The Age Divide in the American Workplace
Demographic shifts are reshaping the U.S. labor market, as the share of the population within the working age has begun to decline. In The Age Divide in the American Workplace, Nicola Bianchi and Matteo Paradisi address the implications of this decline with a focus on within-firm dynamics.
Over the past five decades, longer life expectancy and improved health have enabled workers to remain employed later into life, altering the age composition of the workforce: the share of full‑time private‑sector jobs held by workers aged 20–24 fell by 7 percentage points between 1976 and 2024, the largest decline among all age groups. Over the same period, the share held by workers over 60 rose by 3 percentage points, the largest gain among all age groups.
At the same time, older workers postponing retirement are increasingly concentrated in high-paying leadership positions. In the mid-1970s, workers over 50 were about 5 percentage points more likely than workers under 30 to be employed in management occupations in the top quarter of the wage distribution. By 2024, this gap had widened to almost 8.3 percentage points.
The authors point out that the greater availability of older workers can be beneficial for firms, at least in the short term, as they can rely on a larger number of workers with greater firm-specific knowledge and experience. However, this same force also results in “congestion effects” within firms, which can slow the advancement of younger cohorts. Younger workers face fewer opportunities to move into high-paying and managerial jobs, limiting their ability to make key life investments, such as buying a home or starting a family, and to gain the leadership experience they will eventually need.
The authors argue that this divide is best understood as a shift in fortunes across generations, where gains from experience for older workers come at the cost of decreased opportunities for younger workers. As firms benefit from potential short-term productivity gains, they also neglect long-term investments in the next generation of the labor force. The central task for firms and policymakers is thus to ensure that the benefits of longer and more productive careers for older workers do not come at the expense of the dynamism and opportunities that younger workers need to thrive.