Aug 18, 2020

Axios @Work

By Erica Pandey
Erica Pandey

Welcome back to @Work. Today's edition dives into the ways in which the pandemic is disproportionately hurting older workers — a population key to the health of the U.S. economy.

  • I welcome your feedback on this issue as well as ideas on important topics to cover in future ones. Send 'em to erica@axios.com.

I've got 1,554 words for you — a 6-minute read. Let's begin...

1 big thing: The pandemic's toll on older workers

Photo illustration: Annelise Capossela/Axios. Photo: Bettmann/Getty contributor

The pandemic threatens to chip away at employment among workers over the age of 55 — an increasingly important part of the U.S. labor force.

Why it matters: As the world ages, the older population has become key to economic growth, both as workers and as consumers.

  • Now, the dual impact of the coronavirus' heightened risk for older workers and lingering ageism in the workplace leaves the future of work for that population hanging in the balance.

The big picture: "We’ve seen in the past 20 years a tremendous increase in the employment of older workers," says Richard Johnson, director of the Program on Retirement Policy at the Urban Institute. "And you really wonder if this pandemic is going to change that trajectory."

Virus risk could force older workers to choose between their lives and their livelihoods.

  • Since lockdowns began, the unemployment rate of older workers has been consistently higher than that of their younger counterparts. That may be in part because they are afraid to go back to work.
  • Older workers are less likely than younger workers to have jobs in which they can telecommute, so, for many, going to work means putting themselves in harm's way. Per the Economic Policy Institute, 25% of workers over the age of 65 can work from home, compared with 36% of those between the ages of 35 and 44.
  • And even those who can telecommute are dealing with offices reopening and firms giving employees the option to return. If older employees choose to keep working remotely to avoid virus risk, they'll miss out on in-person interactions and potentially get overlooked or even passed up for promotions.

Older workers who lose their jobs amid the pandemic-induced recession will also have a difficult time re-entering the workforce — and they may drop out entirely.

  • "The issue of ageism unfortunately is alive and well in the workplace," says Jo Ann Jenkins, CEO of AARP. "Being unemployed is tough to navigate at any age, but it is particularly difficult the older you get."
    • Age discrimination claims were on the rise even before the pandemic. "Despite decades of research finding that age does not predict ability or performance, employers often fall back on precisely the ageist stereotypes [the 1967 Age Discrimination in Employment Act] was enacted to prohibit," Victoria A. Lipnic, then-acting chair of the Equal Employment Opportunity Commission, wrote in 2018.
  • Those who are in their 50s and 60s or older and lose their jobs tend to stay unemployed for far longer than the younger cohort. Only 10% of these workers will make as much as they used to when they eventually do get jobs.
  • The bleak outlook for older workers could push many to give up and retire early, experts say.

The stakes: Before the pandemic began, nearly all of the employment growth in the G7 nations was coming from older workers, says Andrew Scott, an economist at London Business School.

That's because falling birth rates in the world's developed countries are causing those societies to age. And as growing numbers of younger people delay work for education, older workers become even more vital.

  • Demographers project that workers over 55 will make up 25% of the labor force in the U.S. and the U.K. by 2025.
  • Employment in the U.S. has risen by 22 million since 1998 — and workers over 55 account for 90% of that surge, Quartz reports. Americans over 50 also account for around $8 trillion of consumer spending, per AARP's estimates.
  • And in the U.K., where demographic and employment trends mirror those in the U.S., those between the ages of 55 and 59 are more likely to be employed than those between 20 and 25, Scott says.

The bottom line: "Older workers' contributions propel economic growth," says Johnson. "The economy needs older workers who fill the nation's staffing needs."

2. A wave of early retirements...

Photo illustration: Annelise Capossela/Axios. Photo: George Rinhart/Corbis via Getty Images

The coronavirus is already triggering early retirements. That's bad news for the American economy, experts say.

Why it matters: "It’s a missed opportunity if people are being forced to retire early," London Business School's Scott says. "There's a big impact on their lifetime earnings and a big impact on lifetime expenditures. And that has macroeconomic consequences."

  • Since March, 2.9 million workers between 55 and 70 have left the workforce, according to the New School's Schwartz Center for Economic Policy Analysis. That's far more than the 1.9 million such workers who exited the workforce in the three months after the start of the Great Recession.

What's happening: There are four factors that are creating a "perfect storm" for early retirement, Nicholas Bloom, an economist at Stanford, tells Axios.

  1. The decreased demand for workers due to the recession is lowering wages.
  2. The uptick in layoffs means many older workers have lost jobs that they liked.
  3. Working might mean increasing the risk of getting infected.
  4. "The stock market is performing well, so defined contribution retirement funds look strong," he says.

The big picture: These early retirements will shrink the U.S. labor supply. "You have less workers and more retirees, which is bad for long-run growth," says Bloom.

  • On top of that, many people may be pushed to retire early even if they aren't prepared to do so. Working until 55 if you had planned to work until 70 is a huge problem.
  • Around 3.1 million older workers will fall into poverty after retirement as a result of the coronavirus recession, the Schwartz Center projects.

Worth noting: Some sectors will be hit harder than others by early retirements. For example, older workers are disproportionately represented in education. "I fear early retirement is going to create major shortages of teachers in certain parts of the country," Bloom says.

3. ...and a wave of retirements, reversed

Photo illustration: Aïda Amer/Axios. Photo: Bettmann/Getty Contributor

A counterpoint to the slew of early retirements: There are many older workers who are being pulled back into the workforce due to the coronavirus.

The big picture: There's "an urgent demand for medical and technology professionals to return to work from retirement or a career break," Carol Fishman Cohen writes in the Harvard Business Review.

  • "Returning physicians and nurses, along with technologists proficient in the 'ancient' COBOL coding language that many states still use in processing unemployment claims, are helping society," she writes.

Why it matters: The institutional knowledge that these returning workers are bringing during the crisis is chipping away at some of the prejudices against older people — that their skills have deteriorated or become obsolete.

And some older workers who've been laid off are learning new skills to find new work, per AARP.

  • Mauricio Oliveira, a 58-year-old logistics manager who lost his job, told AARP he's now learning graphic design at Miami Dade College.
  • Kim Coleman, a 55-year-old former executive assistant, said she took a class at Austin Community College on looking for jobs in the digital age.

"We're seeing that older workers do understand technology and can keep up," AARP's Jenkins tells Axios. "In a matter of two to three weeks, you saw this transition to a teleworking economy. And seeing older workers adapt? That gives me hope."

4. The double whammy for women and workers of color

Photo illustration: Aïda Amer/Axios. Photo: Watford/Mirrorpix/Mirrorpix via Getty Images

Older women and workers of color are likely to suffer the worst economic effects as the pandemic and recession drag on, experts say.

The big picture: "We know from past recessions that if you're an older woman or an older worker of color, your ability to become re-employed is even more difficult than that of an older white man," the Urban Institute's Johnson says.

  • Older women earn less than older men  and they're likely to have less money saved and to live longer, says Jenkins of AARP.
  • Among older people of color, around 12% of women and 10% of men have exited the workforce since March, per the New School's Schwartz Center. When looking at older white workers, that drops to 7.5% of women and 5% of men.

The bottom line: Workplace discrimination on the basis of gender or race gets magnified with age.

5. Worthy of your time
Expand chart
Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

The coronavirus' lasting economic damage (Axios)

  • Economists worry that many who leave the labor force — especially mothers, older workers, minorities, and many who were outside the labor force and had only recently gotten jobs — will return to the sidelines for good.

The pandemic is making older Americans lonelier (Quartz)

  • Millions of older people, who are at greater risk of getting very sick if infected by the coronavirus, are living in strict isolation, without visits from kids or grandkids and with no pandemic end in sight.

Teachers are retiring in fear (TIME)

  • Around 18% of public and private school teachers and 27% of principals are over 55 — and many of them aren't coming back if schools reopen out of concern over the spread of the coronavirus.

The case for hiring older workers (Harvard Business Review)

  • Most American employers continue to see age as a competitive disadvantage, but there are several compelling business reasons to invest in and hire older workers.
6. 1 fun thing: New York's thriving elderly

While many older Americans are navigating an economy that appears to be stacked against them, many others who are well into their retirement years are doing better than ever, the New York Times' John Leland writes.

  • Some New Yorkers over age 70 "are thriving during this catastrophe — skilled at being alone, not fearful about their career prospects, emotionally more experienced at managing the great disruption of everyday life that is affecting everyone," he writes.

These anecdotes are a welcome break from all of the bad news about high death tolls among older Americans.

  • Janet Wasserman, an 85-year-old historian, told the Times she's been using her free time to research an article on Han van Meegeren, the infamous Dutch forger who inspired Patricia Highsmith’s character Tom Ripley. Zoom has also allowed her to "see" relatives more often than she otherwise might have.
  • Gordon Rogoff, who is 88, said he's been reading for pleasure for the first time in a long time.
Erica Pandey

Thanks for reading!