Retirement And The Laws To Help Older Workers

A look at certain statutes with unintended consequences.

“Ageism in the Workplace” is the cover feature of the February 2020 AARP Bulletin. Tales are told of older workers mistreated or axed, and of their sometimes victorious lawsuits.

One must feel some pity for winners of age discrimination lawsuits. What prospective employer would ever invite them in for an interview?

And there should be sorrow for the older workers who never sued over a job but can’t get anybody to look at their résumés. Same reasoning from the personnel department: We better not hire this 54-year-old. What if she doesn’t work out?

An article in the New York Times last summer headlined “New Evidence of Age Bias in Hiring, and a Push to Fight It” informs us that people find it hard to land a job after they turn 50, or even 40. “Workers over 50 — about 54 million Americans — are now facing much more precarious financial circumstances, a legacy of the recession,” the article pleads.

In both of these accounts, there’s an undercurrent of “There ought to be a law!” Or else, “These anti-discrimination laws have to be made a lot tougher.”

But do such laws help?

Consider the parallel matter of forbidding discrimination against job applicants who are disabled. The following note appeared at Overlawyered.com, a site that has done much over the years to highlight legislation that backfires on the intended beneficiaries:

“The Americans with Disabilities Act was supposed to improve the employment outlook for disabled persons, but instead their participation in the labor force has plunged steeply since the act’s passage compared with that of the able-bodied.”

That was published a long while ago, but I’d bet it’s just as true today. Give members of some protected class an avenue for litigation and employers will avoid them. This may explain the difficulties confronted by unemployed 50-year-olds.

The problem with age discrimination laws is that they bump up against reality. Baseball players peak at 24, programmers at 40, airline pilots at 58. Which means that workers still clinging to jobs in their 60s and 70s are overpaid.

And so every retirement is a potential conflict. The 60-year-olds sitting on well-deserved raises earned in their 40s are now uneconomic. How to get rid of them?

One strategy is to hire a bunch of 25-year-olds and then, at the first hint of declining revenues, undertake a mass firing. Two of the youngsters are let go for every overpaid oldster, so the oldsters have a weak case. But this is not a good system for either the young or the old victims.

A friend of mine, a partner at a management consulting firm, was sent packing at 60. No legal case here, for this was foreordained in the partnership agreement. Nor is this fellow likely to appear in a Times story about the destitute.

But surely the consulting firm has not found an economically optimal arrangement. Why aren’t there mechanisms to let workers wind down between 60 and 70? An awful lot of skill and wisdom is going to waste.

The ambitious laws forbidding discrimination against the aged and the disabled are part of a larger phenomenon, which is the effort to improve the lot of workers by edict. The same AARP publication that talks about ageism highlights a Nevada law requiring large employers to offer paid leave that can be used for caregiving. Sounds nice.

Axiom: Any worker benefit mandated by the legislature increases the compensation of workers by the amount of the benefit.

No economist would agree with that. But you will get a buy-in from many a politician, and from any senior-citizen lobby whose value depends on the displacement of free markets by statute books.

I have a two-part plan to help older workers.

The first part is a cultural change that would take a long time. It should be customary for every salary to be automatically reduced 3% a year beginning when a worker turns 55. An employer who needed to hang onto an older worker would be free to counteract the decrease with a merit raise, but such raises would be neither common nor expected.

The second could be implemented tomorrow. Repeal age discrimination laws.

From the Overlawyered archives

AARP magazine

Times story

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