Age-bias laws backfire on jobless boomers

April 22, 2014, 10:57 AM ET

The Great Recession and its aftermath have been particularly tough on older workers who lost their jobs. But age-discrimination laws at the state level may have inadvertently made times even tougher for them, according to a report released this month by the Federal Reserve Bank of San Francisco. The report concludes that older workers stayed jobless longer in states that had tougher laws.

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Did bias laws make it harder for boomers to get hired?

Older boomers have been high-profile casualties in the recent economic cycle. While their unemployment rate has been lower than the national average, those who’ve lost their jobs have tended to stay unemployed much longer than their younger peers—almost twice as long, by some measures. Some economists (and many workers) have seen age discrimination as one factor keeping these folks from getting rehired.

Federal law prohibits workplace age discrimination at firms with 20 or more employees. But according to David Neumark and Patrick Button, economists at the University of California, Irvine who wrote the Fed report, the majority of states have age-bias laws that are more plaintiff-friendly than the federal code. In all, 29 states allow “larger damages under less strict standards” than federal law.

In earlier research, Neumark had found evidence that prior to the recession, tougher laws like these tended to help older workers stay on the job longer. But the newer paper suggests that once boomers started losing their jobs in the recent downturn, the tables turned.

During the 2007-09 recession, the gap between the duration of unemployment for men age 55 and the duration for younger men was significantly wider in the states with tougher laws—by a difference of a little over 5 weeks—and that gap persisted after the recession ended. (The opposite effect happened among older women, with the duration gap narrowing in states with tougher laws; but the authors said they didn’t have enough data on women to declare that trend to be statistically significant.) The authors also concluded that older workers didn’t have better odds of getting hired in states with tougher laws.

Why did the tougher laws backfire on the jobless? The authors theorize that states with tougher laws had created “pent-up demand” among employers who wanted to shed older workers, and that “a sharp downturn [gave] employers cover to engage in age discrimination” by letting such workers go. They also speculate that tougher laws might have made employers that much more hesitant to hire older staff as the economy bounced back, for fear of facing litigation down the road.

Also on Encore:

Secret to retiree happiness: Part-time work

Over 50? Spin your age to protect your job

Boomers fuel surge in age-bias complaints



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