Can Unemployed Older Workers Find Work?

Abstract

Job loss during the Great Recession is upending retirement savings plans for many older workers. Fewer than a quarter of workers age 50 and older who lost their jobs between mid-2008 and the end of 2009 found work within 12 months, much lower than the reemployment rate for younger workers. Older displaced workers who find jobs must often accept deep pay cuts. These challenges highlight the need for more training and employment services for those 50 and older.

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Introduction

Delaying retirement is often viewed as the surest route to financial security in old age. By working longer and earning more, older workers can accumulate additional Social Security, boost savings, and shrink the period their retirement savings must fund. Employment at older ages also expands the nation's labor pool, accelerating productivity, increasing national income, and raising living standards for both workers and retirees. Yet, this strategy depends on whether older adults can find jobs. Workers 50 and older are less likely than younger workers to lose their jobs, but they take longer to find work when they become unemployed, especially in the Great Recession.

Unemployment in the Wake of the Great Recession

Although job creation and destruction help distribute resources efficiently and promote economic growth, this process can impose hardships: displaced workers forfeit wages, and being out of work takes financial, physical, and emotional tolls.

Unemployment soared in the wake of the worldwide financial crisis and the Great Recession. The economy shed 8.5 million nonfarm private-sector jobs between December 2007 (when the recession began) and December 2009 (Bureau of Labor Statistics [BLS] 2010a). Monthly male unemployment rates averaged 10.3 percent in 2009 and 10.5 percent in 2010, the highest since reliable records began in 1948 (BLS 2010b). Job prospects were only slightly better for women, whose unemployment rate averaged 8.1 percent in 2009 and 8.6 percent in 2010. And 31 percent of unemployed adults had been out of work for more than a year in the second quarter of 2010 (BLS 2010c).

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