From a lot of the talk about raising the retirement age, you’d think firms were lining up to offer jobs to 61 year-olds and labor force participation fell off a cliff at age 65. The reality is quite different. As Motoko Rich lays out in an excellent piece, the nexus of recession and aging makes things extraordinarily difficult for unemployed fifty-somethings:
Patricia Reid is not in her 70s, an age when many Americans continue to work. She is not even in her 60s. She is just 57. [...]
College educated, with a degree in business administration, she is experienced, having worked for two decades as an internal auditor and analyst at Boeing before losing that job.
But that does not seem to matter, not for her and not for a growing number of people in their 50s and 60s who desperately want or need to work to pay for retirement and who are starting to worry that they may be discarded from the work force — forever.
In normal times, one of the great engines of prosperity and human progress is precisely the fact that there’s normally a shortfall of fully-qualified people out there for precisely the jobs that need doing. You’ve got a bunch of kids fresh out of school who might be eager to get ahead, but who don’t actually know what they’re doing. You’ve got competent older people who through no fault of their own find themselves possessed with slightly obsolete skills. You’ve got people who’ve screwed up in the past but now have a more mature perspective and want some money and stability. And you’ve got firms who need workers, and this need for workers drives not just hiring but training and investment that can’t be fully internalized. But as Niklas Blanchard observes using National Federation of Independent Businesses survey data, when recessions hit firms’ concerns about labor quality vanish since suddenly there’s a glut of workers and no particular incentive to expand operations:
The biggest victims of this situation are the Patricia Reids of the world, the slightly marginal cases who have skills but don’t perfectly fit what most companies are looking for. And right now poor macroeconomic management is squandering their talents and abilities. No kind of entitlement system is going to be sustainable as long as that’s happening. Able-bodied working age people who want to work need to be able to find jobs. If they can’t then no amount of fiddling with the retirement age is going to make the numbers add up.