A coronavirus recovery: How to ensure older workers fully participate

by nyljaouadi1
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Key takeaways:

  • Because older workers are more likely to be unemployed for long periods, have work-limiting disabilities, and live in areas of the country that were struggling even before the crisis, policies aimed at addressing these problems will especially benefit these workers.
  • While infrastructure spending could help jump-start the post-pandemic recovery, policies must ensure that older workers participate in training and jobs programs related to these investments.
  • Regulatory protections for front-line workers, especially older workers and others at heightened risk for contracting or suffering serious consequences from contagious diseases, need to be strengthened and updated using lessons learned from the pandemic.
  • Employer-provided benefits result in spotty coverage and higher costs for older workers. The United States should catch up to other countries and provide sick leave, paid family leave, and health insurance through government programs rather than leaving these to the discretion of employers.

(See the companion blog post outlining steps needed to protect vulnerable older workers in the economic collapse caused by measures needed to combat the COVID-19 pandemic.)

Once the worst of the outbreak is over and social distancing measures are relaxed, policies to help older workers will be needed to ensure they share in the recovery.

Deficit-financed stimulus spending—needed to quickly bring the economy back to something approaching full employment—will help but not ensure broad-based prosperity. Policymakers also need to address power imbalances between employers and workers and target policies at disadvantaged workers, including unemployed older workers.

Older workers, as I discussed in my last blog post, may find it harder to get back in the job market after layoffs for a number of reasons. They may have health conditions that limit what they can do or they may feel forced to accept large pay cuts because some skills and knowledge they’ve built up aren’t transferable and may be undervalued by prospective employers. Absent policies to help these workers regain their footing, they may become “discouraged workers” who give up on the job search and retire before they’re ready to.

This post lays out a series of policies to address barriers to employment for unemployed older workers and to protect older workers from health and financial risks.

Consider policies to encourage employers to hire long-term unemployed workers

Older workers who lose their jobs in a recession are more likely to be unemployed for long periods. For example, a study of unemployed workers in the Great Recession found that only a third (34%) of adults ages 62 and older who lost jobs were reemployed within 12 months and only two-fifths (41%) were reemployed within 18 months. On average, an older worker’s chance of reemployment each month was about half that of the average worker age 25 to 34.

Policies to encourage employers to hire long-term-unemployed workers must be carefully assessed to gauge their effectiveness and minimize the negative impact on other workers. For example, enacting the Long-Term Unemployment Elimination Act would provide time-limited funding to local workforce development boards and community-based organizations to employ workers who have been unemployed for six months or more, along with providing other employment supports. Importantly, it includes provisions to discourage employers from displacing existing workers or rotating eligible workers through the program.

Currently, the Work Opportunity Tax Credit provides a targeted employment subsidy worth up to $6,000 for one year to employers who hire workers who receive government benefits, are disabled veterans, were previously incarcerated, participate in Vocational Rehabilitation programs, or are long-term unemployed.

Ensure older workers have a role in infrastructure projects

Low interest rates, unmet needs, and bipartisan support make it likely that infrastructure spending will play a role in stimulating the post-pandemic recovery. A Green New Deal and other infrastructure measures could help jump-start the economy and address the even bigger threat to human life and the global economy posed by global warming. However, we need to ensure that workers of all ages are trained and employed for this work. As a quick start, boosting transit funding, especially for buses and accessible transportation, could have multiple benefits for older workers, who are more likely than younger workers to be employed in the transportation sector. (Unless otherwise noted, all references to older workers’ employment shares are based on the author’s analysis of 2015–2017 American Community Survey microdata for workers ages 55–64.)

Another low-tech but effective way to reduce reliance on fossil fuels is rehabbing older housing to make it more energy efficient. Barriers to making these ultimately cost-saving investments, especially for low-income and elderly homeowners, include upfront costs, lack of information, and an understandable reluctance to have a work crew in one’s home. Though construction projects tend to favor younger workers, outreach efforts to overcome these barriers in communities where declining industries have left behind an aging workforce and a dilapidated housing stock could employ many lower-income older workers.

Other forms of job training and public investment, such as universal pre-K, should also take older workers into account. Many older workers currently work as teachers’ aides, and more could be trained to work in preschools.

Better target aid to hard-hit regions

More effective and better-targeted regional economic policies would also benefit older workers, who are more likely to be employed in declining industries and live in economically depressed areas. Unemployed older workers are often less able to relocate to find work because of family commitments and community ties. Homeowners in depressed areas may also have difficulty relocating if the value of their home has declined relative to the outstanding balance on their mortgage. Eligibility for some benefits, such as extended Supplemental Nutrition Assistance Program (SNAP) and unemployment insurance benefits, is partly based on regional economic indicators. These benefits are well targeted and should be expanded. However, the Opportunity Zones tax break enacted in 2017 with the stated goal of encouraging investment in low-income areas mainly benefits wealthy investors and contributes to gentrification.

Expand EITC benefits for workers without dependent children

Another overdue policy reform that could help older workers in the recovery is expanding eligibility for the Earned Income Tax Credit. The EITC in its current form depresses the earnings of older workers competing for the same jobs as workers with dependent children who are the main beneficiaries of the program, because supplementing the incomes of some low-paid workers allows their employers to pay lower wages. We should expand EITC eligibility and benefits for workers without dependent children, while increasing the minimum wage to offset the implicit subsidy the EITC provides to low-wage employers.

We should also consider expanding and promoting the Senior Community Service Employment Program, which provides temporary subsidies for training and employing low-income older workers. This program appears to have at least modest success at promoting longer-term employment.

Institute fair-hiring policies for formerly incarcerated people reentering the labor market

Among those workers who will face the greatest hurdles to employment are formerly incarcerated older Americans. Some states and counties have suspended bail and released prisoners early in response to the pandemic, and U.S. Attorney General William Barr has announced that more federal prisoners will be eligible for home confinement. These initiatives urgently need to be replicated around the country, especially for older prisoners who pose no threat to society. However, formerly incarcerated people reentering the labor market, whether on schedule or early, are doing so at the worst possible time. In addition to ensuring that economic stimulus measures are timely and sufficient to restore a tight labor market, we should promote fair hiring for people with arrest or conviction records.

Enhance use and enforcement of federal worker safety protections

The pandemic has laid bare the weakness of worker health and safety protections in the United States. Under the Trump administration, the Occupational Safety and Health Administration (OSHA) has failed to use even the weak powers at its disposal, let alone instituted an Emergency Temporary Standard for Infectious Disease to protect front-line workers in the pandemic. Protections for older workers, whistleblowers, and others at heightened risk need to be strengthened and updated to take into account lessons learned from the pandemic.

Protect and expand disability insurance and other social insurance programs

The vulnerability of older workers with underlying conditions in the COVID-19 pandemic should also serve as a caution against reforms aimed at moving beneficiaries off disability rolls and into the workforce, as the Trump administration proposed in its 2021 budget (though how the administration intended to accomplish this was unclear). Reforms to move people off of disability rolls are especially ill-advised in a weak labor market. Instead, we should increase access to benefits while expanding supports for workers with disabilities who are able to remain in the workforce.

Strict eligibility standards and a lengthy and complicated application and appeals process make it difficult for workers to access Social Security Disability Insurance benefits. Though SSDI applications are likely to rise sharply as more workers with disabilities lose their jobs, acceptance rates typically drop in recessions due to an increase in marginal applicants. Applicants with less education, language barriers, and transportation challenges are especially disadvantaged by the complicated application and appeals process. These barriers to access have only increased in recent years, contributing to a sharp drop in take-up over the past decade.

Many older workers with disabilities don’t even bother trying to apply for SSDI and simply apply for reduced Social Security retirement benefits at the early eligibility age of 62. This is disadvantageous, since disability benefits at any age are based on retirement benefits at the normal retirement age (currently 66), not benefits reduced for early retirement. Importantly, disabled workers who may be eligible for either type of benefit and can’t afford to wait to see if their disability application is accepted should apply for both disability and retirement benefits simultaneously. Beneficiaries who weren’t aware of this option or who developed a disability after applying for retirement benefits can still apply for disability benefits after the fact. The permanent closing of some Social Security offices and temporary closing of all offices during the pandemic make it less likely that applicants will be made aware of this option or of the potential financial advantage of delaying take-up of retirement benefits.

Some economists and policymakers are concerned that disability benefits may reduce labor force participation. However, expanding government supports for workers who remain in the workforce and removing obstacles to accessing benefits can encourage employers to hire older workers by reducing employer costs associated with accommodating workers with disabilities and by helping workers who develop health conditions that interfere with work exit the workforce. Even if improving access to benefits has a net negative effect on labor force participation, disability insurance is generally welfare-improving because it helps relatively healthy people who want to work find jobs while forcing fewer people in poor health to try to keep working.

Generally speaking, expanding social insurance programs like SSDI will tend to promote the hiring of older workers. The United States is unusual among advanced economies in its reliance on employers to provide health benefits and paid leave. Older workers are more expensive to insure and more likely to take short-term disability leave due to cancer and other illnesses associated with age, though younger workers take more time off for injuries, mental illness, and family caregiving. Social insurance such as Medicare for All and paid family leave would remove the cost of health care and paid leave from employer hiring decisions as well as shield older workers from high out-of-pocket costs.

Social insurance has many potential advantages over employer-provided benefits, including spreading costs over lifetimes, pooling risk widely, reducing incentives to deny coverage or care, and taking advantage of economies of scale and government bargaining power to restrain costs. If there is not the political will for large-scale expansions of social insurance such as Medicare for All in the aftermath of the pandemic, policymakers could take more incremental approaches, such as creating a public option or Medicare buy-in, to leave less of workers’ coverage to the discretion of employers and to minimize potential disincentives to hiring older workers.

Expand Social Security to forestall a looming retirement crisis

Even in a best-case scenario, the recession will likely result in more workers retiring earlier than planned. We should expand Social Security benefits and revenue to forestall a looming retirement crisis caused by the decline of secure employer pensions in favor of do-it-yourself 401(k) plans, among other factors. It’s worth noting that Social Security and traditional pensions act as automatic stabilizers when the economy is operating below capacity due to a decline in overall spending. Social Security and traditional pensions allow workers to retire regardless of economic conditions and inject needed funds into the economy. In contrast, 401(k)-style plans tend to exacerbate business-cycle gyrations.





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