50-plus Workers Hit by Cutbacks
By: Source: AARP Bulletin Today Date Posted: 2003-08-27 15:14:16
With the economy sagging and layoffs mounting, more American workers age 50 and older are losing their jobs—and even more may be unemployed before the year ends.
"We've seen record layoff announcements [this year], unprecedented layoffs, in fact," says John A. Challenger, whose international job placement firm, Challenger, Gray & Christmas, Inc., tracks such data. "I am pessimistic about what lies ahead."
U.S. companies announced 1.2 million layoffs from January through August, exceeding the year-end total for 2000 by 83 percent, Challenger says.
The layoffs are hitting workers hard. The unemployment rate rose sharply to 4.9 percent in August—the highest level since September 1997, according to the U.S. Bureau of Labor Statistics (BLS).
The jobless rate for workers 45 and older rose from 2.7 percent a year ago to 3.2 percent this August.
And, while those figures are lower than the overall jobless rate, experts say the statistics may not fully reflect the older workers' situation. Many grow so discouraged by prolonged joblessness that they stop looking for work and retire and thus are no longer counted among the unemployed.
Since August 2000, the number of unemployed workers ages 45 to 64 has jumped 23.5 percent to 1,478,000 in August 2001. The number of jobless workers ages 25 to 44, meanwhile, rose at a slower clip of 20.1 percent.
One factor that until recently has worked in favor of older workers, says Challenger, is that the current spate of layoffs began at dot-coms, where the work force typically is young.
But that could change, he adds, noting that the downturn has spread from technology to manufacturing and could move on to other industries. Since the jobless rate frequently lags behind a slowdown, there's a "real risk," he says, that unemployment could accelerate for all workers.
Not everyone is so gloomy. The statistics "can be very misleading," claims Delos Smith, a senior business analyst for the Conference Board, a New York-based business network. Some of the layoffs that companies announce may never pan out: They're "just window dressing for Wall Street," he says.
Challenger disagrees. "No company in its right mind would [announce a layoff and then not follow through]," he says. "These cuts are driven by Wall Street, which is demanding that public companies cut their costs in the face of falling revenues."
Complicating the problems of older workers is age bias. "Age discrimination complaints are rising as the economy is slowing down," says AARP Foundation lawyer Laurie McCann.
McCann notes that 16,000 age bias complaints were filed with the U.S. Equal Employment Opportunity Commission last year, up 2,000 from 1999.
That may help explain why it takes unemployed older workers longer than their younger colleagues to find new jobs. In August the BLS clocked the median duration of unemployment at 10.6 weeks for those ages 55 to 64, compared to 6.5 weeks for those 25 to 34.
"Being laid off at the peak of your career can be devastating to retirement security," warns Jan Bowman, professor of gerontology at the University of Louisiana at Monroe.
In a study of displaced workers, Bowman and ULM's Robert C. Eisenstadt, associate professor of economics, found that many of those ages 50 to 60 dip heavily into their retirement savings before finding new jobs.
Their study, supported by the AARP Andrus Foundation, also found that younger workers tend to land new jobs at better pay after being laid off, but older workers often have to swallow significant cuts.
Older workers need to prepare for the worst, says AARP policy analyst Sara E. Rix. And that may require learning new skills. "Anybody who believes the old saw 'last hired, first fired' needs to wake up," she says, "because seniority doesn't matter nearly as much as up-to-date skills."
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