Age Differences In Job Displacement, Job Search, and Reemployment

by Richard W. Johnson and Corina Mommaerts, Working Paper, Center for Retirement Research, Boston College Women riveters

Job loss is an inevitable consequence of a dynamic economy. Employers must be able to shed jobs in response to changing market conditions, and their ability to do so at relatively low cost encourages them to hire more employees. Although job creation and destruction help distribute resources efficiently and promote economic growth, job loss can impose significant costs on displaced workers, who often forfeit wages for extended periods.

The consequences of job loss may be especially serious for older workers, who may encounter more difficulty finding jobs than their younger counterparts. As the population ages, the employability of older adults is becoming increasingly important. Adults age 50 and older made up 31 percent of the labor force in 2010, up from 20 percent in 1995. Working longer is often hailed as the best way to increase retirement incomes, yet this strategy depends crucially on seniors’ ability to find work and hold on to their jobs. Being out of work is especially serious for older workers who are too young to qualify for Social Security retirement benefits, which provides an important lifeline for nonworking adults age 62 and older.

This study examines how the incidence and consequences of job loss vary by age. Data come primarily from the 1996, 2001, and 2004 panels of the Survey of Income and Program Participation, a nationally representative longitudinal household survey conducted by the US Census Bureau. The panels follow respondents for up to 48 months, and our data span the years 1996 to 2007, covering the 2001 recession but not the 2007 - 2009 recession. Respondents are classified as displaced workers if they report separating from their employer because of layoff, slack work, or employer bankruptcy, or because the employer sold the business. Discrete-time hazard models estimate the likelihood that men and women lose their jobs and the likelihood that displaced workers become reemployed. We also compare earnings and other job characteristics before and after job loss for displaced workers who become reemployed. Final tabulations compare job search activities by age, sex, and education for unemployed workers in the March, April, May, and June 2010 Current Population Surveys.

Key Results

Our results show that older workers are less likely than younger workers to lose their jobs, but only because they generally have spent more time with their employers.

• Between 1996 and 2007, men ages 50 to 61 are 21 percent less likely than those ages 25 to 34 to become displaced from their jobs each month, and men age 62 or older are 23 percent less likely.

• The story is similar for women: compared with those ages 25 to 34, women ages 50 to 61 are 30 percent less likely to lose their jobs, and those age 62 or older are 13 percent less likely.

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Age Differences In Job Displacement, Job Search, and Reemployment

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