Bias Against Older Women Collides With Policy to Extend Retirement

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By Joyce E. Cutler

Hiring discrimination, especially against older women, limits the effectiveness of policies driving older workers to work longer, the Federal Reserve Bank of San Francisco said.

An aging population and the consequent increased financial burden on the Social Security system are driving new proposals for program reform, the bank said in an economic letter Feb. 27.

“It’s better for society to have people not as reliant on Social Security benefits because they are able to make a living,” Jessica Stender, Equal Rights Advocates senior staff attorney, told Bloomberg BNA.

Yet the supply-side reforms that encourage people to work longer may be thwarted by age discrimination in labor markets.

“This potential for age discrimination can be doubly problematic: If businesses don’t respond to the policy-induced larger labor supply by hiring older workers, it could lead to even harsher policy reforms for seniors with more adverse effects on older workers who are not actively seeking to work longer,” the bank said in its letter, “Age Discrimination and Hiring of Older Workers.”

The share of seniors 65 and older in the U.S. working-age population is projected to rise from about 19 percent now to 29 percent in the year 2060, approaching equality with the shares of workers aged 25-44 and 45-64, according to the report.

‘Clear Evidence’ of Discrimination

“There’s clear evidence there’s discrimination at this point in time,” David Neumark, an economics professor at the University of California Irvine and director of the Economic Self-Sufficiency Policy Research Institute, told Bloomberg BNA.

“We also know employment of older workers has gone up” as a result of possibly less age discrimination, better health and workers slammed during recession, among other hypotheses, he said. “You would think large old cohorts realize they need these folks.” Neumark co-wrote the federal bank report, along with Tulane economics assistant professor Patrick Button and UCI doctoral student Ian Burn.

Researchers created realistic, fictitious resumes for 40,000 job applicants–young, aged 29-31, middle-aged, 49-51, and older, 64-66, the bank report said. The fake resumes were submitted for job categories that employ large numbers of fairly low-skilled workers of all ages and do at least some hiring of both older and younger workers. Call-back rates were highest for younger workers, the bank said.

Older women applicants had a 47 percent lower call-back rate for administrative jobs and a 36 percent lower call-back rate for sales jobs, the letter said. Older male applicants in sales, security and janitorial jobs had lower call-back rates in general.

Supply-Side Policies Alone Insufficient

“We do not have evidence on why age discrimination may be worse for older women, but it could be because applicant appearance matters in our sample of low-skilled jobs, and the effects of aging on physical appearance are evaluated more harshly for women than for men,” the letter’s authors said, citing research from 1986.

“If age discrimination is particularly severe for older women, then using supply-side policies alone to induce later retirement may mainly reduce older women’s retirement benefits without doing much to increase their employment,” the report said.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at JCutler@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

For More Information

The San Francisco bank's letter is at http://src.bna.com/mxk.

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