Urban Institute Issues Series of Reports on Trends and Challenges Facing Older Workers in Recession

The Urban Institute's Retirement Policy Program recently released a number of analyses detailing new trends and challenges facing older Americans during the recession. Included in this series are:

• "Unemployment Statistics on Older Americans" As the recession has increased joblessness among older Americans, this report provides graphs and tables that report unemployment rates and how they have varied by age, sex, race, and education since 2007.
• "Work Ability and the Social Insurance Safety Net in the Years Prior to Retirement" This study examines disability benefit receipt, income, and poverty status for a sample of Americans as they age. The results underscore the precarious financial state of most people approaching traditional retirement age with disabilities.
• "Older Adults' Labor Force Participation since 1993: A Decade and a Half of Growth" Charts showing that labor force participation rates—-the percentage of adults working or looking for work—-increased sharply for older men and women between 1993 and 2009.

Source: Urban Institute Retirement Policy Program " New Employment, Social Security Take Up Rate and Disability Benefits Data" (January 15, 2009)

AARP Reports that Unemployment for Older Workers Not Improving as Recession Peaks

AARP has been tracking how older workers fare as the United States comes out of the recession. Looking at the November 2009 numbers, it found that while unemployment make have peaked, older job seekers saw their unemployment rate, duration of unemployment, involuntary part-time employment rate, and job-seeking discouragement rise. Further, looking at the December 2009 numbers, AARP reported that overall unemployment did not increase, 29,000 more persons aged 55 and over were unemployed in December than in November, bringing the total unemployment rate for this group up to 7.2% from 7.1%.

Sources: AARP Public Policy Institute Fact Sheet (December 2009), Fact Sheet (January 2010)

Netherlands: Proposal to Cut Duration of Unemployment Benefits to Encourage Older Workers To Seek Work

According to published reports, Chris Buijink, Secretary-General of the Ministry of Economic Affairs of the Netherlands, has called for reducing the length of time people can claim unemployment benefit to encourage them to find work as quickly as possible. Writing in the economics journal "Economic Statistische Berichten" (ESB), Buijink suggested that a reduction in the length of time income-related jobless benefit is paid would be an important stimulus to find new work, particularly among older workers.

The long slide towards a pension must be made less attractive. Unemployment is still an attractive way out for many older workers,' he said. While there have been improvements in the job take-up rate among older workers, just 26% of people aged 60 to 64 still have a job, he pointed out.

However, "Christian Democrat spokesman Eddy van Hijum and Labour's Roos Vermeij told Trouw it was too simplistic to say older workers would be encouraged to stay in work if their benefit rights were cut." Instead, they argued, "efforts need to be made to change the working culture and employers must be encouraged to invest in their older staff. Only some 26% of the over 60s are still in work."

Sources: Dutch News "Top civil servant calls for jobless benefit cuts" (January 7, 2010); NRC Handelsblad "Topman EZ wil dat WW wordt beperkt" (January 7, 2010); Dutch News "Jobless benefit cut no solution for older staff" (January 8, 2010)

Urban Institute Research Shows Increase in Older Worker Labor Participation Rates

Growing concerns about retirement income security appear to be leading to an increase in seniors’ labor force participation rates stems, according to a report from the Retirement Policy Program of the Urban Institute. "Rising Senior Unemployment and the Need to Work at Older Ages" also reports that unemployment rates for older workers reached record levels in 2009, partly because fewer workers eligible for early retirement benefits are dropping out of the labor force. With more older workers remaining in the labor force and searching for work after they lose their jobs, the there is an imperative for new policies that help address the special challenges that older job seekers face.

Unemployment has serious consequences at older ages. It usually takes older workers an especially long time to become reemployed. The earnings lost while out of work certainly make it more difficult for unemployed people to meet current spending needs. But unemployed older workers also forgo Social Security and pension credits and are less able to save, leaving them with less money in retirement. When older workers become reemployed, they usually end up earning much less than they did on their former jobs.

Among other things, the report calls for the federal and state governments to improve workforce development programs. They need additional funding and be redesigned to better serve workers of all ages. In addition, Congress could change Medicare secondary payer rules to require the federal health insurance program to provide primary coverage to workers age 65 and older with employer-sponsored health benefits, instead of forcing these older workers to rely primarily on their employer’s insurance.

Source: Urban Institute Press Release (September 23, 2009)

Research: Lower Income Unemployed Older Workers Facing Economic Crisis

ExperienceWorks has released a research report finding that 46% of low-income unemployed workers age 55 and older need to find jobs so they don’t lose their homes or apartments, and approximately half (49%) have been looking for work for more than a year. The research was based on a survey of 2,000 people enrolled in the Senior Community Service Employment Program (SCSEP)

According to "Overlooked and Underserved: The Crisis Facing America’s Older Workers, 38% of these older workers had retired but they are going back to work, and many have no end in sight for their working years. For those who do have a retirement time frame, the average targeted retirement age is 72. In addition, 90% of survey respondents age 76 and older plan to continue working in the next five years.

“These people are at the age where they understandably thought their job searching years were behind them,” said Cynthia Metzler, president and CEO of Experience Works. “But here they are, many in their 60s, 70s and beyond, desperate to find work so they can keep a roof over their heads and food on the table.” Forty-six percent of these older job seekers say they sometimes have to choose between paying rent, purchasing food or purchasing medication.

In addition, according to the report, older workers say the poor economy and age related barriers including lack of the necessary training are the most significant challenges they face to finding employment. 73% strongly agree or somewhat agree that their age makes it difficult for them to compete for jobs with younger workers.

“This study underscores the need to create policies that remove barriers to employment for older workers, and provide additional programs and services specifically aimed at helping older people re-enter the workforce or remain working,” said Metzler. “These actions will benefit everyone because training programs such as the SCSEP have proven to be successful in helping unemployed older workers transition to unsubsidized employment.” The SCSEP, which is the only federal program designed specifically for older low-income workers, is currently funded to serve less than 1 percent of the eligible population.

Source: Experience Works Summary (September 22, 2009)

OECD Urges Countries: Don't Lump Older Workers among Disabled

Addressing policy challenges for disabled workers in a time of high unemployment, the OECD co-sponsored a High-Level Forum on Sickness, Disability and Work and, in its final communique, warned against repeating the mistakes of the past where in previous economic downturns, many older workers who lost their jobs were pushed onto disability benefit rolls rather than unemployment benefit schemes.

"While this may seem a harmless short-term measure, we now know that most people who receive a disability benefit for more than a year will never work again," said John Martin, OECD Director of Employment, Labour and Social Affairs. "It is crucial that governments align short-term social protection measures taken in response to the downturn, with longer-term goals of economic security and strong labour force participation."

As one of the background papers showed, older workers dominate the disability benefit rolls.

For links to other information, see OECD's "Sickness, Disability and Work" project.

Source: High-Level Forum on Sickness, Disability and Work Final Communique (May 15, 2009)

Commentary: Unemployment and Older Black Workers

Writing in Black Voices, Matthew Scott suggests that it may turn out that older Black men may be the group at greatest risk during the recession in the United States. This of special concern, since "[h]aving a significant number of older Black Americans unemployed and unable to support themselves less than 10 years from retirement raises major challenges for the Black community."

Source: BlackVoices.com "The Hidden Concern In Unemployment Numbers: Black Elderly" (February 11, 2009)

Report: Economy Leading to Record Labor Participation Rates, Unemployment by Older Workers

The Economic Policy Institute (EPI) reports that older Americans’ labor force participation has reached a 40-year high, with workers holding onto their jobs and putting off retirement as the recession worsens. At the same time, unemployment rate is also growing for older workers

According to EPI Issue Brief 251--"Older Americans in the recession: More are staying in the workforce, more are losing their jobs", workers 55 and over are 18.8% of the total population employed in the United States, up from 17.9% in December 2007; the number of unemployed workers 55 and over has increased 56.8% in less than a year.

Displacement rates – which measure job losses due to plant closures, the elimination of positions, or other shifts in labor demand – are at the highest level on record for older workers. “Older workers were already more susceptible to displacement in 2007 than their predecessors were 10 or even 20 years ago, and this trend is exacerbated by the recession,” said [the report’s author, EPI researcher Emily] Garr. “More and more older workers are truly between a rock and a hard place. Retirement is not an option, but jobs that they can live on are getting scarcer.”

In addition, while the report finds some evidence suggesting that older workers may be better able than younger counterparts to find or maintain jobs in this recession, data show that employment activity reflects poor financial circumstances or delayed retirement rather than increased job opportunities.

Source: Economic Policy Institute Press Release (February 4, 2009)

United States: Unemployment of Older (65 Plus) Workers Increases

According to unemployment statistics from December 2008, the current economic slowdown has substantially increased the unemployment rate for older Americans. In the fact sheet prepared for the Urban Institute, "Senior Unemployment Rate Hits 31-Year High", unlike most previous recessions, Richard W. Johnson points out that 5.1% of workers age 65 and older were unemployed, a higher share than at any time since March 1977.

In the current recession, the age-65-and-older unemployment rate has increased by 1.7 percentage points since November 2007, the last month before it began, while 13 months into the severe 1981–82 recession—-the most recent downturn to have lasted as long as the current one—-the number of unemployed older adults had not increased at all. However, Johnson points out that "the recession has not yet discouraged many older job seekers. Since November 2007, the share of adults not in the labor force has not declined at ages 55 to 64 or at ages 65 and older."

Source: Urban Institute Research Summary (January 14, 2009)

Research: Effect of Older Worker Unemployment Protection on Employment

Faced with low employment rates for older workers, most OECD countries
have experimented with specific older worker employment protection in the
form of taxes on firing and subsidies on hiring. A paper issued by the Institute for the Study of Labor examines the age-related design of firing taxes by extending the theory of job creation and job destruction to account for a finite working life-time.

Arnaud Chéron, Jean-Olivier Hairault, and François Langot, the authors of "Age-Dependent Employment Protection," argue that the potential employment gains related to employment protection are high for older workers, but higher firing taxes for these workers increase job destruction rates for the younger generations. On the other hand, age-decreasing firing taxes can lead to lower job destruction rates at all ages. Furthermore, because firings of older (younger) workers exert a negative (positive) externality on the matching process, the authors find that the first best age-dynamic of firing taxes and hiring subsidies is typically hump-shaped. Taking into account distortions related to unemployment benefits and bargaining power shows the robustness of this result, in contradiction with the existing policies in most OECD countries.

Source: Institute for the Study of Labor Abstract (November 2008)

Research: Relationship of Age and Unemployment

The Institute for the Study of Labor has published a paper seeking "to gain insights on the relationship between growth and unemployment, when considering heterogeneous agents in terms of age." According to the authors (François Langot and Eva Moreno-Galbis) of "Does the Growth Process Discriminate against Older Workers?":

under the assumption of homogeneous productivity among workers, firms tend to fire older workers more often than young ones, when deciding whether to update or not a technology: there is an equilibrium where the creative destruction effect dominates over the capitalization effect for old workers, whereas the capitalization effect dominates for young workers. This discrimination against older workers can be moderated when we introduce heterogeneity (in terms of productivity) among workers.

Source: Institute for the Study of Labor Discussion Paper 3841 Abstract (November 2008)

Research Study Evaluates Government Programs in United States Helping Older Workers Obtain New Skills

A report by Heldrich Center researchers Carl Van Horn, Ph.D. and Maria Heidkamp reviews the federal government resources available to assist older unemployed job seekers and highlights examples of initiatives undertaken by states, community colleges, nonprofits and community-based organizations, and the private sector to help older workers find another job.

The study, also published as an issue brief by the Sloan Center on Aging & Work--"Older and Out of Work--Employer, Government and Nonprofit Assistance"--follows up on their earlier work. Among their conclusions is that only a small percentage of older unemployed workers will receive post-layoff assistance from their former employer and that finding that next job is likely to be difficult and time consuming--considerably more so than for younger job seekers—-and may require them to prepare for a new
career in a new industry.

While some primarily large employers do provide employees sufficient advance notice of a layoff and access to a range of outplacement and other services, small and mid-sized employers may not have the resources to offer post-layoff benefits. "They may need to seek opportunities to partner with government and nonprofit agencies in order to provide assistance to their older workers targeted for layoff. These opportunities may include participating in regional talent and skills alliances and sector strategies."

Source: John J. Heldrich Center for Workforce Development Home Page (October 16, 2008)

Research: Scope and Impact of Unemployment on Older Americans

A report by Heldrich Center researchers Carl Van Horn, Ph.D. and Maria Heidkamp looking at unemployed older workers finds that older unemployed workers face more significant challenges than their younger jobseeking counterparts. In particular, older unemployed workers take longer to find new jobs, and when they do, it is often in a different occupation, a different industry, and at much lower earnings than in their previous job.

Published as an issue brief by the Sloan Center on Aging & Work, "Older and Out of Work – Trends in Older Worker Displacement" reports that a growing proportion of older adults do not have the option of retiring from work, due in part to rising prices and lack of sufficient savings. Thus, Heidkamp says: "It is time to ask how employment and training programs can be more effective in bringing older unemployed workers back into workplaces where their talents are still needed and valued."

With talent shortages approaching as the Baby Boomer generation reaches retirement age, employers need to proactively ensure that they provide their older workers with a supportive work environment sensitive to their needs. For older workers, this often means providing greater workplace flexibility and benefits packages.

Source: Sloan Center on Aging & Work Issue Brief No. 16 (September 2008)

Taiwan: Numbers of Unemployed Older Workers Increasing

According to the China Post, Taiwan's Council of Labor Affairs has reported that the number of older Taiwanese workers who are unemployed has more than doubled over the past 10 years, indicating increased employment barriers for this group. Specifically, 75,000 workers aged 45-64 in Taiwan were unemployed in 2007, compared with 34,000 workers in 1997.

Of these unemployed workers, 37% were offered employment but turned down the jobs, mainly because the pay offered was too low. Of the remaining workers, 59% were hampered by age restrictions set by employers, while another 19% were not equipped with the skills required by employers. However, it was also acknowledged that the increase in unemployment of older workers was also partly due to the aging of Taiwan's population.

Source: China Post "Number of elderly jobless workers rising" (August 21, 2008)

United Kingdom : Unemployment and Older Workers

Since the mid-1990s there has been a rapid rise in the number of older people in work. In spring 2003 seven in ten people aged between 50 and State Pension Age, and almost one in ten people over State Pension Age, were working. According to the Autumn 2004 ONS Labour Force Survey, older (50 to state pension age) workers’s ILO unemployment rates are lower than those of their younger counterparts--2.9% compared to 3.4% for the 25 to 49 age group and 12.6% for the 16 to 24 age group. In addition, older workers are more likely to be working part-time than the 25 to 49 age group, and self-employment is more common amongst older workers compared to the younger age groups.

Source: "Older people are much more likely to be long-term unemployed" TheMatureMarket.co.uk (May 23, 2005)

AARP Pushes for Fairness to Unemployed Older Workers

After the Pennsylvania House Labor Relations voted in favor of House Bill 163, a measure to allow qualified unemployed workers who are receiving Social Security benefits to get full unemployment compensation, AARP Pennsylvania recognized the action to end the state's practice of discriminating against unemployed older workers. According to AARP, Pennsylvania currently penalizes these unemployed workers by forcing them to forfeit $1 of unemployment compensation for every $2 they receive in Social Security benefits. "This is an unfair situation for older workers," said J. Shane Creamer, AARP Pennsylvania State President. "These workers and their employers contribute to the unemployment compensation system just like any worker. Yet should they lose their job, they are denied their full unemployment compensation payment." Thirteen other states penalize older workers in this manner, and West Virginia and Hawaii enacted legislation earlier this year to enable older workers in those states to collect full unemployment benefits.

Source: News Release PR Newswire (May 12, 2005)