated by access to pension income. The labor market bases of these complex patterns are the focus of the remainder of this chapter.

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Employee Benefits as Decentralized Occupational Welfare

The history of fringe benefits or occupational welfare was introduced in Chapter 3. This set of institutions slowly developed in the United States from the end of the last century until the enactment of the Social Security Act in 1935 (Jacoby 1985). In that early period, "welfare work" emerged in only a few large manufacturing industries (automotive manufacturing) that were competing for short supplies of workers and attempting to fend off unionization. Welfare work appeared in the form of profit-sharing schemes, family wages, and personnel departments serving selected (favored) workers' needs (Ford 1922). Following World War II the development of occupational welfare accelerated as a result of several historical factors. The first was initiated by corporate tax structures that evolved during the war to control wages, but it had the early unanticipated consequence of producing a "hidden payroll" used by employers to compensate their favored workers above the ceilings imposed by wage controls (U.S. Chamber of Commerce 1980). Subsequent taxation policies after the 1950s encouraged employers explicitly to provide benefits as elements of compensation (Goodfellow and Schieber 1993). Second, the ascendance of collective bargaining and its spillover effects in the manufacturing sector helped diffuse fringe benefit institutions to other sectors (Cornfield 1990). Finally, the growth of organized professions, public employment, and large firms with bureaucratized employment systems created occupational and internal agency or firm labor markets, respectively, that privileged selected workforces with age- and tenure-related promotional opportunities and income protections like pensions and health insurance (Knoke 1994; O'Rand 1986). These compensation packages provided the anchors for what came to be typified as the "lifetime employment contract," an institution that reinforced long-term employment relations (Pfeffer and Baron 1988; Belous 1989; Jacoby 1985; O'Rand and MacLean 1986). Employers used them to maintain stable core workforces; employees valued them as protections of their income streams across the life cycle. Excluded from these contracts were marginal or secondary labor forces, including contingent workers of all kinds, lower skilled jobholders with high substitutability on the job, and intermittent workers. Service and retail sales sectors and smaller employing establishments, who historically depended on secondary workers, were less likely to offer compensation packages beyond hourly wages (Tilly 1996). Women and minorities, who have always been highly overrepresented in marginal labor forces, were thus excluded from this relationship, except as its derived beneficiaries based on their relationships to covered workers.

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However, the rise of women's sustained labor force participation over the past three decades has coincided with the apparent decline of the lifetime employment relationship (Kalleberg 1996). Although selected industrial, occupational, and firm labor markets continue to preserve structures to support the lifetime employment model for favored workers, the "externalization" of work presents an alternative to "lifetime employment" with the same employer (Pfeffer and Baron 1988), which Belous (1989) has termed the "day laborer model." This second ideal type identifies with the spot market model of employment relations in contrast to the more hierarchical and enduring lifetime employment contract. It represents two growing tendencies among employers. The first is to cut costs by narrowing the provision of long-term benefits with employer obligations to smaller portions of their workforce. Compensation packages include fewer long-term promises by employers and more benefits requiring greater worker contributions and responsibilities. The second is to hire part-time and contingent workers as temporary help in the workplace or to "contract out" for services historically provided by internally maintained labor markets. These workers are not typically covered by fringe benefits, and particularly not by those with long-term obligations for employers. The accelerating pressures of globalization since the early 1970s account for a large share of the change in the employment contract. Emergent foreign competition for U.S. automotive and related industries (i.e., rubber, glass, steel, and oil) was apparent in this period, when dated arid sometimes outmoded factories and production systems could not rapidly adapt to competition from Germany and Japan. The response to this challenge by U.S. industry over the next two decades first included "deindustrialization" or the shift away from manufacturing (Bluestone and Harrison 1980), and then corporate restructuring (Harrison 1994), which included a number of labor-related transformations such as the shift to cheaper offshore labor markets to carry out parts of the production process formerly in the hands of large unionized U.S. workforces, the technological upgrading of communication and coordination processes, and the trimming of middle management workforces. Blue-collar workers in the 1970s and early 1980s were followed later by white-collar workers into unemployment or involuntary job shifts as a result of plant closings, downsizings, and corporate reorganization, including mergers. Pfeffer and Baron (1988) refer to this set of practices as the "externalization of labor," which has altered the "administrative, temporal, and /or locational attachments between organizations and employees" (Pfeffer and Baron 1988). These practices have dispersed and segmented human resources and loosely integrated, them using communications technologies with the twin goals of greater efficiency and flexibility (Piore and Sabel 1984).

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Contingent employment has been estimated to make up between onefourth and one-third of the U.S. labor force. Belous (1989) reports that between 1980 and 1987 four sectors of the contingent workforce grew most dramatically: temporary workers (usually hired from a mushrooming broker industry called the temporary help industry) grew 125 percent; part-time employment grew 20 percent, from 16.3 percent of the labor force in 1980 to 19.5 percent in 1987; self-employment increased by 13 percent; and business services by 55 percent. It is obvious that these labor forces are quite heterogeneous in their access to resources and power and in the extent of their "extemalization" or distance from long-term employment structures. For example, Tilly (1996) has recently distinguished two major types of part-time jobs. "Secondary" part-time jobs are those closely attached to the day-laborer model; these are typically lower skill jobs and are meant to be short-term and to save labor overhead costs. On the other hand, "retention" part-time jobs are designated to keep favored workers (especially women with valued skills). Such jobs carry more complex compensation packages including vacation time, health insurance, and pensions. Over all, the secondary part-time workers are increasingly spread across industries but more likely to be concentrated in the retail sales and service sectors; the retention part-time workers are more evenly spread across sectors that also include communications and insurance (Tilly 1996). The significance of this distinction is that the kind of part-time work for those components of the labor force most represented in these categories is consequential for their career patterns, earnings trajectories, and final pension incomes. Earnings are critical to pension savings. In turn, labor force continuity or job career maintenance is critical to earnings growth. Protections for all forms of employment, including retention part-time work, introduces alternative trajectories for retirement saving. Historically, unionization benefited workers in the core industrial sector dominated by manufacturing. Among these benefits were social protections attached to compensation packages for their workers. Although union coverage of workers has reached an all-time low in the United States, hovering below 15 percent, recent shifts in unionization efforts are being directed away from the declining manufacturing sector and toward high growth sectors, particularly service sector employees and workers in smaller establishments such as community hospitals. Labor market segmentation and extemalization have exacted a heavy toll on unionism. Paradoxically, union influence (measured as certification victories and successful contract negotiation) has been greater in the sectors in which unionism has been least prevalent historically—sectors that consist of female-dominated occupations and smaller establishments. In these settings, which are labeled "contested milieux" by Krecker and

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O'Rand (1991), workers are gaining benefits (including pensions) at a relatively higher rate than workers elsewhere. Yet even in these new sectors commitments made by employers are nevertheless becoming weaker. The occupational welfare system in the United States remains a highly decentralized and modestly regulated system. Industry and firm size persist as nontrivial factors in the provision of protective benefits to workers. Not all workers are covered arid where coverage is available, the benefit package varies considerably by industry, from firm to firm within industries, and within firms from job to job. The variability of and recent changes in industry pension participation rates are evident in Figure 5.3. Pension participation rates between 1979 and 1993 are taken from the Current Population Surveys (U.S. Department of Labor 1994). Four different rates are reported in the figure by major industry: the percentage of all workers in 1993 who participated in a pension plan; the percentage of female workers in 1993 who participated in a pension plan; the percentage change in worker participation in pension plans between 1979 and 1993; and the percentage change in female workers participating in a pension plan between 1979 and 1993. Participation patterns by industry vary significantly and in the direction of historical differences. First, agriculture falls below 20 percent, construction and retail trade hover around 34 percent, and the service industry (employing over one-third of all women who work) falls just above 40 percent. All four of these industries require fewer skills from most workers and depend much more on secondary part-time or seasonal workers. Mining exhibits among the highest participation patterns as a result of high unionization levels, although this industry is among the smallest and most regionally concentrated. Durable manufacturing participation rates equal those in mining, though the former is a much larger industry, with rates in the nondurable manufacturing sector slightly lower. Unionization in these sectors as well as in the transportation sector, where slightly over half of workers participate, accounts for their relatively high rates. It is important to keep in mind, however, that between one-third and one-half of workers in manufacturing and transportation are not participating in a plan. Indeed, by 1993 the manufacturing sector accounted for only one-third of all pension-covered jobs, down 5 percent from 1988 and 10 percent from 1980 (Reno 1993). Examination of the third bar of the histograms shows that since 1979 worker participation rates have not changed in manufacturing. In 1993 women's pension participation rates were remarkably close to men's across industries and actually exceed men's in construction, transportation, communications/utilities, retail trade, and finance/insurance/real estate sectors. In all industries except mining arid agriculture,

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women's participation rates have increased and, importantly, have increased at higher rates than those for all workers. Women's overall pension participation rates in 1993 were 48 percent and men's 51 percent— with a nearly 1 percent per year increase from 1988 of women's rates while men's rates remained constant until 1993 (U.S. Department of Labor 1994). The most recent estimates are that women are now slightly more likely (58 percent) than men (56 percent) to work for an employer who offers a pension plan (Employee Benefits Research Institute 1997). The gender distribution of workers across industries results in a striking segregation in pension coverage: in 1993 nearly three-fourths (72 percent) of pension-covered workers in manufacturing were men and over half (55 percent) of pension covered service sector workers were women. Gender segregation patterns are more evident when occupational sectors are compared. Figure 5.4 reports two distributions: the first consists of occupational pension participation rates among women in 1993 and the second consists of the percentage of female workers in occupations reported in the 1990 census (U.S. Department of Labor 1994). The striking overall finding is that female pension participation rates are inversely related to their occupational concentration. Three sectors in which over 40 percent of all women workers are concentrated and in which women make up the majority of employees—sales, clerical, and service—reveal among the lowest pension participation rates. In the services sector, in which six out of ten workers are female, only one in five women is participating in a pension. Women are less likely than men to be participating in health insurance coverage in both the private and the public sector. In 1993, men and women in the private sector participated in health insurance, covering themselves a n d / o r their families at rates of 63 and 51 percent respectively; among government workers the rates were 85 and 71 percent. Among married workers, the tendency is for one spouse to provide coverage, making the significance of gender differences difficult to interpret. Health insurance coverage rates also vary by industry, although this form of occupational welfare is more likely than pensions to be offered to workers. Figure 5.5 reports industry rates of health insurance coverage in 1993 (U.S. Department of Labor 1994). The lowest rates appear in agriculture, construction, retail sales, and services; the highest in mining, manufacturing, communications/utilities, and finance/insurance/real estate sectors. In the communications/utility sector nine out of every ten employees are covered, whereas in the retail and service sectors only five and six out of ten workers, respectively, are covered. Both pensions and health insurance coverage continue to be strongly influenced by the size of the employment organization across all industries. Figure 5.6 reports benefit coverage rates for pensions and health

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100 M • D Q

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Pension coverage Family health insurance coverage Employee only health insurance coverage No health insurance

80 70 60 50

0— <10

FIGURE 5.6

10 to 24

25 to 99 100 to 499 Number of Employees

Establishment Size and Benefit Coverage Rates, 1993

SOURCE: Department of Labor 1994; Pension and Health Benefits of American Workers A

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insurance by establishment size in 1993 (U.S. Department of Labor 1994). With the increase in size from less than ten employees to more than five hundred employees, the rate of family health insurance coverage rises almost fourfold. The smallest establishments—in which job growth has been highest over the past two decades (Birch 1987)—have the lowest coverage by both benefits: two-thirds of workers in establishments with fewer than ten employees are not covered by health insurance and over one-third in those firms employing ten to twenty-four workers are not covered by health insurance. Pension coverage rates remain below 30 percent in firms under a hundred employees, but jump significantly in firms of 100-499 (57 percent), 500-999 (62 percent), and 1,000 or more (73 percent). Recent trends suggest that women are slightly more likely to have pension coverage, or to be offered pension coverage, in some industries. In addition, there is little difference in the probability that women and men will be offered health coverage at the same level of wages. The same holds true for disability, although a recent study has found that for women, sick leave is often substituted for disability insurance, and especially in lower paid jobs (Currie 1993). This is a salient difference, since disability typically pertains to the longer-term employment relationship and sick leave to the shorter-term. Indeed, sick leave is usually the rubric under which pregnancy or maternity leave has been subsumed (Kamerman and Kahn 1989). Defined Benefit and Defined Contribution Pension Plans The change in the types and mix of pension plans offered to workers is a critical indicator of the changing employment contract (O'Rand 1996; Farkas and O'Rand 1998). In 1991, approximately 700,000 pension plans were offered to workers in the United States (U.S. Department of Labor 1997). One out of seven plans was a defined benefit plan, the type of plan that evolved until the 1970s as the primary retirement savings instrument for workers in major industries and in some government sectors. The remaining plans were defined contribution plans, which come primarily in the forms of profit-sharing, thrift-savings, stock bonus, target benefit, and money purchase or money market accounts. These plans have grown dramatically since the 1970s and now serve to supplement the old-fashioned defined benefit plans for some workers. About half of all pension participants have a secondary defined contribution plan besides their defined benefit plan. But more and more, defined contribution plans are the exclusive pensions offered to workers in the rapidly growing sales, service, and clerical sectors. Bajtelsmit and VanDerhei (1997) report that 84 percent of all plans now offered to workers are of the defined contribution type, and for nearly

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one-fourth of workers (and an annually growing share of workers) the defined contribution is their primary plan. Defined benefit (DB) plans tend to be larger than defined contribution plans (DC) and, therefore, the actual drop in DB plan participants has not been great. Over threefourths of pension plan participants are covered by DB plans. However, the dramatic growth in DC plans has brought significant changes to retirement policy in the workplace, changes that may diffuse to the Social Security system if some advocates are successful. The defined benefit (DB) plan is predicated on the long-term employment relationship. This plan is sponsored by the employer, union, a n d / o r vendor (usually an insurance company) who (1) makes contributions to the plan based on actuarial estimates of the cost of future benefits, (2) absorbs all risks in the case of market failures, and (3) is liable for the delivery of benefits upon retirement after vesting has been achieved. Benefits are fixed monthly amounts calculated by formulae based on service and earnings. An illustrative monthly benefit formula would be to take 1 percent of the employee's final annual earnings and multiply this amount by years of service. The DB reward structure is seniority based and backloaded. Higher benefits accrue later in the employee's tenure. DB plans also encourage early departure from career jobs by offering maximum benefit incentives for a limited period in the preretirement years. Working past the window of maximum benefit offer leads to diminished benefit accrual. In this way, the DB plan rule structure serves the dual purpose of encouraging worker attachment over the long term and tightly scheduling retirement at the end of the work career (see Wise 1997 for additional discussion of these incentives and their effects). The General Motors-United Auto Workers pension plans, developed by the late 1950s and early 1960s, are typical DB structures. Workers with thirty or more years of sendee qualify for the maximum benefit; hence retirement after thirty years is strongly encouraged. For many workers who began their jobs at age 25, the retirement window is open by age 55. These plans, referred to as "regular early retirement packages," have played a major role in the trend toward early retirement over the past thirty years (Barfield and Morgan 1969). By the 1980s, when plant closings became more frequent events in the automobile and affiliated industries, special early retirement packages were offered for even shorter years of service (Hardy, Hazelrigg, and Quadagno 1996). An important feature of the DB plan is that it is not available as income until retirement. Accordingly, it is out of reach of the worker and is not liquidated for other purposes. Another feature of this plan is its collective foundation. Defined benefit plans usually cover large collectivities of workers (e.g., union members) who often work for different employers but are covered by the same rules and rights (these plans are referred to

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as multiemployer plans). The role of unions, particularly after World War II, was a central one in bargaining for protective structures like pensions to preserve income security. As such, the defined benefit plan developed over thirty years into a well-funded and relatively secure occupational welfare base for protected workers, including large numbers of blue-collar workers in the manufacturing and transportation sectors. Hie relative decline of the defined benefit plan has been attributed to two major factors. The first is the relative shift away from manufacturing in the United States in response to global competition. The second is the increased regulation of these pension plans that began with the Employee Retirement Income Security Act (ERISA) of 1974. Until ERISA, the rule structures of plans regulating minimum service requirements and benefit ranges varied enormously from industry to industry, firm to firm, and even within firms. The GM-UAW plan was not a universal model. Some plans required twenty years of service before vesting, whereas others delayed eligibility toward vesting until after initial extended probationary periods. Similarly, pension promises were not always honored. Pension fund shortages were frequent. ERISA was enacted to protect workers' pension rights by standardizing participation and eligibility criteria of all nongovernmental pensions and by securing adequate funding of pensions through employer liability. At its enactment, it covered all plans in existence provided by companies engaged in interstate commerce and set minimum standards for all future plans. Subsequent legislation and regulatory action have reinforced or amended the 1974 provisions of ERISA. Important among these actions are the Retirement Equity Act of 1984, the Pension Protection Act of 1987, and the 1990 amendment of Title I of ERISA. Several other revisions have followed from tax reform, revenue, and omnibus budget enactments including, among other things, nondiscrimination rules. The Pension Benefit Guaranty Corporation (PBGC) established by Title IV of ERISA is a self-financing, government-owned corporation whose purpose is to guarantee basic pension benefits in covered private plans if they terminate with insufficient funds. Two benefit insurance programs are administered for single employer and multiemployer plans, respectively. All defined-benefit plans must pay prescribed premiums to PBGC for each participant. Multiemployer plans can be insured for insolvency instead of termination to assist them when they are unable to pay basic benefits, but these plans are obligated to repay. The Changing Pension Mix

Figure 5.7 displays the distributions of all pensions plans between 1975 and 1993. The data come from the Internal Revenue Service's 5500 Series

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Employer Records (U.S. Department of Labor 1997). In 1991, the 77.6 million participants in DB and DC plans were approximately equally distributed between them (39 million and 38.6 million in defined benefit and defined contribution plans, respectively). Both plans are commonly offered by larger employing establishments and are frequently taken by the same workers who supplement their DB plans with DC plans. Accordingly, the total number of workers who are pension participants is smaller. The total assets of these plans approached $3 trillion in 1991, with 56 percent in defined benefit and 44 percent in defined contribution holdings. Over three-fourths of the assets in defined contribution plans were in profit-sharing or thrift-savings accounts, usually offered in the form of mutual funds or so-called 401Ks. Finally, in 1991 nearly threefourths (73 percent) of worker contributions to all pension plans were being made to defined contribution plans. All projections are in the direction of the continued growth and dominance of defined contribution plans and the continued decline of defined benefit plans, especially with the retirement over the next two decades of workers covered by the latter from earlier times (Gordon, Mitchell, and Twinney 1997). Like the shift from manufacturing to service sector work, the shift from defined benefit to defined contribution plans signals a change in the workplace and particularly in the lifetime employment contract. Defined Contribution

Plans

A consequence of the history of pension regulation has been the accelerating retreat by employers from the defined benefit form of pension in favor of new instruments placing greater responsibility on workers. Defined contribution (DC) plans do not define or promise final benefit levels. Rather, they define fixed rates of contributions by employers (which may include shares of profits) to individual employee accounts usually based on a predetermined percentage of salary and sometimes adjusted upward with increased employee tenure. These contribution rates vary widely. Final benefits are based on the size of the account, which has grown relative to accumulated contribution levels, market gains and losses, fees, loans, and forfeitures. At retirement, the worker has access to the account via a lump sum payment or annuity. But the worker bears all of the risk. The Revenue Act of 1978 supported the marketing of new pension plans based only on workers' voluntary contributions and not requiring employer contributions at all. These new tax-deferred savings instruments were finally introduced in 1982 as 401Ks. These plans operate pri-

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marily as salary reduction, thrift plan, or profit-sharing instruments with tax-deferred features. The contribution structure varies from employer to employer, but the most common arrangement is a salary reduction accompanied by an employer match. Other arrangements can include employer contributions only, salary reduction only, salary reduction and employer's discretionary contribution, or all three of these components. 401Ks have become among the most popular types of DC plans in the market. Three reasons for their popularity have been suggested (Papke, Peterson, and Poterba 1993). First, from the worker's perspective, these plans offer tax advantages through salary reduction that the earlier DC plans (i.e., profit sharing and thrift plans) did not. Second, 401 Ks are far more flexible and individualized than other arrangements. Diverse sets of workers can determine the amounts they wish to shelter and save. Unlike DBs, 401 Ks have very short or no service requirements. They are portable, that is, they can be maintained from job to job, employer to employer. They permit short-term loans with limited interest for significant family needs such as a down payment on a mortgage, college or hospitalization costs, job loss, or bankruptcy. They also permit cash outs with tax penalties. From the employer's perspective, DC plans cost less; employers sponsor them because they bear no responsibility for them. A highly competitive market of vendors present DC plans through employers, who often, in turn, provide employees with several choices. Figure 5.8 displays the distribution of private pension plans by industry in 1991 (U.S. Department of Labor 1997). The first series shows the share of all pensions by industry; the second the percentage of pension plans in the industry that are defined contribution plans in 1992. Nearly half of all pension plans (48 percent) are offered in the service industries; nine out of ten of these are defined contribution plans. The three industries with the lowest rates of DC plans are the traditional DB-dominated industries of mining, manufacturing, and communications/utilities. The general availability across all industries is notable. A recent review of studies of the determinants of type of plan coverage reveals a mix of correlates that suggests a complex set of relationships (Andrews and Hurd 1992). Defined benefit pensions are highly associated with larger firms, unionization, and industries in which workers are predominantly of one sex. Defined contribution plans, on the other hand, are bimodally distributed: more profitable firms and wealthier workers (in the financial, communications, and high-end services sectors) are highly likely to have defined contributions plans both as primary and supplementary plans. However, lower wage service industry workers are more likely to have DC than DB plans and usually as their primary or exclusive retirement strategy.

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This bimodality is perhaps the surface representation of the accentuated disparity in worker compensation produced by occupational welfare (Root 1985). Among the higher earnings category, higher risk pensions are more likely to be supplementary saving/investment strategies, whereas among lower wage workers these pensions are increasingly their primary—if not exclusive—workplace-provided means of saving for retirement above and beyond Social Security. Other individualized retirement savings methods are proliferating in the market. Individual Retirement Accounts (IRAs) are among these new mechanisms for retirement savings devised by banks rather than employers to attract investment income by offering tax shelters to more affluent workers. These devices have grown at even faster rates than defined contributions plans, since they do not require employer coverage and provide an opportunity to part-time and contingent workers and to nonworking spouses to gain a tax shelter as well as to save for retirement. All of these individualized schemes present new problems for pension saving to all workers—though perhaps with greater hazards for lowerwage workers and women in the long run. More affluent workers tend to participate in more than one of these plans and to remain in them longer. Male and female workers already covered by traditional pension plans have increased their participation in IRAs and 401Ks over the past decade at accelerating rates (Bodie and Munnell 1992). None of these new savings strategies (IRAs, 401 Ks, or ESOPs) is covered by ERISA and the Pension Benefit Guaranty Corporation.

New Risks for Workers

Finally, the shift toward individual management of retirement accounts is introducing variability in retirement income outcomes based on risktaking propensities in the population. A recent survey of working Americans reports that over two-thirds (69 percent) of the respondents prefer low-risk, low-return investments (Employee Benefit Research Institute 1993). Moreover, a number of studies have found that women are more risk averse than men when it comes to the market. Women are more likely to invest in fixed-income securities and less likely to invest in employer stock (VanDerhei and Bajtelsmit 1997). An analysis of the federal government's Thrift Savings Plan (TSP) for federal employees in 1990 supports these findings further (Hinz, McCarthy, and Turner 1997). The federal government automatically contributes 1 percent of federal workers' salaries in the TSP; the government also matches up to 5 percent of pretax contributions made by workers to this plan. The TSP has three funds. The G fund holds short-term nonmarketable U.S.

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Treasury securities; the F fund is a fixed-income index fund of government and corporate bonds; and the C fund is a Standard & Poor's 500 index common stock fund. The G, F, and C funds are successively more risky, with the common stock fund the most speculative of the three. Only 28 percent of women, compared to 45 percent of men, participate in the common stock fund. Higher earners are more likely to invest in common stock. Althougli married men and unmarried women take similar investment risks, married women are the most conservative and unmarried men are the least conservative. Even after controlling for salary, other family income, age, and marital status, gender differences persist and result in differential portfolio sizes that exacerbate the gender gap. The growth of defined contribution plans and non-employment-based savings mechanisms has increased the diversity of the pension mix. The growing array of opportunities for investment and saving introduces new uncertainties and life course risks that promise to play themselves out to the individual's benefit or expense. The relatively unregulated environment of pension saving in the United States provides fertile ground for increasing variability in the transition to retirement and for patterns of retirement inequality. Time will tell if the rim up of equity markets in the 1990s has led to a change in the pattern of risk taking by DC plan participants. The Private-Public Linkages in Occupational Welfare

The evolution of Social Security legislation in the United States has extended women's benefits as wives, former wives, and survivors over six decades (see Chapters 2-4), but it has also promoted the progressive integration of private and public sector-based occupational welfare to exclude women from private pension benefits in addition to Social Security (Achenbaum 1986; O'Rand 1988). Taxation incentives to employers to provide fringe benefits have reinforced the provision of protective structures. However, the public-private linkage has produced further inequalities over the working life. One source of inequality stemming from the private-public linkage appears in the policy of pension integration; the other source rests in public policy toward unemployment and disability. These two sets of policies serve in important ways to stratify the fortunes of workers in the United States and to distinguish the United States from other countries in its treatment of long- and short-term unemployed and disabled workers. Pension integration refers to the defined benefit plan formula that ties Social Security and defined benefit plans explicitly either by (1) reducing (offsetting) a portion of the private pension benefit by subtracting part of the Social Security benefit or (2) paying a higher private benefit to earn-

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ings above a specific level. This linkage leads to a bifurcation in retirement income. Lower-wage workers' benefits are absorbed by Social Security, whereas higher-wage workers receive pension income above Social Security levels. For many women in recent retirement cohorts the former outcome is applicable. These women often retire officially covered by private pensions and expecting income above and beyond Social Security, but they learn that their Social Security accounts for a significant share, if not all, of total pension income (Schulz and Leavitt 1983). This rule has been a matter of considerable dispute and a recurrent issue in recent pension legislation debates over discriminatory aspects of public pension policy that increase rather than decrease income inequality among the elderly. Unemployment

and Worker's

Compensation

Unemployment insurance was established by Title III and Title IX of the Social Security Act of 1935 (Social Security Administration 1997). The policy was established "to insure workers, with attachment to the labor force, against unemployment of short duration and to provide them with sufficient income to tide them over, but not so much as to generate serious work disincentives" (Baicker, Goldin, and Katz 1997, 4). Eligibility is based on minimum standards of previous earnings and employment experience during a base period and availability for work. The system in the United States is distinctive when compared to systems in western Europe and the United Kingdom in at least three ways (Baicker, Goldin, and Katz 1997). First, it is not a national but a federalstate coordinated structure in which each state administers its own program within federal guidelines. Second, state autonomy and control leads to variability in tax rates to support the system and rules regulating benefit eligibility, levels, and duration. Third, financing is based on an "experience- or merit-rating" system that is unique among countries. This system taxes employers on the basis of benefits dispersed to their workers; in other words, the system penalizes firms for layoffs and provides incentives for smoothing production across seasons and cycles. Over time, and especially in recent years, the system has become more and more unevenly administered across states and has contracted as state revenue structures have been altered in response to diverse demographic, economic, and political forces. Over the past decade, the fraction receiving unemployment insurance in the United States has decreased to the lowest levels since 1948, except for the period between 1965 and 1970, when the national unemployment rate fell below 4 percent (Baicker, Goldin, and Katz 1997). In 1995, when the unemployment rate was 6 percent in the U.S., unemployment insurance

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participation as a ratio of GDP was less than 0.004, the same level as 1965-1970, when unemployment was lower. The reasons for the decline have been variously attributed to the decline of unions, sectoral shifts away from manufacturing and toward service and sales sectors, and the externalization of labor. The overall trend, however, is away from the provision of support to workers for involuntary layoffs or seasonal employment cycles. The changing employment contract excludes more workers from traditional sources of occupational welfare based in the employment system. Interestingly, as unemployment insurance has declined, a related occupational welfare system—worker's compensation—has increased. Worker's Compensation, which developed earlier in the century than Social Security, provides income maintenance protection to workers for work-related injury, illness, or disability (Social Security Administration 1997). Employer-provided and state-regulated in a similar federal-state structure as unemployment insurance, worker's compensation now covers twice as many workers as unemployment insurance—a pattern quite the reverse of 1960, when two times more workers were covered by unemployment insurance (Baicker, Goldin, and Katz 1997). Like unemployment insurance, it provides partial income replacement for persons with temporary total injuries who are expected to be able to return to full-time work. Benefits are of limited duration, which often is not coterminous with the course of recovery and varies from state to state.

Disability

Insurance

Permanent total disability is covered by a mix of other private insurance systems and the Social Security Disability system—all of which are available only to workers with coverage based on minimum work experience requirements and are inconsistently administered from state to state (Social Security Administration 1997). The disability rolls more than doubled between 1982 and 1993 from about 300,000 to over 600,000 beneficiaries as other social insurance programs contracted. A parallel trend was the increase in the concurrent coverage of workers by disability insurance and Supplemental Security Income, the means-tested income supplement for the poor (Burkhauser, Haveman, and Wolfe 1993). All in all, some researchers argue that "disability retirement" is becoming an alternative pathway out of the workplace (see Chapter 4). The absence of other social welfare structures for workers too young to qualify for retirement benefits has probably rendered the worker's compensation and disability programs as the default income security program for some workers who fall outside the boundaries of health and pension insurance protection (Burkhauser, Haveman, and Wolfe 1993).

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Conclusion

In short, the occupational welfare system in the United States is highly decentralized and increasingly individualized. Workers participate in a market-centered system in which they increasingly carry the burden for income maintenance both over the normal work-retirement life course and in the face of unexpected or involuntary income loss from life course risks such as unemployment or injury. Workers at the margins of the system are absorbed by default (rather than by design) by state-administered, means-tested programs that offer only short-term support. We know that unemployment and disability among older workers are becoming institutionalized alternative pathways to retirement. As such, they have been added to the decentralized and loosely coupled wrelfare structure of the United States. Pensions, health insurance, unemployment, disability, and worker's compensation do not constitute a coherent national agenda for income maintenance or social welfare. They form a loose complement of programs that are extensions of the market. They categorize and isolate individuals rather than gather them under a common umbrella of life course support. In the following chapters we will compare labor force participation patterns and the welfare system of the United States with several other countries. All of these countries share common challenges and concerns regarding population aging and labor market policies, but their responses to these exigencies are very different. The differences stem from distinctive market-state relationships that have evolved under diverse cultural-historical conditions. The outcomes of these differences for cohorts of workers include cross-national variability in labor force exits and relative economic inequality in retirement.

6 U.S. Labor Force Participation Trends in Comparative Perspective

Although the broad outlines of life course definition are similar in the United States and the large nations of the European Union, there are important differences. History and culture combine to produce public programs and employment institutions that have reacted differently to the changing environment of employment that has affected all industrial nations. As a result, there is important divergence in the socially constructed life course between countries at the same time that the amount of heterogeneity within each country is probably increasing. In this chapter we discuss the main trends in work and retirement in three large countries of the European Union—France, Germany, and the United Kingdom—and compare them to trends in the United States to highlight the similarities and differences in the environment workers face, public policy responses, and the resulting life course organization. In addition, we consider Sweden. With a population that is only 15 percent that of France, the next smallest country considered here, Sweden's contribution to aggregate trends is very modest. Nonetheless, Sweden's orgaiiization of the life course is distinctive and theoretically important, and we discuss it for that reason. Though there are important differences in degree, all these countries have experienced declining labor force participation of older men during the last twenty-five years. The decline has been greater in Europe than in the United States, though there are important differences among EU countries. The main differences can be largely traced to the more aggressive use of public early retirement mechanisms in France and Germany. Women's midlife participation has increased, although older women have also joined the trend toward lower participation at older ages. The similarity in pattern across countries can be deceiving, however. The so158

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cial institutions producing early exit and the social and cultural context within which it occurs differ across countries in important ways. Our goal in this chapter is to describe the changing pattern of employment among the elderly across the four countries and link this change to shifting definitions of the life course, that is, to changes in the timing and process of the move between work and retirement. We begin by presenting comparative statistics on changing labor force participation of the older population. To understand the similarities and differences, we then present an overview of shifting employment sfructures and examine how early exit from the labor force has been part of the public or private response in each country. In the final section of the chapter, we link the various changes and policy responses together in an account of the changing life course. Changing Patterns of Late-Life Labor Force Participation

Figures 6.1 and 6.3 show labor force trends for men and women aged 60-64 in France, Germany, the United Kingdom, Sweden, and the United States, and Figure 6.2 shows 1996 rates for both men and women aged 65 and over (OECD 1997a). Data for the European countries come from national surveys that provide broadly comparable data to the Current Population Survey data from which U.S. rates are estimated. These cross-national data are only presented in cross-sectional form; cohort analyses for some of these countries may be found in Jacobs, Kohli, and Rein (1991a). There have been changes over the years covered in the way data are collected as national statistical agencies adjust to changes in the labor market. Close inspection of the data suggests that only one shift in procedure has had a substantive effect on labor force trends: Between 1990 and 1991 the German data were revised to include East Germany and introduce other changes. There is some discontinuity in labor force participation rates between the two years, and the inclusion of East German data is most likely responsible. Rates at ages 60-64 declined as a result of early retirement options in East Germany; rates at younger ages increased because East Germany had higher overall participation rates and unification caused an economic boom (Sackmann 1998). Trends for Men

Figure 6.1 (derived from OECD 1997a) presents participation rates for men aged 60-64 for each year between 1977 and 1996. This age-group has shown the largest decline in labor force participation because the trend to earlier retirement has progressively moved average age of exit earlier in this age interval. The countries fall into two broad categories: France and

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Germany have low participation and large declines. The United States, the United Kingdom, and Sweden have relatively high participation and, with the exception of the United Kingdom before 1986, relatively little change. Differences in trends can easily be seen by comparing change before and after 1986. Comparing rates in 1977 and 1986, the decline in the French labor force participation rate from 49.1 to 27.5 indicates a decline of 44 percent (i.e., the change in participation of -21.6 percent divided by the original level). The decline in Germany was 28 percent, and in the United States 12 percent. Data for the current labor force series in the United Kingdom are available only from 1984. However, using an earlier data series (OECD 1992a), the decline in the United Kingdom between 1977 and 1986 was 31 percent. The decline in Sweden, 6.6 percent, was the smallest. France has not only had the largest decline, but its decline has continued in the period after 1986; between 1986 and 1996, the declines were 37 percent for France, 9 percent for Sweden, 8 percent in the United Kingdom, and 1 percent in the United States. Data for Germany are available to 1995; although the decline between 1986 and 1995 was 19 percent, three quarters of the change is accounted for by the difference between 1990 and 1991 when East German data were included. Discounting this abrupt change, German rates declined about 5 percent between 1986 and 1995. Both the United Kingdom and Germany show the same slowing of the early exit trend discussed for the United States in Chapter 4. Figure 6.2 (derived from OECD 1997a) shows labor force participation rates at ages over 65 in 1996 (1995 for Germany). These rates have also declined over time, though they have declined much more in the three large EU countries than in the United States (Henretta 1994a) and Sweden. Older workers who continue working are more likely to be self-employed or part-time workers in the European Union (Kiiisella and Gist 1996) as in the United States. The United States altered its mandatory retirement age to 70 in 1978 and subsequently abolished compulsory retirement for virtually all occupations in 1986 (Clark and McDermed 1990), it is unlikely that this change is responsible for continuing high rates of U.S. labor force participation after age 65 or the difference between the United States and the large European Union countries. The United States had a higher rate of late labor force participation before the change and continues to have it today. Researchers who have examined the issue argue that small proportions of the workforce were affected by mandatory retirement rules. Moreover, those affected were very likely to also have had firm pensions that encouraged retirement before the mandatory age (Quinn, Burkhauser, and Myers 1990). Overall, all the countries examined have experienced decline in labor force participation rates of older men, but the magnitude of the change dif-

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fers across nations. At ages 60-64, France has shown the greatest change and the United States and Sweden the least. Another way to examine the data is to compare labor force participation rates across countries for 1996. France clearly has the lowest participation rates over age 60, and Germany has the next lowest rates. The United States, the United Kingdom, and Sweden have similar rates at ages 60-64. After age 65, the United States clearly has the highest participation rates. Yet equal rates do not necessarily have the same meaning or result from identical processes. For example, retirement age for men under the state pension is 65 in the United Kingdom, whereas reduced benefits are available at age 62 in the United States. Trends for Women

Each EU country has experienced increases in women's midlife labor force participation (e.g., ages 45-54) since the 1970s, similar to the patterns discussed for the United States in Chapter 4. The percentage increases were larger in the United States, France, and Germany than in the United Kingdom or Sweden because the latter two countries had high participation rates early. Figure 6.3 (derived from OECD 1997a) presents labor force participation data for women aged 60-64. The effect of the early retirement trend is clear for France and Germany. Despite an increase in participation at ages 45-54, rates at 60-64 have declined in both countries, though clearly more in France than in Germany. Between 1977 and 1986, rates dropped 34 percent in France and 18 percent in Germany. Since 1986, French rates have declined another 20 percent. Were it not for the discontinuity between 1990 and 1991, German rates would have been essentially unchanged. Rates have increased in the United States since 1977, and the same is true in the United Kingdom and Sweden. As in the United States, women's retirement in Britain and Sweden are overwhelmed by increases in successive cohorts' labor force participation. Jacobs, Kohli, and Rein (1991a) use national survey data to examine cohort profiles of labor force participation for the United States, Germany, and France. Cohort definitions vary across nations but generally range from the 1910 to 1925 birth cohorts—thus ranging between those who were 45 and 60 in 1970. Women in Germany show a clear pattern in which more recent cohorts have higher levels of labor force participation before age 60 and lower rates afterward. French data show the same pattern in an attenuated fashion, and U.S. data show the weakest pattern. Hence, there is evidence of decline across successive cohorts in older women's labor force participation, particularly in Germany. Over age 65, women's participation rates have declined in Germany and France while in the United Kingdom, the United States, and Sweden they have been approximately stable or slightly increasing, depending on

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the time period examined. The right panel of Figure 6.2 shows participation rates at this age in 1996 (1995 for Germany). U.S. women clearly have the highest participation levels, followed by women in Sweden. Changing Patterns of Employment

Declining labor force participation at older ages is one aspect of large and general changes in the pattern of employment in industrial countries. The 1994 OECD Jobs Study (OECD 1994) points to a number of underlying trends. Some employment trends, such as the shift from manufacturing to service employment and increasing labor force participation among midlife women, are similar across the countries being examined. However, unemployment levels, the rate of job growth, and inequality in earnings have diverged. Although there are difficulties inherent in any comparisons of statistics collected in different nations (Wohlers and Weinert 1988), the patterns in these measures are large enough to provide a clear picture of areas of similarity and divergence across countries. Common Trends

The countries examined have experienced a relative loss of manufacturing employment and growth in service employment. Changing technology requires fewer employees to maintain the same or a higher level of output (OECD 1992b), resulting in a relative loss in manufacturing compared to service jobs. Absolute levels of manufacturing employment were relatively stable in Germany, Sweden, and the United States during the 1980s, but losses were greater in France and highest in the United Kingdom. Over the same period, all five countries examined experienced important growth in nongovernment service employment, which was greater in the United States and the United Kingdom than in France, Germany, or Sweden (OECD 1994). The shifting structure of employment is important for two reasons. First, though the early retirement trend is not limited to manufacturing, industries with greater decline in employment experienced the largest relative loss of older employees (Jacobs, Kohli, and Rein 1991b). Second, the growth in service employment is particularly important for life course definitions, since service jobs are more likely to be part-time (OECD 1992b) and part-time jobs are predominately held by women, particularly in Europe (OECD 1997b). Job Creation and

Unemployment

Rates of job growth differ between the United States and the EU countries examined. Although the number of jobs increased in all five

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countries, a better measure examines job growth relative to population change (Wohlers and Weinert 1988). Despite greater population growth, U.S. jobs grew faster than population during the 1980s. In the United Kingdom and Sweden, jobs were very slightly ahead of population, but in France and Germany, jobs did not keep up with population growth (OECD 1994). The inability of some European nations to increase jobs at the same rate as population is reflected in unemployment rates. Before the 1970s, the nations of the European Union generally had lower unemployment than the United States. In addition, cyclical changes in unemployment level were smaller. European unemployment began to rise in the early 1970s, and since the early 1980s it has generally exceeded the U.S. rate (Bean 1994). These differences continue today. Both France and Germany have had long-term rises in unemployment that bring them above the U.S. level. Employment in the United Kingdom has been highly variable but has been higher than the U.S. rate in recent years. Sweden had very low unemployment during the 1980s, but unemployment began to rise in the early 1990s and since 1993 has been higher than the U.S. rate (U.S. Department of Labor 1998). Some of the difference between the United States and European Union countries results from short-term cyclical variation in each country, so the current results may overstate the average difference (Krugman 1998). However, the difference in the long-term trend seems clear. The length of time workers are unemployed also differs between the United States and Europe. Workers are more likely to become unemployed in the United States, but unemployment in France, Germany, and the United Kingdom (OECD 1994) and the European Union generally (Bean 1994) is more likely to be long-term.

Wage and Income

Inequality

A final trend has been the increase in wage and income inequality. Per capita income per hour worked is similar in France, Germany, and the United States, but overall per capita income in these European countries lags partly because of higher unemployment (Krugman 1998). However, income inequality trends differ. Comparing a male worker at the 10th and 90th percentiles of earnings, there was a large increase in inequality in the United Kingdom and the United States during the 1980s while Swedish inequality remained stable and France and Germany showed very small change in the direction of greater equality (OECD 1994). Though other analyses show small increases in inequality in Sweden, France, and Germany, their levels of inequality and amount of change is considerably less than the U.S. (Gottschalk, Gustafsson, and Palmer 1997). In the United States, the real wages of low-paid male workers ac-

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tually declined during the 1980s while they increased in the other four countries (OECD 1994). There are similar trends in household disposable income. The United States has the highest level of income inequality followed by the United Kingdom; these two countries experienced the greatest increase in inequality during the 1980s. In married households, men's earnings are the most important component of income in the bottom half of the income distribution, whereas wives' wages are increasingly important at the top of the distribution (Atkinson, Rainwater, and Smeeding 1995), suggesting that both components of earnings may affect household income inequality. Some observers argue that a focus on income distribution does not provide an adequate measure of inequality because there are different types of inequality. Higher unemployment imposes costs on the individual who experiences it as well as the society. Individual costs include results such as loss of skills, psychological harm, loss of motivation, and ill health. Societal costs involve less production (Sen 1997). In this perspective, the social costs of higher income inequality in the United States may be balanced by lower unemployment. Explaining Changes in Employment

Overall, the United States shares with Europe some important labor force trends—the relative shift from manufacturing to services and increasing women's labor force participation. But there are two important differences in trends. The United States has created jobs faster than its population has grown while wages of lower-income workers have declined in real terms. Nations of the European Union have created many fewer jobs, and in some countries job creation has not kept pace with population growth, leading to rising unemployment. Moreover, unemployment is more likely to be a long-term state in Europe. But wages of low-income workers have continued to increase in real terms, albeit modestly, and only the United Kingdom has experienced a large increase in inequality. "Europe Jobless, America Penniless," the clever title of an article by the American economist Paul Kxugman (1994), nicely captures these trends in unemployment and wages in Europe and the United States. There is much more agreement on the description of divergent trends in the United States and the three large EU countries than on explanations of them. Most explanations focus on aspects of the institutional structure of employment. Paul Krugman (1994) argues that modern technology concentrates rewards in the hands of the most skilled. Although this trend is not limited to manufacturing industries, a standard account of change in manufacturing illustrates the idea and proceeds along these lines: In an earlier era, mass production industries maintained high production levels

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of a standard product in order to fully utilize single-purpose machinery. Employment was relatively stable, and the industries employed relatively unskilled workers for highly subdivided tasks (Piore and Sabel 1984). Wages were relatively high, given the skill level, to maintain a stable work force. However-, in recent years, growth in industrialized countries has been in industries that follow more of a craft model. The lowskill, mass production industries have been under increasing pressure during the last twenty-five years for many reasons, including saturation of markets for mass-produced goods (Piore and Sabel 1984), increased competition from low-cost producers in developing and industrialized countries (Piore and Sabel 1984; Jacoby 1995), and economic "shocks" of the 1970s (Piore and Sabel 1984). The new manufacturing model involves development of technologically unique processes that require highly skilled workers. In these industries, products are more specialized and are produced in smaller production runs. Being competitive requires the ability to adjust to changing demand. This organization requires more adaptable and "flexible" machinery and workers. Workers require more firm—or industry—specific skills but also require more flexibility so they can use judgment and adapt to different tasks (Piore and Sabel 1984; Storper 1995). One way to adapt to this new production method (but not the only possible way) is to develop a core group of highly skilled workers with high wages and a second group of workers with less stable employment, either within the firm or by subcontracting less central tasks to other firms (Storper 1995). Although core workers are relatively protected from fluctuations in demand, adjustment occurs by increasing or reducing the less stable workforce. Hence, the dual structure of employment produced by this approach differentiates the workforce into those in highly protected, stable jobs and those in less stable employment. Some researchers argue that these changes have been more extensive in Europe than the United States (Piore and Sabel 1984). In addition to these changes, service jobs for unskilled workers tend to pay less than similar skill-level jobs in manufacturing. Although the division of workers into core and contingent labor forces (as well as great differentiation in skill levels in the growing service industries) may account for increasing inequality in the United States, why has the effect in Europe been different? Krugman (1994) develops an argument based on the structure of employment. Although he argues that U.S. employment institutions are similar to a free market, European countries utilize a different structure. For example, the greater importance of unions in European countries may keep wages higher, discouraging employers from hiring more workers. Longer-term unemployment benefits reduce the motivation of unemployed workers to seek a new job at low wages. Finally, restrictions on firing workers and high employ-

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ment taxes discourage employers from hiring workers for low-wage jobs. These arguments probably apply fairly well to France and Germany but, in protection given to workers and employment taxes and benefits, the United Kingdom is somewhat closer to the U.S. pattern. Compared to the United States or United Kingdom, manufacturing workers' compensation is higher in France and Germany and a higher proportion is in benefits (Mitchell 1995). The same policies that produce higher unemployment—higher benefit costs, various factors keeping wages higher, and higher unemployment benefits—play a major role in producing lower inequality in continental Europe. Mitchell (1995) argues that flexibility pressures are greater in Europe, particularly continental Europe, because there is greater protection of workers from layoff than in the United States or the United Kingdom as well as higher levels of benefits. The result has been increasing pressure to utilize part-time workers or self-employed workers to avoid some of the benefit costs of full-time workers and avoid legal restrictions on firing (e.g., OECD 1994). In a number of countries, women and young inexperienced workers have been important sources of this contingent labor force (Berger and Piore 1980). Part-time employment grew more in the three large EU countries considered here during the 1980s than in the United States (OECD 1994). Although there are difficulties in comparing part-time work across countries because definitions vary, part-time work in the United States is not as heavily concentrated among women as in the three European Union countries (OECD 1997b). hi sum, labor market characteristics that limit the number of new jobs reduce inequality and raise unemployment. Flexibility pressures have been met by utilizing the increasing female labor force in part-time work. The United States, in contrast, has created large numbers of low-wage jobs; having flexibility does not require hiring workers in a part-time status. This institutional argument makes sense, but there are a large number of possible explanations for the persistence of unemployment in Europe and little agreement among researchers on the relative contributions of each explanation (Bean 1994).

Social Policy and Early Exit Linking Employment Changes to Early Exit

Understanding the particular pattern of change in each of the countries examined requires attention to the specific mechanisms producing earlier exit (Kohli, Rein, Guillemard, and van Gunsteren 1991). Faced with shifting employment patterns, rising unemployment, long-term unemployment, and economies that have not produced an adequate number of

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new jobs, France and Germany developed public policies to give employers flexibility to change workforce levels through mechanisms that encouraged early exit from the labor force. The goal was to maintain the integrity of the life course by reducing the prevalence of long-term unemployment. Early retirement mechanisms moved older workers into a retired status (instead of leaving either younger or older workers unemployed for long periods) on the assumption that it is less disruptive to cultural ideas of a "normal" life course. By redefining some unemployment as retirement and lengthening the period of retirement, these policies attempted to reduce disruption of the working years (Kohli 1987). Hence public policy encouraged employers to shed older workers in order to adjust to changing firm-specific factors. There was relatively less change in public policy in the United Kingdom. Although a number of state policies—particularly disability benefits—encouraged early exit, firm pensions played a greater role than on the continent. The United States, which experienced a relatively small change in exit age, did not develop public policies to encourage early exit. Two main factors are associated with earlier retirement in the United States. The early-1970s increase in Social Security benefits focused on reducing poverty among the elderly, not encouraging earlier retirement or addressing unemployment. Second, the increase in firm pensions, together with dynamic changes in the job market, also led to earlier retirement. As discussed in Chapter 4, changes in availability of disability benefits have encouraged earlier exit, but these programs in the United States are only a shadow of those elsewhere. Sweden is distinctive because social policy has encouraged high levels of labor force participation before age 65. Yet these policies have not prevented a trend toward men's earlier exit comparable in level to that in the United States. France

Figure 6.1 shows a rapid decline in labor force participation of French men aged 60-64 beginning around 1980. Participation rates at ages 55-59 also declined. During the 1970s, early exit was possible after age 60 through the unemployment compensation system, which provided relatively generous benefits until age-65 regular retirement. The regular retirement age was reduced to age 60 beginning in 1983, and unemployment compensation allows retirement as early as age 58 in cases in which workers are dismissed (Mirkin 1987; Guillemard 1991; Blanchet 1998). All these programs had certain limitations concerning length of previous employment and length of coverage under the social security system, but they affected enough workers to produce the major movement toward early exit observed in the French data. Social security retirement pay-

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ments at age 60 replace over 90 percent of preretirement earnings, providing a strong retirement incentive for those eligible (Gruber and Wise 1997). In discussing these changes, Anne-Marie Guillemard (1991) emphasizes four themes. First, the use of unemployment mechanisms gave employers major control over the timing of workers' exit, in contrast to an earlier time when retirement under the state pension system was highly predictable based on age. Hence, these mechanisms were important in allowing employers to reduce the number of workers in parts of their organizations with the cost subsidized by government, but the effect was firm specific. For example, some mechanisms that addressed unemployment were based on negotiations between specific firms and government (Blanchet 1998). In a dynamic economy in which jobs are destroyed and created continually, early exit mechanisms allowed an exit pathway for the incumbents of destroyed jobs. Because some costs usually borne by employers who dismiss workers were transferred to the state, employers were encouraged to shed older workers; but the programs did not necessarily encourage employers to shed older workers rather than younger workers. In the absence of incentives, it is possible that fewer workers would have been dismissed because of the costs in a country with considerable employment protection (For a discussion of employment protection, see OECD 1994, pt. 2, 69-76). Second, Guillemard describes considerable shifting from one mechanism to another to provide early retirement. Part of this shifting relates to source, for example, from unemployment fund to retirement fund with the lowering of retirement age to 60. But an equally important aspect concerns shifting costs from one set of institutions to another, for example, from government to employers. The shifting programs Guillemard describes for France fit Bernard Casey's (1989) concepts of "cost-shifting" and "instrument substitution" as a way of understanding the implication of the mixture of pathways for distributing the cost of early retirement. Third, early retirement in France was carried on under the ideology of solidarity or a social contract. In contrast to the individualistic approach, which is widespread in the United States, early retirement for older workers was viewed less as a loss or cost for the young than as the best solution for all age-groups to provide the least painful way to adjust to economic change. Finally, she argues that early exit patterns in France and other countries are better understood as institutional responses than individual choices (Guillemard and Rein 1993). Without early exit mechanisms, employers may have dismissed fewer workers. And, given high levels of unemployment in Europe, earlier retirement is one way in which institutions—government, employers, and unions—attempted to manage unemployment. Much early retirement, particularly in Europe,

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is not much different from unemployment targeted at older workers through the existence of special retirement programs. The French retirement system includes strong incentives to retire at age 60 for those who are eligible, but focusing on individual behavior in response to retirement system incentives ignores the broader institutional context that has created the incentives. Germany

Though institutional details are different in Germany, the general pattern is the same (Mirkin 1987; Jacobs, Kohli, and Rein 1991; Kohli 1994). In 1995, 41 percent of men exited through disability insurance, 24 percent through early retirement provisions for unemployed workers, and 35 percent left through the regular pension system (Borsch-Supan and Schnabel 1998). The normal retirement age in Germany is 65, with early retirement at 63 for those with long work records. Workers may also retire at 63 (raised from age 60 in 1997) after extensive unemployment (Dull 1998). Germany requires only five years of Social Security coverage for age 65 receipt of a pension and provides one year of coverage for each child born to a woman. Therefore, women with very little lifetime employment experience may qualify for a late pension. Women with fifteen years of coverage may retire at age 60, and this has been the major route for women with extensive employment experience (Jacobs, Kohli, and Rein 1991). The changing patterns of labor force participation in Germany show the effects of state programs for early exit. Declining participation levels at ages 60-64 reflect the introduction of various early exit options since 1975. Among women, the availability of an age-60 pension has produced lower rates of participation after that age (Jacobs, Kohli, and Rein 1991). Early retirement in Germany developed in the Federal Republic of Germany (West Germany) before unification. The German Democratic Republic (East Germany) had developed a very different organization of work with an ideology of universal work and distribution of social benefits such as child care by the firm to maintain high participation. Extensive industrial reorganization following unification and the introduction of early exit programs led to a decline in labor force participation rates for older workers in eastern Germany (Kohli 1994). The themes discussed by Jacobs, Kohli, and Rein (1991) parallel those discussed earlier for France. The most central is the important role of firms. At least some of the early exit pathways, for example, unemployment, depended oil the initiative of employer. Hence the existence of early exit mechanisms should be seen as part of the dynamics of job creation and destruction. Early retirement allowed employers to avoid some of the costs of shedding workers. The particular mechanism used

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changed over time, reflecting cost shifting and instrument substitution (Casey 1989). In both France and Germany, development of pathways out of the labor force were highly dependent on state action. Although the state created unemployment benefit or disability pathways, truly understanding which workers used these pathways requires an understanding of changes at the firm level as well (Kohli 1994). The United

Kingdom

Work exit in the United Kingdom follows a pattern that is intermediate between the United States and the continental European countries discussed. Although there has been significant decline in men's labor force participation at ages 60-64 and even at earlier ages (Tanner 1997), the age of eligibility for state pensions has remained at age 65 (and is currently age 60 for women). Unlike France and Germany, the United Kingdom has few public programs designed to move older workers out of the labor force. Hence most change has occurred directly through the firm. The only specific state program designed to replace older workers with unemployed workers was the Job Release Scheme between 1977 and 1988. But it attracted only about 10 percent of eligible men in those years. Men were more affected than women because women (with a pension age of 60) were eligible from age 59 whereas men (with a pension age of 65) were eligible, depending on the particular year, sometime between age 62 and 64 or age 60 if disabled (Laczko and Phillipson 1991a). The program was used primarily by semiskilled and unskilled manual workers (Casey 1989; Laczko and Phillipson 1991a; 1991b; Casey and Bruche 1983). Changes in administrative procedures have also reduced labor force participation. Long-term unemployed male workers over age 60 are eligible to receive means-tested income support payments. Since 1983 men aged 60-64 have not been required to register as unemployed in order to receive benefits, thereby reducing labor force participation rates. There has been no similar program for women, presumably because of their lower pension age (Laczko and Phillipson 1991a; Laczko and Phillipson 1991b; Laczko, Dale, Arber, and Gilbert 1988; Casey and Creigh 1989). Disability benefits have been a very important publicly sponsored route of exit, hi 1994, about 25 percent of all men aged 60-64 and 40 percent of those not working were receiving disability benefits, as were nearly 20 percent of men 55-59 (Blundell and Johnson 1998). The proportion receiving disability benefits is not a simple function of individual health limits; employment opportunities are not formally considered in the U.K. disability benefit system, but it is likely that job opportunities both affect self-definition of disability and influence the administrative process of awarding benefits (Laczko and Phillipson 1991a).

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Coverage by firm pensions is common in the United Kingdom, and coverage levels are roughly equal to those found in the United States (Henretta 1994a); but they are more important for retirement. The United Kingdom has a two-tier state pension: a basic retirement pension that pays low benefits and is supplemented by means-tested benefits for onethird of recipients (Davis 1998) and an earnings-related component. Three quarters of the labor force is not included in the state earnings-related component because they belong to a firm pension plan or have opted for an approved individual pension arrangement (Davis 1995). Although the alternatives to the earnings-related state pension are regulated by government and integrated with the state pension (Birmingham 1991), the low level of the basic state pension—which is equal to 18 percent of the average worker's earnings compared to 43 percent in the United States (Bosworth and Burtless 1998)—and the late age of eligibility make the state pension less important and occupational pensions more important. There has been less research in the United Kingdom than in the United States on the behavioral effects of firm pensions, but the indications are that firm pensions are also very important in early exit. The labor force participation rate of those with occupational pensions begins to decline very rapidly after age 55; participation of those without pensions starts to decline earlier but declines more slowly, a pattern that is consistent with occupational pension incentive structures (Tanner 1997; Blundell and Johnson 1998).

Sweden

Eskil Wadensjo (1991) notes that outsiders view Sweden as having high labor-force participation rates at older ages, but concern within Sweden focuses on the implications of the early exit trend. Both patterns are clear in the data presented earlier. Men and women aged 60-64 have higher participation rates in Sweden than in the four other countries included. But there is a clear trend toward earlier exit among men. Considering the twenty-year period between 1977 and 1996, Swedish and U.S. rates for men have fallen by approximately the same amount. Women's rates at these ages have risen because of higher midlife participation levels in successive cohorts. A cornerstone of Swedish social policy is a strong emphasis on universal employment (before age 65). Sweden has an "active" labor market policy in that unemployed workers are normally provided with further training or public project employment as a condition for receipt of benefits (OECD 1994; Wadensjo 1991; Forslund and Krueger 1997). Sweden also had very low unemployment rates during the 1980s that aided the administration of universal employment policies. Using concepts that

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approximate those used in the United States, Swedish unemployment ranged between 1.8 and 3.5 percent from 1977 to 1990. During the same period, U.S. unemployment ranged between 5.3 and 9.7 percent (U.S. Department of Labor 1998). However, in combination with long-term poor performance, the recession of the early 1990s produced very serious economic problems and high unemployment (Lindbeck et al. 1994). Beginning in 1991, Swedish unemployment rose far above its previous range, reaching 9.9 percent in 1996 (U.S. Department of Labor 1998); this rise may have rendered active labor market policies less effective (OECD 1994). Figures 6.1 and 6.3 indicate that this rise in unemployment coincides with declines in labor force participation of men and women at ages 60-64 (Palme and Svensson 1997). Partial recovery in 1994 and 1995 (Freemen, Topel, and Swedenborg 1997) coincides with an increase in labor force participation in Figures 6.1 and 6.3. Although the normal age of retirement in Sweden is 65—which is also the age at which employees lose their seniority rights—the earlier data show extensive exit before that age. The age of early retirement under the state pension is 60, but relatively few workers take early pensions. Disability benefits are more common, and in 1994 37 percent of men and 35 percent of women aged 64 were receiving disability pensions. Disability eligibility rules were tightened during the 1990s, and by 1995 the number of new disability pensions had declined substantially (Palme and Svensson 1997). Two other elements of the Swedish system deserve mention. First, it is possible to continue working part-time and receive a partial pension beginning at age 60, an option that provides higher income than a regular early retirement pension (Wadensjo 1991). Second, occupational pension participation rates are very high and pension assets are higher (relative to GDP) than in Germany and France, though somewhat lower than the United States or United Kingdom (Davis 1998). There are separate occupational pension plans for blue-collar, white-collar, and public employees. The blue-collar pension rules strongly discourage exit until age 58 (or later) and cannot be received until age 65. The standard age for the white-collar pension is 65, though a reduced pension is available from 62 or even earlier. The pensions differ in a number of other ways, but both base benefits on salary level and number of years of contributions (Palme and Svensson 1997). Overall, Sweden's retirement patterns differ substantially from those in the United States or United Kingdom, even though the pattern of change over time is similar. Many of these differences flow from the implications of Sweden's full employment policy. For example, partial retirement and recent changes in disability rules indicate a continued focus on employment policies. The effect of these policies can be seen in the high levels of labor force participation among men and women aged

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60-64. Yet older Swedish workers have joined the trend toward earlier exit, particularly in the difficult labor market conditions of the 1990s. Common Trends

Although the broad outlines of the life course are similar in the countries examined, there are important differences that divide the four large countries examined into two groups. France and Germany consciously adopted policies to encourage early exit from the labor force in the context of "solidarity," or a social contract to address increasing unemployment. Given the relatively high level of job protection in these countries, early retirement gave companies flexibility in reducing their labor force by removing older workers from it a few years earlier than previously. Early retirement plays a particularly important role in societies in which unemployment, once it occurs, may be semipermanent. The United States and United Kingdom fall into the second category. Labor force participation has remained higher and the state retirement pension has not been used as a mechanism to reduce unemployment. Important routes for early exit include disability benefits and firm pensions. Yet there are also important differences between the United States and the United Kingdom. First, disability benefits play a much more important role in the United Kingdom. Second, firm pensions are probably more important for early exit in Britain for reasons just discussed. Given the different prevalence of disability benefits and the different ages of state retirement benefits and the different structure of the state pensions, it is quite remarkable that U.S. and U.K. rates at ages 60-64 show similar levels and trends for men and a similar pattern, albeit at different levels, for women. Overall, French and German retirement is controlled primarily by public programs while in the United Kingdom and United States exit is more "individualized" because state programs are not as central in defining the life course (Kohli 1994). Sweden falls into a third category: social policy has strongly encouraged continued work and has produced higher participation rates than the other countries. Though Sweden has not been insulated from the early retirement trend, it has maintained relatively high labor force participation even in the face of serious difficulties in the 1990s.

Future Changes The population of Western countries is growing older as a result of declining birth rates. The relatively large cohorts born before 1970 have been followed by smaller cohorts. Public discussion of this shift in the United States focuses primarily on the baby boom—the large cohort born

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between 1947 and 1960 that is now moving through midlife and toward retirement. This focus is partly misplaced because populations will age as a result of declining birth rates even without an event such as the postwar baby boom. European nations had a smaller baby boom that occurred later, but they are moving toward even older populations than the United States because their birth rates have declined more. The increase in older populations will become very noticeable in the early part of the twenty-first century, but in recent years Western nations have begun to ponder the implications of this aging population for social policies that produce early retirement. The general outlines of the problem are clear. Recent years have seen a decline in labor force participation rates of the older population. As older people become a higher proportion of the population, the costs of providing pensions for them will increase, even as there will be relatively fewer young workers to take their place. Does this change require that the trend toward earlier exit be reversed? The difficulty in providing an answer is that demographic change is only part of the equation. For example, growth in the economy might allow earlier retirement. Therefore, although we know the qualitative effect of increasing proportions of elderly persons, we do not know how important it will be in quantitative terms.

Population Age Structure and Retirement Costs

Figure 6.4 shows the 1994 estimated and 2020 projected population aged 65 and over in Sweden, Germany, France, the United Kingdom, and the United States (Bureau of the Census 1996). The figure is particularly useful in providing perspective on the usual discussion of U.S. aging populations. Both in 1994 and 2020, the United States has the lowest proportion of elderly persons. In 1994 the U.S. proportion was lowest of the four countries because the large postwar baby boom cohort was still under age 65. Even in 2020, when most of the baby boom cohort will be over age 65, the relative position of the United States does not change, because of continued growth in the younger population. The number over 65 is a function of the number of births 65-100 years earlier and death rates in the interim, while the number of younger people depends on immigration, the number of more recent births, and associated death rates at each age. One key difference between the United States and the European countries shown is the current birth rate. The total fertility rate (the number of children that would be born to a woman who experiences the current age-specific fertility structure) in 1998 was 2.1 in the United States, 1.8 in Sweden, 1.7 in the United Kingdom, 1.6 in France, and 1.2 in Germany (Bureau of the Census 1998). Hence women in the United States who have the same fertility at each age as women in 1998 are having will

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bear 2.1 children in their lifetime, compared to 1.3 in Germany. Higher fertility will keep the U.S. population younger, despite the effects of the baby boom cohort as it ages. The implications of population aging are mediated by the organization of pensions. Because of the low benefit level in the U.K. basic pension and the large proportion of workers who have opted out of the second level, public pensions as a percentage of Gross Domestic Product will drop slightly in the United Kingdom by 2020 and will be the lowest among the four countries examined. The other three large countries will experience an increase. The U.S. proportion will rise and be approximately equal to the United Kingdom while French and German costs as a percentage of GDP will rise from their current higher level and remain considerably higher than the United Kingdom or United States. Even including health care costs paid by public programs, which will rise more in the United States as the population ages because post-65 medical costs are primarily a public expense whereas pre-65 costs are private, the United States will pay less of its GDP for publicly supported health care and Social Security pensions than France or Germany (Bosworth and Burtless 1998).

Changes in Retirement Systems

Western nations have begun paying attention to their changing demographic structure and have begun to make changes in their social security systems to adjust to a future in which there will be a shift in relative iiumbers of workers and retirees. Two popular solutions are a slow rise in the age of receipt of retirement benefits or an increase in years of covered employment required for a full pension. These changes will usually be phased in so that successive cohorts will experience only a small change compared to the immediately preceding one. For example, changes in the U.S. law, which were enacted in 1983, will affect persons attaining age 62 in the year 2000 (the 1938 birth cohort). The age of full benefit receipt will be slowly moved to age 67 from age 65, with the change completed for the cohort attaining 62 in 2022 (the 1960 birth cohort) (Social Security Administration 1994). Workers will still be able to receive benefits at age 62, but they will be reduced from the current level. When the changes are fully implemented for the 1960 and later birth cohorts, a worker retiring at 62 will receive 70 percent of the amount he or she would receive at 67. In addition, working after becoming eligible for full benefits will result in a larger increase in benefits than today (Social Security Administration 1997). There is also active discussion of proposals to move the age of full benefits even further back, to age 70.

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France passed similar legislation in 1993. It affects cohorts born since the late 1940s and increases by 2.5 years the number of years in covered employment required to receive a full pension (Wall Street Journal 1993, A6). Partly to provide equal treatment of men and women in pensions, as required by the European Union, Germany will raise women's pension age from 60 to 65 and men's from 63 to 65. These changes will take full effect between 2001 and 2005 (Dull 1998). To address EU requirements, the United Kingdom will raise women's retirement age to 65, from 60, and leave men's age at 65, with final completion of the change in 2020 (Social Security Administration 1994). The emphasis on occupational pensions as the second tier of the U.K. retirement system has already reduced the implications of population aging on public expenditures in the United Kingdom (Davis 1998). Sweden will phase in a new pension system that will index public pensions taken at a particular age to life expectancy and economic growth; it addition, it will base retirement pensions on earnings over a greater number of years (Palme and Svensson 1997). In addition, the EU countries have made other changes with the goal of encouraging later retirement (Davis 1998; Blanchet 1998; Dull 1998). Likely Effects of Planned Changes

There are a number of reasons to be cautious in predicting the likely effect of these changes in retirement age (Guillemard and Rein 1993; Kohli 1992; 1994). The changes have been legislated but many have yet to take effect. There remain many years to reconsider and possibly repeal retirement age changes. Many years of early retirement have changed cultural expectations about retirement age. The drumbeat of public discussion now focuses on the inevitability of later retirement, but it is not at all clear that it will be quietly accepted when it is actually implemented. In addition, we have limited knowledge of the likely effects of the demographic shift toward an older population. We can describe the qualitative effect, but there is no way to tell how large it will be. That is, the pressure of a higher burden on those employed and the need of employers for workers will tend to keep older workers in the labor force longer. But demographic effects are only one part of a complex equation. For example, high levels of economic growth, which make everyone wealthier, could counteract the effect of demographic changes (OECD 1988). Conversely, high unemployment in Europe might lead to renewed use of special early exit provisions; even if they become very costly, early retirement schemes may be seen as the best solution in societies that emphasize the "social contract" among workers, governments, and firms. Finally, early exit in European countries in recent years has used nonretirement mechanisms to bridge the time between exit and pension age. That is, the reg-

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ular pension system has not been the main source of early retirement. The same process could occur again, though perhaps not in such an extreme way, since there are pressures to reduce disability and other early benefits. The continued increasing role of firm pensions in the United States (and also in the United Kingdom) could blunt the effect of later retirement ages in public pensions (Quinn, Burkhauser, and Myers 1991; Wise 1997), producing greater variance in the age of work exit (Henretta 1994b). Those with firm pensions may continue to retire early while those who depend on Social Security alone—a more disadvantaged segment of the population—may work longer. In sum, popular discussions of the issue focus on only the demographic part of the equation, indulging in a kind of "demographic determinism" that hides as much as it illuminates. We know the direction of demographic changes, but there are so many unknowns relating to the political process, economic growth, and firm pension policies that we do not know what changing population structure will mean for average age of exit or patterns of inequality. The Shifting Life Course Martin Kohli (1986; 1987; Kohli and Meyer 1986) has outlined an influential view of the life course as consisting of a tripartite division of life into preparation, work, and retirement. The three life course phases are created by the operation of state and workplace institutions that have created an age-segregated society in which age is an important determinant of daily activities. Life Course

Institutionalization

The social construction of the age-segregated life course is elaborated in the "life course institutionalization" hypothesis. The underlying idea is that over the long term individual lives have become increasingly organized by institutions of the state (Mayer and Schoepflin 1989) and the workplace (Kohli 1986; 1987). Two long-term developments have produced institutionalization. The growing bureaucratization of work has reduced the role of personalized relationships in the workplace (Graebner 1980; Jacoby 1985), and the increasing proportion of women's lives spent in employment, as well as the weakening relationship between employment and family events, means that women are increasing affected by bureaucratic organizations. Hence individuals have been freed from the bonds of family and personalized relations (Kohli 1987) and are influenced instead by bureaucratic structures. This concept was developed for and applies most clearly to continental Europe, where the life course is most effectively organized by age-based

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collective institutions. But there are exc\mples in the United States as well. State influence is found in compulsory schooling laws and eligibility ages for Social Security and Medicare. Workplace rules, such as seniority rules that determine eligibility for higher wages, promotions, and pension receipt also serve to structure work careers and life by age (Spilerman 1977; Henretta 1994b). Both in the United States (Wise 1997) and the United Kingdom (Tanner 1997) the strong link between work exit and the eligibility ages found in firm pensions suggests important age structuring by the workplace. Bureaucratic structures have an inherent tendency to be age based. For example, using age or seniority in a firm (instead of ability to continue work) to determine retirement timing provides the clear, impersonal rule (Graebner 1980) that is the hallmark of bureaucratic organization because it reduces individual discretion. In addition, many observers would argue that both state and workplace regulation have become more age based over the long run. Jacoby (1985) argues that regularized employment—involving such things as seniority-based systems exemplified in promotion ladders—developed slowly during this century and then most rapidly during periods of labor shortage in the two world wars. Pensions came late in the development of these systems but were important in providing an exit portal from a highly regularized, age-based career (Lazear 1979). In the area of state regulation, the increasing length of schooling during this century and the development of public pensions and their increasing value provide examples of a long-term trend in agebased structuring of the life course. Earlier work exit has shifted the boundary between the work and retirement phases of life to an earlier age, whereas proposals to raise retirement age aim to shift the boundary back. Although changing proportions of the life course devoted to work and retirement are an important issue, some observers argue that recent events have loosened institutionalized control over the life course. Several scholars have recently suggested that there may have been a recent reversal in institutionalization of the life course, although they do not challenge the long-term account of change (Anderson 1985; Guillemard 1989; Kohli 1986). For example, Guillemard (1989; Guillemard and Rein 1993) argues that the recent decline in labor force participation of older persons in Western countries does not just represent a decline in the average exit age but a major change in the structure of the life course. Retirement institutions have lost control of the process of exit, meaning that universal age-based programs are less important in determining life course programs. In its place, particularly in Germany and France, unemployment and disability benefits— programs based on employer behavior or functional status—have become more important and bridge the gap between exit and pension age.

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Unemployment reflects the prosperity of one's former industry or firm while disability reflects health—though increasingly, employment opportunities have become an implicit part of disability benefit determination (Piachaud 1986; Casey and Laczko 1989). This argument challenging the life course institutionalization hypothesis concludes that the trend toward a standardized life course with timing of events constrained to a narrow time band has been halted or reversed. To the extent that there are more paths out of the labor force, the social meaning of retirement is affected as well as the timing of exit. That is, the social definition of retirement is less clear when it happens at diverse times and in diverse ways. Guillemard's conclusion is that the uniformity of the institutionalized life course is declining, just as the time of life spent in postemployment activities is lengthening. The five countries examined are affected by these trends in different degrees and in different ways. In the United States and United Kingdom exit timing is primarily a matter for the individual worker and the employing firm, that is, exit is "privatized" (Kohli 1994). The greater role of state programs in France and Germany raises additional questions about whether public policy has reduced the coherence of the life course. It is probably the case that public policy is somewhat less age based than it was in the past because unemployment and disability benefits have become more important. Unlike Germany and France, Sweden has used public policy machinery to encourage labor force participation until age 65. These efforts have attained their goal of higher participation, but disability and other contingencies in Sweden have reduced the role of age in the determination of work exit, as men's employment at ages 60-64 has become less universal. Heterogeneity of Career Endings

As discussed in Chapter 4, the issue of heterogeneity in career endings has received increasing attention in recent U.S. research. A number of studies have linked heterogeneity to early exit, and others have documented the level of complex career endings. The issue of within-cohort variation in exit timing (and the conditions under which exit occurs) has also been of great interest to continental European scholars because it indicates the significance of age in work exit. Hence, within-cohort variation raises important theoretical questions. It is ironic, therefore, that data on heterogeneity exists primarily for the United States which, along with the United Kingdom, has the least age-structured system. It is not clear whether patterns of exit viewed at the individual level have become more heterogeneous in continental Europe because the long-term longitudinal studies of retirement required to examine the issue are not available in

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sufficient numbers (Kohli 1992). There is scattered evidence of these patterns, particularly in the United Kingdom. Casey and Creigh (1989) find that older workers who lose secure employment are caught in a "continuum of decline" in which replacement jobs are temporary or part-time. McGoldrick and Cooper (1988) found that over one-third of their earlyretirement sample returned to work. Findings in the United Kingdom, however, may not be applicable to continental Europe. The United Kingdom has the latest age for men's retirement in its state pension, and the previous analysis clarifies the difference in retirement dynamics in the United Kingdom compared to France and Germany. The greater protection afforded to workers in France and Germany, together with more extensive and earlier exit options under the state retirement systems, which have strong disincentives to continue work (Gruber and Wise 1997), may have limited the heterogeneity of career endings. Moreover, high unemployment rates on the Continent, combined with the difficulties older workers have in obtaining new jobs, may significantly reduce reentry to employment even if early exit incentives were absent. Evidence from the United States (Henretta 1992) provides clear indication that age-based state institutions make net work exit more uniform for a cohort whereas workplace institutions make net exit less uniform, that is, workplace institutions make cohort members less like each other in the timing of their labor force exit. As the retirement age has dropped, an increasing number of early exits occur before the state retirement age (age 62 in the United States). These exits are spread over a lengthening span of ages. After the state retirement age, exits are more concentrated man in the past. Uniform age-based state institutions have lost control over early exit. These results are broadly consistent with Guillemard's (1989) argument: Within the context of an increasingly standardized life course, there are indications of some weakening of standardization as more diverse and privatized pathways to exit draw workers out of the labor force at more variable early ages. In addition, retirement has become a more universal experience because it is more likely to be a status experienced before death than in the past. The growing universality of retirement is linked to more diverse patterns of exit because both characteristics result from declining retirement age.

Conclusion The broad outlines of the life course are similar across the nations examined, but there are clear differences in the level of late-life labor force participation and the state policies that have produced them. The United States, Sweden, and the United Kingdom have relatively high levels of participation at ages 60-64 while France and Germany have much lower

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levels. France and Germany adopted early retirement policies in pensions and other state benefits to give employers some flexibility in addressing the challenges of globalization while maintaining high levels of job protection for younger workers. In contrast, the state is less involved in retirement policy or job protection in the United States and the United Kingdom. Exit is privatized, and there have not been extensive statesponsored early retirement programs. Sweden is unique among the countries examined because it has actively encouraged continued employment. These different retirement patterns have two important implications. First, the implications of population aging are mediated by the organization of state pensions. France and Germany face the largest increase in public pension costs and the United Kingdom faces the smallest. Second, the coherence of the individual life course is affected by public and firm pension policy. Some scholars now argue that the timing of retirement has become more individualized as the highly uniform state mechanism producing retirement has become relatively less important and, depending on the country being examined, disability benefits, unemployment payments, or firm pensions have become more important. Overall, therefore, retirement and pension structures have implications for future public policy and the coherence of the individual life course.

Aging in the Welfare State: Strategic Cross-National Comparisons of Life Course Variability and Inequality

A number of demographic, historical, and structural trends are coinciding during the last decade of the twentieth century to make this period especially interesting with respect to aging and inequality. The world population aged 65 and above has more than doubled since 1950. Following World War II, North American countries followed European countries in the steady increase of population aging. Current projections suggest a modest slowing of the process in these developed countries, but a tripling of the older population in less developed countries over the next quarter century (Martin and Preston 1994). For the United States, the aging of its population has resulted from both the slower tempo of longterm, increased longevity across cohorts with declining fertility rates, and the faster tempo of an aging baby boom cohort born during an exceptional period of postwar prosperity, and aging over a sequence of economic cycles. Population aging as a demographic phenomenon is a global trend. However, as earlier chapters have indicated, the relationship of aging to distinctive state and market contexts produces quite different policies, varying levels of heterogeneity, and unequal social and economic outcomes for the aged population. Chapter 1 introduced the idea that aging cohorts exhibit interesting patterns of variability and inequality. Chapters 2-5 traced the individual and structural bases of life course variability, focusing primarily on the United States. Chapter 6 turned to specific comparisons of labor force participation patterns between the United States and selected European countries that reveal both the common and the distinctive features of these patterns and the institutions that shape 186

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them. This chapter presents a strategic comparison of the United States with two countries studied in Chapter 6, Germany and Sweden. The United States, Germany, and Sweden present strategic cases for the study of how distinctive configurations of workplace, family, and state institutions affect the relative coherence or variability of the life course and, in turn, inequality in old age. Other countries fit more or less closely to each of these three, for example, the United Kingdom in the liberal case, Austria, France, and Switzerland in the corporatist case, and the Netherlands and other Nordic countries in the social democratic case. Of course, each country's unique cultural and demographic history produces deviations from the ideal type and from the specific countries we examine here. Table 7.1 summarizes the basic framework that has guided our analyses to this point and integrates the themes developed in earlier chapters. The two outcomes of interest are life course variability and aged inequality. The interdependent institutional arrangements that lead to these outcomes include employment pathways, family (and related gender) pathways, and state welfare regimes. Welfare institutions have served historically to offset the stratifying impact of economic institutions. In their strongest forms, they ensure a universally applied, minimum level of well-being through the normal passages of the life course and during times of increased vulnerability stemming from unexpected risks to well-being. In their weaker forms, they provide uneven security and result in socially patterned, cumulative risks for economic and health-related declines and mortality. We will begin with a discussion of the major state welfare institutions that have developed in advanced industrial countries over this century. It is important to remember that these public policy systems were institutionalized under similar economic conditions (specifically, advanced industrialization), but they took different forms that were shaped by their distinctive cultural and demographic histories. That is, state structures have developed in concert with the market and family systems of these countries, have assumed different forms, and have contributed to cross-national diversity in life course patterning and aged inequality. Then the institutional pathways that produce variability and inequality in the life course will be compared across the United States, Germany, and Sweden.

The Origins of Welfare States

Models of the welfare state have been developing in a tradition reaching back to Richard Titmuss (1958) and the thesis of industrialism. The shift to wage labor that arrived with industrialization produced social dislocations

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TABLE 7.1 Comparative Pathways to Inequality United States

Germany

Sweden

Employment Pathways

Family/Gender Pathways

Educationally anchored work pathways but loose coupling between education and market. High levels of female labor force participation. Occupational segregation and high wage inequality. Part-time work is marginalized. Education to work linkages tightly coupled via a "dual system"of partly school-based and partly firm-based vocational training. Low levels of female labor participation with occupational segregation. Part-time work highly gendered and marginalized. Education to work linkages moderately coupled via vocational training in public schools. High levels of female labor participation. Occupational segregation coupled with solidary wage policy. Part-time work is not marginalized.

Mixed breadwinner and role-sharing models.

Breadwinner model predominates.

Role-sharing model predominates.

Welfare Regimes

Life Course Variability

Aged Inequality

High /increasing levels liberal model based on the principle of equivalence of variability across between covered employment tripartite phases. and benefit eligibility. Life course risks receive limited protection with some based on means-tested eligibility. Conservative-corporatist Low /increasing levels model based on the principle of variability across of social insurance. Life tripartite phases, course risks are protected by the state.

High overall Poverty high

Social democratic model based on the principle of citizenship. Life course risks are protected by the state.

Low overall Poverty low

Medium/increasing levels of variability across tripartite phases.

Medium overall Poverty low

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in family and living arrangements. Government programs were needed to assure the viability of labor for the economy. Accordingly, the statutory social policy systems that developed to constitute welfare structures were viewed as residual, i.e., as inevitable outgrowths of the market serving to ameliorate market failures, to preserve and reproduce market relations, and to protect categories of the population who fall outside of the market, particularly women, children, the elderly, and the indigent. However, historical and comparative research on the welfare state since these original, efforts has uncovered the heterogeneity of welfare systems that have developed in different industrialized societies. Newrer institutional theories have identified other sectors, besides the market, as important for the development of the form taken by welfare policies. For example, social democratic institutions that increase the economic and political power of working-class organizations have been identified as important factors in welfare state development by Myles (1989). Relative wrorking-class power within the political systems has important implications for the level of citizenship entitlements that transcend market constraints. Societies with strong unions and labor parties provide broader entitlements for citizens, in part, by removing benefits from the marketplace and making them universally available. Interest groups, more generally, have also been identified as important nonmarket bases for the advocacy of status group rights (Pampel 1994; 1998). In the case of pensions, Pampel and Williamson (1989) find mat as the size of the elderly population increases, welfare institutions expand to accommodate the needs of this population group. The changes brought by the demographic and political pressures of an aging population are distinct from those brought by working-class organizations. In addition, the outcomes of these welfare changes do not always result in the decrease of inequality at large in the population. A more comprehensive institutional argument is presented by Quadagno (1984; 1988a), who argues that welfare capitalism is not constituted exclusively by "the market." It is a social system of production made up of a matrix of historically situated interest groups that struggle for social power. Her case study of the origins of the U.S. Social SecurityAct focuses on the legislative process and the contest among representatives of labor, capital, and agrarian interests (particularly from the American South) that shaped the act. The independent role of state institutions in the construction of social welfare is emphasized by Skocpol (1992). New social policies are not painted on a clean canvas; preexisting or established policies strongly affect the form that new policies take and the manner in which they are implemented. This occurs because the existing polity is composed of diverse social, political, and governmental (state as well as federal)

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organizations and groups that seek to preserve earlier policy initiatives. As historical conditions change, new social needs are addressed in the context of a structured polity. Her analysis of the development of welfare institutions in the United States at the turn of the twentieth century illustrates this argument. She identifies "paternalist" and "maternalist" social policies. The former policies were narrowly targeted at soldiers—elderly, disabled veterans—and the latter at mothers' pensions and public facilities for children and infants. Both sets of policies were compatible with preexisting programs and left out the general population of men. Finally, the most recent theories have turned to patriarchy as a critical institutional environment for the development of welfare policies (Sainsbury 1996; Orloff 1993; 1996). Patriarchal institutions, which include the gendered division of household labor between market work and unpaid caregiving, the family wage system, and state-institutionalized support for traditional family arrangements, have both formative and reinforcing influences on welfare policy. Formative influences are evident in the origins of "maternalist" and "paternalist" policies identified by Skocpol (1992). Welfare systems are structured according to gendered bases of entitlement: welfare benefits are differentiated by gender status (mother, wife, widow) and by tier (benefit levels are defined by gendered labor market patterns influencing the extent of labor force participation). Across societies these policies have tended to assume the form referred to as "the breadwinner model" by Sainsbury (1996), a model of welfare that carries over gender inequalities from the market into the state. Gendered welfare policies act in concert with other gendered structures in the market (e.g., the family wage) and the state (e.g., family income tax policies) to produce separate and unequal subsystems of support that reproduce gender inequality over the life span into old age (Sainsbury 1996).

Three Ideal Types of Welfare Regimes

Perhaps the most widely applied theory of the welfare state that attempts to account for the diversity of systems observed across several countries is Esping-Andersen's (1990) empirically constructed ideal types of welfare regimes. He begins with the assumption that the core idea of welfare is the "decommodification of labor," that is, the extent to which individuals are "emancipated from market dependency" in meeting their ordinary and extraordinary needs (1990, 47). He operationalizes the level of decommodification by clustering eighteen welfare states across seven indices: corporatism-—the number of occupationally distinct public pension schemes; statism—the level of national expenditure on pensions to government employees as percent of GDP; the share of means-tested poor relief-—as a percentage of total social expenditures; the relative predomi-

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nance of private pensions-—as a percentage of total pensions; the extent of private health spending—as a percentage of total health spending; average universalism—relative citizenship access to sickness, unemployment, and pension benefits; and average benefit equality—the difference between basic and maximum social benefits for sickness, unemployment, and pension. The clustering procedure produces three ideal types of welfare regime: liberal regimes strongly cluster around private pensions, private health spending, means-tested poor relief, and wider benefit differentials; conservative-corporatist regimes cluster around corporatism, statism, public pensions, private health, and wider benefit differentials; and social democratic regimes cluster around universalism, public health spending, and narrow benefit differentials. As the most decommodified, the social democratic model's universalism extends social rights (entitlements) to citizens as individuals independent of their market participation. The fundamental democratic logic of the system is that entitlement comes from citizenship. The conservative-corporatist model blends a public-private mix of benefits; privatization is not defined in market terms only, that is, private is not strictly defined as "worker." Instead, individuals' social rights stem from other domains (as well as from the marketplace), which include the family and the religious community. Social insurance is thus allocated to protect nonworkers, as well as workers, based on their statuses as wives, students, legitimately unemployed, and so on. The fundamental logic of social insurance is one of solidarity, which recognizes social and economic inequalities based on individuals' relationships to the market and directly offsets them through collective (public) resources. The liberal model is the least decommodified and comes closest to the earliest formulations of the welfare state as residualist. Social rights are the least well developed outside of the marketplace. In the liberal regime, benefits are derived primarily from employment, and nonworkers' (especially women's) benefits are derived from primary workers' benefits rather than from citizen or social entitlements. The logic of the liberal model is one of equivalence: Benefit eligibility is directly connected to employment in the market and redistribution is modest and often means tested. In short, entitlements are earned and serve less to abate inequality than to reproduce it. Old-age pensions, sickness benefits, and unemployment insurance constitute the principal policy areas that represent the degree of decommodification or market independence in Esping-Andersen's typology (1990). In the case of old-age pensions, for example, the United States and Germany are ranked low and close to each other because they both require long periods of contribution, large individual financial contributions, and

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(for most retirees) yield modest benefits—although pensions are widespread in both countries. Sweden is ranked highest in this category. In the case of sickness benefits, Sweden and the Nordic countries rank highest, but Germany is ranked more closely to these countries than the United States, which is ranked lowest (0.0) because a comparable program is nonexistent. Unemployment policies cluster more closely among all countries—which converge in their policy concerns over the disincentive effects of these programs—although Germany is highest and the United States is lowest among the three. In Chapter 4 the retirement system in the United States was reviewed. Disability and private and public retirement benefit policies were found to influence both the timing of retirement and economic status after retirement. Tine key characteristic of this process is variability. In Chapter 5 the occupational welfare system of United States was summarized with respect to pensions, health insurance, and unemployment compensation, and the institutional bases of this variability were presented. The marketbased individualization of pension and health insurance coverage and the decentralized and unevenly administered unemployment insurance system produce wide variability in the United States. Accordingly, pathways to retirement in the United States are less protected against life course risks related to health and unemployment, except through the publicly supported disability system. Global decommodification scores ranking all eighteen countries in his analysis produce three ordinal clusters: the highest cluster is composed of (in order) Sweden, Norway, Denmark, the Netherlands, Belgium, and Austria; the second cluster of Switzerland, Finland, Germany, France, Japan, and Italy; and the third, of the United Kingdom, Ireland, Canada, New Zealand, the United States, and Australia. These empirically derived clusters and the threefold typology lead Esping-Andersen to generate two hypotheses. The first is that nations with legacies of conservative or Catholic reformism are more likely to develop a fair degree of decommodified social policies. The second is that nations with liberalist legacies will bifurcate depending upon the relative (sustained) dominance of social democratic labor movements: Nordic countries into the most highly decommodified forms and the Anglo-Saxon countries into the least. Feminist theorists have criticized Esping-Andersen's model for failing to incorporate gender as a core element of welfare structure (Orloff 1996). Sainsbury (1996), particularly, has proposed that the "male breadwinner model" of the family pervades both the conservative-corporatist and the liberal welfare regimes. In the case of the conservative-corporatist model, social insurance systems are intended to protect workers' families, and they include wives/mothers inasmuch as they fit within the "male breadwinner model." In the case of the liberal regime, the centrality of

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employment for the acquisition of social benefits by definition rewards the primary breadwinner and penalizes the dual-earner family. In contrast, the social democratic model extends benefits universally on the basis of citizenship to individuals in spite of their employment and marital or family status. We find the "breadwinner model" a useful addition to the welfare regime typology for understanding life course variability. Men's and women's life courses are becoming increasing similar as a result of women's large-scale entry into the labor market, but gender structure persists to a greater or lesser extent across market, family, and state systems and influences the pathways followed by women and men into old age. In Table 7.1 these pathways are characterized by the extent to which the breadwinner or the role-sharing models (defined in Chapter 3) predominate across countries. Life Course Variability and Life Course Risks As Welfare Policies

The relative coherence of the tripartite organization of the life course discussed throughout this book results from the interplay among market, family, and state welfare regimes. Indeed, welfare regimes can be defined as sets of life course policies constructed to produce normal transition and event sequences, on the one hand, and to manage deviations or randomly occurring "risks" over the normal life course, on the other (Leisering 1995). We find this distinction another useful extension of the Esping-Andersen (1990) model that enables it to take a life course orientation beyond the typification of ideal types of social policy targeted to whole populations universally or to categories of populations differentially. Thus gender and life course concepts are integrated with types of welfare regimes in Table 7.1. Standardization of the life course is largely organized around age-differentiated educational, workplace, and state institutions. It is also influenced by the connections among these institutions. In market-centered societies with liberal welfare regimes, these institutions are loosely coupled. The U.S. occupational welfare system falls in this category; it is highly decentralized and derivative of the market. Life course variability is high between and within gender groups. In societies with more developed welfare states, these institutions are more tightly coupled. Life course variability and inequality are major outcomes of the differential integration among these institutions. Less variability is associated with tighter institutional coupling, although this relationship is conditioned by unique historical circumstances. The social democratic regime is most closely approximated in Sweden, although social policies in this country (as in nearly all countries) are

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changing. The social democratic model emphasizes individual citizenship rights as the bases of welfare provision. As such, active labor market policy, which is the core of Sweden's system, serves to support the work careers of all citizens, men and women alike. This is accomplished largely through the provision of public sector service jobs for women and extensive workplace support systems for mothers. Women's labor force participation rates are high and approach men's more closely than in any other country (see Chapter 6). The variability remaining between men and women is associated with the higher prevalence of part-time work among women, women's childbearing roles, and changing marriage and cohabitation patterns. Consequently, life course variability in Sweden is not as high as in the United States, but it is not as standardized along traditional gender norms as in other countries either (see Leisering 1995; Blossfeld 1995a, b; Blossfeld and Hakim 1997). The conservative-corporatist model probably produces the most standardized life course, since it is tightly coupled with the "male breadwinner model." The corporatist model is market and status based and emanates from the coexisting influences of traditional religious and family institutions and the market. In Germany, taxation and social insurance structures reinforce traditional family arrangements with incentives for their maintenance and protections against life course risks. Breadwinners are protected by relatively generous unemployment compensation systems. Families are protected with health care support. Alternatively, nontraditional arrangements are penalized; for example, welfare programs for public child care facilities receive little support. The principle consequence is that traditional gender-family roles are reproduced through the support of the "regular" life courses of men and women and through the buffering of the impact of life course risks. Women's labor participation is discouraged and men's breadwinner roles are protected (see Kalleberg and Rosenfeld 1990; Blossfeld 1995a, b). The liberal model diverges from its two alternatives in the provision for life course risks and as well in the maintenance of a coherent life course. As discussed earlier in this book, life course risks are both random and socially patterned. Random, less age-related, and exogenous events—unemployment, accidents, disability, illness, divorce, desertion, poverty—can derail the life course. Social democratic and corporatist regimes offer more protection from the derailing effects of these life course shocks, whereas liberal regimes offer modest protection and only following more rigid rules of program inclusion through means testing a n d / o r diagnostic eligibility. Decentralized and highly restrictive programs of unemployment compensation, privatized health care systems, and locally specific means-tested workfare programs in the United States make the encounter of almost any risk in the life course a potentially de-

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railing event that is always costly to the individual or family involved. Lack of welfare support against life course risks increases both variability and inequality. Loss of income in the case of unemployment, divorce or desertion, or an accident causing physical injury can reorient individual life paths and precipitate a wide range of possible transitions, ranging from poverty to returning to work or to education. Life course risks are also socially patterned to the extent that subgroups of the population are nonrandomly vulnerable to episodic risks and to cumulative disadvantage for the maintenance of well-being in work, family, and health. In the United States life course risks are correlated with market relationships. Over the life course, risks for unemployment, illness, disability, poverty, and early death are systematically associated wdth lower education, race/ethnicity, and gender (see Chapter 2). The weak provision of social insurance across the life span thus interacts with market position to increase variability and inequality. Comparative Pathways to Variability and Inequality The stratified profile of the United States is telegraphed provocatively by Esping-Andersen (1990, 65) as follows: "a curious mix of individual responsibility and dualisms: one group at the bottom primarily reliant on stigmatizing relief; one group in the middle predominantly the clients of social insurance; and, finally, one privileged group capable of deriving its main welfare from the market." If wre introduce gender to this characterization, we can better specify the composition of these stratified groups. Gender intersects this hierarchy to allocate women more than men to "derived" or "means-tested" beneficiary statuses. The allocation is based on their caregiving roles, which are unpaid and outside of the market and uncredited by state policies (Orloff 1996; Sainsbury 1996). If life course variability and risks are entered into this characterization, a more dynamic picture emerges that portrays diverging pathways rather than rigid categories. The triangulation of liberal welfare practices with gender stratification and the neglect of life course risks probably brings us closer to explaining life course variability and inequality. Arguably, Esping-Andersen's profile is somewhat overdrawn, but it does provide a template against which aged inequality can be measured and its historically contingent foundations in employment, family, and state policies assessed. We begin with educational systems because they provide entry portals to the labor market and are the basis of long-term life course outcomes in occupational attainment (Kerckhoff 1993; 1996), status maintenance in middle and late life transitions (Henretta and Campbell 1976; Elman and O'Rand 1998a), and cumulative advantage (Pampel and Hardy 1994a, b;

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Blau 1998) among men and women. Recent comparative examinations of educational systems and their impact on the organization of the life course reveal several general patterns (Shavit and Blossfeld 1993; Kerckhoff 1996). First, educational systems have expanded rapidly and at similar rates across countries at the primary and secondary levels, but not at the postsecondary /tertiary (university and vocational school) levels. As larger succeeding cohorts across countries have completed secondary education, they have faced differential obstacles and opportunities to later education and training. Second, the expansion of secondary education has been accompanied, to varying degrees, by the differentiation of academic and vocational tracks. Blossfeld and Shavit (1993, 20) argue that this process has led to an "opening up of secondary education without disturbing the basically exclusive character of higher education." Tracking has been especially pronounced in European countries, including Germany and Sweden. Third, the expansion of education has not had even effects in reducing the impact of social origins on subsequent educational and occupational attainment. In Sweden, the impact of social origins on these outcomes has generally declined, but less so in the United States, Germany, and most other countries—although the effects of social origins diminish over the educational career in all countries (Shavit and Blossfeld 1993). Fourth, gender differences in educational attainment have declined and even reversed in favor of women over men (particularly lower-class men) in terms of completion rates at the secondary school level in the United States, Germany, and Sweden. But notable differences among our three cases in the structure and outcomes of expanded education have life course effects. In the case of the United States, there is relatively high access to secondary and postsecondary general education, although the system is highly decentralized and split between public and private systems. Tracking between academic and vocational curricula is highly uneven. And higher education opportunities are varied and dispersed across public and private (some denominational) institutions. These diverse educational structures are not tied to a centralizing logic of certification with direct occupational implications, In addition, a prestige hierarchy of higher educational institutions has long-term implications for job and professional school placement. The overall consequence is that for the vast majority of secondary-graduation cohorts (easily two-thirds of all high school graduates), secondary and postsecondary school completion does not provide clear pathways to specific careers, let alone to immediate employment (Kerckhoff 1996). Instead, there is a weak coupling between educational and employment institutions, thus leaving social origins, prestige of schooling, social networks, and diffuse local labor market demand to play more promi-

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nent roles in the school-to-work transition (Kerckhoff 1996). General academic curricula in the United States at the secondary and postsecondary levels—even with ability-tracking systems and with gendered selection patterns into academic majors and specific vocational programs—on the whole generate more ambiguous paths to jobs and careers. This loose coupling between schooling and work thus results in more "churning" in the early work career, that is, delays in educational completion, more job shopping and atypical work patterns, slower movement into stable career paths, and more variance in work and earnings trajectories. Changing employment contexts over the past two decades are serving to attenuate the education-career linkage even more as trends toward "flexible specialization," the externalization of labor, and the disappearance of lifetime jobs with single employers introduce more instability to job finding and career maintenance (Kalleberg 1996). The result is growing variability in the transition to work—a part of what is deemed the "transition to adulthood" in the United States, which has become highly heterogeneous and individualized (Modell 1989). The transition is universal but highly variable in its timing (age) and in its ordering of transitions among education completion, work entry, marriage or household formation, and fertility (Rindfuss, Swicegood, and Rosenfeld 1987; O'Rand and Krecker 1990). The German and Swedish contexts are different in several respects. First, both have more publicly centralized and integrated educational systems. But their respective organizations of academic and vocational training diverge. Germany has highly differentiated academic and vocational tracks following early secondary (middle school) completion. The academic track leads to upper secondary school {Gymnasium or Fachoberschuk) with better opportunities for university education for about onefourth of German cohorts. The vocational track feeds into what is called the "dual system" of vocational education and training (VET), which is partly school based and partly (public and private) firm based and provides a bridge to employment via 360 apprenticeships in crafts, blue-collar, and white-collar occupations (Blossfeld 1993). A mix of part-time school-based education with government-regulated onsite vocational training in public and private sector establishments in which first jobs have usually been found provides a tightly coupled transition for most German youth. This system is based on formal certification-tied specific jobs. Little employer discretion operates outside the boundaries of vocational certification and (later) experience-based criteria for earnings and promotion opportunities. The strict certification-skill-job linkages that emerge from this system place workers on narrow, highly gender segregated tracks from which there is little deviation (Heinz, Keele, Witzel, and Zinn 1998). And in recent periods of economic downturns and rising

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unemployment in Germany, cohorts of vocationally certified youth find themselves closed out of jobs for which they are not certified, although generous unemployment benefits serve to maintain youthful workers in abeyance during these periods. Sweden maintains a centralized system of comprehensive education for everyone through the age of 16 (Jonsson 1993). It integrates the traditionally elite secondary system (gymnasium) with technical and business schools and a variety of shorter vocational programs in health care, technical crafts, manufacturing, and other areas. As such, it maintains a tracking system but does not segregate pupils within these systems as early or as strenuously as the German system. Although it does not "hard-wire" job placements between vocational tracks and employers, as is often the case in Germany, its active labor market policy operates to maintain high employment levels up to age 65. Indeed, Sweden is widely referred to as "a workers' state," since it provides incentives (some say "obligations"; Leisering 1995) to work in private and public sectors. The control of the state by the Social Democratic Party for most of the p r e - and post-World War II period (between 1932 and 1991) has promoted a persistent policy based on the principle of egalitarianism with equal provision for all citizens. The organizational power of labor has been a strong force in the development of this welfare regime. The expanded public sector provides jobs across the occupational structure. Service jobs for women in the public sector are a major source of earnings among women in Sweden. In addition, child care support is integrated with wage policy in the workers' state (Sainsbury 1996). Three important elements of active labor market policy in Sweden, besides expanded public sector employment, include high and progressive taxes, solidary wage policies, and the mainstreaming of part-time work. Solidary wage policies consist of state interventions to contain wages within a narrower distribution than decentralized markets would normally exhibit; strict control of minimum wages together with highly progressive taxation creates higher wage equality generally in Sweden. The female-to-male (time-adjusted) wage ratio is 0.827 (Blau and Kahn 1996). These policies are targeted to "equalize the living conditions" of all citizens and have led to the relative equality of access to life course benefits extending into retirement. The male breadwinner model is largely absent from formal Swedish policy, although gender inequality has not disappeared (O'Rand 1988). Policies toward part-time work have played a major role in the balance between work and children for Swedish women and men (Sundstrom 1997). Women's labor force participation rates are the highest in the world at about 85 percent, but about four in ten of these workers are part-

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timers. Most work approximately thirty hours per week and tend to work continuously in these schedules over significant portions of their lives. Longitudinal studies of part-time work trajectories reveal less tendency to mix work and nonwork schedules, and more tendency to change the level of hours worked over the life course. Age-specific rates of part-time work among Swedish women reveal the lowest rates in young adulthood (around 30 percent) and increasing rates afterward with rates over 60 percent among the 55 to 60-year-old groups (Hakim 1997). Moreover, part-time work among more highly educated and highstatus workers is more common than in any other country. However, the structural importance of part-time work in Sweden is its attachment to full social benefits (health, retirement, and transitional grants), paid vacations, job security, and income-related benefits proportional to earnings (including supplementary pensions). Part-time work is not marginalized in the labor market nor in the social benefit system but incorporated in an integrated work and family welfare regime. Part-time work is less common among women in the United States. Although over two-thirds of women who are of working age are employed in the United States, less than 25 percent work part-time at any given time, compared to about 10 percent of men (Drobnic and Wittig 1997; Rosenfeld and Birkelund 1995). But part-time work is marginalized. It is highly concentrated in the secondary sectors of the economy and among the youngest (under 25) and oldest workers (over 60) (Hakim 1997). The age-specific patterns of part-time work suggest that it is a transitional work status at the boundaries of the more general work career in the United States and is not integrated into the employment system. Tilly (1991) argues that the expansion of part-time jobs in the United States is part of the more general trend of employer-related creation of more nonstandard or atypical jobs meant to trim labor costs. Their concentration in the service and trade sectors, in which small establishments predominate, and in lower skilled or unskilled occupational categories makes them generally undesirable. They have high turnover rates. Wages are low—about half of the hourly wage earned by full-time workers. And formal benefits are all but nonexistent; the exceptions include part-time workers with highly desirable technical skills whom employers wish to retain and to whom benefits are more available (Tilly 1996; see discussion in Chapter 5). In Germany, part-time work is highly gendered and marginalized. German women have among the lowest labor force participation rates in the industrial world (54 percent); about one-third of these are part-time workers. Age-specific rates of part-time work rise steadily after age 20 among German women (Hakim 1997). High wages in the male sectors and the predominant male breadwinner model in Germany serve to marginalize

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part-time work as secondary work. Blossfeld and Rohwer (1995) report that two distinctive aspects of part-time work in Germany underscore its attachment to the breadwinner model. First, the growth in women's labor force participation in Germany over the past thirty years has been largely a result of the expansion of married women's part-time employment. Second, over the 1980s part-time jobs in the public service sector targeted at women doubled, with large increases in higher levels of public service. This policy, however, should not be treated as equivalent to the Swedish policy toward mainstreaming part-time work. Rather, it was developed with purposes consistent with the protection of the German family and male wage structure rather than with an eye toward equalization of wages and benefits. Recent upswings in unemployment among the young in Germany have stimulated debates over an expansion of part-time work into the core manufacturing and professional sectors of the economy, but corporatist interests have prevailed in protecting the high wage sectors through unemployment compensation rather than through part-time or partial employment systems. Even the introduction of "gradual retirement" through part-time work in Germany has failed since a "culture of early retirement" from full-time work to full benefits prefers the traditional passage (Schmahl, George, and Oswald 1996). Occupational segregation and wage inequality characterize the employment pathways of all three systems. Blau and Kahn (1996) report gender segregation indices for major occupations and industries for the United States, Germany, and Sweden. They find that the United States is less segregated by gender. Occupational and industrial segregation indices are 0.36 and 0.34, respectively. For Germany and Sweden the figures are 0.42 and 0.32, and 0.46 and 0.42, respectively. Sweden's higher occupational and industrial segregation is clearly attributable to the role of the public sector in women's employment in Sweden. However, female-to-male (hours adjusted) wage ratios favor Swedish women (0.83), when compared to the United States (0.67) and to Germany (0.68). In addition, Swedish and German women workers benefit from an added social wage in the form of fuller social benefit coverage over their lifetime. U.S. women have highly uneven access non-wage benefits to across industrial and occupational sectors (as per Chapter 5) and their lower earnings histories constrain their accumulation of retirement benefits relative to men's. Finally, German women receive social benefits primarily as wives rather than as workers. Aged Inequality The level of income inequality among the aged is usually less than that among the nonaged across countries. The greater dependence of the aged

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population on public pensions and related social expenditures produces a smaller gap between the highest and lowest incomes. As such, statusleveling processes are more pronounced among aged populations. Since 1980, however, exceptions to this pattern have emerged; included among them are the United States and, to a lesser extent, Germany (Gottschalk and Smeeding 1997). Examination of the composition of aged income across the income distribution reveals the relative importance of market, state, and gender factors in aged inequality. As Chapter 2 emphasized in detail, pathways to inequality can be tracked usefully by examining sources of income and patterns of asset accumulation. Table 7.2 adopts this approach. Data for the table are drawn from the Luxembourg Income Study database and reports within decile gross income composition of all aged persons and single women aged 65 years and older, respectively, in the United States, Germany, and Sweden (see Smeeding 1997, for details on measurement and individual country source, as well as other country comparisons). Each figure in the table reports the percentage of income in that decile (i.e, the 1st, the 5th, and the 10th, respectively) derived from

TABLE 7.2 Countries

Within Decile Aggregate Income Composition of the Aged in Three All Aged Per sons

Sin gle Womei:i 65+

Decile I Decile 5 Decile W Decile 1 Decile 5 Decile 10 United States (1994) Social retirement Means-tested income Occupational pensions Earnings Capital/Property Germany (1989) Social retirement Means-tested income Occupational pensions Earnings Capita 1 / Property Sweden (1992) Social retirement* Means-tested income Earnings Capital/Property

69.7 17.8 3.7 2.6 6.1

65.7 .9 14.7 9.6 9.2

18.6 .1 20.1 37.9 23.2

68.6 18.8 2.7 .6 9.3

84.3 1.5 6.6 J .9 5.8

26.8 2 21.2 17.2 34.6

73.9 8.9 3.7 6.5 7.1

83.5 .1 7.5 6.5 2.4

26.4 .3 31.3 33.6 8.4

83.1 5.3 5.1 1.3 5.3

86.6 1.3 3.3 0 3.8

40.7 0 37.3 5.3 16.7

76.8 15.8 .4 7.0

90.6 .6 1.7 7.1

71.2 0 16.5 12.4

79.0 13.7 0 7.3

74.6 13.1 .2 12.1

84.2 .1 5.1 10.6

"Social retirement in Sweden includes occupational pensions, which average about 8 percent of income. SOURCE: Percentages are rounded from figures reported in the Luxembourg Income Study Database (Smeeding 1997).

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one of the following sources: social retirement, means-tested income, occupational pensions, earnings, and capital and property. Sweden

The relative share of income drawn from social retirement (public pensions) differs notably across countries and income deciles. Sweden has the highest level of dependence among aged persons on social retirement. The median decile (decile 5) of Swedish aged depends on public pensions for over 90 percent of income. Meanwhile, both the lowest and the highest deciles (decile 1 and decile 10) also depend significantly—77 percent and 71 percent, respectively—on public pensions. Sweden has a two-tier system of social retirement consisting of a flat-rate universal pension and a work-based second tier that averages about 8 percent of aged income. Accordingly, occupational pensions are more integrated with the social retirement system and more evenly distributed. Economic inequality in this population is more clearly demarcated by the greater relative dependence of the lowest income decile on means-tested income (about 16 percent of income) and of the highest income decile on earnings and other assets (about 16 percent). Solidary wage policies and a narrower distribution of social retirement benefits produces less inequality. Single women aged 65 and older in Sweden display somewhat more variability in the source of retirement income, and they are slightly worse off than the aged population generally. Seventy-five to eighty-four percent of older single women's income comes from social retirement (Smeeding 1997). The highest decile of older women depends more on social retirement (84 percent) than the highest decile of all aged persons (71 percent). More older women at or below the median depend on means-tested income; women at the median income level receive approximately the same share of income (about 13 percent) from meanstested sources as women at the bottom decile (about 14 percent). Finally, women at or above the median decile depend somewhat more than aged persons in general on other assets (capital and property)(about 12 percent and 11 percent, respectively, at the 5th and 10th deciles). In short, older women in Sweden depend overwhelmingly on social retirement, but their sources of income are also more variable in the middle of their income distribution. A larger share of income is means tested at and below the median, and a larger share of income comes from capital and property at the median and above. Germany

The German aged population shows greater variability than Sweden's in their dependence on social retirement across the income distribution. De-

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pendence on public pensions is highest at the median (84 percent), slightly lower at the bottom of the distribution (74 percent), and lowest at the tenth decile (26 percent). Older single women in Germany depend more on social retirement than aged persons generciliy and display a slightly flatter distribution of the public pension share, with the highest decile group about 1.5 times more dependent (41 percent versus 26 percent). Occupational pensions are the second most important source of income for all aged and for single older women in Germany, but they are restricted to the highest income deciles. Occupational pensions in Germany are effectively supplementary to social retirement. They are modest. But their unequal availability to all workers increases variability in inequality among the aged German population when compared to Sweden. The share of occupational pension income among older single women in the highest decile is perhaps a remarkable figure (37.3 percent) given the relatively lower rate of labor force participation among women generally in Germany when compared to both Sweden and the United States (see Chapter 6). But German women who work full-time may be similar to some American women workers who gain retirement income advantages by working full-time in selected sectors. And in the American case, their retirement benefit advantage is highly associated with earnings generally. Accordingly, the prevalence of occupational pension income among higher deciles is not an anomaly. Earnings are twice as important for aged income in Germany than in they are in Sweden; as in the case of occupational pensions, they are concentrated among the highest deciles in the general aged population. A very low share of income comes from means-tested sources. Only the lowest deciles depend on this source, with the income of older single women about half as likely (5 percent) as that in the lowest decile of the aged population generally (9 percent) to come from programs for the indigent and needy. Finally, income from other assets like capital and property, as expected, composes more of the income of the upper decile, with older single women twice as dependent (16.7 percent) as aged persons in general (8.4 percent) on this source. The older women in this category perhaps benefit most from the family breadwinner system in Germany, which rewards breadwinners with higher earnings and benefits over a lifetime, leaving their survivors with two pillars of support: a strong social retirement system and greater accumulated wealth.

The United States

Aged income in the United States is the most highly differentiated across sources of income, and the most stratified. Recall Esping-Andersen's (1990, 65) caricature of the United States quoted earlier: three U.S. strata—the bottom dependent on relief, the middle on social insurance,

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and the top on the market. Nine-tenths of lower decile U.S. income depends significantly more on social retirement and means testing, whereas eight-tenths of higher decile income comes from market-based sources: occupational pensions, earnings, and capital. The median decile groups depend primarily on social insurance, particularly older single women (84.3 percent). Social retirement accounts for less than one-fifth of the highest decile income of all aged and a little over one-fourth of single older women's income in the highest decile. Means testing is restricted to the lowest deciles; it accounts for just under one-fifth of the income of the lowest income groups. Occupational pensions play a bigger role in the United States in differentiating income in the aged population than in the other two countries, especially in the top half of the income distribution for all persons. Among older women, only the upper decile depends significantly on this source of income (about 21 percent of income). Earnings further stratify the U.S. population. The highest deciles of all aged persons and of single older women depend more on earnings (38 percent and 17 percent, respectively). This pattern stems from the higher variability of labor force exit in the United States, especially in recent years (see Chapter 6; Quinn 1997). Recent labor market trends and the uneven distribution of occupational pensions produce heterogeneity in the work patterns of older workers and in the sources of their income. Finally, asset income from capital and property contributes more to aged income across income distributions and accounts for the most significant share of income in higher deciles. It accounts for about one-fifth of income in the highest decile of all aged, and for over one-third of income in the highest income group of older women. Even more dramatically than in the case of Germany, aged single women in the United States who are in the upper income decile depend on income derived from the market, rather than the state. Single Older Women and the Risk for Poverty

Although we have raised cautions regarding the usefulness of poverty rates in representing the well-being of the elderly generally, their association with the economic circumstances of older women across countries deserves a final note. Siegenthaler (1996) has examined the institutional heterogeneity of old-age security systems in the United States and Europe, drawing data from multiple studies using the Luxembourg Income Study and selected household surveys conducted in the European Union. He compares the economic position of single older women (widows, divorcees, and never marrieds) across countries between 1979 and 1989. Economic position is measured as minimum pension benefits and poverty rates. When the minimum old-age (social retirement) benefit is

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measured as the percentage of the median income of older persons, he finds U.S. older single women are worst off, with their minimum benefits equal to 34 percent of median older income; German and Swedish figures are 52 percent and 66 percent, respectively. Siegenthaler (1996) examines poverty rates among older single women in numerous ways across countries. His general finding is that U.S. rates are typically much higher. Nearly one-fifth (17.6 percent) of older women in the United States aged 65 or older receive less than 40 percent of median total income among the aged, whereas 2.4 percent and 1.7 percent of German and Swedish single older women, respectively, fall in this category. Over one third (37.8 percent) of U.S. older single women aged 75 and older receive less than 50 percent of the mean income among older persons generally, whereas 14.7 and 6.4 percent of their German and Swedish counterparts fall in this category. The distribution of income sources reflects the underlying variability of employment and family pathways across these three contexts. The social democratic system in Sweden, which depends nearly exclusively on social retirement, produces the lowest levels of variability in income sources and in income inequality. The corporatist German system is more stratified than the Swedish system; above median income levels, market-based income sources increase in their share of total income relative to social retirement. The United States produces the highest levels of aged income source variability and inequality. Higher income groups are far less dependent on social retirement than the market. Income from assets based on employer-based occupational pensions, earnings and capital, and property predominates above the median of the aged income distribution in the United States. Finally, older single women, on average, are at higher risk for poverty across systems but are most at risk in the United States. Meanwhile, across these three systems older single women in the highest income groups are distinctive in their status as the final beneficiaries of market- and state-based systems. They benefit from market systems as the derived beneficiaries of breadwinners; they benefit from social democratic systems as citizens and as the survivors of citizens.

Conclusion

In summary, the relative decentralization of the educational system and the labor market distinguishes the U.S. liberal welfare regime from its counterparts and produces greater variability in life course trajectories and careers. It also results in a more highly stratified older population with uneven dependence on market and state transfers in retirement. Men and women in the U.S. market-centered state follow diverse pathways through employment and family to retirement. The demographic

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mix of traditional married couples with male breadwinners, dual-earner couples, and single-person households across age-groups in a decentralized labor market with limited state protection from life risks provides fertile ground for diversity and inequality. Greater centralization of the educational and labor market systems in Germany and Sweden produces lower levels of inequality in old age. Similarly, welfare supports for life course risks are provided by these systems to buffer against the shocks of unexpected life events. But these countries are distinctive beyond that comparison. The family/gender system distinguishes them from each other. German women are primarily derived beneficiaries of the conservative-corporatist state based on their clearly defined family roles. As such, they are socially "credited" for these roles in wrays that U.S. women are not. Swedish women and men benefit relatively equally from their entitlements as citizens. Perhaps a final ironic comparison can be proposed between the United States and Sweden. Both contexts impel relatively high levels of individualization, but of different kinds. Individualization in the United States is privately defined. It is expressed by the variability in the life course across all domains-education, family, and work—that are loosely coupled over the lifetime of aging U.S. cohorts. In the absence of a strong welfare system, loose coupling among these institutions tends to segment the experiences of individuals in the system. Individualization in Sweden is publicly defined as citizenship. Variability in the life course extends mainly to family and gender roles, roles that receive coherent and integrated support within the system. Solidarity as opposed to segmentation or isolation appears to be the contrasting result. In between these two systems, Germany exhibits more clearly defined gender-based pathways that emerge from tightly coupled market, state, and family systems. Workers are relatively more advantaged, but women are less at risk of poverty as a result of protection from the social insurance system.

8 Conclusion: The Future of the Age-Structured Life Course

Diverse social structures, like those depicted in the previous chapter on welfare states, face common problems at the turn of the century that impel social change. Demographic pressures stemming from population aging, fiscal crises tied to mismatched taxation and social spending policies, and global markets promoting the privatization of all aspects of social life have converged on advanced industrial societies to challenge their welfare regimes. The ascendance and spread of new market-based solutions to these problems has extended beyond liberal welfare systems like the United States and the United Kingdom to include more social democratic and corporatist welfare states in Europe. Even newly developing countries in Latin America and Asia are adopting market-centered approaches to the development of social policies. The implications of applying twenty-first century market-based solutions to the organization of the life course are complex and probably variable across societies. However, a likely outcome will be the decline of the age-structured life course, accompanied by increased inequality. This chapter considers the future of the age-structured life course in the United States and worldwide. First, the role of changing workplace institutions in reconstructing (or perhaps deconstructing) the tripartite life course is addressed. These changes emanate from the globalization of markets that has reorganized labor and redistributed market power from workers to shareholders arid financial managers. All countries are subject to these forces in spite of their previous welfare regime histories. Second, the countervailing pressures of population aging that promote the growing individualization of the life course are examined. These pressures 207

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bring new opportunities and new risks to aging cohorts. On the one hand, extended life expectancy and projected declines in morbidity and mortality in the population provide individuals with greater freedom from illness and early death and more time for the actualization of the self over the life span. On the other hand, population aging is compelling governments to revise their welfare policies in a direction away from sustained support of the normal life course and from protection against life course risks. Finally, the future of the U.S. baby boom cohorts are assessed. This population exemplifies the themes developed throughout this book. The aging baby boom is a study in variability and inequality and a harbinger of the future of the age-structured life course. The Deinstitutionalization of the Life Course? The tripartite organization of the life course in industrial societies developed primarily from work institutions regulating the entry, tenure, and exit of workers. These rule structures have selected and allocated workers to age-related career pathways ending in retirement. Over the past half century, a major trend toward earlier retirement has occurred across industrial societies, but it has been accompanied by another trend toward increasing variability in the scheduling of work careers and work exits and in the pathways from work to retirement. The first trend has been universal across advanced societies, although differences in welfare regimes have created diverse pathways to retirement that include distinctive mixes of public pensions, occupational pensions, unemployment, and disability. This trend has not challenged the tripartite organization of the life course, but it has rescheduled it to decrease the duration of the work life (especially among men when compared to earlier periods during this century) and to increase the duration of retirement. The second trend—toward increased variability in the work career—is more pervasive in market-centered economies like the United States, since strong welfare policies that support a coherent, age-structured life course protected from market cycles are relatively absent. Instead, the relationship of the individual to the market over his or her lifetime shapes the life course and results in considerable variability. In recent decades, market institutions have accelerated the introduction of policies toward workers that segment their work experiences and further individualize their work careers. These policies introduce flexibility in work schedules and more inequality in work rewards. Increased variability in the work career is found in countries such as France and Germany to the extent that public (social) retirement systems have been used to assist employers in dealing with market changes. This is a theme that is discussed in Chapter 6.

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in the Workplace

The period since 1973 is now widely recognized as one with changes in the organization of the market that are so significant that they approach the magnitude and the pervasive societal impact of the industrial revolution over a century ago. Economic restructuring in response to emergent global competition among the three major regions of the world—North America, Europe, and the Asian Pacific Rim nations—has reorganized the division of labor among nations. Technological streamlining of the production and distribution systems of the market and improved access to new labor and consumer markets globally render many traditional workplace institutions obsolete, especially those preserving worker power. Notable among these institutions were labor unions, seniority systems, the full-time work week, lifetime employment contracts, and the family wage. Replacing these older structures is a twenty-four-hour global economy that presses employers to achieve new standards of efficiency in capital and labor investments. New workplace policies to these ends include downsizing of the full-time labor force (including internal labor markets once protected from economic cycles), a retreat from wage and benefit policies that bind long-term employment relationships between employers and workers, and the shift toward contingent work. Downsizing began in tlie late 1970s and 1980s with plant closings, early retirement packages, and the offshore relocation of large shares of the production process in manufacturing industries. By the late 1980s this practice had spread to managerial and professional levels across industries (e.g., manufacturing, service, finance) and was accompanied by corporate merger and acquisition activities that exacerbated the workforce trimming process, especially among older, more experienced workers. Today, the threat of downsizing and the layoffs, out-placements, and early retirements that often follow are relatively permanent concerns of workers. The life course implications of downsizing are transparent. The triphasic organization of the life course was predicated on assumptions of stable and permanent employment in the middle passage of life. Voluntary and involuntary job mobility are increasing among older workers and introducing variability to the preretirement years, which in earlier times for a significant sector of the labor market composed a period of seniority and security leading to voluntary early retirement. Jobs that "bridge" midlife careers and final labor exit are increasing among older workers and there is growing evidence that the trend to early retirement has been halted (see Chapter 4; Quinn 1997). Labor exits and job mobility have also increased in the midlife work career, which in earlier times promised, on average, to be an upward

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trajectory of earnings accompanied by income protections, from fringe benefits to family support to savings for the future. Instead, job shift patterns are more and more frequent in sectors of the labor market that were historically more stable. Midlife reentry to vocational training and formal education by more highly educated workers is also increasing in the aging labor force and could become a more normally occurring transition in the job mobility process of the future (see Chapter 3; Elman and O'Rand 1998b). Spells of unemployment are also more prevalent and introduce a new level of volatility to income trajectories that places more individuals and their families at risk of temporary (and less frequently, permanent) poverty or near poverty (Duncan 1988). Since long-term employment relationships are at risk in this environment, the life course is further prone to greater variability. Employers are retreating from work policies that encourage these relationships. The shift to contingent labor, by definition, abandons this relationship. But other policy changes also attenuate the employment contract. Pensions and other fringe benefits are indicators of the strength of employment contracts. Historically, they operated as income protections and incentives to remain with the same employer. However, new fringe benefit packages serve less to increase the mutual obligations of employers and workers, and more to increase workers' responsibilities for their own income and family maintenance, including individualized pension packages, health insurance arrangements, and family maintenance devices. Meanwhile employers are relieved of these long-term obligations to workers and free to turn to external, less costly sources of short-term labor. Thus the incentives for job mobility among workers and the preference for smaller core workforces and contingent marginal workers among employers has led to an overall decline in job tenure. Women's labor force participation patterns are inextricably intertwined with the rise and spread of these policies worldwide. They are employed primarily in the service and clerical sectors, which have rapidly expanded as manufacturing and related sectors have contracted. They have lower access to income protections in these sectors. Moreover, they constitute the majority of part-time workers, although their relative predominance varies across countries. Their large-scale entry and increased permanence in the workplace has been consequential for their family roles and has introduced another source of variability in women's lives—the diverse scheduling of family and work roles over the life course—leading to heterogeneity and inequality among women, as well as between men and women. Men's and women's lives have become similar in overall organization and less segregated into different spheres, but female labor force participation has had a multiplicative effect oil life course variability; both the

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course of their lives and the lives of their families have been affected in complex ways. The linked lives of dual-earner spouses are complicated by their joint role investments in work and family, but married worker couples benefit by higher household incomes and improved general wellbeing over the life course. Alternatively, women's relative economic independence, gained through education and work, increases the risk of marital disruption. The effect of the latter transition is to stratify women's fortunes further, since they incur high risks for a decline in standard of living, including for falling into poverty, following divorce or separation. The economic and personal risks from marital disruption are sustained into old age, when older single women are more likely to be poor across countries, especially in market-centered, liberal welfare regimes. Changing workplace participation schedules for women and men contribute to what we have called "asynchronous lives," or life courses riven with temporal contingencies that produce turning points and deflections from earlier trajectories (see Chapter 3). At minimum, these patterns increase variability in the life course. They also increase the level of inequality over the life span into old age. For some male worker groups, work itself has all but disappeared from the life course (Wilson 1996). Globalization and privatization have reconfigured the distribution of lower-skilled jobs on a worldwide scale. In the United States, this redistribution has contributed to the isolation and concentration of relatively permanent poverty and unemployment in major urban centers. Sustained unemployment and labor force dropout among men (especially urban, African-American men) disrupts the aged-graded life course. Unemployability decreases marriageability. This pattern reverberates through the poorest segment of the African-American population, producing female-headed households, high rates of childhood poverty, and permanently stigmatized life course patterns that include incarceration, disability, indigence, and early death. In Europe, where unemployment rates are higher and more generally distributed in the workforce (although the youngest and the oldest workers are at more risk) social welfare regimes have intervened to preserve more coherence in the life course with public benefits. For older workers, these benefits have been bridges from work to retirement; for younger workers they have acted as abeyance mechanisms until work is available. In sum, although the global economy has produced unprecedented levels of wealth, it has also accelerated the reconstruction and diversification of the life course into multiple asynchronous pathways. Greater economic inequality across market societies has followed. The normal life course does not fit easily with the privatizing forces of the new global economy. Neither does the welfare state, which faces the conflicting demands of population aging and globalization.

Conclusion

212 Aging Populations and Social Policies

Increased life expectancy worldwide and the so-called compression of mortality (i.e., increased survival and the concentration of death around the mean age of death) reflect the success of public and private institutions and individuals in overcoming the h-aditional threats of earlier death, which have included infectious diseases, some chronic diseases, and selected environmental hazards. The most recent Social Security Administration projections of life expectancy at age 65 for men of the U.S. baby boom cohort range between 12.9 and 13.1 years and for women between 14.6 and 15.9 years (depending on year of birth over the baby boom period). These projections produce expected mean ages at death that range between 78 and 81 for men and women—projections that some demographers consider conservative, given the dramatic recent declines in mortality at older ages in the United States (Manton and Stallard 1996). Other projections of active life expectancy, chronic disability, and institutionalization of the elderly have expressed confidence that, all else being equal, extended life in the next few decades will also be more free of prolonged disability and institutionalization (Manton, Corder, and Stallard 1993; Manton, Stallard, and Corder 1997). Indeed, new low levels of fertility and mortality across developed countries are accelerating population aging worldwide. Even the oldest old are surviving longer across developed and undeveloped countries at a time when their governments and economies are facing new exigencies in the maintenance of their national workforce and their welfare regime. The proportion of elderly in developing countries who rely on pensions is still very low. Latin American countries, some of which have had pension systems in place for over fifty years, have been more active than Asian and African countries in the development of pensions. However, these programs are highly uneven from country' to country and between rural and urban populations, and the benefits are generally very low (Martin and Kinsella 1994). Recent attention has been directed at Chile, which implemented a privately funded pension system fifteen years ago to replace its public pay-as-you-go plan that has become a model. But recent downturns in the stock market, high fees charged to contributions, and marketing costs have provoked criticisms of this new system (Economist 1998a).

The Age Continuum and Age Integration

The extension of active life expectancy is an achievement of the late twentieth century and a boon to the aging cohorts of the next century. Matilda White Riley (1998) argues, further, that longer, healthier lives in

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the United States have already spawned two revolutionary changes: the significant extension of the "age continuum" and a less visible revolution in societal structures that segregate roles on the basis of age less and less—a process she refers to as "age integration" (see Chapter 3). The extension of the age continuum refers to the replacement of age-graded phases of the life course by an extended age continuum, along which multiple life transitions and activities that were once restricted to one phase or segment of the life course can occur and recur over the life span. Age integration, Riley argues, is quietly proceeding as the age barriers once associated with selected social institutions—such as those related to education, work, family, health, and welfare—are breaking down. Persons have more opportunities to participate in these social domains across their lifetime and with persons of different ages. Structural Lag and Public Policies

However, a structural lag persists in the transformation of many societal institutions, and any policy change carries anticipated and unanticipated consequences. The age distribution of a population has special implications for the economy and for existing pay-as-you-go welfare redistribution policies that were institutionalized in earlier times, when population pressures were different (Bosworth and Burtless 1998). Three general social policy alternatives are available to governments with rapidly aging populations (Uhlenberg 1992). The first is to intervene in the demographic process itself, that is, to alter the aging of the population. This approach has been followed in diverse ways across countries. Pronatalism or the implementation of incentives for childbearing is one approach that has been followed by some European countries since World War II (e.g., France). Another policy promotes the high and selective immigration of the young; this approach is also an active labor market policy that has been applied by United States (and other European countries like Germany following World War II) more to alleviate labor shortages than to contain the aging of the population. The first policy is a long-term investment in cohort succession; the second can have more immediate impact on the age structure, but it also imposes new costs related to the integration of immigrant groups into the wider society. The age-specific rationing of health care is a third option for changing the age structure itself. It has received attention in the United States as recently as 1993 during the most recent round of debates on national health insurance. This policy proposes limits on the level of health insurance available for the more costly life-extending remedies and procedures for the aged. One advocate (Callahan 1987) proposes the rationing of government-financed health care at ages close to the life span (80 and

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beyond). Certain European countries have in fact institutionalized some form of health rationing through hospice and other practices limiting the delivery of care, but the idea has yet to receive widespread support in the U.S. context. The second broad social policy alternative is to increase the productivity (or alternatively to decrease the dependence) of the older population (Uhlenberg 1992). The intended effect of this approach is to reconstruct the life course by resetting the boundaries of the work life, specifically by extending institutionalized retirement to later ages. Numerous incremental changes proposed for Social Security fall under this category and take the general forms of cutting benefits and raising payroll taxes. Proposals for cutting benefits include (1) raising the retirement age, (2) deleting or suspending cost indexing, (3) reducing benefits for high-income retirees, (4) changing the benefit formula over time to reduce the replacement rates of higher income groups, and (5) making benefits fully taxable within the income tax code. Proposals for increasing payroll taxes include removing the wage/salary ceiling and raising the tax rate. Overall, these proposals operate to reconfigure the life course by prolonging the work life through delayed benefit eligibility and/or through higher taxation. As such, they increase variability and diminish the force of age structure. More advantaged workers with higher levels of occupational pension benefits and income from other assets can retire, as they have in recent years, before they are eligible for Social Security with lower risk. Meanwhile workers who depend more exclusively on Social Security for retirement income will be constrained to work until they finally qualify for benefits with cumulative risks to their health and general well-being and with limited options. The third broad area includes policies that shift the locus of responsibility for maintenance of the life course away from the state and toward the individual (Uhlenberg 1992). The privatization and individualization of pensions, health insurance, long-term care, and other individual and family insurance systems fall squcirely within this approach and are already components of the occupational welfare system of the United States. Recent proposed expansions of these individualized models to the public sector in the United States call for mandated savings in private (401K-like) pension accounts and in selected health accounts (such as proposals for long-term care insurance) that function as annually dedicated, savings deposits that at year's end can be used for other needs if health costs did not arise. The Federal Thrift Plan for pension saving among federal employees (described in Chapter 5) is the exemplar for the "privatized public" pension system. It presents the worker with an array of investment plans with variable market risks and leaves it up to the individual to manage his or her funds.

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The multiplex health insurance system under the rubric of "managed care" is already a privatized and individualized system of cost-graded alternatives that offer unequal health services. Health Maintenance Organizations (HMOs) are the most widely available plans and the most restricted. They are prepaid plans that control health care by requiring beneficiaries to use only those health professionals participating in the contract. Other plans with higher premiums offer beneficiaries more freedom to select health care providers. As such, managed care is, by definition, unequal care. Health accounts are even more individualized variations of privatized health insurance and thus promise even greater inequality. Privatized models of social welfare are also spreading to the social welfare states of the United Kingdom and Europe that are faced with fiscal crises. In Britain, population aging has stimulated steady debates over the past two decades over the management of its pension system. The most recent actions and proposals target two kinds of benefits, meanstested assistance for poorer pensioners and funded pensions—called "stakeholder" pensions—and individual savings accounts (like IRAs in the United States) for middle- and high-income groups (Economist 1998b). The multi-tier pension structure in Britain is typical of privatizing systems that bifurcate income groups. They provide incentives to those with stable employment and higher earnings to save more as individuals for their own retirements, and they redistribute public funds to lower earning groups (including segments of the population with histories of unemployment and underemployment). The privatization of health policy is also diffusing to European welfare states. Public disability benefits have expanded rapidly over the past two decades in Europe, doubling in Great Britain and increasing even more in some European states. Disability programs have expanded as growing unemployment levels have challenged the limited carrying capacity of unemployment and pension systems (see Chapter 6 for more discussion of the relationship of disability policy to retirement policy). Governments are beginning to charge employers premiums for their workers' disability coverage, basing the premiums on the employers' past records. This approach is similar to U.S. policy on unemployment and workers' compensation (see Chapter 5). The Netherlands, which has maintained one of the most generous public disability programs in the world, privatized disability in 1998 along these lines and, in addition, has instituted a new privatized short-term sickness plan (Economist 1998a). Policy changes such as these effectively decentralize the welfare structure by including employers more directly in the system. Employers are important sources of variability, since they will probably respond to these changes differently. Most are likely to find ways of retaining workers who may have been released

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to the disability rolls earlier and of discouraging workers from taking sick leaves, but the methods they adopt and the strength with which they apply them will introduce heterogeneity in the ways that workers are treated. Decentralization increases variability and inequality. In short, population aging and the development of individualized private welfare instruments are influencing welfare policies globally. Public systems are not being replaced wholly by privatized systems. Instead, they are being revised by selective substitution of privatized plans for public plans in parts of the system (as in the case of disability), or they are being augmented with privatized programs in other parts of the system (as in the case of old-age pensions). These policies introduce diversity to social welfare structures, and they segment and stratify their client populations along other criteria besides age, including gender, class, and race. The long-term prospect for life course structure under these changing conditions is that it will lose its coherence, especially its age-based organization. The Baby Boom: Past and Future

The U.S. baby boom cohorts have received attention at selected points throughout this book because they exemplify intracohort variability. They also provide strategic material for answering the final question of this study about the future of the age-graded life course. Trends in the labor market since 1970 have had an uneven impact on the fortunes of all worker cohorts, including baby boomers. Economic inequality measured in terms of wages and asset accumulation has increased. Those with higher educational attainment at the beginning of their work career have fared better, especially over the most recent period of wage stagnation. This pattern has been the same among women and men alike. Economic restructuring has taken its worst toll on the less educated, although managerial and some professional and technical workers in their 40s and early 50s during the 1990s began to feel the sharp edge of downsizing. Women's increased labor force participation has influenced inequality in these cohorts by diversifying the fortunes of families of varying structure and size. Dual-worker couples predominate among middle-aged baby boomer households and fare better economically than singleperson and single-earner households. Educational homogamy further stratifies this population, since more highly educated spouses have a cumulative advantage in the market. Finally, marital dissolution also differentiates baby boom fortunes through income decline for former spouses, through interruptions and losses in wealth accumulation and through the deflection of spouses from earlier life paths to new ones. Labor market trends influence retirement prospects through their impact on work careers, earnings trajectories, and pension accumulation.

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Although the baby boom cohorts appear to be better off in income and wealth than their parents and other cohorts at the same age (Radner 1998), variant patterns of job mobility, wage growth, and coverage by pensions and other fringe benefits during middle age promises to increase diversity among them, both in the timing of retirement and in economic status following retirement. Higher proportions of these cohorts participate in more individualized DC plans. Changes in the normal retirement age for receipt of full Social Security benefits that are scheduled over the years ahead will probably increase life course variability even more for boomers, since the pension receipt clock will be moved back for some who would otherwise have retired earlier. Meanwhile those retirees who have prospered during the stock market boom of the mid-1990s will have increased opportunities for early retirement. Future changes in the labor market and in the Social Security system could also introduce variability to the timing of retirement among baby boom cohorts. For example, if Social Security rules are changed to lift the earnings cap for full benefits, then more boomers could continue working than otherwise would have. Similarly, if employers find that the smaller cohorts of workers following the baby boom do not provide an adequate supply of preferred labor, then diverse members of older cohorts may have strong incentives to remain at work. Optimistic projections of active life expectancy support the expectation of prolonged workplace productivity. Such imagined future changes are likely to elicit diverse responses from these cohorts. Changes in the Social Security system will be shaped by the engagement of these cohorts in the political process. The baby boomers held great promise in the 1960s to be a long-term political force. But even then it was clear that their impact would not be a monolithic one. Lipset and Raab (1970) identified at that time that the political ideology of the baby boom was divided. A survey of youths with different educational attainments that ranged from non-high school graduation to college completion was conducted by Daniel Yankelovich and Fortune magazine. Lipset and Rabb uncovered two patterns in their data. The first was that younger voters (baby boomers) were significantly more likely to support right-wing candidates over mainstream candidates, when compared to older voters. This finding was particularly surprising, given the more visible displays of left-wing and liberal opinions of some baby boomers. The second finding was one that revealed a cleavage in this cohort, which has turned out to be a nearly permanent political fissure: Educational background differentiated political orientation toward mainstream versus extremist third parties. Wallace supporters during the 1968 election came disproportionately from the young and, among the young, his supporters came from lower educational backgrounds, low-

218

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income families, and rural and southern regions. These groups wrere also more likely to enter the military service following the completion of their education. These findings are informative insofar as they were predictive of current political differences over welfare and market policies, as well as current inequalities stemming from educational and occupational achievements that differentiate cohort fortunes. Finally, the lives of these cohorts are linked to those immediately ahead of them and to those that follow them. The transfer of resources between these cohorts and their parents and children, respectively, also bears on the future of the life course. Intergenerational exchanges are mediated by the relative fortunes of generations. Economic inequality is maintained through intergenerational exchanges. And the transfer of economic resources from one generation to another has direct bearing on the age grading of the life course. Parental resources influence the educational and occupational outcomes of children, including the trajectories of their lives through education, work, and family domains. The divergent fortunes of the baby boomers will influence the patterns of inequality among their children. Variations in parental support for postsecondary education have strong effects on the level of educational attainment and the timing of educational completion. The growing privatization of educational institutions that span elementary schools to college financial support structures should interact with other market forces to transfer inequality from one generation to the other. Meanwhile the extended lives of the baby boomers parents are coinciding with policy debates about long-term care and filial (as opposed state) responsibility for this care. The joint survivorship of multiple generations through the adult years introduces new possibilities and responsibilities in family life and in living arrangements. The increase of family responsibilities to maintain aging parents as well as to assist maturing children has significant implications for the timing of retirement among the baby boom cohorts and on the timing of life transitions for their children. The age-graded life course faces more change in the century ahead. The interplay of demographic, market, and state processes has introduced more choices for individuals and has presented them with more uncertainties. The mix of choice and uncertainty has raised new risks for individuals, who can expect declining levels of support from public institutions. Those with earlier relative disadvantage for the achievement and maintenance of economic and social well-being face the prospect of limited social support when confronted with life course risks. The most advantaged can better accumulate private forms of insurance against these risks, although even these groups must manage uncertainty. Across the range of advantage and disadvantage is an accelerating diversity in the life course that challenges societies.

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Index

Achenbaum, Andrew, 81 Adulthood, transition to, 76-77,197 Age continuum, 212-213 Aged inequality, 187, 200-205 Age integration, 71-74, 85, 212-213 Agency, 7,9, 38-41 Age-structured employment, 57-58, 120 Age-structured life course, 1, 4, 6, 71-72,96, 101,109 "Aging as a Challenge for Social Theory" (Kohli), 34 Amendments to the Social Security Act (1983), 90 Annuities, 27, 40, 55 Apprenticeship, 72,197 Asset and Health Dynamics Among the Oldest Old Study, 53-54 Assets, 40-41, 44, 51-54 Atchley, Robert C , 103,104,117 Baby boom cohort, 4-8, 17-18, 62, 74, 176-177,207, 216-218 Bajteldsmit, V.L., 146 Becker, Gary S., 75-76 Belous, Richard S., 138,139 Benefit equality, 191 Benefits, 1 divorce and, 91 fringe benefits, 80-81, 131-132,138, 210 as occupational welfare, 137-146 survivors' benefits, 68, 82, 95-98 widows/single elderly and, 67-68

See also Medicaid; Medicare; Pensions; Public transfers; Social Security Birthrate, 177 Blau, Francine D., 85, 200 Blossfeld, Hans-Peter, 84,196, 200 Bound, John, 129 Breadwinner model, 3, 30, 79-83, 93, 190, 192-193, 194 Bridge jobs, 112-116 Burkhauser, Richard V., 113,114 Campbell, Richard T., 36 Capitalism, 30 Caregivers, 83, 93-94,198 Casey, Bernard, 171,184 Census Bureau, 10 Chan, Christoper G., 92 Childbearing, 8-9, 22, 30, 35, 56, 79, 125-126 Child care, 83,198 Chile, 212 Class issues, 29-30, 35-36, 75 Clerical occupations, 74, 77, 81 Clocking out, 87 Cohorts, 6 baby boom, 4-8,17-18, 62, 74, 176-177,207,216-218 birth, 50, 60,163 economic inequality and, 16-27 gender inequality and, 18-23 labor force participation rates, 106-109,163 marital status, 73-74 pensions and, 23-27,46, 50,133 retirement timing and, 101-102 243

244 Social Security and, 47, 217 variations, 5-6, 9-11, 31, 62, 217-218 wage gap and, 23-27 women, 55-56, 62,124-126 See also Intracohort differentiation Communications/utilities industry, 140,151 Community property, 82 Conservative corporatist states, 30, 32,191, 194, 205 Consumption, 39, 40, 41 Contested milieux, 140 Contingent employment, 81,139 Continuity, 35-36, 37,41-42, 59 Cooper, Cary L., 184 Core workers, 168 Corporatist states, 30, 32,190, 194, 205 Cost-shifting, 171,173 Couch, Kenneth A., 115 CPS. See Current Population Survey Craft model, 168 Creigh, Stephen, 184 Cross-sectional approaches, 10-11 Crystal, Stephen, 37, 38 Cultural capital, 72 Cumulative advantage, 10, 31, 37, 41, 133 Current Population Survey (CPS), 10, 16-17, 23, 83, 87,96 labor force participation data, 106, 114 pension data, 50, 133,140 Day laborer model, 138 DB. See Defined benefit plans DC. See Defined contribution plans Deeommodification, 190-192 Defined benefit plans (DB), 47, 111, 118,146-154 as collective benefit, 147-148 gender inequality and, 151-153 Defined contribution plans (DC), 29, 47,111,146-153 401K plans, 150-151 Deindustrialization, 138

Index Dependent spouses, 94-95 Derived beneficiaries, 95,195 Dictionary of Occupational Titles, 22, 88 Disability benefits, 111, 122-123, 215-216 cross-national comparison, 173, 175,182-183,192 Disability insurance, 1,156 Disengagement theory of aging, 101-102 Disposable income, 16 Divorce, 54, 60, 64, 89-91, 216 economic hypotheses, 89, 90 poverty and, 90-91 Dual earners, 82, 83, 84, 91-92,193, 211,216 Earnings, 2,12-13, 44, 91,139, 203 gender inequality and, 23, 59, 135, 204 low earners, 40-41, 53,81,155, 168-169 Easterlin, Richard A., 8, 10 Easterlin effect, 8-9 Eastern Europe, 14 East Germany, 159 Economic independence hypothesis, 89, 90 Economic inequality, 6-8, 69 aging cohorts and, 16-27 cross-national comparison, 11-16 gender and, 75-76 pensions and, 46-50,118 women's well-being and, 74-75 Economic restructuring, 83,138, 207, 209, 211, 216 contingent employment, 81,139 globalization, 1, 4, 28-29, 31 privatization, 182,183,184,191, 214 Economic theories, 39, 83 Education,^ 10, 23, 31,37 assets and, 41, 53-54 as consumption item, 77 cross-national comparison, 72, 195-198

Index gender inequality and, 72, 75-77, 84-85,195 health and, 126,127,129 household labor and, 83 linkage with employment, 72-73, 196-197 in midlife, 87-88 pensions and, 38, 47-50,118 retirement and, 101 secondary education, 196 self-selection into, 76 tracking systems, 196 Education-to-work transition, 72-73, 196-197 Elder, Glen H., Jr., 113-114 Elman, Cheryl, 87-88 Employee Retirement Income Security Act (ERISA) (1974), 28, 68,148,' 153 Employment. See Labor force participation Employment institutions, 27-29, 115-116 structure and segmentation of exit, 117-120 Empty nest, 89, 90 England, Paula, 22 Entitlements, 191 ERISA. See Employee Retirement Income Security Act Esping-Andersen, Gosta, 30,190-192, 193,195 European Union, 158. See also France; Germany; Sweden; United Kingdom "Europe Jobless, America Penniless" (Krugman), 167 Event histories, 103 Experience-rating system, 155 Externalization of labor, 138 Families, 2-3 age-based roles, 55-56 alternative models, 83-84 breadwinner model, 3, 30, 79-83, 93,190,192-193,194 breakup, 63-64, 68

245 changing patterns, 60-61,124 cross-national comparisons, 84-85 formation, 63-64, 84 household labor, 78-79, 83 income, 12-13 retirement pathways and, 91-96 roles, 71, 72 role-sharing model, 83-85 women's employment and, 124-126 See also Women Family development theory, 90, 91-92 Family economy, 91-92 Family wage, 80 Fannie Mae, 55 Federal National Mortgage Association, 55 Federal Thrift Plan, 214 Feminist theories, 192 Fertility, 8, 9, 59, 60, 61, 63 cross-national comparison, 177-179 5500 Series Employer Records, 148-150 Flexibility pressures, 169, 176, 197 Fogg, W. Neal, 114 Ford, Henry, 80 Fortune, 217 401K plans, 47,150-151 France, 3 early exit policies, 169-172 labor force trends, 159-165 retirement age, 180,183,184 unemployment and, 170-171 Fringe benefits, 80-81,131-132,138, 210 Fuchs, Victor R., 74 Functionalism, 101-102 Gendell, Murray, 105,109 Gender inequality, 8,18-23, 69 aged inequality and, 202 childbearing history and, 8-9, 22, 30,35,79,125-126 defined benefit plans and, 151-153 earnings and, 23, 59,135, 204 economic inequality and, 18-23, 75-76

246 education and, 72, 75-77, 84-85, 195 employment and, 58-59 intracohort differentiation, 55-56 occupational welfare and, 21-22, 58, 77-79,140,142,154-155 part-time employment and, 77-78, 198-199 pension participation and, 47, 50-51,140 pensions and, 18, 23, 25-27, 64, 133-136 resilience of, 74-79 risk-taking and, 153-154 wage inequality anci, 14, 21-22, 73, 199-200 welfare policies and, 30,81-82,190, 192-193 well-being and, 74-75 See also Labor force participation; Women General Motors-United Auto Workers pension plans, 147,148 Germany, 3, 4,14, 78,138 aged inequality, 202-203 early exit policies, 169-170,172-173 education, 196,197-198 family models, 84 gender inequality, 72, 200 labor force trends, 159-165 part-time employment, 199-200 pathways to inequality, 188 pensions, 172, 191-192 retirement age, 180,183,184 welfare policies, 30, 32,194 Gini coefficients, 10-17, 38 Globalization. See Economic restructuring Goldin, Claudia, 73, 74, 76 Goode, 92 Gottschalk, Peter, 14 Greece, 78 Guillemard, Anne-Marie, 171,182, 183,184 Hakim, Catherine, 77 Hall, Robert, 112,118

Index Han, Shin-Kap, 86-87 Hardy, Melissa A., 38 Hayward, Mark D v 114 Hazards models, 90 Health and Human Services Department, 94 Health and Retirement Study (HRS), 47,114-115,118, 129,133 Health care industry, 93-94,179,191, 215 Health insurance, 1, 111, 115, 142-146, 192 Health issues, 68,102, 111, 124, 126-129 education and, 126,127,129 managed health care, 93-94, 215 structural lag and, 213-216 Health Maintenance Organizations (HMOs), 215 Hearn, John C , 76 Heidemann, Bridget, 89, 90 Henretta, John C , 36, 37, 92 Herz, Diane E., 115,121 Hidden payrolls, 80,137 Hiring practices, 168-169 HMOs (Health Maintenance Organizations), 215 Home ownership, 40, 53, 54-55 Household labor, 78-79, 83 HRS. See Health and Retirement Study Hurd, Michael D„ 37, 39,116 "Importance of Lifetime Jobs in the American Economy, The" (Hall), 112 Income, 16, 40-45 inequality, 10-15, 166-167 median, 2,15,23 retirement income, 42-55,103,132 widows/single elderly and, 15, 44, 54 Income attainment path models, 37 Income maintenance, 72 Income protection policies, 14, 28 Individualization, 3, 206, 209-211, 214

Index of pensions, 8, 27, 29, 46-47, 153-154 Individual lives continuity in, 35-37, 41-42, 59 variation in pathways, 123-124, 129-130 Individual Retirement Accounts (IRAs), 153 Industrialism, 187-189 Industries establishment size, 142, 145, 146 gender distribution, 140,142 pensions and, 125-126,140-142 types of, 125-126,140,151, " 167-168 Inequality comparative pathways, 188 income inequality, 10-15 See also Aged inequality; Economic inequality; Gender inequality; Wage inequality Inequality, theories of, 8-11 cumulative advantage, 10, 31, 37, 41,133 status leveling hypothesis, 11, 31, 36-37, 40-42 status maintenance, 9-11, 31, 36-37, 40, 69,133 Informal Caregivers Survey, 94 Institutional theories, 189 Institutions, 2, 7-8,117-120 life course and, 181-183, 208-211 See also Employment institutions; Retirement institutions Instrument substitution, 171,173 Intercohort trends, 8, 9, 21 Interest groups, 189 Internal Revenue Service, 148-150 Intracohort differentiation, 2, 6—11, 33-34, 216 cross-national comparison, 183-184 gender and, 55-56 implications, 62-64 poverty and, 65-69 See also Cohorts Investment skills, 41, 42

247 Ippolito, Richard A., I l l IRAs (Individual Retirement Accounts), 153 Italy, 14 Jacobs, Jerry A., 76, 77,163, 172 Jacoby, Sanford M., 182 Japan, 13,138 Job creation, 165-167,172-173 Job Release Scheme, 173 Job security, 80,117,119, 209-210 Job tenure, 57,112,115,118,147, 209-210 John, Daphne, 79 Joint retirement, 91-93,125 Kahn, Lawrence M., 200 Kohli, Martin, 34, 35, 36, 69, 102,104, 121,172,181 Kozy, Michael, 114 Krecker, Margaret L., 139-140 Krugman, Paul, 167,168 Labor force participation, 2-3 childbearing and, 35, 56, 79, 125-126 cohorts and, 106-109,163 common trends, 165 cross-national comparison, 78, 159-165 explanation of changes, 167-169 increase in women's, 59-60 individualization and, 209-211, 214 job creation anct unemployment, 165-167,172-173 late-life, changing patterns, 159-165 long-term employment, 80-81, 137-138,147,210 part-time employment, 77-78,113, 139,175,198-200 patterns of employment, 165-169 return to work, 88,100,113, 114, 116-117,184,209-210 wage and income inequality, 166-167

248 by women, 7,17-19, 56-58, 73-74, 86,100,158-159,162,194, 210-211,216 See also Unemployment Labor markets gendered structure of, 79 internal, 57, 79,137 linkages and, 36-37 Late-life outcomes, 3, 10, 62-63, 159-165,187 Latin America, 212 Levy, Frank, 12 Liberal model, 30,191,192-193, 205 Life course, 1-7 age-differentiated, 2, 73 age-integrated, 71-74, 85, 212-213 age-structured, 1, 4, 6, 71-72, 96, 101,109 asynchronous, 85-87, 96, 211 cross-national comparison, 158, 176 deinstitutionalization, 208-211 individualization of, 84, 85, 123-124,129-130 institutionalization of, 181-183 linkages, 34-36 variability, 187,193-195 See also Normal life course Life course risks, 132,153-154, 193-195 Life cycle framework, 39-40 Life expectancy, 5,102,126, 212 Linkages, 34-36, 69 education and employment, 72-73, 196-197 occupational welfare and, 153-156 research on, 36-42 Lipset, Seymour Martin, 217 LIS (Luxembourg Income Study), 14-15,204 Longitudinal Retirement HistoryStudy (LRHS), 112-113,114,122, 125,126 Longitudinal studies, 86,183-184 Long Term Care Surveys, 94 Long-term employment, 80-81, 137-138,147, 210

Index Low earners, 40-41, 53, 81,155, 168-169 LRHS (Longitudinal Retirement History Study), 112-113,122, 125,126 Luxembourg Income Study (LIS), 14-15, 204 Managed health care, 93-94, 215 Manufacturing employment, 28, 57-58,59,100,137,140,151 Marital status, 10, 68, 76 changing patterns, 60-61 cohorts and, 73-74 divorce, 54, 60, 64, 89-91 dual earners, 82, 83, 84, 91-92,193, 211,216 income level and, 42-44 pensions and, 50-52 unmarried-couple households, 84 Market economy, 8, 27-29 public policies and, 189,190,195 United States and, 32,195, 208 Master trends, 1, 6 Maternalism, 81,190 McGoldrick, Ann E., 184 Means-tested programs, 46,190, 195, 204 Medicaid, 41 Medicare, 33, 41, 45-46, 69 Men cross-national comparison, 159-163 labor force participation, 85,106, 107,109,111 status variables, 11 Merit-rating system, 155 Midlife, education in, 87-88 Mining industry, 140, 151 Mitchell, Daniel J.B., 169 Model!, John, 76, 77 Moen, Phyllis, 86-S7 Mortgages, reverse, 55 M-shaped pattern, 56-57, 62 Myers, Daniel L., 113 Myles, John, 189

Index National Longitudinal Studies of Mature and Young Women, 17 National Longitudinal Studies of Mature Women, 88-89 National Longitudinal Survey of Older Men, 11 National Survey of Families and Households, 94 Netherlands, 14,187, 215 New Beneficiary Study, 92,121 Nonstandard work schedules, 83, 199 Nordic countries, 30,187,192 Normal life course, 7, 64-65, 96, 115-116,193 public policies and, 169-170 See also Life course Nurturance, 22-23 Occupational segregation, 21-22, 58, 77-79,154-158 Occupational welfare, 3, 9-10,132, 193 as decentralized, 140 employee benefits as, 137-146 historical context, 137-138 private-public linkages, 153-156 United States, 131,154,155-157 OECD Jobs Study, 165 Old Age Assistance, 46 Oppenheimer, Valerie K., 85 O'Rand, Angela ML, 87-88, 89, 90, 92, 140 Osterman, Paul, 121 Pampel, Fred C , 38,189 Panel Study of Income Dynamics, 90 Part-time employment, 113, 139,175 cross-national comparison, 198-200 gender and, 77-78,198-199 Paternalism, 81,190 Pavalko, Elizabeth K., 113-114 Pension Benefit Guaranty Corporation (PBGC), 148,153 Pension integration, 153-154 Pension Protection Act (1987), 148 Pensions, 3, 99 changes in, 148-150

249 cohorts and, 23-27,46, 50,133 cross-national comparison, 191-192 as deferred earnings, 132 earlier socioeconomic attainments and, 46-50,118 early pensions, 120-121 education and, 38, 47-50,118 gender inequality and, 18, 23, 25-27, 64,133-136 incentives, 111 individualization of, 8, 27, 29, 46-47,153-154 industry type and, 125-126, 140-142 marital status and, 50-52 participation rates, 47, 50-52, 140-143 percent vested, 118 private, 190-191 risks to workers, 153-154 structures, 28-29, 46 traditional pathway and, 118-119 unemployment and, 122 widows/single elderly and, 51, 68 See also Defined benefit plans; Defined contribution plans; Public pensions Personal care, 22-23 Personnel divisions, 80 PIA (Primary insurance amount), 45 Planning, sociological model, 39-40 Population aging, 72,176-178 age continuum and age integration, 212-213 welfare policies and, 30, 32,186, 205 Post-World War II era, 12, 16, 73-74, 131 Poverty caregivers and, 93 divorce and, 90-91 historical overview, 65 intracohort variability, 65-69 public policies and, 68-69 race and, 67, 211 widows/single elderly and, 15, 67-69, 90-91, 204-205

250 Presser, Harriet B., 83 Primary insurance amount (PIA), 45 Privatization, 182-184,190-191, 214 Public policies, 8,11,29-31, 42 early exit and, 169-176 market and, 189,190,195 normal life course and, 169-170 poverty and, 68-69 structural lag and, 213-216 See also Welfare policies Public transfers, 2, 27, 42, 44-46. See also Medicaid; Medicare; Public policies; Social Security; Welfare policies Quadagno, Jill S., 189 Quinn, Joseph R, 113,114 Rabb, Earl, 217 Race health and, 126, 128 pension participation and, 47, 49 poverty and, 67, 211 wage inequality and, 22, 54 Radner, Daniel B., 38 Railroad Retirement, 46 Redistribution hypothesis, 11 Rein, Martin, 102,104,172 Reno, Virginia P., 44 Research on linkages, 36-42 Residualism, 189,191 Retention part-time jobs, 139 Retirement caregivers and, 93-94 cohorts and timing, 101-102 costs, 177-179 definitions, 102-105,116,182 dependent spouses and, 94-95 early exit, 3,11,100,103-105,115, 117,120-123,147,169-176,182, 208 eligibility, 180-184 family-work pathways to, 91-96 gender inequality and, 21 heterogeneity in exit patterns, 112-113,129 heterogeneity of, 183-184

Index historical context, 99-100 income sources, 42-55, 103, 132 increase in variant patterns, 113-114 individual pathways, 103,123-129 inequality, 100, 132 interests and values, 35-36 intracohort variability and, 100-101 joint retirement, 91-93, 125 men, trends in U.S., 106,107 organization of employment and, 119-120 partial, 103,113 privatization of, 182-184 processes, 103 recent data, 114-115 return to work and, 100, 113, 114, 116-117,210 significance of heterogeneous patterns, 115-117 social structure and, 101-102, 123-129,183 traditional pathway, 117-119 women, patterns of, 63, 106-110 work exit and, 103-105 See also Retirement institutions Retirement Equity Act (1984), 148 Retirement History Study, 125 Retirement inequality, 100,132 Retirement institutions, 33-35,101, 104,117 changes in, 179-180 effects of changes, 180-181 See also Retirement Revenue Act of 1978,150 Reverse annuity mortgage, 55 Riley, Matilda White, 71-72, 212-213 Rohwer, Gotz, 200 Role-sharing model, 83-85 Role strain, 92 Rose, Arnold, 36 Ruhm, Christoper, 112, 113 Sainsbury, Diane, 190,192 Savings, 39,41,42, 53,120,139, 215 patterns, 30-31 Schoenbaum, Michael, 129

Index Schulz, James, 64 Secondary occupations, 114,137 Secondary part-time jobs, 139, 199 Self-employment, 113,139 Seniority, 57, 117,122,147,175,182 Service employment, 57-60, 74, 81, 125,198 pensions and, 140,142 Shavit, Yossi, 196 Shea, Dennis, 37, 38 Shelton, Beth Anne, 79 Sheppard, Harold L,, 117,121 Siegel, Jacob S., 105,109 Siegenthaler, Jiirg K., 204-205 SIPP (Survey of Income and Program Participation), 10, 50, 58,118 Skills training, 87 Skocpol, Theda, 81, 189-190 Smeeding, Timothy M., 14 Social contexts, 7, 9, 33-34 Social democratic mcxlel, 30,189, 191, 193-194,205 Social Democratic Party, 198 Socialization, 1-2, 78-79 Social Security, 11, 21,25, 30, 37-38, 44-46, 99 cohorts and, 47, 217 determining benefits, 45 disability and, 122-123,156 dual entitlement, 63 early exit and, 170 eligibility age, 179,182, 214 historical context, 81 increase in benefits, 65 low earners and, 40-41,155 pension integration and, 154-155 retirement benefits, 111, 116 survivors' benefits, 68, 82, 95-98 women and, 62-64, 82, 90, 93, 95 Social Security Act, 90,137,155,189 Stx:inl Security Bulletin Annual Statistical Supplement, 44 Social Security New Beneficiary Study, 92 Social theory, 34-36 Solidarity policies, 171, 176,180,191, 198

251 SSI (Supplemental Security Income), 25,38,41,42,46,65 Stakeholder pensions, 215 Statism, 190 Status background variables, 11, 38, 41 Status leveling hypothesis, 11, 31, 36-37,40-42 Status maintenance hypothesis, 9-11, 31,36-37,40, 69," 133 Status politics, 5, 189 Suhomlinova, Olga, 89, 90 Sum, Andrew M., 114 Supplemental Security Income (SSI), 25, 38, 41, 42, 46,"65 Survey of Income and Plan Participation (SIPP), 10, 50, 58, 118 Survivors' benefits, 51, 82, 95-98 Sweden, 3, 4,14, 78, 84,192, 202 active labor market policy, 194,198 early exit policies, 170,174-176 education, 196-198 gender inequality, 200 individualization, 206 labor force trends, 159-165 part-time employment, 198-199 pathways to inequality, 188 retirement age, 180, 1.83 welfare policies, 30, 32,193-194 Taxes, 80-82,137, 214 Tax shelters, 29,151,153,154 Technology, 121,167-168 Temporary workers, 139 Terman study, 113-114 Thrift Savings Plan (TSP), 153-154 Tilly, Chris, 139, 199 Title HI (Social Security Act), 155 Title IV (ERISA), 148 Title IV (Social Security Act), 155 Titmuss, Richard, 187 Transitions, 1,10, 71-74,100 to adulthood, 76-77,197 education-to-work, 72-73,196-197 Transportation industry, 140 TSP (Thrift Savings Plan), 153-154

Index

252 Unemployment, 12, 14, 30, 121-122, 155-156, 210 cross-national comparison, 165-166,182-183,192,211 Union-management accords, 80-81 Unions, 137,139-140,147-148 United Kingdom, 3, 27, 78, 84,155 early exit policies, 170,173-174 labor force trends, 159-165 pensions, 179, 215 retirement age, 180, 182,183,184 wage inequality, 12,13 United States aged inequality, 203-204 family models, 84 gender inequality, 200 income inequality, 14-15 market economy and, 32,195, 208 occupational welfare, 131,154, 155-157 part-time employment, 199 pathways to inequality, 188 pensions, 191-192 retirement age, 182,183,184 wage inequality, 12,13 welfare policies, 30, 32, 81-82, 194-195 Universalism, 191 Unmarried-couple households, 84 U-shaped pattern, 56, 62, 89 VanDerhei, J.L., 146 Vietnam War generation, 6 Vocational education, 72-73, 75, 87-88,197-198, 210 Voting patterns, 217-218 Wadensjo, Eskil, 174 Wage inequality, 2,12-13,133-136 cross-national comparison, 14, 166-167 gender and, 14, 21-22, 23-27, 73, 199-200 low earners and, 40-41, 53, 81, 168-169 race and, 22, 54 Wage structures, 2, 12-13, 22, 80, 85

Waidman, Timothy, 129 Wealth, 15-16, 51-54,126 Welfare policies, 30-32 gender inequality and, 81-82,190, 192-193 See also Occupational welfare; Public policies Welfare regimes, 1, 29-30, 81 ideal types, 190-193 origins, 187-190 See also Public policies Welfare work, 80,132,137 Widows/single elderly, 82, 88, 95 income inequality, 15, 44, 54 pensions and, 51, 68 poverty and, 15,67-69, 90-91, 204-205 See also Survivors' benefits Williamson, John, 189 Women changing workplace and, 57-58 childbearing history, 8-9, 22, 30, 35, 56,79,125-126 cohorts, 55-56, 62,124-126 families and employment, 63, 124-126 fertility and, 8, 9, 59, 60, 61, 63, 177-179 labor force participation, 73-74, 106-110,158-159,162,194, 210-211,216 pensions and, 18,125,141-143, 172 single, cross-national comparison, 202, 203, 204 single elderly, poverty rates, 15, 204-205 Social Security and, 62-64, 82 unmarried, 44,125 Worker's compensation, 155-156 Work exit, 103-104. Set' also Retirement Workplace. See Labor force participation Work societies, 35 Yankelovich, Daniel, 217