Here’s How We Can Improve Age Discrimination Laws - presented by Prudential and SlateCustom

Here’s How We Can Improve Age Discrimination Laws

Here’s How We Can Improve Age Discrimination Laws

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Here’s How We Can Improve Age Discrimination Laws

An interview with Prof. David Neumark (UC Irvine) reveals some surpisingly simple solutions to lowering barriers for an aging work population.

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David Neumark has studied the history of American age discrimination laws, the challenges of population aging, and the current impact of age discrimination laws on markets and Social Security. He is an economics professor and director of the Center for Economics and Public Policy at the University of California, Irvine.

Why is it difficult to ascertain whether age discrimination is happening compared to other types of discrimination?

Race and gender discrimination are the two we tend to talk about the most and I think there are a couple reasons for that. When you're talking about women or minorities, the starting point is that they're doing worse – they have lower employment rates, lower earnings, etc. When you try to explain that, some non-discriminatory factors play a role, of course, but there's considerable evidence that discriminatory factors play a role as well. When you talk about older people, in some ways the conundrum you start with is that on average they're doing better. They earn more certainly compared to many young people. So the problem is a little subtler.

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Why do older people have longer unemployment durations?

That has a number of possible explanations. The discriminatory one, of course, is in hiring. If you lose your job and you're 40 it's not so hard, but if you're 60, it's tough. There are other explanations, of course. If you're older you might have left a high earning job so you're looking for higher wages, which means you're pickier about taking a new job. But we also know a lot of older people voluntarily choose not to work.

So what is the research that shows that age discrimination is happening? 

We know that before the federal law changed there were ads that said employers were looking for employees of certain ages. That clearly used to happen and it's clearly illegal, and it hardly ever happens anymore. In studies today, we ask workers if they've experienced discrimination. That’s not the most reliable thing in the world to do, of course. But people do say they've experienced age discrimination and when they do, if we follow them in data over time, they do subsequently experience things you think might be caused by discrimination: They're more likely to leave their job, more likely to retire, less likely to be promoted.

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Is age discrimination getting worse?

It’s hard to say because it's hard enough to pin it down at a point in time in the first place. There is some evidence on negative stereotyping of older workers and those studies have found less of it over time. They don't so much pin it on there being more older people; they pin it on more older people working and older people being healthier. So some of those stereotypes about differences between older and younger workers may actually have changed.

Why might discrimination become more prevalent during a recession?

When the economy is in the toilet in general, employees are more likely to discriminate against whomever they want to discriminate against because it’s less costly to do so. The cost of discriminating is to pass up a qualified worker with a characteristic you don't like, but who is otherwise a good worker. When you have a lot of people looking for jobs, the chance that you'll be able to find a worker who doesn't have the characteristics you dislike is greater. So discriminating in 1999 probably would have been very costly because the labor markets were so tight, you might have only wanted to hire a white guy but you couldn't find any because they all had jobs. In 2011, that wouldn’t be the case.

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You wrote that "population aging means that public policy must be increasingly concerned with the employment of older individuals." Why?

Social Security is the most obvious case.  When people retire and go on Social Security, they start drawing benefits earlier, but the benefits are lower. So in some sense it doesn't really matter a heck of a lot for the Social Security Trust Fund whether you retire earlier or later, but if you keep working, you keep paying Social Security taxes. So in that sense it's clearly a net benefit for the system for people to keep working. The age structure is shifting in such a way that relatively fewer workers will be supporting relatively more retirees, which is of course a fiscal challenge to the Social Security system. Anything we can do to increase revenue would help.

How do you think age discrimination laws might be improved?

One concern is there is in fact a lot of discrimination in hiring against older workers. In general, we think discrimination laws are much less effective at preventing discrimination in hiring than discrimination in firing.

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Can we do anything to discrimination laws to make them more effective at reducing discrimination in hiring?

I’m not sure. On the race and sex side, we do that through affirmative action, which is very controversial, of course. Affirmative action for old people is a nice idea but I'm pretty skeptical that would happen. But, in principle, you could do it.

Has the U.S. gotten better at enforcing age discrimination over time?

Compared to the time before the Age Discrimination in Employment Act, of course. It used to be legal to discriminate, and there was discrimination. We passed the law in 1967 and amended it in 1991. There hasn't been much change since then as far as that goes, but laws are influenced not just by what gets passed but by the way courts interpret them. In age discrimination law in particular, various rulings over time have given the laws more or less teeth. I think there's a perception that they've been somewhat emasculated compared to what they used to be, though future court decisions could change that back in the other direction.

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Do you think there's less support for anti-age discrimination than other types of anti-discriminatory causes?

I don’t know of any opinion polls that ask that question, but certainly race and sex discrimination get more play. One of the reasons for that, people have speculated, is that if you're female you're always female, if you're black, you're always black, but if you are old, you were young once. So it doesn't attract the same obvious unfairness. But my hunch is if you ask people, “Do you think the following groups suffer from discrimination?” my guess is you're going to get higher affirmation for women and blacks because on average they're doing worse.

Why is it important economically for age discrimination to be fought?

Well, we never want age discrimination per se to be constraining individuals’ choices. If they want to work, they should be able to work, if they don't want to work, they shouldn't have to work. With respect to older workers in particular, because of these issues of population aging and the strain on public programs, people working longer is good for all of us because it will reduce the strain on the system.

Interview by Jordan G. Teicher.