How does age discrimination affect the economy?

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Market hearer Kim S. Stewart asked:

How does age discrimination over 50 affect the economy? And what corrections can be made from a political point of view to help with this?

Discrimination against older workers not only means billions in losses, it can also lead to a loss of GDP.

The advocacy group AARP published a study last year which found that biases against workers aged 50 and over increased nationwide Gross domestic product at an estimated $ 850 billion in 2018. The study also found that age discrimination could have resulted in wages and salaries of $ 545 billion for older workers that year.

According to the AARP, the annual loss could be $ 3.9 trillion by 2050.

Joanna Lahey, age discrimination expert and associate professor of economics at Texas A&M University, said that people who want to work but cannot find work or receive training generally result in a loss of economic productivity.

One belief Lahey has heard is that older workers should leave the workforce to pave the way for younger workers. She called it a mindset that adhered to the “Lump of work error” – the idea that increasing the number of workers decreases the work available for everyone else.

“You can have older workers in the economy and still have room for younger workers,” she said.

Patrick Button, assistant professor of economics at Tulane University, said older people who are discriminated against tend to retire early, which results in people drawing early on social security or applying for social security disability insurance.

“Either way, it’s going to put pressure on the social security system,” Button said. “Due to the aging of the population, there are more people who are withdrawing from social security than putting money into it.”

He noted that the Social Security Trust Fund expected to be used up by 2035.

When it comes to different areas, Button said that certain industries can be older than others.

“The tech industry is being berated for age discrimination,” he said, noting that some tech companies are making job requirements in favor of “technology natives,” meaning they are looking for younger workers.

Lahey found that age discrimination varies by gender and race. For white women, it starts at 35, she said, while for white men, 50 could be a “turning point”.

For black workers Age discrimination hits twice – when they start work and are about to retire.

Both Lahey and Button said our current laws do not fully address intersectional discrimination. Button noted that the Age Discrimination in Employment Act of 1967 naturally covers age, while Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sex, race, ethnicity, or nationality, among other things.

“Since gender and age are included in different laws, as well as different laws, it means that many courts do not allow you to bring a case of intersectional discrimination,” Button said. “So if you were to say, ‘I was intersectionally discriminated against because I am older and female,’ which is a very common occurrence, the courts would effectively say that you have to choose one.”

Button said some Supreme Court cases weakened the ADEA and increased the burden of proof employees must submit. To counter bias, Button said there could be changes to the law that reverse some of those decisions and allow people to bring intersectional cases.

One policy change proposed by Lahey is that the Federal Equal Opportunities Commission could screen large companies and punish those who discriminate on the basis of age when hiring.

The COVID-19 crisis has worsened economic conditions, with more than 82 million Americans Application for unemployment insurance since March 2020. The pandemic squeezed 1.1 million older employees (from 55 years of age) from the workforce, according to on a February report by the Schwartz Center for Economic Policy Analysis, Part of the New School for Social Research.

That report listed its own policy recommendations, including lowering the Medicare age to 50 and establishing an office for older workers that could formulate guidelines that would promote their well-being and improve their working conditions.

Button said there is a possibility that COVID-19 may have exacerbated age discrimination and may continue to do so because older people, who are more vulnerable, shouldn’t work during a pandemic.

He also noted that age discrimination was getting worse during recessions, when jobs are harder to come by.

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