Older Workers Confront Cold New World in Harsh Job Market

With hiring in the private sector slow and the Republicans systematically blocking each and every stimulus measure, the prospects for older workers are bleak indeed. At a point in their lives when they expected to be making their peak earnings, this group of workers finds themselves navigating a complex minefield of problems without significant social support.

JOB INSECURITY: While the pace of layoffs has slowed considerably, corporations continue to reduce their workforces unpredictably and to send both manufacturing and white-collar professional work overseas.

PAY INSTABILITY: Even though profits have achieved record levels for major corporations, firms like General Electric are imposing pay cuts of as much as 45 percent on long-term workers. The wage-cutting wave that began immediately after the Wall Street meltdown is persisting.

REDUCED SAVINGS: Falling wages have reduced the ability of Americans to save. Meanwhile, dropping home values have been a central factor in shrinking the net worth of American families, reported The Los Angeles Times:

The typical American family lost nearly 40% of its wealth from 2007 to 2010 as the Great Recession reduced household net worth to a level not seen since the early 1990s.
The net worth of the median U.S. family — one with an equal number of families richer and poorer — fell to $77,300 in 2010 from $126,400 three years earlier, after adjusting for inflation, the Federal Reserve said in a new report.

Among working families, ​“most folks have all their net worth tied up in their homes,” Burzynski says.

LONG STRETCHES OF UNEMPLOYMENT
When laid off, older workers face especially long periods of unemployment, the Urban Institute found:

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.

Another study revealed, ​“The median duration of unemployment for those 55 and older was 34.1 weeks in May, according to the Labor Department, in contrast to 22 weeks for all jobless people over 16.”

Prolonged periods of unemployment are remarkably stressful to both physical and mental health, with one noted British doctor equating the effects of long-term joblessness with the death of a spouse.

FORCED TO OPT FOR SOCIAL SECURUTY: With job-hunting stretching out and exhausting older workers’ savings, many older workers find that they need to opt for Social Security before age 66. This means a permanent reduction of 20 to 30 percent in benefits for the rest of their lives, but some find themselves with no other alternative, The New York Times reported:

Even as most Americans are delaying retirement to bolster their savings accounts, the recession and its protracted aftermath have forced many older people who are out of work to draw Social Security much earlier than they had planned.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness.

TRADITIONAL PENISONS DISAPPEARING FAST: For decades, Americans have relied on pensions that provided a predictable source of income in combination with Social Security and savings. But various Individual Retirement Account and 401(k) plans — infinitely cheaper for employers — have taken their place. As Jacob Hacker and Paul Pierson point out in their excellent book, The Great Risk Shift, ​“As recently as twenty-five years ago, more than 80 percent of large and medium-sized firms offered a defined – benefit plan; today, less than a third do.”

The funds being accumulated in IRA-type accounts are hardly sufficient to provide a secure and fulfilling retirement, says Burzysnki. ​“The average IRA contains only $55,000 to $60,000 — that’s not enough for what I what I call a quality retirement.”

The lack of support for workers aged 50 and over is exacerbated by the unpredictable circumstances that can lead some to retire, often without the necessary savings and a solid plan. As Hacker and Pierson point out, ​“Four in ten retired workers today report that they left their jobs earlier than planned because of layoffs health problems, or sick family members.”