Employment at Older Ages

As unemployment surged during the Great Recession and subsequent recovery, older workers were less likely than their younger counterparts to lose their jobs. However, unemployed workers in their fifties were about a fifth less likely than those age 25 to 34 to become reemployed between 2008 and 2011, and they experienced steep wage losses. Median hourly earnings for reemployed workers age 51 to 61 were 21 percent lower on the new job than the prelayoff job, compared with only 7 percent for those age 25 to 34. These declines may reflect lost productivity or employer reluctance to hire older workers.

The recession has increased joblessness among older Americans. These graphs and tables report unemployment rates and how they have varied by age, sex, race, and education since 2007.

After peaking in the wake of the Great Recession, Social Security retirement and disability awards fell in 2011 as the economy improved. Only 27 percent of Americans age 62 and older began collecting retirement benefits that year, the lowest take-up rate since 1976. Disability applications and awards remained unusually high, however. In 2011, 18.9 insured workers per 1,000 applied for Social Security disability benefits, more than in any year except 2010. The surge in disability applications and awards exacerbated Social Security’s financial problems.

Social Security claiming behavior matters because early claimants receive lower monthly benefits for the rest of their lives. Early claiming fell over the past decade, after increasing over the previous 10 years. However, high unemployment encourages early claiming by less-educated men. A 1 percentage point increase in the state unemployment rate is associated with a 0.4 percentage point increase in the monthly claiming probability by men who never attended college, implying that the Great Recession boosted their claiming rates by about 40 percent. In contrast, claiming behavior by women and well-educated men is not significantly correlated with the unemployment rate.

Unemployed workers participate in various temporary assistance programs. They are also more likely to apply for Disability Insurance (DI) and Supplemental Security Income (SSI), growing programs with large costs. Temporary benefits can both increase and decrease probabilities of re-employment and application for DI/SSI. When controlling for selection bias, we find evidence that increased access to unemployment benefits reduces applications for DI, while increased access to food benefits increases applications for SSI. These results suggest that applications for DI/SSI are sensitive to participation in temporary assistance programs, and that increased access to unemployment is less costly than it may appear.