An Unemployment Crisis for Older or Younger Workers?

Real Clear Markets ^ | 05/17/2012 | By Diana Furchtgott-Roth

[SeekAndFind]

On Tuesday the Senate Special Committee on Aging held a hearing on how to help older workers find jobs. I was one of five witnesses at the hearing.

No matter that Americans aged 55 and over are the only group that over the past decade has shown an increase in employment (8.9 million) and in labor force participation rate (5.7 percentage points). No matter that nationally, the unemployment rate, at 6.6 percent, was lowest for those 55+ in 2011, and that those older workers have experienced the smallest increase during the recession.

Why, then, did the committee decide that this is a topic that merits attention? The answer may like in the narrowly focused jurisdiction of special committees like this one, and in the imperative that committee staffers generate hearings and reports to justify their existence.

Proportionately fewer older workers (6.6 percent) were unemployed in 2011 than those aged 20 to 24 (14.6 percent) and 25 to 54 (7.9 percent). However, a larger share of older unemployed workers, 55 percent, is unemployed long-term, 27 weeks or longer. That compares with 47 percent of unemployed workers aged 25 to 54, and 35 percent of unemployed young adults ages 20 to 24.

One reason is clear. As workers rise in the labor force, and acquire experience that gives them specialized skills, they find fewer openings to match their credentials-or their expected earnings. Workers in their fifties are at their peak earnings, and there are fewer openings at these levels than entry-level positions.

The committee released a new Government Accountability Office study performed at the request of committee chairman Herb Kohl (D-WI) entitled "Many Experience Challenges Regaining Employment and Face Reduced Retirement Security."

It contains a series of recommendations including: Congress offer temporary wage and training subsidies to employers who hire those older workers who have experienced long-term unemployment; Congress compensate older workers for accepting lower-paying, full-time jobs; Congress eliminate the requirement that Medicare is the secondary payer for workers 65 and older covered by employer-provided health insurance; and Congress expand job search and training programs for older workers.

It's important to examine unemployment among older Americans because of the aging of the workforce, which is accelerating now that the Baby Boomers are approaching retirement. On average, older workers can expect to live until their mid-80s, and dropping out of the labor force at 55 could mean 30 years of retirement. Not many have saved for 30 years of retirement. One implication is that a larger older population is supported by a smaller younger population, the essential problem going forward with Social Security.

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[skeeter]

Doesn’t it make sense that a person who has been steadily employed for the past 25+ years more likely be employed than would a young college grad attempting to enter the job market during bad economic times?

[Vigilanteman]

Older workers haven't increased their participation in the labor force because the labor markets have suddenly become less discriminatory.

They've increased it for basically two reasons:

1. Fewer can afford to retire.
   
2. Companies cannot find younger workers with the skill sets needed to replace them.

I am personally acquainted with a couple of oldsters who fit the later category.

One is in his late 60's and is on call by a local power plant who needs him to supervise shifts because a lot of their younger supervisors call off, especially during weekends, holidays and Steeler's games. He doesn't need the money, but they pay him a premium to cover, so he takes it.

The other is in his mid 70's and is a metallurgist for a smelter in this area. Most of the work he does at home because there just aren't enough qualified full timers to do what he does. Again, he doesn't need the money. But they need his skill-set and pay him enough to make it worth his while.

[NEMDF]

I also think part of what we are seeing is older workers willing to take all kinds of pay freezes and pay cuts, just to hold onto their jobs. So they are a lot less likely to try to move on and move up than they would be in an economy with higher employment.