Flexible Work Arrangements, Phased Retirement, and Self-Employment

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Background

America’s workforce development system is made up of public- and private-sector programs, financial aid, and supportive and other services that provide training and retraining to current workers and the unemployed. It helps workers stay or become employable and helps the unemployed find jobs. It also connects employers with job vacancies to job-seekers and identifies areas of job growth and the skills workers need to get those jobs. Cooperation and collaboration between public and private sectors is essential to foster skills development and employment in good jobs paying adequate compensation while promoting economic growth. Government agencies, large and small businesses, labor, educational institutions, and community-based organizations must work together.

In a rapidly changing global economy, workers must update and refresh their skills often throughout their working lives to remain competitive. As people work longer because they either want to or must—and because employers may need them if labor or skills shortages materialize—it becomes critically important that the workforce development system is better attuned to the needs of employees, employers, and the economy as a whole.

The Workforce Innovation and Opportunity Act (WIOA) coordinates federal workforce development programs and activities in several thousand one-stop career centers. In addition to WIOA, public workforce programs focused on older people include:

  • the Senior Community Service Employment Program (SCSEP), which provides part-time public-service employment and job placement assistance for low-income people age 55 and older with funds appropriated under the Older Americans Act; and
  • Trade Adjustment Assistance, which helps workers who have lost their jobs as a result of increased imports or movement of jobs offshore. Affected workers may be eligible for a variety of services, including training. Under the Reemployment Trade Adjustment Assistance (RTAA) program, older workers may be eligible for a wage subsidy if they accept a job with lower wages than they had received at previous jobs.

SCSEP and the RTAA program are the only two federal workforce programs that specifically target older workers.

Under WIOA, workforce development centers offer a variety of services to job-seekers, from self-service access to electronic databases; staff support for services such as individual employment plan development, counseling, job referrals, and placement assistance; and access to training services to help workers acquire or upgrade job skills.

The majority of WIOA provisions took effect on July 1, 2015. There were a number of provisions in the new law that could work well for older workers. For example, WIOA:

  • Singles out “individuals with a barrier to employment” as segments of the population to which WIOA services should be targeted. Among the groups with barriers are older individuals (age 55 and older), along with several groups in which older workers are disproportionately represented: the long-term unemployed, displaced homemakers, and persons with disabilities. States must develop plans on how they will serve these groups and report how they have been served. Reporting data must be disaggregated by age, which should make it easier to see how older workers fare under WIOA programs.
  • Eliminates the sequence of services, which should enable jobseekers to access training and support immediately. This could speed up the return to work.
  • Improves services to people with disabilities, many of whom are older.
  • Maintains and broadens state flexibility on supportive services, without which many older people cannot work.
  • Enhances reporting requirements. Core programs will be required to report on performance indicators such the number of participants who entered and retained employment, median wages, and credential acquisition. Administrative reports on individuals with barriers to employment must be made public.

If effectively implemented, WIOA will result in a streamlined workforce development system that promotes job training and encourages greater collaboration between employers and training providers, such as community colleges. It will strengthen and streamline membership on the state and local workforce development boards that will implement WIOA as they did the Workforce Investment Act. In addition it will focus workforce development collaboration on the needs of regional economies, and promote career pathways and sector partnerships to foster employment in in-demand jobs. The law emphasizes the importance of having American Job Centers (one-stop career centers) create strong ties with employers by requiring Workforce Investment Boards (WIBs) to identify strategies for engaging employers.

Implementing regulations were issued in 2016. Unfortunately, the regulations did little to ensure that older workers and other “individuals with barriers to employment” receive staff-assisted services. It is also unclear whether the challenges faced by older workers will be adequately considered in setting goals and measuring the performance of service providers. The extent to which outcomes for older job-seekers will improve under WIOA is likely to depend in large measure upon state and local implementation, economic conditions, funding levels, and other policy considerations. A variety of improvements to the public workforce system that extend beyond the new federal law could further enhance employment opportunities for America’s older workers and job-seekers.  

Older workers seeking financial assistance for nontraditional educational programs have few resources at their disposal. Pell Grants have been a major source of federal funding for low-income undergraduate students to pursue their first bachelor’s degree or credential. And while Pell Grants are an important source of grant money for adults who want education and training, only a tiny proportion of all recipients are over the age of 50. Because the program was designed to help low-income undergraduates, some provisions are not suitable for older workers. For example, participants must be enrolled at least half time, which may be unfeasible for many older workers. Eligibility criteria premised on the previous year’s income may exclude the newly unemployed who had jobs with decent income. In addition, eligibility criteria were designed to determine how much financial support parents are allowed to contribute.

Moreover, older job-seekers may require or might benefit from extra help as they try to navigate the workforce development system. Special federal funds have been available to serve certain groups who enter the workforce development system, including veterans and people with disabilities. Older workers have not been singled out for special assistance, even though many have not had to look for work in decades and may need individualized help to use the system effectively.

In particular, older jobs-seekers may have little knowledge about available training programs. For example, they may not know whether particular programs offer value for money, whether they are likely to lead to sustainable jobs that pay good wages and benefits, and whether they themselves have the qualifications to successfully complete training. Specialized assistance in finding appropriate training might be especially helpful to older workers.

Flexible Work Arrangements, Phased Retirement, and Self-Employment: Policy

Alternative work arrangements

Congress, federal policymakers, and the states should ensure that the workforce development system is accessible to and meets the needs of a diverse population of older workers and job-seekers. This diversity includes differences in education, experience, occupational background, employment barriers, disabilities, geographic and transportation barriers as well as gender, race, ethnicity, language, and cultural background. Individuals who face barriers in their efforts to find work should receive specialized attention and services that meet their needs.

Part-time work should be fully recognized in publicly supported job-training programs

Phased or partial retirement

Barriers to the adoption and acceptance of phased-retirement programs should be eliminated.

Employers should adopt phased-retirement programs that encourage employees to stay in the workforce beyond the time they would normally plan to retire and that protect the adequacy of their pension and retirement benefits until they do fully retire.

Phased-retirement options must be voluntary for employees, be designed to protect workers’ benefits both during phased retirement and after full retirement, and not undermine the long-term retirement security of workers who choose to participate. Employers must fully inform workers about the potential impact of phased retirement on benefit arrangements.

Public and private agencies should educate employers about successful partial-retirement programs (involving such options as job-sharing, part-time work, and progressive reduction of work hours) and about how to resolve legal issues, and reconcile these programs with company policies.

Self-employment

In this policy: FederalStateEmploymentself-employmentself-employed

Federal and state policymakers should work to eliminate barriers to self-employment, which include lack of access to capital, technical assistance, and training.

The Small Business Administration and Departments of Labor and Commerce should coordinate programs designed to assist individuals in their efforts to become self-employed.