Age Bias Laws Might Not Help Older Workers

During tough economic times, older workers are not protected by age discrimination laws, study finds.

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Age discrimination laws provided no meaningful protection to older employees during and after the recession, according to a study released this month by the National Bureau of Economic Research.

 Job interview in office sitting at desk
Job interview in office sitting at desk

David Neumark, an economics professor at the University of California–Irvine, worked with economics Ph.D. candidate Patrick Button to study unemployment and job offers to employees ages 55 and older. They looked at the record in states before, during and after the recession.

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Federal law prohibits age discrimination, but it turns out that many state laws offer better protection. So the researchers honed in on those states that, at least on paper, offer superior protection to older workers.

What they found is that these tougher laws only seemed to work in non-recession times. When times were tough, and employers found themselves confronting large-scale layoffs and had few new jobs to offer, older employees in states with strict laws fared worse than before the recession.

"We find very little evidence that stronger age discrimination protections helped older workers weather the Great Recession, relative to younger workers," the researchers concluded. "The evidence sometimes points in the opposite direction, with stronger state age discrimination protections associated with more adverse effects of the Great Recession on older workers."

In looking at how older workers have fared during the past several years, the paper recounts a familiar story: Older workers tend to hang onto their jobs more successfully than younger employees. When they do become unemployed, however, they have a much harder time finding a new position than younger job seekers.

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Looking at unemployment rates is of limited value in telling the story of older employees. That's because older employees are more likely to leave the labor force when they lose a job than younger employees. The jobless rate for older people may appear better by comparison, but that's not a complete reading of their situation.

There are 29 states plus the District of Columbia with age discrimination laws that are tougher than federal regulations, the study said. In these places, the laws provide compensatory or punitive damages if the discrimination claim can prove intent or willful violation. The researchers tried to isolate these laws as the determining factor in evaluating jobless rates and hiring patterns for older men and women in these places.

Before the recession, the study found, jobless rates for younger men were higher than for older men in states with strong age discrimination safeguards. The impact on women was less pronounced. However, as the economy recovered after the recession, the story changed dramatically.

"There is rather clear evidence that relative unemployment rates for older workers were higher in states with the stronger age discrimination protection – especially the first 18 months or so after the Great Recession ended," according to the study. "For women this negative conclusion is even stronger."

The study's findings were based on overall employment and hiring patterns for younger and older workers in different stages. It did not attempt to look at details of age discrimination claims or their outcomes. And it did not attempt to assemble any research looking into why employer decisions may have changed during the recession and recovery periods.

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The authors suggested that the incidence and intent of age discrimination is harder to prove during periods when employers are laying off many people. "It is even possible that because stronger state age discrimination laws impose constraints on employers," they said, "there could be 'pent-up demand for age discrimination' that firms act on during a sharp downturn – with more of this occurring in states with stronger age discrimination laws."

In terms of employer hiring patterns during the recovery, they noted, anti-discrimination laws make it harder to terminate older employees. Knowing this is the case, they said, such laws might actually discourage employers from hiring older employees in the first place.

"Stronger age discrimination laws protect older workers in normal times," they concluded, "but during an experience like the Great Recession, severe labor market disruptions make it difficult to discern discrimination, weakening the effects of stronger state age discrimination protections."