Long Road Ahead for Older Unemployed Workers

Transcription

1 National Employment Law Project ISSUE BRIEF March 9, 2012 Long Road Ahead for Older Unemployed Workers By Claire McKenna Summary 1. Older workers (age 50 and older) represented a larger share of the long-term unemployed in 2011 than they did before the Great Recession. This share is disproportionate relative to their share of the unemployed. 2. More than half of older unemployed workers were out of work for six months or more in This is a worsening of a pattern from Four in ten older unemployed workers were out of work for at least one year in The share of workers experiencing unemployment lasting for one year or more increased most dramatically among older workers from 2007 to Policymakers should ban the practice of discrimination against the unemployed; address the special training needs of older workers; and explore targeted reemployment strategies. There are signs that the economic recovery from the Great Recession is finally taking hold. The economy added an average of 143,000 jobs per month during the second half of 2011; average growth during the first two months of 2012 was even more robust at TK. Yet, TK million workers remain unemployed, including TK million, or TK percent of all unemployed, who have been out of work for at least 27 weeks; most of these workers have been jobless for a year or more. 1 A group that fares relatively well in the labor market, but that has disproportionately high rates of long-term unemployment, is older workers. Workers age 50 and older make up 32 percent of the workforce, a share projected to increase to over 35 percent by As the workforce continues to age, it becomes more important for policymakers to understand the employment prospects of this group. Hence, this issue brief examines the labor market experiences of older workers (age 50 and older) in 2007 and in This time frame contrasts the period immediately prior to the Great Recession, which lasted from December 2007 until June 2009, with the period of the fragile economic recovery that followed. 3 Older Workers in the Labor Force, the Unemployed, and the Long-Term Unemployed As shown in Figure 1 (page 2), workers age 50 and older made up a larger share of the labor force and the unemployed in 2011 than in More significantly, while older workers were underrepresented among the unemployed (23.5%) relative to their share of the labor force in 2011 (31.5%), they were overrepresented among the long-term unemployed (29.2%) relative to their share of the unemployed. This continues a pattern from before the Great Recession. Furthermore, the share of long-term unemployed workers who were at least 50 years old increased from 26.1% in 2007 to 29.2% in The shares made up of younger workers increased by less (25- to 34-year-olds), stayed flat (35- to 49-year-olds), or decreased (16- to 24-year-olds). 75 Maiden Lane, Suite 601, New York, NY

2 Figure 1: Age Distribution of the Civilian Labor Force, the Unemployed, and the Long-Term Unemployed (27 weeks or more), 2007 and % 16 to 24 years 25 to 34 years 35 to 49 years 50 years or more 80% 60% 40% 20% 0% 19.1% 28.3% 23.5% 31.5% 26.1% 29.2% 26.0% 26.9% 35.5% 32.9% 21.8% 23.2% 21.6% 22.0% 33.1% 14.5% 13.7% 30.1% 30.0% 21.3% 22.6% 26.4% 22.5% 18.2% Civilian Labor Force Unemployed Long-Term Unemployed Source: Bureau of Labor Statistics, Current Population Survey. Data are not seasonally adjusted. Unemployment and Long-Term Unemployment Among Older Workers Although older workers had the lowest average monthly unemployment rate in 2011 (6.7%), it is more than double their rate in 2007 (3.1%) (Table 1). Furthermore, older workers experienced the greatest percentage increase in the size of their unemployed population. It more than doubled from 1.3 million in 2007 to 3.2 million in Although younger groups of workers also experienced large increases in the number of unemployed over this period, proportionally the increases were not as great. The second part of Table 1 shows the share and the number of unemployed in each age group who were long-term unemployed in 2007 and in In 2007, older unemployed workers were more likely than younger workers to Table 1: Unemployment and Long-Term Unemployment (27 weeks or more) by Age Group, 2007 and 2011 (Numbers in millions) Unemployment Rate Number Rate Number Total, 16+ years 4.6% % to 24 years 10.5% % to 34 years 4.7% % to 49 years 3.4% % years 3.1% % 3.2 Long-term Unemployment 1 Total, 16+ years 17.6% % to 24 years 11.9% % to 34 years 17.1% % to 49 years 20.3% % years 24.1% % 1.8 Source: Bureau of Labor Statistics, Current Population Survey. Data are not seasonally adjusted. 1 The long-term unemployment "rate" refers to the long-term unemployed (27 weeks or more) relative to all unemployed. become long-term unemployed about one-quarter (24.1%) compared to about one-fifth (20.3%) of jobless 35- to 49-year-olds, and smaller shares of younger unemployed workers. During the recession and its 2

3 aftermath, the number of long-term unemployed older workers more than quintupled, the greatest percentage increase out of all the age groups, from 0.3 million to 1.8 million. In 2011, more than half (54.3%) of older jobless workers were out of work for at least six months. Very Long-Term Unemployment Among Older Workers Figure 2 (below) shows the distribution of unemployment duration among the age groups in 2007 and in First, most of the long-term unemployed in 2011 were very long-term unemployed, or out of work for 52 weeks or more. Older unemployed workers were the most likely to be unemployed for one year or longer about 4 in 10 (41.6%) jobless workers age 50 and older. Again, this continues a pattern from Furthermore, during the recession and its aftermath, the share of workers experiencing unemployment lasting for one year or more increased most dramatically (by 27 percentage points) among older workers. Figure 2: Distribution of the Duration of Unemployment by Age, 2007 and 2011 Less than 5 Weeks 5 to 26 Weeks 27 to 51 Weeks 52 Weeks or more 100% 80% 60% 40% 20% 0% 6.5% 9.3% 5.4% 11.4% 19.5% 14.6% 7.8% 29.2% 8.9% 35.7% 9.4% 41.6% 10.6% 45.4% 13.5% 47.3% 47.5% 13.1% 46.4% 12.7% 43.8% 38.2% 34.5% 30.1% 42.7% 35.6% 26.2% 32.2% 29.5% 19.2% 16.6% 15.6% to 24 Years 25 to 34 Years 35 to 49 Years 50+ Years Source: Bureau of Labor Statistics, Current Population Survey. Data are not seasonally adjusted. Discussion As the population ages, so does the labor force. Moreover, changes to Social Security and employee benefit plans are causing older working adults to delay retirement. 4 However, the historical protection from lay-offs for older workers is diminishing. 5 Older workers still have relatively low unemployment, but they saw the greatest percentage increase in the number of unemployed from 2007 to The prospects are dim for older workers who lose their jobs. They have the highest rates of long-term and very long-term unemployment of any age group. Older workers made up a larger share of the long-term unemployed in 2011 than they did before the recession; this share is disproportionate relative to their share of the unemployed. Older unemployed workers are more likely to have been laid off from industries undergoing structural declines that commenced years before the recession, such as manufacturing. 6 This helps to explain why they fared worse in 2007 with respect to rates of long-term unemployment. And as this brief shows, the recession and its aftermath aggravated their problems. 3

4 The findings of this brief are consistent with research showing that although workers age 50 and older were less likely to lose their jobs over the recession, they had a harder time than their younger peers getting back to work. Controlling for select demographic and job characteristics, workers ages 50 to 61 were one-third less likely than workers ages 25 to 34 to find work within 12 months of job loss; workers over 61 were half as likely. 7 Compounding the effects of a weak labor market on older workers, evidence shows that employers are explicitly excluding the unemployed from hiring consideration. 8 Because this kind of discrimination is more likely to affect those who have been out of work for the longest amount of time, older workers are more likely to be its victims. In January, workers age 55 and older had an average duration of unemployment of over 56 weeks. 9 Prolonged periods of unemployment may have a severe impact on older workers retirement prospects and later-life well-being generally. A national survey of workers who lost their jobs during the recession shows that a majority of respondents age 55 and older experienced a decline in savings while unemployed. 10 Because older workers are nearer to traditional retirement age, they have less time than younger workers to replace lost savings with new wages. There is the option of delaying retirement, but with such limited job prospects for older unemployed workers, forced early retirement seems a more likely possibility for many. In fact, twothirds of older respondents had taken up Social Security or planned to do so as soon as they are eligible. 11 Even if older workers find new work, research shows that they are more likely than younger workers to earn less than they did in their previous job, which also has an impact on their retirement plans and financial security. 12 As the population and the workforce age, and if long-term unemployment among older workers stays elevated, pressure will increase on an already overburdened Social Security system and other safety net programs. Policymakers are tasked with developing new ways to help older unemployed workers more quickly find their way back to good employment and financial self-sufficiency. This includes addressing the problem of discrimination against the unemployed. Federal legislation banning this practice is pending; state legislation modeled on this bill has been proposed in thirteen states. 13 This also includes addressing the special training needs of older workers, who are more likely to require assistance aligning their skills with the needs of growing industries, and exploring targeted reemployment strategies. About the National Employment Law Project The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more than 40 years, NELP has sought to ensure that work is an anchor of economic security and a ladder of economic opportunity for working families across America. In partnership with grassroots and national allies, NELP promotes policies to create good jobs, enforce hard-won workplace rights, and help unemployed workers regain their economic footing. For more about NELP, please visit 4

5 Endnotes 1 U.S. Department of Labor, Bureau of Labor Statistics, Employment Situation Summary, February U.S. Department of Labor, Bureau of Labor Statistics, Employment Projections, Civilian Labor Force, , Updated February 1, This brief uses average annual Current Population Survey data from the U.S. Census Bureau covering 2007, the year before the Great Recession, and 2011, the most recent year for which annual employment data are available. Please direct any questions to cmckenna@nelp.org. 4 Richard W. Johnson, The Growing Importance of Older Workers, in Public Policy & Aging Report, Volume 21, Number 4, Fall Alicia H. Munnell, Dan Muldoon, and Steven A. Sass, Recessions and Older Workers, Center for Retirement Research, Number 9-2, January Maria Heidkamp, Nicole Corre, and Carl E. Van Horn, The New Unemployables : Older Job Seekers Struggle to Find Work During the Great Recession, Sloan Center on Aging and Work, Issue Brief 25, November Richard W. Johnson and Janice S. Park, Can Unemployed Older Workers Find Work? Urban Institute, Older Americans Economic Security, Number 25, January National Employment Law Project, Hiring Discrimination Against the Unemployed, Briefing Paper, July 12, This figure is from the Current Population Survey (CPS) and is not seasonally adjusted. It is taken from Table A-36 from the Bureau Labor Statistics. The public CPS files do not reflect the new top-code of 260 weeks that was incorporated into the CPS in Heldrich Center for Workforce Development, Older Workers, the Great Recession, and the Impact of Long-term Unemployment, February The survey was conducted over 2009 and Respondents were a national random sample of 1,200 workers who lost their jobs between September 2008 and August Ibid. 12 Richard W. Johnson and Corina Mommaerts, Age Differences in Job Loss, Job Search, and Reemployment, Urban Institute, Program on Retirement Policy, Discussion Paper 11-01, January They are: Arizona, California, Colorado, Connecticut, Hawaii, Indiana, Maryland, Nebraska, Ohio, Oregon, South Dakota, Washington, and Wisconsin. A discrimination law was enacted in the District of Columbia. 5