How Do Older Workers Use Nontraditional Jobs?

Nontraditional jobs – defined here as jobs without health and retirement benefits – are on the rise, and this trend extends to older workers as well as the young. But the impact of this trend depends on how long the jobs last and what older workers do subsequently. If older workers end up in nontraditional work for much of their later careers, then the lack of benefits will put their retirements at risk. If, instead, they use nontraditional jobs only temporarily before returning to traditional work or as a bridge to retirement, these jobs may offer the flexibility that enables them to keep working and improve their retirement prospects. To address these issues, this brief, which summarizes a recent study, follows workers from ages 50-62 in the Health and Retirement Study (HRS) to identify how they use nontraditional jobs and the effect of these employment patterns on their retirement security. The discussion proceeds as follows. The first section clarifies how the “no-benefits” definition of nontraditional work used in this analysis relates to other, more job-based, definitions. The second section describes a technique called sequence analysis, which allows for grouping the sample workers together by similar employment patterns based on how they use nontraditional work. The third section identifies the socioeconomic characteristics of the group that uses nontraditional work most frequently. The fourth section estimates, for all groups in the sequence analysis, how the different work patterns affect retirement security. The final section concludes that just 26 percent of the workers in the sample are in a traditional job with benefits throughout their 50s and early 60s, and that nontraditional jobs are clustered among frequent users rather than serving as a temporary landing spot or a bridge job for workers more generally. The group that works consistently in nontraditional jobs ends up with about 25 percent less in retirement income than those consistently in traditional jobs.