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Barriers to Later Retirement: Increases in the Full Retirement Age, Age Discrimination, and the Physical Challenges of Work David Neumark and Joanne Song.

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Presentation on theme: "Barriers to Later Retirement: Increases in the Full Retirement Age, Age Discrimination, and the Physical Challenges of Work David Neumark and Joanne Song."— Presentation transcript:

1 Barriers to Later Retirement: Increases in the Full Retirement Age, Age Discrimination, and the Physical Challenges of Work David Neumark and Joanne Song

2 Goal of research: understand barriers to lengthening work lives, and how we might reduce them Supply-side policies to lengthen work lives may be less effective than we might think or hope Supply-side policies to lengthen work lives may be less effective than we might think or hope Demand-side barriers from age discrimination Demand-side barriers from age discrimination Increasing incidence of physical challenges to work at older ages Increasing incidence of physical challenges to work at older ages

3 Policy complementarities with increases in FRA? Research presented last year asked: Research presented last year asked: How do stronger state age discrimination protections influence the employment and benefit claiming responses of those “caught” by increases in FRA (62-65 and 65-FRA)? How do stronger state age discrimination protections influence the employment and benefit claiming responses of those “caught” by increases in FRA (62-65 and 65-FRA)? Most importantly – apply to smaller firms; larger damages Most importantly – apply to smaller firms; larger damages Answer: Especially for those above age 65, but also aged 62-65, stronger state age discrimination protections enhanced the impact of increases in the FRA on delaying retirement and remaining employed Answer: Especially for those above age 65, but also aged 62-65, stronger state age discrimination protections enhanced the impact of increases in the FRA on delaying retirement and remaining employed

4 Goals of new research Look at additional evidence on how age discrimination laws might have this complementary effect Look at additional evidence on how age discrimination laws might have this complementary effect Use HRS to develop a better understanding effects of physical challenges at work for those at ages affected (or to be affected) by increases in FRA Use HRS to develop a better understanding effects of physical challenges at work for those at ages affected (or to be affected) by increases in FRA Explore whether stronger age discrimination laws ease some of the tensions between lengthening work lives and physical challenges of older individuals Explore whether stronger age discrimination laws ease some of the tensions between lengthening work lives and physical challenges of older individuals

5 New evidence on labor market effects of state age discrimination laws (goal 1) What kinds of labor market transitions do older workers caught by increases in the FRA make, and how do age discrimination laws influence these transitions? What kinds of labor market transitions do older workers caught by increases in the FRA make, and how do age discrimination laws influence these transitions? Transitions to new jobs provide common route to remaining employed/delaying retirement for older workers (partial retirement or “bridge” jobs) Transitions to new jobs provide common route to remaining employed/delaying retirement for older workers (partial retirement or “bridge” jobs) Responding to FRA by moving to new job likely to provide more scope for lengthening work lives Responding to FRA by moving to new job likely to provide more scope for lengthening work lives But age discrimination laws may be especially ineffective at reducing hiring discrimination But age discrimination laws may be especially ineffective at reducing hiring discrimination So is response to higher FRA to stay in same job or move to new job? Do stronger age discrimination laws make transitions to new jobs easier? So is response to higher FRA to stay in same job or move to new job? Do stronger age discrimination laws make transitions to new jobs easier?

6 Physical challenges at work for those at ages affected by increase in FRA (goal 2) How do older workers at ages affected by increases in FRA respond to physical challenges of work? How do older workers at ages affected by increases in FRA respond to physical challenges of work? Do they leave the workforce, take other jobs, become self-employed? Do they leave the workforce, take other jobs, become self-employed? Are they able to mitigate physical challenges at work, either by changing jobs or via changes at the current employer? Are they able to mitigate physical challenges at work, either by changing jobs or via changes at the current employer? Questions important because efforts to delay retirement create some tensions with the increasing physical challenges of work for some older people Questions important because efforts to delay retirement create some tensions with the increasing physical challenges of work for some older people Part of motivation for this analysis is to identify channels of accommodation of physical challenges, so we can then test impact of age discrimination laws Part of motivation for this analysis is to identify channels of accommodation of physical challenges, so we can then test impact of age discrimination laws

7 State age discrimination laws and physical challenges at work (goal 3) Because ages for which we are trying to increase employment are strongly associated with rising incidence of physical challenges … Do stronger age discrimination laws influence the ability of older workers facing physical challenges at work to remain employed? If so, how? Because ages for which we are trying to increase employment are strongly associated with rising incidence of physical challenges … Do stronger age discrimination laws influence the ability of older workers facing physical challenges at work to remain employed? If so, how? Relates to first question of whether age discrimination laws act mainly to extend employment with the current employer, or move to new jobs; but now puts this together with the role of physical challenges and mitigation of them Relates to first question of whether age discrimination laws act mainly to extend employment with the current employer, or move to new jobs; but now puts this together with the role of physical challenges and mitigation of them Begins to get at question of whether policy can help older workers remain at work while accommodating physical challenges; fuller analysis left for future research that also studies state disability protections Begins to get at question of whether policy can help older workers remain at work while accommodating physical challenges; fuller analysis left for future research that also studies state disability protections

8 Data HRS original cohorts plus a couple additional birth cohorts provide right window (ages and periods) and information to address these questions HRS original cohorts plus a couple additional birth cohorts provide right window (ages and periods) and information to address these questions Data set captures first six birth cohorts ( ) affected by increases in FRA, up to 65 and 10 months (HRS through 2008, because 2010 files with state identifiers not yet available) Data set captures first six birth cohorts ( ) affected by increases in FRA, up to 65 and 10 months (HRS through 2008, because 2010 files with state identifiers not yet available) Extensive work with data to capture labor market transitions; focus on hiring, including determination of whether hire occurred between the interviews Extensive work with data to capture labor market transitions; focus on hiring, including determination of whether hire occurred between the interviews Detailed information in HRS about physical demands of jobs (and physical limitations of workers, in analyses not reported) Detailed information in HRS about physical demands of jobs (and physical limitations of workers, in analyses not reported) Compendium of state age discrimination laws Compendium of state age discrimination laws Variation across states is central to our identification Variation across states is central to our identification

9 Transitions of those caught by increases in FRA Current wave (t) Previous wave (t-2) Employed (same employer) Employed (different employer) Self- employedNot working Employed Caught by increase in FRA, Age ≥ * (0.047) ** (0.027) (0.019) (0.042) Caught by increase in FRA, Age (0.022) (0.014) (0.008) (0.020) N=12,389 Self-employed Caught by increase in FRA, Age ≥ 65 n.a ** (0.034) (0.062) (0.057) Caught by increase in FRA, Age n.a * (0.019) * (0.031) (0.027) N=4,499 Not working Caught by increase in FRA, Age ≥ 65 n.a * (0.019) (0.018) (0.026) Caught by increase in FRA. Age n.a (0.013) (0.009) (0.015) N=11,723

10 Simple response to increase in FRA is to remain at current job Those 65+ and caught by increase in FRA are more likely to remain at their current employer, or in self-employment, and less likely to move to other jobs (or to become non-employed) Those 65+ and caught by increase in FRA are more likely to remain at their current employer, or in self-employment, and less likely to move to other jobs (or to become non-employed) May reflect very short-term nature of “adjustment” needed to work until FRA – in our sample period a matter of months – may not be worth cost/risk of changing jobs May reflect very short-term nature of “adjustment” needed to work until FRA – in our sample period a matter of months – may not be worth cost/risk of changing jobs Could also reflect difficulty of changing jobs (or becoming re-employed), perhaps because of age discrimination in hiring Could also reflect difficulty of changing jobs (or becoming re-employed), perhaps because of age discrimination in hiring Note that these kinds of effects may be less conducive to significant lengthening of work lives Note that these kinds of effects may be less conducive to significant lengthening of work lives

11 Effects of age discrimination protections on transitions of those caught by increase in FRA Employed (wage & salary or self- employed) at t-2 Employed (wage & salary) at t-2 Not employed at t-2 Not employed at t-2 Any employment at t Employed (wage and salary, different employer) at t Any employment at t Wage & salary employment at t Self- employed at t Caught by increase in FRA, Age ≥ 65 × Lower firm size * (0.070) (0.053) ** (0.049) ** (0.036) (0.035) Caught by increase in FRA, Age × Lower firm size (0.033) (0.029) (0.031) (0.027) (0.018) Caught by increase in FRA, Age ≥ 65 × Stronger remedies (0.076) *** (0.052) (0.054) (0.041) (0.037) Caught by increase in FRA, Age × Stronger remedies (0.035) (0.029) (0.033) (0.027) (0.020) N17,00612,38911,

12 More detailed look at hiring Based on employment status at waves t-2 and t Incorporating information inter- wave information Hired between waves t-2 and t Hired between waves t-2 and t Caught by increase in FRA, Age ≥ 65 × Lower firm size * (0.028) * (0.035) Caught by increase in FRA, Age × Lower firm size (0.018) (0.022) Caught by increase in FRA, Age ≥ 65 × Stronger remedies ** (0.029) (0.037) Caught by increase in FRA, Age × Stronger remedies (0.018) (0.023) N28,72928,230 Hiring rate Overall Age < ≤ Age < Age ≥

13 Age discrimination protections boost job transitions of those caught by increase in FRA For those age 65+ caught by increase in FRA, stronger state protections increase likelihood that For those age 65+ caught by increase in FRA, stronger state protections increase likelihood that Employed remain employed Employed remain employed Non-employed become employed (lower firm size) Non-employed become employed (lower firm size) Employed move to new employers (stronger remedies) Employed move to new employers (stronger remedies) Higher probability of a hire Higher probability of a hire So age discrimination protections appear to increase employment via hiring of older workers 65+ caught by increases in FRA – who otherwise tend to respond by staying with same employer or staying non-employed So age discrimination protections appear to increase employment via hiring of older workers 65+ caught by increases in FRA – who otherwise tend to respond by staying with same employer or staying non-employed Hiring evidence unsettled – test of differential effects of lower firm size cutoff at small vs. large firms does not corroborate evidence Hiring evidence unsettled – test of differential effects of lower firm size cutoff at small vs. large firms does not corroborate evidence Research getting started uses experience of Great Recession to provide independent evidence on the effects of state age discrimination laws on employment and employment dynamics of older workers Research getting started uses experience of Great Recession to provide independent evidence on the effects of state age discrimination laws on employment and employment dynamics of older workers

14 Effects of physical demands on employment transitions Current wave (t) Employed at previous wave (t-2) Employed (same employer) Employed (different employer)Self-employedNot working Age ≥ 62 and < 65 × Any physical demand (0.023) (0.014) (0.008) (0.019) Age ≥ 65 and < 66 × Any physical demand (0.042) (0.027) (0.015) (0.038) Age ≥ 66 × Any physical demand *** (0.025) (0.014) (0.010) *** (0.022) N 12,052 Here we expand age categories Here we expand age categories Previous analysis focused on those whose FRA increased Previous analysis focused on those whose FRA increased Now we focus as well on those for whom FRA will increase Now we focus as well on those for whom FRA will increase

15 Effects of physical demands on employment transitions Current wave (t) Employed at previous wave (t-2) Employed (same employer) Employed (different employer)Self-employedNot working Age ≥ 62 and < 65 × Any physical demand (0.023) (0.014) (0.008) (0.019) Age ≥ 65 and < 66 × Any physical demand (0.042) (0.027) (0.015) (0.038) Age ≥ 66 × Any physical demand *** (0.025) (0.014) (0.010) *** (0.022) Selected results for specific demands Age ≥ 66 × Lots of physical effort *** (0.026) (0.015) (0.010) *** (0.022) Age ≥ 65 and < 66 × Lifting heavy loads (0.057) *** (0.023) (0.014) (0.054) Age ≥ 66 × Lifting heavy loads ** (0.033) ** (0.018) (0.013) *** (0.030) Age ≥ 62 and < 65 × Stooping, kneeling, or crouching ** (0.025) (0.016) (0.008) * (0.021) Age ≥ 66 × Stooping, kneeling, or crouching *** (0.028) (0.016) (0.011) *** (0.025) N 12,052

16 Effects of physical demands on employment transitions Workers age 66+ (and less so 62-66) in physically-demanding jobs less likely to remain at same employer, more likely to leave employment Workers age 66+ (and less so 62-66) in physically-demanding jobs less likely to remain at same employer, more likely to leave employment

17 Mitigation of physical demands Current wave (t) Employed Employed, different employer Employed, same employer Employed at previous wave (t-2) Less physically- demanding job Age ≥ 62 and < 65 × Any physical demand *** (0.018) * (0.069) ** (0.016) Age ≥ 65 and < 66 × Any physical demand *** (0.038) (0.130) *** (0.041) Age ≥ 66 × Any physical demand *** (0.022) (0.091) *** (0.023) N9,7531,1728,089

18 Mitigation of physical challenges Current wave (t) Employed Employed, different employer Employed, same employer Employed at previous wave (t-2) Less physically- demanding job Age ≥ 62 and < 65 × Lifting heavy loads (0.028) *** (0.090) (0.025) Age ≥ 65 and < 66 × Lifting heavy loads (0.061) *** (0.179) (0.062) Age ≥ 66 × Lifting heavy loads *** (0.035) ** (0.122) *** (0.037) N9,7531,1728,089

19 Mitigation of physical challenges Workers 62-65, 65, and 66+ who stay employed are more likely to report declines in physical demands of jobs than younger workers, suggesting some mitigation/accommodation Workers 62-65, 65, and 66+ who stay employed are more likely to report declines in physical demands of jobs than younger workers, suggesting some mitigation/accommodation For those aged 65+ this occurs for those remaining at same employer, whereas year-olds do this mainly via switching employers For those aged 65+ this occurs for those remaining at same employer, whereas year-olds do this mainly via switching employers Results similar for other specific demands, except lifting heavy loads, which for all three age groups is mitigated by moving to other jobs Results similar for other specific demands, except lifting heavy loads, which for all three age groups is mitigated by moving to other jobs So older workers in ranges that are or will be affected by increases in FRA are in some cases able to mitigate physical demands of jobs So older workers in ranges that are or will be affected by increases in FRA are in some cases able to mitigate physical demands of jobs

20 Age discrimination protections and employment transitions of those with physical challenges Current wave (t) Employed at previous wave (t-2) Employed (same employer) Employed (different employer) Self- employedNot Working Age ≥ 62 and < 65 × Any physical demand × Lower firm size cutoff (0.048) (0.031) (0.016) (0.040) Age ≥ 65 and < 66 × Any physical demand × Lower firm size cutoff (0.085) (0.054) (0.031) (0.077) Age ≥ 66 × Any physical demand × Lower firm size cutoff (0.051) (0.030) (0.019) (0.044) Age ≥ 62 and < 65 × Any physical demand × Stronger remedies (0.051) (0.032) (0.016) (0.042) Age ≥ 65 and < 66 × Any physical demand × Stronger remedies (0.090) (0.056) (0.028) (0.083) Age ≥ 66 × Any physical demand × Stronger remedies (0.053) *** (0.030) (0.020) (0.045) N12,052

21 Age discrimination protections and mitigation of physical challenges Employed Employed, different employer Employed, same employer Employed at previous wave (t-2) Less physically- demanding job Age ≥ 62 and < 65 × Any physical demand × Lower firm size cutoff (0.036) (0.144) (0.034) Age ≥ 65 and < 66 × Any physical demand × Lower firm size cutoff (0.077) * (0.283) (0.080) Age ≥ 66 × Any physical demand × Lower firm size cutoff * (0.042) (0.187) (0.045) Age ≥ 62 and < 65 × Any physical demand × Stronger remedies (0.038) (0.154) (0.035) Age ≥ 65 and < 66 × Any physical demand × Stronger remedies (0.078) (0.276) (0.082) Age ≥ 66 × Any physical demand × Stronger remedies (0.044) * (0.179) (0.046) N9,7531,1728,089

22 Age discrimination protections and employment transitions of those with physical challenges Essentially no consistent evidence that stronger age discrimination protections alter labor market transitions of those with physically-demanding jobs Essentially no consistent evidence that stronger age discrimination protections alter labor market transitions of those with physically-demanding jobs Also true if we look at specific demands Also true if we look at specific demands Mixed evidence on whether age discrimination laws appear to increase mitigation of physical demands at work Mixed evidence on whether age discrimination laws appear to increase mitigation of physical demands at work Some estimates suggest they increase likelihood of reduction in physical demands, in some cases for those changing employers Some estimates suggest they increase likelihood of reduction in physical demands, in some cases for those changing employers Other evidence points in opposite direction Other evidence points in opposite direction Cannot draw firm conclusions, and same is true thinking of other ways to use these data and data on physical limitations Cannot draw firm conclusions, and same is true thinking of other ways to use these data and data on physical limitations Some of our cells get very small Some of our cells get very small

23 Policy implications Some strengthening of conclusions that stronger state age discrimination laws can enhance effects of supply-side reforms to lengthen work lives Some strengthening of conclusions that stronger state age discrimination laws can enhance effects of supply-side reforms to lengthen work lives Increase likelihood of remaining employed at same or different employer, or becoming employed Increase likelihood of remaining employed at same or different employer, or becoming employed Some evidence that hiring of those affected by increase in FRA is increased, which may imply these laws do more than just enable older workers to hang onto their jobs a little longer Some evidence that hiring of those affected by increase in FRA is increased, which may imply these laws do more than just enable older workers to hang onto their jobs a little longer But then evidence gets murkier But then evidence gets murkier Evidence on hiring and age discrimination laws not crystal clear Evidence on hiring and age discrimination laws not crystal clear Evidence doesn’t establish that age discrimination laws help those with physical challenges to find accommodations in labor market Evidence doesn’t establish that age discrimination laws help those with physical challenges to find accommodations in labor market In raising retirement age, we clearly want to know more about implications for workers with physical challenges, and how we might ease the burden of employment In raising retirement age, we clearly want to know more about implications for workers with physical challenges, and how we might ease the burden of employment

24 Future work Because older individuals much more likely to have physical disabilities, we need to think about disability discrimination laws as well as age discrimination laws, to better characterize the legal environment Because older individuals much more likely to have physical disabilities, we need to think about disability discrimination laws as well as age discrimination laws, to better characterize the legal environment Different in potentially important ways Different in potentially important ways Laws vary in important ways across states, including definitions of disability and unlimited damages Laws vary in important ways across states, including definitions of disability and unlimited damages Disability laws require accommodation – so harder to fight claims based on costs of employment Disability laws require accommodation – so harder to fight claims based on costs of employment Because older workers may develop disabilities, strong disability laws could deter hiring older workers even before they have disabilities/physical challenges Because older workers may develop disabilities, strong disability laws could deter hiring older workers even before they have disabilities/physical challenges Beginning to look at this – longer-term project Beginning to look at this – longer-term project


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