Are Older Workers More Vulnerable in this Recession?

BY Business Desk  September 22, 2009 at 10:41 AM EDT

Worker at Cafe du Monde, New Orleans; Adam Melancon via Flickr

Question: I lost my job in April. I have yet to find any new position. I get this feeling that age plays a big part in the hiring process. I am 48 …soon to be 49 years old.

Are older workers more vulnerable in the recession and are we more likely not to be hired? I am 16 years before retirement and I will only have Social Security after this recession. I was in the restaurant and retail industry. Would going back to school (I have a BFA in Art) be worth my time to be retrained in another field?

Paul Solman: Age almost always affects employment. Sometimes it’s to the employees’ benefit; often, to their detriment. It’s illegal to use age as a basis for layoffs. But with hiring, how would you ever know?

Look, there’s a certain cold economic logic to not employing older workers. According to economics, people are paid according to their “marginal productivity.” The theory is that labor is like everything else you buy: You get what you pay for. Leaving “marginal” out of it, the more productive you are, all else equal, the more you supposedly get paid; the less, the less.

Of course, all else is never equal. That may be the biggest problem with economics: simplifying the world to the point of implausibility or, in this case, absurdity. But you’ve got to admit: If YOU were paying employees, you might try to pay each according to her abilities.

Okay, big question at this point: Does your ability — your productivity — increase or decrease with age? If you’re a professional athlete, the answer seems to be an unequivocal ‘decrease.’ Even in sports where skill and experience seem to matter a great deal, performance seems to peak around age 28. (Interestingly, if grimly, the peak price for slaves in the U.S., according to a chart I once read, was also 28.)

You, David, were in the restaurant and retail industry. Since you haven’t specified, I don’t know how physical your job was or what you’ve applied for since losing it. But if brawn or endurance has much to do with what you were and are selling, you might conceivably be worth less than you were. And yet, in this economy, you were probably paid more every year, regardless of productivity. And if not you, we all know plenty of people who are.

I’m not talking “fairness” here, just cold, cruel economics.

Okay, you might say, let’s even grant than I’m less productive than I used to be (though if you asked ME the question, I personally would dispute the claim, even though I’m 65). But, you might add, I’m willing to take a pay cut and I still can’t find a job. Is THAT due to age?

Might be. Think of how you might operate if YOU were the employer. You’re reeling from the Great Recession. Credit markets are still incredibly tight, so loans are hard to come by. But suddenly, you need to fill a job at your firm. With something like 30 million Americans either under- or unemployed, you’ve got your pick of potential hires. Some are younger. Some are older. From which are you likely to get more bang for the buck? Or to put it more bluntly, which are you more comfortable exploiting?

There’s no obvious answer. But you could see how age might factor in, no? As to whether going back to school will pay off, who knows? But if you think about the theory of marginal productivity, the efficacy of education for employment at higher pay becomes clear. You learn more: you have more to sell.