Recessions tend to lead to higher unemployment among the young than the old. But older workers have more severe problems. As Naomi Cohn writes:
Like my readers, despite my persistence, I could not find a job. In all that time, I had about half a dozen interviews. Most of them were conducted by men who were significantly younger than me. Some of my interviewers asked questions that revealed their possibly unconscious age discrimination. One, for example, asked nonchalantly, “so, how old are your kids?” It was clear in most of the interviews that they were looking for someone with whom they would feel comfortable socially — and a fifty-two-year-old woman was not that person.
It’s also worth noting that there’s a special problem here in a non-recession context. If you look at the JOLTS data, it’s clear that even during periods of healthy growth, plenty of people get laid off. A recession doesn’t so much reflect a spike in people leaving their jobs as much as it does a collapse in new hiring. Indeed, people get so afraid to quit during a recession that quits + layoffs actually declines and the unemployment increase is on net entirely a matter of nobody getting hired:
So what’s the deal with these people who get laid off during a period of economic growth? Well, if you’re 25 and working in a low-level job at a firm that goes out of business because the managers made some bad decisions, then if there’s no recession you can probably just get a low-level job at some better managed firm that’s hiring. But if you’re 55, you probably get paid more than you did 30 years ago. That greater pay represents, in part, firm-specific knowledge and skills that you’ve developed. And now that you’ve been laid off due to firm mismanagement, the value of those skills has declined sharply and you’re only qualified for jobs that a younger, less-skilled person version of yourself would have been qualified for. But that younger-version of you wasn’t just less-skilled he was also younger, and it thus made more more sense for firms to invest in your training and skills. This gets even worse if you’re thinking about people who are victims of industry collapse rather than firm collapse. Being good at managing an evil soulless chain record store like HMV was a very valuable skill acquired through years of hard work, until suddenly it was nearly worthless.
To an extent, this is just the nature of life, and you wouldn’t want an economy in which mismanaged firms didn’t go out of business and technological change didn’t upend industries. But it does reflect one of the myriad problems with the idea of raising the Social Security age, an idea that’s curiously punitive to the worst-off and most unlucky people. What’s more, it highlights the case for some further expansion of the welfare state into some form of comprehensive wage insurance to mute the impact of these kind of shocks on ordinary people.