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December 05, 2001
Report: Older Workers' Fears Are Legit
Tho
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ugh hard numbers on those displaced by the current downturn won't be in for another two years, a trio of researchers believes they'll show that older workers have borne the brunt of layoffs, The New York Times reports.

The researchers, Marjorie Honig, Michele Siegel, and Charlotte Muller, recently prepared a report - "The Incidence of Job Loss: The Shift From Younger to Older Workers, 1981-1996" - for the International Longevity Center-USA, a research organization affiliated with the Mount Sinai School of Medicine in Manhattan.

The report, according to the Times, concludes that older workers have cause to worry, based on what happened in the last two recessions, in 1981-82 and in the early 1990s.

In the earlier recession, the job-loss rates for men 45 to 59 years old were 40 percent lower than those for men 25 to 39. In the recession of the early 1990s, however, the job-loss rates of older workers were just as high as those of younger workers. (For unclear reasons, such a change was not found among women in the work force: in both recessions, layoff rates were higher among younger women.)

"The data aren't available on what's happening now, but it's my gut feeling that what we see from the previous two recessions is a trend," Honig told the Times. "Many employers are using the current downturn as an excuse to get rid of older workers." Under the guise of restructuring, she said, they are usually able to get around age-discrimination laws.

Less than two years ago - in the midst of one of the tightest labor markets ever - companies were warned that they faced dire consequences if they discriminated against older workers. With baby boomers expected to retire in huge numbers within the next decade or so, there will not be enough younger workers to replace them.

In her pre-recession book "Age Works: What Corporate America Must Do to Survive the Graying of the Workforce," Beverly Goldberg contended that even if the economy turned sour, the labor shortage would ease only temporarily.

Honig echoed Goldberg's point that the downturn was temporary but that the looming labor shortage was not. "Companies are going to need those older workers," she said. "They're going to need that experience."

Why are companies so shortsighted when it comes to older workers?

"In part, it's probably because many companies take a short-term view generally, looking from quarter to quarter in terms of shareholders and profits," she said. "If you cut a bunch of workers, especially higher-paid older workers, your profits look better. But there will be trouble in the long term."

Another factor, Honig said, is that companies have broken an implied long-term contract they used to have with workers. A worker would stay with one company for an entire career, on the understanding that lower wages at the start would turn into higher ones as they got older, even though they might be performing at a less robust rate.

"This was good for the company," she said, "because that lure of higher wages later kept workers' job performance high."

"Now that's all gone out the window," Honig observed. "But as a result, younger workers are ruthless in demanding higher wages. And they're right, because they don't expect to be with one company more than five or 10 years. So now a company has to pay through the nose to attract younger workers, because there's no expectation the company will keep them, as was the case under the old implicit contract."

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