; pijiir’ *’ Q 7 6.: ae~e73 E Congressional Research Service The Library of Congress Washington, DC. 20540 DISPLACED OLDER WORKERS: A SNAPSHOT OF THEIR PLIGHT, 1979 ~ 1983 Linda H. LeGrande ‘V5 ,2‘ fill . . VIIV g|:“§,A‘::(l3e.%';%1,1b».;,_«-:: m X--45 (S .: ‘-. V,-.» ‘g.’-,._V",\ Speclallst in Labor Economlcs V"7 ‘ Economics Division April 30, 1986 fififiémment Publications Unfi AUG 01 1994 Eiashingmm University Libraries R ‘Sin i'.0UiS, ‘MO 63130 u niversi ssouri Co Iiiiiiiii iii in mbi lliliil O10-10394 120 a CONTENTS ABSTRACT ................................................................. iii INTRODUCTION .....,....................................................... 1 WHO ARE DISPLACED OLDER WORKERS? ......................................... 2 WHAT HAS BEEN THEIR EMPLOYMENT EXPERIENCE? ............................... 7 WHAT HAS BEEN THEIR EARNINGS EXPERIENCE? ................................. 11 OGOOIOOOOOOOOOOOOOOOOO00000000000OOOOOOIOOOIOOIOOOO ABSTRACT Upon losing their jobs in the 1979 - 1983 period, displaced older workers had more difficulty in the labor market than did younger workers: older workers experienced a lower rate of reemployment and a longer duration of unemployment. Among displaced older workers, blacks had relatively greater difficulties in the job market. The concentration of displaced older workers -- particularly black workers -- in low skilled blue-collar occupations appears to have exacerbated their problems in the labor market. DISPLACED OLDER WORKERS: A SNAPSHOT OF THEIR PLIGHT, 1979 - 1983 INTRODUCTION In the early 1980s, due to a combination of cyclical andstructural factors that affected the economy in general and certain industries in part- icular, millions of workers lost their jobs. For some, unemployment was a temporary condition that ended once the economy recovered from the 1980 and 1981-1982 ‘recessions, causing employers to (re)hire workens. For cmhers, unemployment was longer lasting, because they might have lxun1 employed :in industries or lived in regions that continued to encounter problems even as the economy rebounded, or they might belong to demographic groups that typically experience difficulties in the labor market. This paper will analyze the labor market experience of one such group-- displaced older workers. Generally, older workers have fairly low jobless rates, but once they become unemployai, they have 21 relatively luini time finding another job. Using «data from tflua only currently available com- prehensive survey of workers who lost their jobs in the early 19803, 3] this if Throughout the report, the source of data is the U.S. Bureau of Labor Statistics (BLS) survey of displaced workers. BLS defines displaced workers as adults (i.e., age 20 or older) who lost a job between January 1979 and January 1984 because of plant closings, employers going out of business, or permanent layoffs, and who had at least 3 years of tenure on the jobs they lost. CRS-2 report will compare the plight of displaced workers age 55 or older with the universe of displaced workers to determine whether displaced older workers have greater labor market problems than their younger counterparts. Z] In addition, the employment situation of subgroups within the displaced older worker pool will be examined, and the factors associated with their employment status will be explored. WHO ARE DISPLACED OLDER WORKERS? Of the 5.1 million workers who lost their jobs between January 1979 and January 1984, 939,000 (18.4 percent) were age 55 (N? older. (See table 1.) Four out of five of these older workers fell in the 55 - 64 age group. Just as was the case for all displaced workers, most older workers were, white males, living in the East North Central and Middle Atlantic regions, formerly employed in full-time jobs, and from durable goods manufacturing in- dustries. Nearly 60 percent of displaced workers age 55 or older were men, and 90 percent were white. Somewhat over 40 percent lived in the East North Cen- tral (i.e., Tlllinois, ‘Indiana, Michigan, Ohio, and Wisconsin) and Middle Atlantic (i.e., New Jersey, New York, and Pennsylvania) regions. Close to 90 percent usually had worked more than 35 hours per week on their former jobs, gj Just as there is no one definition of displaced workers, there is no one definition of older workers. In this report, older workers are limited to those individuals age 55 or older. After analyzing the data, it was concluded that this definition was preferable to one which used either a lower (i.e., 45 or older) or higher (i.e., 65 or older) age cutoff: the 45 -.54 age group appeared to have labor market experiences more closely resembling those of relatively younger workers; the 55 - 64 age group appeared to have labor market experiences more closely resembling workers age 65 or older than those age 54 or younger. CRS-3 TABLE 1. Employment Status of Displaced Workers by Age, Sex, and Race, January 1984 Total Not in Number Per- Employed Unemployed the (in cent (percent) (percent) Labor thous- Force ands) (percent) Total, 20 years or older 5,091 100.0% 60.1 25.5 14.4 20-44 years old 3,252 100.0% 66.6 24.5 8.8 45-54 years old 900 100.0% 60.7 26.7 12.4 55 years or older 939 100.0% 4 36.7 27.8 35.5 55-64 years old 748 100.0% 40.8 31.8 27.4 65 years or older 191 100.0% 20.8 12.1 67.1 Men, 20 years or older 3,328 100.0% 63.6 27.1 9.2 20-44 years old 2,199 100.0% 69.1 26.2 4.7 45-54 years old 575 100.0% 66.3 27.3 6.3 55 years or older 553 100.0% 39.2 30.6 30.3 .55-64 years old 461 100.0% 43.6 34.1 22.3 65 years or older 92 100.0% 16.8 12.9 70.3 Women, 20 years or older 1,763 100.0% 53.4 22.5 24.2 20-44 years old 1,052 100.0% 61.6 21.1 17.5 45-54 years old 325 100.0% 51.0 25.8 23.4 55 years or older 386 100.0% 33.3 23.7 43.0 55-64 years old 287 100.0% 36.3 28.0 35.7 65 years or older 99 100.0% 24.6 11.3 64.1 White, 20 years or or older 4,397 100.0% 62.6 23.4 13.9 20-44 years old 2,798 100.0% 69.6 22.2 8.2 45-54 years old 752 100.0% 63.8 25.4 10.9 55 years or older 847 100.0% 38.5 2630 35.5 55-64 years old 675 100.0% 42.7 29.5 28.0 65 years or older 171 100.0% 22.2 12.3 66.1 Black, 20 years or older 602 100.0% 41.8 41.0 17.1 20-44 years old 409 100.0% 45.9 41.1 13.2 45-54 years old 122 100.0% 42.6 35.2 25.0 55 years or older 70 100.0% 15.7 51.0 33.3 55-64 years old ‘ 59 100.0% 18.6 57.6 23.7 65 years or older 12 100.0% 8.3 16.7 75.0 Source: Calculated by the Congressional Research Service from BLS data. CRS=4 and about 30 percent had been employed in durable goods manufacturing industries (e.g., (non)electrical machinery, autos, primary and fabricated metals). As one would expect, older workers had accumulated more seniority on the jobs they lost than had younger workers. The median tenure on the job lost was 12.3 years for older workers compared with 6.1 years for all displaced workers, according to the BLS data. Regardless of age, men had more years of service than women. Older blacks had worked longer on the jobs they lost than had older whites: displaced black workers age 55 cu? older funi accumulated 16.2 (median) years on their lost jobs as against 12.1 (median) years for older white workers. Older black men (20.3 years) had worked 6 years longer than white men (14.1 years); older black women (13.1 years), almost 4 years longer than white women (9.9 years). Because cfif their greater seniority, displaced older workers more often lost their jobs due to plant closings than did younger workers. (See table 2.) That is, the longer service of older workers protected them from layoffs due to slack work which, according to union contracts, typically are conducted in reverse order of seniority. Greater job tenure also probably worked to protect older workers‘ jobs through the bumping rights that it conferred on them. Generally, union contracts provide that more senior workers may take more junior workers’ jobs should the formers’ positions or shifts be eliminated, for example. CRS-5 TABLE 2. Reasons for Job Loss by Age, Sex, and Race, January 1984 Total Plant or Slack Position Number Per‘ Company Work or Shift (in cent Closed or (per- Abolished thous- Moved cent) (percent) ands) (percent) Total 20 years or older 5,091 100.0% 49.0 38.7 12.4 55 years or older 939 100.0% 60.5 26.1 13.4 Men 20 years or older 3,328 100.0% 46.0 42.9 11.1 55 years or older 553 100.0% 57.8 28.0 14.2 Women 20 years or older 1,763 100.0% 54.6 50.8 14.6 55 years or older 386 100.0% 64.3 23.4 12.3 White 20 years or older 4,397 100.0%- 49.6 37.9 12.5 55 years or older 847 100.0% 61.0 25.5 13.5 Black 20 years or older 602 100.0% 7 43.8 44.7 11.6 55 years or older 70 100.0% 50.6 38.3 11.1 Source: Calculated by the Congressional Research Service from BLS data. However, seniority did not protect older black workers to the same extent that it did older white workers. Put another way, relatively more older blacks than whites lost their jobs due to layoffs related to slack work (e.g., layoffs induced by reduced demand for goods). This disparity could well be related to the relatively greater prevalence of older blacks in blue-collar jobs (e.g., operators, fabricators, and laborers). These jobs typically are more prone to CRS~6 layoffs than vddtercollar’ jobs (e.g., xnanagers, professionals, clerical workers, sales personnel). Nearly nine out of ten older black workers formerly were in blue-collar occupations compared with six out of ten older white workers. The greater seniority of displaced older workers also is one likely explanation for why fewer of them left their jobs before being laid off. According to the BLS data, just 6.6 percent of displaced workers age 55 or older who expected or received advance notice of a layoff left their jobs prior to the layoff. In contrast, ll.l percent of all displaced workers who had the expectation or knowledge of a forthcoming layoff left before it van; to have occurred. The seniority and age of older workers meant that many probably were eligible for retirement and could exercise that option if they stayed with their employers until the layoff took place. Q] Younger workers, on the other hand, had only one option if they remained until tflua layoff occurred-- unemployment. Other possible reasons that might have contributed to the higher rate at which older workers stayed with their former employers include the belief that they faced fewer alternative employment opportunities than their younger counterparts, and that they had lived through "permanent" Ilayoffs before only to be recalled to their former jobs at some later time. Q] As shown 1&1 table 1, over one-third of displaced workers age 55 or older had withdrawn from the labor force as of January 1984. Among workers at least 65 years old, over two-thirds were no longer in the labor force. It is likely that a large share of these workers, especially those in the oldest age group, retired upon being laid off. Because of the way in which the data were collected, one cannot distinguish within the group no longer in the labor force what proportion left to retire. CRS=7 WHAT HAS BEEN THEIR REEMPLOYMENT EXPERIENCE? Although seniority might have helped displaced older workers by initially protecting them from being laid off and by providing them the option of retirement rather than unemployment, seniority could well have exacerbated their reemployment problems. In other words, by the time older workers were let go by their firms, the already displaced younger workers could have snapped up many of the locally available jobs. Thus, displaced older workers might have faced slimmer pickings in the local labor market than younger workers. (Moreover, older workers were less likely than younger workers to move out of the area to find another job. According to the BLS data, only 5.7 percent of displaced older workers relocated compared with 13.5 percent of all displaced workers. Since individuals who moved had higher rates of reemployment, the lower mobility of older workersrfurther limited their opportunities for finding other jobs. Among displaced older workers”, 60.4 percent of those who moved were reemployed in January 1984 as against 35.5 percent of those who remained at home.) As shown in table 1, 36.7 percent of displaced workers age 55 or older were reemployed in January 1984 compared with 60.1 percent of all displaced workers. Older workers consequently comprised a disproportionately small share of all reemployed displaced workers: while workers age 55 or older were 18.4 percent of eflj. displaced workers, they represented just 11.3 percent of al displaced workers who had found new jobs. Given their relatively high unemployment rate (31.8 percent), it appears that the 55 - 64 age group had tflue most difficulty upon losing their jobs. Black workers ixl this age group, with an unemployment rate of 57.6 percent, seem to have had an especially hard time in the labor market. CRS =-8 Once again, the different kinds of occupations in which displaced black and whites formerly worked might have contributed to the greater employment problems of older blacks. Three out of four black workers age 55 - 64 had held blue-collar factory jobs requiring fairly low skill levels, such as machine operators and equipment cleaners. Conversely, one out of five whites in this age group had worked in blue-collar jobs requiring relatively higher skill levels (e.g., craft and repair workers) and two out of five formerly were in white-‘collar jobs (e.g., sales, clerical, and administrative personnel). For the black workers, then, new jobs might have been harder to find because they had little to offer other employers given their low skill levels, or skills that were useful only to their former employers (i.e., nontransferable firm- or industry-specific skills). As shown in table 3, displaced older workers formerly in fairly low skilled blue-=collar occupations had among the highest unemployment rates, while those who once worked in more skilled blue-collar occupations and white-collar occupations had among the lowest unemployment rates 0 CRS-9 TABLE 3. Employment Status of Displaced Older Workers by Occupation of Lost Job, January 1984 Total Not in Number Per— Employed Unemployed the (in cent (percent) (percent) Labor thousr Force ands) (percent) Total, 55 years or older 939 100.0% 36.7 27.8 35.5 Managerial and pro~ fessional specialty 127 100.0% 54.5 20.1 25.4. Exec., admin., and managerial 83 100.0% 55.7 19.2 25.1 Professional specialty 43 100.0% 52.0 21.9 26.1 Technical, sales, and admin. support 217 100.0% 36.1 22.1 41.8 Technicians and , .related support 16 100.0% 45.3 26.2 28.4 Sales occupations 104 100.0% 40.7 16.3 43.0 Admin. support, * incl. clerical 97 100.0% 29.6 27.8 42.6 Service occupations 84 100.0% 31.5 32.1 36.4 Precision production, craft and repair 180 100.0% 41.0 28.7 30.4 Mechanics and repairers 42 100.0% 55.8 26.1 18.1 "Construction trades 50 100.0% 34.9 44.0 21.1 Other 88 100.0% 37.4 21.2 41.4 Operators, fabrica- tors, and laborers ' 325 100.0% 29.7 * 32.9 37.4 ~Machine operators, assemblers, and inspectors 208 100.0% 33.3 26.8 39.8 Transportation and material moving occupations 43 100.0% 30.8 39.0 , 30.2 Handlers, equipment cleaners, helpers, and laborers , 73 100.0% 18.8 46.5 34.7 Farming, forestry, and fishing 6 100.0% -— -- ~- Source: Calculated by the Congressional Research Service from BLS data. CRS-10 Not only were a larger proportion of displaced older than younger workers still unemployed in January 1984, but also, a larger proportion of older workers experienced longer periods of joblessness. (See table 4.) The (median) duration of, unemployment for all displaced workers was 24.1 weeks compared with 29.8 weeks for displaced workers at least 55 years old. 4] As was the case for all displaced workers, older female and black workers were more prone to be out of work for a longer time than were older male and white workers. TABLE 4. Duration of Unemployment among Displaced Workers, January 1984 ' Total Less More Number Percent than 5-14 15~26 27-52 than (in 5 Weeks Weeks Weeks 52 thousands) Weeks Weeks Total, 20 years Q or older 5,091 100.0% 25.1 _ 17.9 13.9 19.3 _ 23.8 Men 3,328 100.0% 25.1 18.9 14.6 19.4 22.0 Women 1,763 100.0% 25.0 16.0 12.6 19.2 27.2 White 4,397 100.0% 26.9 17.7 14.2 18.9 22.4 Black 602 100.0% 14.0 19.1 11.5 22.1 33.4 Total, 55 years or older 939 100.0% 24.2 11.6 13.0 19.1 32.2 Men 553 100.0% 25.3 12.1 14.8 18.3 29.5 Women 386 100.0% 22.8 10.9 10.4 20.2 36.0 White 8847 100.0% 26.1 11.8 13.0 18.8 30.2 Black 70 100.0% 8.5 9.8 15.5 16.9 50.7 Source: Calculated by the Congressional Research Service from BLS data. 4_/ Given their longer period of unemployment, one would have expected relatively more older than younger workers to have exhausted their’ unemployment insurance ‘benefits. However, the exhaustion. rates were quite similar. About 50 percent of displaced older workers who received unemployment compensation collected it for the maximum period to which they were entitled as against 48 percent of all displaced workers. CRS-11 The disparity between the duration of unemployment for all displaced workers and older displaced workers was greatest among blacks. As shown in table 3, 67.6 percent of displaced older blacks had been without work for 6 months or longer compared to 55.5 percent of all displaced blacks, a 12 percentage point gap. With relatively more younger blacks formerly in white“ collar and more highly skilled blue-collar occupations, they probably had more employment alternatives after being laid off than did older blacks who predominantly had worked in low or semiskilled blue-collar jobs. WHAT HAS BEEN THEIR EARNINGS EXPERIENCE? As was the case for all displaced workers, some older workers were able to find new jobs that paid more while others only could find jobs that paid less than those they had lost. Some were able to find full-time employment, while others took part-time work. According to the BLS data,‘ displaced workers age 20 or older who were reemployed in January 1984 had median weekly earnings of $272 on their new jobs compared with $306 on their former jobs -"- an earnings loss of $64 a week. Older workers fared somewhat better: the difference between the median weekly earnings on their new jobs ($226) compared with their lost jobs ($256) was $30 a week. One explanation for the~smaller earnings loss of displaced older workers might Ina that relatively more of them were recalled by their former employers, since recalls generally are conducted in order of seniority. Thus, for older workers, a larger share of their "new" jobs actually were their former jobs, and consequently, a larger share of older workers were earning the same amount of money as they had in the past. In contrast, relatively more of the less senior, displaced younger workers would have had to go out and find ' CRS~l2 new jobs with new employers. As a result, the younger workers were more likely to be starting at the bottom of the new employer's pay scale since they had no prior experience with the firm or in the occupation. As shown by the data in table 5, more than half of the displaced older workers who had found full-time employment in January 1984 were earning at least as much as they had on the full-time jobs that they lost; This was similar to the experience of all displaced workers. Compared with all displaced workers, those age 55 or older who once held fullrtime jobs were not as likely to have again found full-time employment. Of the 312,000 displaced older workers who formerly worked’ at least 35 hours a week and were reemployed in January 1984, 69,000 (22.1 percent) were in part- time jobs. (See table 5.) Among the universe of displaced mmrkers, 12.6 percent (387,000 out of 2,841,000) of those who lost full-time jobs were reemployed in part-time jobs in January 1984. Thus, for the displaced full“ time worker, a larger share of individuals age 55 or cflxkn: were earning less than they previously had, as fewer hours worked usually means lower pay. CRS-13 TABLE 5. Earnings of Older Displaced Workers Who Lost Full-Time Wage and Salary Jobs Full-Time Wage and Salary Earnings on New Job Compared To Former Job Self Total Part- 20% Below, Equal 20% Employ- Reem- Time Total or but or or ment ployed Job (1) More Within Above More Other in Jan- Below 20% but Above Full- uary With- Time 1984 p in 20% Job (numbers in thousands) Total, 55 years or older 312 69 222 57 26 66 39 21 Construction 27 5 22 8 1 6 A 6 0 Manufacturing 154 27 117 25 19 34 14 10 Durable goods 97 18 69 19 6 23 ll 10 Primary metals 7 -- 7 2 -- 4 2 -- Steel 7 -- 7 2 -- 4 2 -- Fabricated metals 7 2 5. -- -- 3 -- -- Machinery, except _ electrical 25 4 17 4 —- 7 4 4 Electrical mach- ' inery 10 3 7 3 -- -- 2 -- Transportation equipment 17 2 12 6 2 3 -- 4 -Automobiles 9 2 8 6 -- 1 -- -- Nondurable goods 57 9 48 6 13 11 3 -- Transportation and public utilities 23 2 18 6 -- 6 3 3 Wholesale and retail trade 48 17 29 8 3 10 5 2 Finance and services 45 15 25 8 3 6 8 6 Public administration 5 2 2 O -- 2 -- -- Other industries 10 2 8 2 -- 2 2 -- (1) Includes persons who did not report earnings on lost job. Source: U.S. Bureau of Labor Statistics. CRS~l4 SUMMARY AND CONCLUSION Compared to the universe of workers age 20 or older who lost their jobs between January 1979 and January 1984, workers age 55 or older (1) (Z) (3) (4) (5) (6) shared the same demographic characteristics (i.e., white males living in the East North Central and Middle Atlantic States who lost full-time jobs in durable goods manufactur- ing industries); had more seniority on the jobs they lost, which initially helped them to retain their jobs, allowed many the option of retirement, and increased their chance to be recalled, but probably hurt them indirectly in terms of the number of jobs available when they finally were laid off; were less likely to have found new jobs partly because they predominantly were low or semiskilled blue~collar workers who could offer other employers few enticements to hire them; were more likely to have been out of work for a longer time, a possible consequence of their late entrance into the job market, their relative unattractiveness to employers, and their reluctance to move; experienced less of an earnings loss for those able to find jobs, perhaps because they had a higher rate of recall by their former employers; and, for those who lost full-time jobs, more often reemployed in part-time jobs whose fewer hours generally would mean a smaller paycheck than was earned previously. Among) displaced older workers, blacks between 55 and 64 years of age appear to have encountered the greatest labor market problems. It is not surprising that displaced older black workers would have had greater employment difficulties than displaced older white workers since this is true for all black compared to white workers regardless of age and reason for job loss. In this specific instance, the employment problems of older black workers seem to have been related, in part, to their concentration in bluevcollar occupations CRS-15 that require little or no skill. Although these workers may have performed a necessary service for their former employers, their lack of skills limits the jobs for which they are qualified. While a larger proportion of displaced older black than white workers lost jobs in low skilled blue-collar occupations, a larger number of displaced older white workers formerly worked in such jobs. Therefore, the constraint of low skill levels is a problem for older white as well as older black displaced orkers. ‘Without upgrading their skills, either through retraining activities funded by Government programs (e.g., Title III of the Job Training Partnership Act, Trade Adjustment Assistance), under labor-management agreements (e.g., the United Auto Workers and Ford), or through their own resources, the reemployment problems of displaced older workers are very likely to have continued between January 1984 (the end of the BLS survey period) and today. if lg/mls 2] The BLS conducted a followup survey of displaced workers in January 1985. Data from the survey should be available in late 1986. A limitation on the usefulness of the first survey in analyzing the labor market problems.of older workers -- namely, not distinguishing those individuals who voluntarily leave the labor force (e.g., retire) --= also will be present in the second survey's 3. ~ a"”‘“U"B~ c~Lc~JF GTON Vv%§i‘\:.g€r‘:r;fiY ‘L 31'. LOUIS - M°.;....... cask-