Recession and Employment: How Will Older Workers Fare During The Next Recession?

Economic recessions significantly affect people’s employment status: The growth in labor force participation slows, unemployment rates increase, and unemployed workers are more likely to drop out of the labor market. Economic recessions also have negative effects on job quality and job transition patterns. Because nearly 24% of workers in the United States will be over the age of 55 years by 2020, it is important to examine the extent to which these outcomes will be better or worse for older workers.  Are older workers more or less likely to maintain their jobs during recessions? And even if they are able to hold onto their jobs, do their working conditions improve or worsen?

In a recent study published in the European Journal of Ageing, my coauthors and I investigated these questions. We used data from SHARE, a nationally representative survey on health, employment, and social conditions of Europeans ages 50 years and up. The data focused on almost 5,000 50- to 70-year-olds from 13 countries who had enrolled in the study at least twice: before and after the 2008–2009 recession. They were in the labor market (employed, self-employed, or unemployed) when they first participated and we tracked their employment status (employed/unemployed/retired) as well as job quality indicators: hours worked per week, employment security, satisfaction with salary, prospects for job advancement, and job satisfaction. Our aim was to examine the extent to which economic changes related to the 2008–2009 recession were associated with employment status and job quality indicators among older workers.

We found that country-wide economic recessions were associated with negative employment outcomes for older workers.  For example, decreases in gross domestic product were associated with an increase in the likelihood of being unemployed and a decrease in the likelihood of being retired. Moreover, an increasing country-level unemployment rate had a significant effect on job quality such that there appeared to be fewer prospects for job advancement and less job security. In somewhat of a surprise, higher unemployment rates were associated with greater job satisfaction.

Although previous studies have shown that people who were able to retain their jobs in the midst of layoffs—e.g., “dismissal survivors”—experienced less job and life satisfaction, using these country-level unemployment rates, we found that these survivors actually experienced greater job satisfaction, probably because they were able to hold onto their jobs when others were fired or laid off.

We also found that sociodemographic and health-related characteristics influenced older workers’ employment conditions following the recession: Compared to adults ages 50–55, respondents ages 55–60 were more likely to be employed or unemployed (i.e., not retired); however, respondents ages 65–70 were less likely to be employed or unemployed, and more likely to be retired. Good health was associated with a better chance of being employed.

We found that civil servants had a greater likelihood of being employed and a lower likelihood of being unemployed or retired. They also had better prospects for job advancement and better job security.

Longer tenure was associated with a higher likelihood of being employed and a lower likelihood of being unemployed or retired. It was also associated with an increased number of hours worked per week, greater job security, and more satisfaction with salary.

Additionally, we found that being in the higher income quintile was associated with more hours worked per week, better prospects for job advancement, better job security, and greater job satisfaction and salary satisfaction.

These findings are important, because country-level indicators aren’t easily influenced, but sociodemographic factors related to employment or health can be changed by policy measures, and through them limit negative employment and job quality outcomes following a recession.

For example, since our results reveal that better health conditions at older ages and being a civil servant can diminish negative employment consequences, healthcare to maintain older workers’ employability or encouraging older workers to work in the public sector may minimize the worst blows of a recession: unemployment, inadequate salary, low job satisfaction, low job security, and poor prospects for job advancement.

Our findings also suggest that policy measures need to take into account these workers’ unique needs and allocate resources during recessions to help moderate or mitigate potential negative employment consequences among those older workers who are more vulnerable and exposed to a recession’s impact on the labor market.