Senior Citizens at Work

Everybody knows someone who is still out of work because of the Great Recession. But you may not know many senior citizens who are. A blog entry by the economist Casey B. Milligan on The New York Times website points out that per capita employment of people ages 65 to 74 actually rose between 2007 and 2010, whereas in the population as a whole it fell by 7 percent. On the blog, you can see a nice chart illustrating this contrast, with one line for people ages 65 to 69, one line for people ages 70 to 74--both of these zigging and zagging a little, but ending up at a higher place--and another line for all ages, showing a steady downward slide. Mulligan notes that for those age 75+, the increase is even higher, but this is such a small group of workers that it is left off the chart.

I found this news fascinating because I recently finished working on the manuscript of 150 Best Jobs for a Secure Future, in which I look at career fields and occupations that have more security than most. I also look at the factors that contribute to job security and give suggestions for how you can make your job more secure.

One of the studies (PDF) that Mulligan cites to help explain this phenomenon, by economists at Boston College, looks at unemployment figures for young men and senior men over six past recessions and finds that older men used to have greater job security during slumps but this difference has been eroding. This makes it all the more noteworthy that older workers are bouncing back from unemployment so well. On the other hand, I want to point out that older workers still remain a little more secure, and this seems consistent with my finding, in the research for my book, that the more secure occupations tend to have greater-than-average concentrations of older workers. My own theory, which I have no way of proving, is that over the course of a career, workers in insecure jobs tend to lose them, whereas workers in secure jobs tend to be able to hold on, resulting in a gradual sifting of older workers out of insecure jobs and into secure jobs.

Another factor that may be in play, which was noted by some people who commented on the blog, was that older workers are likely to have better networks for finding jobs.

Mulligan explains the relatively high employment of elderly people by saying that they’re more willing to work. The Boston College study notes that older workers are less discouraged by the physical demands of work than previously because the economy now offers fewer physically demanding jobs. Now that more women are in the workforce, older men may be postponing retirement until their wives (who are, on average, three years younger) reach retirement age. Finally, those workers too young to get Medicare may be motivated to work because of the lack of post-retirement health-care benefits, which used to be a common benefit of employers but has diminished greatly over the past two decades, even as health-care costs have risen dramatically. Several of the people who commented on Mulligan’s article took up this argument, such as the elderly person who wrote, “I would not say that the elderly are ‘willing’ to work so much as they are forced to work.”

Others who left comments noted that the figures don’t indicate which workers are full-time and which are part-time. Many of these employed senior citizens may be holding part-time jobs to supplement retirement income. One wrote, “My spouse and I are senior citizens and we both work part time at two jobs. Employers would rather hire part-timers because they are less expensive. Young people have to find full-time work; empty nesters like us have fewer expenses and can just about make it on two (four all together) part-time jobs. We realize we are being exploited, but what can we do? We must supplement Social Security.”

Here’s the lesson I take away from this: The politicians who would cut back unemployment benefits and slash funding for workforce development want to believe that unemployed young people simply are not trying hard enough to find jobs. But I believe that’s a mistake. Unemployed young people tend to lack job-finding resources and, at the same time, they need jobs that they can build a life on. Their need for work is very different from the need for work experienced by senior citizens.

A Graphic Look at Secure and Insecure Industries

Right now I’m working on a book called 150 Best Jobs for a Secure Future, which is intended to take the place of 150 Best Recession-Proof Jobs. I received a lot of media coverage, including face time on several TV networks, when Recession-Proof came out, thanks to the efforts of JIST’s crackerjack publicist, Selena Dehne, and also because the book came out just as the recession was taking its heaviest toll and the subject of the book thus had newsworthiness.

Now that I’m working on a similar concept, I’m trying to benefit from hindsight. Did all 150 occupations included in the book weather the recession with no layoffs? Of course not. In fact, almost every occupation you can think of has a certain number of layoffs and dismissals, even in good times. Think of layoffs as like body temperature: There’s a certain rate, like our normal 98.6 degrees, that can be considered healthy. A better question to ask is whether some of the occupations in the earlier book experienced a considerable uptick in layoffs, a feverish recessionary level. Sadly, some did, but that’s not surprising. The Great Recession was ever so much worse than any we have experienced since the 1930s, and some occupations that are barely affected by normal recessions did experience a higher level of job loss.

One lesson that I learned from the previous book is that in considerations of job security, it is helpful to think not only in terms of occupations but also in terms of industries. Some industries are much less sensitive to the ups and downs of the economy than others. That’s something I stated in the earlier book, but this time I’m constructing the lists of best jobs based on industry-specific data for occupations. So, for example, a given occupation may appear as tenth on the list of best jobs in educational services but as twenty-second (or maybe not at all) on the list of best jobs in government.

I’ve used several lines of research for selecting the most secure industries, but perhaps the most dramatic is the graphic that appears below. (This ties in nicely with my blog of two weeks ago, in which I discussed the importance of graphicacy--skill with using and understanding visual representations.)

Layoff and Discharge Rates (Percent) in Selected Industries

Source: JOLTS database, BLS

I created this graph from data I downloaded from the Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS). It shows the average annual percentage rate of layoffs and discharges in several major industries over the previous decade. The first thing you should notice is the bold black line, which represents all private-sector industries. You’ll note that over the course of the last decade, it starts out flat (at around 1.7%), coasts down along a very slight mid-decade dip, trends upward beginning in 2007, hits a peak in 2009, and then slopes downward, reaching about the lowest point of the previous decade. The impact of the Great Recession is obvious, and this is the line against which you should compare the other lines in the chart.

Now let’s focus on the lowest and flattest lines on the chart. The star performer here is the bold robin’s-egg blue line that represents education and health care, which maintains a steady rate of between 8.0% and 9.0% over the course of the decade. You can barely see the recessionary uptick that appears along almost all the other lines. You can be sure I’m going to include this industry (actually, the two smaller industries it subsumes) in the book I’m working on now.

Government, the pink line, is another interesting industry to observe. It begins the decade with the lowest rate of all, 0.5%, and maintains the lowest rate until the very end of the decade. Note that it actually slopes downwards slightly from 2007 to 2008, when almost every other industry is beginning to see increased layoffs. It parallels the other industries in sloping upward after 2008, but it is unique in that it continues this upward slope even after the private-sector industries start seeing diminished layoffs. It’s not hard to understand why you’re seeing increasing government layoffs here: reduced tax revenues and politicians who have experienced an overnight conversion to deficit hawkishness. Nevertheless, I’m going to include government as one of the industries in the new book, because there are several kinds of government workers (such as in law enforcement) that are essential and will not be dismissed unless we are prepared to model our country after Somalia.

Note also the green line that partially overlaps with the robins’-egg blue education and health care line. This is finance and insurance. You’ll observe that it’s a little more volatile than education and health care, but it still shows fewer perturbations than most of the other industries and overall maintains one of the lowest rates of layoffs and discharges.

The most sensitive industry on this chart, with the widest swings and a very high layoff rate to begin with, is construction, the red line. But the one that particularly fascinates me is the yellow line for arts, entertainment, and recreation, which keeps changing places with construction as the industry with the highest layoff rate. This industry is the most countercyclical of all those shown here, actually doing better as the recession sets in. I’m not going to include either of these two industries in the book.

Earning Less Because of Recession

It should be no surprise that workers are earning less now because of the recession from which we’re still recovering. This is a tricky thing to quantify, for several reasons. For example, when you lay off a lot of low-skilled people, the average wage figure for those who are still employed actually goes up. However, if you look at the experiences of individuals over time, you’ll find lots of evidence that people are earning less, especially when they lose a job and take a new job.

This is the theme of a disturbing article in The Wall Street Journal: “Downturn's Ugly Trademark: Steep, Lasting Drop in Wages.” The article offers several accounts of workers who lost good-paying jobs and are now working in positions such as Starbucks barista and school janitor.

The most obvious reason for this drop in wages is simple supply and demand. When the labor market is overcrowded with job-seekers, people who are being hired have less leverage to ask for good wages. Or you might phrase it this way: The large number of job-seekers effectively bid down the price that it costs to hire them.

This is also the conclusion of a blogger on the PayScale.com site. Using a measure of earnings that the site developed, called the PayScale Index, he shows the inverse relationship between this index and unemployment. The PayScale Index began to decline in the first quarter of 2009, just when unemployment jumped from about 6.5 to about 9.2. Just as unemployment has shown only tiny declines since then, so has the PayScale Index remained quite flat.

The drop in wages is particularly severe for people who are laid off, and this is not just a temporary effect. The Columbia University labor economist Till von Wachter and two colleagues analyzed Social Security data to explore the effects of the recession of the early 1980s. The researchers found (PDF) that earnings of those who were laid off improved somewhat after the initial drop in pay, which averaged around 30 percent, but did not return to pre-recession levels. Earnings remained 21 to 27 percent lower 20 years later.

To explain this drop, Von Wachter looked beyond the simple matter of an oversupply of job candidates. He believed that the stale skills of workers were (and are) also to blame.

Many workers who have held a job for a long time do not keep their skills current with emerging trends in their job. These are the workers whom employers most readily target when there is a need for layoffs. In other cases, workers have skills that are fully adequate for the job they hold, but the need for that job is declining. This is the case for jobs that can be replaced by automation or foreign workers. Workers in these jobs will need to shift careers before they can find work.

I should caution that it’s not fair to blame the victim of layoffs and pay cuts in every case, especially in such hard times as these. Some workers have lost their job even though they have excellent skills for their position and are working in a field that is in demand. They may be the victim of a mismanaged company that could have survived in normal economic times. Or they may be unable to relocate to find work because they can’t find a buyer for their house. So they end up taking a job at a lower skill level, and with less pay, than they are qualified for.

On the other hand, these unfortunate workers are the exception. Everybody has heard of someone who survived a traffic accident because of a seatbelt that was not buckled. However, the odds of survival are much better for those who do buckle in. Play the odds. Your odds of weathering a recession with a good job and good pay are better if you keep your skills up to date and work in a career that has a future. For some tips on these matters, I recommend my new book, 2011 Career Plan.