The Great Recession, the Social Safety Net, and Economic Security for Older Americans Richard W. Johnson and Karen E. Smith Urban Institute Presented at the 17 th Annual RRC Conference August 7, 2015

How Did the Great Recession Affect Older Adults? We examine trends in labor force statistics, income, wealth, Social Security claiming behavior compare outcomes in various datasets We model Social Security claiming behavior use administrative data from 1980 to 2011 linked to household surveys

How Did Unemployment Affect Older Workers and Their Families during the Great Recession and Recovery? We measure: unemployment time to reemployment earnings income level and source poverty How effective were various types of insurance and income supports? unemployment insurance retirement and disability benefits other income supports (SNAP) family (spousal earnings) Compare outcome by age, before and after recession

Measuring Unemployment Restrict sample to adults ages 25+ who were employed for at least one full month in first 6 months of survey requires fairly strong attachment to labor force workers younger than 25 are excluded Unemployment spell begins when a worker has been (1) out of work and (2) on layoff or looking for work for an entire month more stringent criteria than official unemployment rate Unemployment spell continues until worker receives earnings captures discouraged workers

Survey of Income and Program Participation SIPP interviews respondents every 4 months We track workers for 45 months before and after the recession Before: 2004 panel (Jan – Sept. 2007) After: 2008 panel (Aug – April 2012) Compare outcomes by age 25 – – – Focus on long-term unemployed workers out of work for at least 6 months

The Recession Substantially Increased the Likelihood of a Long-Term Unemployment Spell Source: 2008 SIPP panel.

Younger Workers Were More Likely than Older Workers to Become Unemployed During the Recession and Recovery Source: 2008 SIPP panel.

Older Unemployed Workers Spent More Time out of Work than Their Younger Counterparts Source: 2008 SIPP panel.

Unemployment Spells Were Nearly Twice as Likely to Last 12+ Months after the Start of the Recession as Before Source: 2008 SIPP panel.

Yet, Long-Term Unemployed Workers Were Less Likely to Become Impoverished during the Recession Source: 2008 SIPP panel.

Unemployment Insurance Extensions Substantially Increased the Program’s Reach during the Recession Source: 2008 SIPP panel.

Unemployment Benefits Still Generally Replace Less than Half of Lost Earnings Source: 2008 SIPP panel.

Supplemental Nutrition Assistance Program Benefits and Other Government Help Became More Common at Older Ages Source: 2008 SIPP panel.

Spousal Earnings Protected Many Long-Term Unemployed Workers Ages 62+ during the Recession Source: 2008 SIPP panel.

Single Long-Term Unemployed Workers Are Much More Likely to Fall Into Poverty than Their Married Counterparts Source: 2008 SIPP panel.

Retirement and Disability Benefits Helped Fewer Older Unemployed Workers than in the Past Source: 2008 SIPP panel.

Many Unemployed Workers Suffered Large Earnings Losses When They Became Reemployed during the Recession Source: 2008 SIPP panel.

Conclusions Unemployment insurance extensions expanded the program’s reach during the Great Recession and its aftermath helped keep the poverty rate relatively low Spousal earnings protected many workers who lost their jobs Social Security kept many unemployed workers ages 62+ out of poverty But wage penalties associated with unemployment suggest longer-term consequences