When the jobs report for November was released last week, it was hailed by some politicians and mainstream media as good news. The unemployment rate dropped from 9 percent to 8.6 percent and the number of jobs increased by 120,000.
Sounds promising, right? Well, not so fast. That 120,000 rise in the number of jobs barely covers new entries into the workforce and one of the major reasons the jobless rate fell is that 315,000 unemployed simply gave up – stopped looking for work – and have been added to the 5.7 million officially classified as long-term unemployed.
In addition, it was not widely reported that the unemployment news for elder workers is terrible. From Motoko Rich in The New York Times:
”More than half of all unemployed workers 45 to 54 years old have been out of work for six months or more, and among unemployed 55-to-64-year-olds, close to 60 percent have been searching for work for more than six months.
“People in the older of these two groups are worse off than they were a year ago. The median duration of unemployment rose from 36.6 weeks a year ago to 42.7 weeks this November.
“The younger of the two groups is slightly better off; its median duration of unemployment fell to 27.9 weeks, down from 30.2 weeks a year ago.”
Don’t forget that those weeks of unemployment are average; some older workers have been out of work for years but whether short-term or long, the consequences will have a negative impact on the rest of their lives, circumstances from which they will never recover even if they find work.
Most laid off workers who had health coverage through their employers are allowed continue it for 18 months via COBRA – that is, if they can afford the premiums. But later, anyone who still out of work after a year-and-a-half is unlikely to be in a position to purchase coverage at open market prices.
Medicare is no help yet. Except in a few specific instances unrelated to employment status, it is unavailable to anyone until age 65, so many must go without health care and live in constant fear of an accident or illness.
I have some personal experience with this. For the several months until I would turn 65 after my COBRA expired, I could not buy health coverage at any price. More than a dozen insurance companies dismissed me out of hand as soon as they heard I was 64. Imagine being in that position with needed medications or regular checkups for yourself, a spouse or children, with no income and no coverage.
There are many older, unemployed workers living like this; some will die prematurely though no one will attribute their deaths to lack of a single-payer system that covers everyone.
Unemployment insurance does not and was never designed to cover all living expenses. It doesn’t take more than a few weeks for most newly unemployed to begin dipping into their retirement savings to pay the bills and for older workers, this happens just at the time in life when many have accelerated their contributions to 401(k)s and other savings programs in anticipation of retiring in five or ten years.
There are stories all over the Web of people who have maxed out their retirement savings and, often, have racked up big balances on credit cards just to stay afloat. They will rely entirely on Social Security in their retirement, even the ones who were diligent in planning and saving.
MORTGAGE AND HOME
Many older workers relied on the growing value of their home as one kind of investment for their retirement. Until the housing crash, they intended to sell the house, pay off what was left of the mortgage and downsize.
Now, many cannot sell because their home is worth less than the remaining mortgage. Others are losing their homes to foreclosure when savings are depleted and they can’t keep up the payments. So – no job, no savings, no home.
This is the most insidious consequence of high unemployment for elder workers that few politicians and policy wonks have considered.
Workers who, due to unemployment, are forced into taking early Social Security benefits, which can be done beginning at age 62, will see their monthly payment dramatically reduced for the rest of their lives.
Plus, there is a second strike against them and even against those who can hold out until they are eligible for the full benefit: their payment will be reduced further because they were not working during what are, usually, their highest earning years.
Here is how that happens. A person’s starting Social Security benefit amount is calculated based on lifetime earnings – an average of the 35 years during which the worker earned the most. A formula is then applied to determine the basic benefit from which all future COLA increases, for example, will be determined. The only way to increase the basic benefit is to retire at a later date.
So all this is a quadruple whammy for older workers: declining health when there is no money for doctors; depletion of retirement savings; loss of home; and permanently reduced Social Security benefits.
As terrible as unemployment is for young workers and new college graduates, they do have the rest of their lives to plan for their old age. Not so for those who are older than 45 or 50. Any who are unemployed for longer than a year will never catch up.
Even though it is illegal, age discrimination in the workplace happens every day and it is almost impossible to prove. Many companies are refusing to hire workers who are unemployed. As a result, there are unknown numbers of people in the upper age groups who will never work again and those who do rarely match their previous salaries.
Unless there is suddenly such a abundance of work that employers don’t care about these things, hundreds of thousands of people face a bleak old age. It would not have been this way without the bankers who brought the economy to its knees and continue to stuff their pockets with stolen money. Yet, none have been indicted.
Worse, Congress is fighting over the payroll tax holiday this week. Hardly mentioned is that if they do not act by 31 December, two million unemployed will lose their benefits in January along with three times as many later in the year.
You can read some real-life stories of older unemployed workers at a website called Over 50 and Out of Work and more stories from people of all ages at the AFLCIO website. I urge you to do so.
At The Elder Storytelling Place today, Terry Hamburg: From Sweet to Sour Notes