College of Social Sciences

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Employment of Older Workers

Even before the beginning of the 2008 recession and the loss of so much retirement wealth, older workers were encountering barriers to continued employment. The displacement of older workers has become an increasingly serious threat to retirement security since the mid 1980’s. In the relatively distant past, older workers were less likely to be displaced than younger workers. This advantage for older workers has now largely disappeared.

According to Munnell, Sass and Zhivan (May, 2009):

"Once displaced, older workers are less likely to be reemployed, have less time to adjust their retirement plans, and are more likely to retire prematurely. Given the contraction of the nation’s retirement income system and rising longevity, these adverse effects make displacement increasingly injurious to older workers disrupting the accumulation of retirement savings and encouraging premature labor force exits."

Older workers appear to be more disadvantaged than younger workers by a steady decline in the amount of time workers spend in the same job (job tenure) which has fallen from a median of 13 years in 1984 to 10 years in 2006 and by a sharp drop in the manufacturing sector which now employs only 13% of all workers compared to 23% in 1984. These changes are largely products of technical and organizational changes in the current economy that will not be reversed anytime soon. Older worker displacement and rehiring rates are not likely to improve in the absence of major policy initiatives specifically designed to support higher employment levels for older workers.

The experience of older workers (age 60 plus) in Japan may offer some guidance for the development of effective interventions in the U.S. Japan has the highest labor force participation rate for older workers (30%) among the developed nations. The Japanese government has contributed to this high employment level by broadening the reach of job skills training programs and by supporting self-employment opportunities. For example, over 700,000 older Japanese workers were involved in job skills programs in 2004 compared to about 60,000 in the U.S.

Another major barrier to increasing the employment of older workers is the attitude of employers towards them. Research findings indicate that many employers have serious concerns about the relative productivity of older workers whose experience, knowledge and work ethic they respect, but do not think is sufficient to overcome their limited creativity, reluctance to learn and greater costs. There is not much, if any, empirical evidence that supports these negative perceptions of older workers, but they help create the reality of limited opportunities for many older persons who want and often need to continue working.