• The protective effects of age, however, derive solely from older workers’ seniority with their employers. When we hold job tenure and other characteristics constant, we find that older workers are just as likely as younger workers to lose their jobs. In fact, men ages 50 to 61 are significantly more likely to become displaced from their jobs than men ages 25 to 34 with the same length of service with the employer.
• As long-term employment relationships become less common at older ages, the existing layoff advantage for older workers may erode further. When older workers lose their jobs, they appear to have more trouble than their younger counterparts finding work.
• Displaced men ages 50 to 61 are 39 percent less likely to become reemployed each month than otherwise identical men ages 25 to 34, and men age 62 or older are 51 percent less likely.
• Displaced women are 18 percent less likely to find a new job at ages 50 to 61 than at ages 25 to 34 (when personal and job characteristics are held constant), and 50 percent less likely at age 62 or older.
When older displaced workers find jobs, they typically experience sharp wage declines.
• For displaced men who become reemployed, the median hourly wage on the new job falls 20 percent below the median wage on the old job at ages 50 to 61. For those reemployed at age 62 or older, the new median wage falls 36 percent below the old median wage.
• By contrast, men’s median wages fall only 4 percent at ages 35 to 49 and 2 percent at ages 25 to 34.
• Older displaced women who become reemployed also suffer sizeable wage losses, but the differences between older and younger workers are not as dramatic as for men.
Implications
Although more research is needed to understand why older displaced workers are less likely to become reemployed than younger workers, these findings suggest that employers are reluctant to hire workers age 50 and older. Employers may fear that they will not have time to recoup hiring and training costs before older new hires retire, or they may worry that older workers are less productive than younger workers.
For example, surveys reveal that many employers believe that older workers lack creativity and are generally unwilling to learn new things. Many employers also express concern that older workers are more expensive than younger workers, because of rigid seniority wage structures or because health and pension benefits are more expensive at older ages.
The employment challenges facing older workers have important implications for retirement policy. For example, the debate over increasing Social Security’s retirement age is intensifying. This policy option becomes less desirable when the employment prospects for older Americans are poor. As concern over retirement income security mounts, the option to delay retirement is increasingly viewed as the best way to increase retirement income. This strategy, of course, depends crucially on older adults’ ability to find work. Although many employed seniors may be able to work longer on their existing jobs, our results highlight the difficulty that older Americans without jobs face finding work.
The complete paper may be read at the CRR site.
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