At first blush, it wouldn't appear that older workers have it all that bad in today's economy. They got their start long before the economy's Troubles really began seven years ago (or even 17 years ago). They had time to sock away money while times were still good.
The unemployment rate among workers over 55 is 4.1 percent, compared with 5.7 percent for the population overall, and labor force participation among older workers has been rising since the early 1990s. That's arguably a better position to be in than that of a young person whose earnings potential has been forever damaged by starting out in the Great Recession.
But the headline statistics hide a harsher reality: older workers who do lose a job spend longer periods out of work, and if they do find another job, it tends to pay less than the one they left. A new survey from the AARP sheds a lot of light on how older people react to sudden unemployment, what their new work looks like, and why.
First, let's look at long-term unemployment data, which show that older people have a harder time landing jobs after losing one. (The next few charts are from a slide deck by the U.S. Department of Labor's Chief Economist Heidi Shierholz, who spoke at the AARP's report launch event Monday morning.) Although overall unemployment is lower among workers over 55, the situation is reversed when it comes to long-term unemployment:
Not only that, but older workers who've lost a job they've been in for a long time are more often just leaving the labor force altogether:
That's what's going on, broadly speaking. So what happens if you do find another job? According to the AARP survey, although older people often found the working conditions at their new jobs were better than their old one, nearly half found that the new job paid less.
The reasons why it takes older workers longer to find new jobs are well known. People who've spent a long time developing a specific skill set have more limited options when they go out looking for something new, and indeed, 53 percent of re-employed respondents said they changed occupations. Employers can be reluctant to hire someone who might come with higher health-care costs and have a shorter future with the company.
Sometimes, older workers have more savings, which allows them to take a break before job hunting again -- even though the survey showed that people who started looking immediately were much more likely to be successful.
But the top reason why older workers themselves say they've had a hard time finding a job is that, well, there aren't that many jobs out there. Job scarcity, according to workers, trumps age discrimination and even negative self-perception as a barrier to employment:
According to Shierholz, workers between ages 54 and 65 earned 13.5 percent less in a new job after losing one. Still, there are a few reasons why older workers might be accepting lower salaries than they enjoyed in the job they lost -- or quit -- including working fewer hours than they used to. As a previous AARP report explained, fewer older workers are part time for economic reasons than younger workers. A full 57 percent of part-time workers over age 65 put in fewer hours because they've retired, or want to stay under their social security earnings limit.
Regardless of the reasons why older workers might want to take it easy, it's best to make sure they have a choice of whether or not to do so, by making sure they don't end up out of work involuntarily before they're ready. To that end, Shierholz emphasized the value of work sharing, which allows firms to spread unemployment insurance for reduced hours across their whole workforce in the event of cutbacks, rather than laying people off entirely (currently, 29 states have such programs in place). She also reiterated the White House's push for public infrastructure investment, which tends to generate job growth in other sectors instead.
In that way, the remedies for unemployment among older workers are different from the things that help younger workers: While vocational programs and access to higher education are seen as the ticket to a better job for those just starting out, those who've already spent decades in the workforce have less to gain from a training course that will only benefit them for the few years it takes to get to retirement. That's why avoiding job loss in the first place is so important.