Older, More Educated Workers Longest Unemployed

Speaking of good jobs, more experienced and more educated workers, generally speaking those who hold the best jobs, are those finding it hardest to find new jobs once they’ve lost them:

More education = longer unemployment if the job is lost. The upside is the more educated the worker, the less likely they are to lose their job, but the downside of being more educated is that once they hit 45 if they lose their job, they are toast.

So what does one do with the over-45s with a BA or higher? … The current mantra is ‘more education is good for you’ but this shows that it can, in the long run, hurt you.

I think there are a number of factors involved here. One of them, obviously, is that the higher you are up the wage scale, the fewer jobs are available for you. Simple supply and demand. Those jobs are higher paid because there are fewer of them.

Second, the older workers frequently have more responsibilities—kids, mortgages, child support, and so on. They may reluctant to take jobs that are below their skill level or what they’re accustomed to because they’re going to find it hard to make ends meet with those jobs.

And they may be underwater—they may owe more on their houses than their houses are worth. That tends to tie you down and make you less willing to move to take a job.

Older workers, at least until they reach 65, tend to have higher healthcare costs. That’s significant particularly in the third and fourth income quintiles.

And then there’s plain old age discrimination.

7 comments… add one
  • Mongoose Link

    You come back with unsubstantiated assumptions.

    Wait until it happens to you.

    What is happening is the middle class is being decimated.
    Those jobs are being in the main outsourced.

  • Simple supply and demand. Those jobs are higher paid because there are fewer of them.

    Uhmmm…what? Lets walk through it, who is demanding and who is supplying? Firms are demanding and demand is low. Supply is apparently pretty good…that has the recipe of having a low price–i.e. low wage/pay. I’m thinking it isn’t so simple as just supply and demand.

    Those jobs are being in the main outsourced.

    Outsourced or off-shored?

  • PD Shaw Link

    I also recall reading some comments over at Volkh, indicating graduating law students were looking for jobs last year and leaving off any reference to having attended or graduated law school. They were ascribing negative value to their degrees, at least in the short term.

  • steve Link

    Now try to square this with raising eligibility ages for SS or Medicare. It is going to be difficult. We think that people need to work longer, but employers seem less likely to hire them. A big part of that is health care IMHO. We have been seeing double digit increases even w/o anyone chronically ill or over the age of 60. It’s also cheaper to replace older workers with younger ones for the most part.

    Steve

  • Steve,

    Older workers are less likely to be unemployed, even the ones over 45. As such raising the retirement age may not be the problem you are suggesting.

    Also, sure you can hire a younger worker to replace an older worker at less pay, but you also lose the human capital the older worker has aquired. We have two new hires in my department and both have strong statistics background, but when it comes to getting data, organizing the data, and so forth I’ll likely have them beat for several years, and there are things like writing testimony, preparing data requests and so forth. That isn’t to say they aren’t contributing, just that I’ve had 12 years to run up the (human) capital accumulation curve for this job that they haven’t. In time, they’ll run up it and the differences between them and me will dwindle. Which goes back to why older workers are less likely to be unemployed.

  • steve Link

    That works in your line of work. Less so for others. I do not like having to bring in new docs/nurses and getting them up to speed, but after about 5-10 years, they usually do not progress much further in general competence. On the older side, since we cannot used fixed retirement dates, I have had to deal with older docs who had trouble adapting to new skills. Many are unable to handle the call. It gets hard being up all night after 55. What are the chances of successfully retraining a physician into another career at 60? Why would an employer hire them over a 30 y/o?

    Your point stands well in a fully employed economy. I do value my senior employees, but if any lost their job, I suspect they would find it harder to get employed again. I suspect this holds true for other professions and for manufacturing and retail jobs.

    Steve

  • On the older side, since we cannot used fixed retirement dates, I have had to deal with older docs who had trouble adapting to new skills. Many are unable to handle the call. It gets hard being up all night after 55. What are the chances of successfully retraining a physician into another career at 60? Why would an employer hire them over a 30 y/o?

    I would argue it is up to the individual to think about these things. It sure as Hell isn’t my responsibility to worry about what a 60 year old doctor will do in terms of employment…especially given earning differences.

    Your point stands well in a fully employed economy.

    I would say its true in just about any economy. However, for each employee there will be a point of indifference for the firm where the cost savings of getting rid of the older employee is offset by the loss of the human capital. That point probably moves around as the economy changes, but I would still expect a company to try and retain its more valued employees over the less valued and that there’d be a correlation between age and value. Is it iron clad and a truth that holds in all cases? Of course not, but then again we shouldn’t be crafting policy that tries to be perfect because there is no such thing.

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