1. Has the Displacement of Older Workers Increased? Alicia H. Munnell, Steven Sass, Mauricio Soto, and Natalia Zhivan Center for Retirement Research at Boston College “Pathways to a Secure Retirement” National Press Club, Washington DC August 11, 2006

2. The decline in the retirement age needs to reverse… Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1962-2005. Current Population Survey. Average Retirement Age for Men, 1961-2004 1

3. …because Social Security replacement rates are declining… 2 Estimated Social Security Replacement Rates for the Medium Earner, 2002 and 2030 Source: Authors’ calculations based on Alicia H. Munnell. 2003. “The Declining Role of Social Security.” Just the Facts on Retirement Issues. Center for Retirement Research at Boston College. 20302002

4. …and the shift to 401(k) plans has produced small balances. Workers with Pension Coverage, by Pension Type, Survey of Consumer Finances 1983, 1992, and 2004 3 Source: Alicia H. Munnell and Annika Sundén. 2006. “401(k) Plans Are Still Coming Up Short.” Issue Brief No. 44. Chestnut Hill, MA: Center for Retirement Research at Boston College.

5. But bad things happen to people in their fifties, making continued work difficult. Source: Richard W. Johnson, Gordon B.T. Mermin, and Cori E. Uccello. “How Secure Are Retirement Nest Eggs?” Issue Brief No. 45. Chestnut Hill, MA: Center for Retirement Research at Boston College. Incidence of Selected Personal Shocks, HRS 1992 - 2002 4

6. Question: Have displacement rates increased for older workers? Older Displaced Workers as a Percent of Total Displaced Workers, 1984, 1994, and 2004 5 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey.

7. Many factors can affect displacement rates of older workers: Greater educational attainment Shift from goods to services Shift from defined benefit to defined contribution plans Aging of baby boom Changing tenure Source: Alicia H. Munnell, Steven Sass, Mauricio Soto, and Natasha Zhivan. 2006. “Has the Displacement of Older Workers Increased?” Paper prepared for the 8 th Annual Joint Conference of the Retirement Research Consortium, Washington, DC. August 10- 11, 2006. 6

8. Data suggest tenure of older workers has declined. 7 Percent of Men and Women Age 55-64 with More than 10,15, and 20 Years of Tenure, 1983 & 2004 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2005. Current Population Survey.

9. The Displaced Workers Survey (DWS) provides 20 years of displacement data. Percentage of Workers Displaced by Reason for Displacement, 1984-2004 8 *Note: Adjusted as suggested in Farber (2003). Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey. *

10. Raw DWS data suggest that older worker displacement rates remain below those for younger workers. Displacement Rates, by Age, 1984-2004 9 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey.

11. Regression results also show older workers with lower probability of displacement. 10 Probability of Displacement for Workers Age 50-64 Compared to Workers Age 20-49, 1984-2004 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey.

12. However, further DWS analysis indicates that job tenure – not age – drives the results. 11 Probability of Displacement for Older Workers by Tenure and Age, 2004 Tenure: 10 or more years Tenure: 5-9 years Tenure: 1-4 years Age: 60-64 Age: 55-59 Age: 50-54 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 2004. Current Population Survey and Displaced Workers Survey.

13. The declining impact of education in DWS is also interesting. 12 Impact of College on Probability of Displacement, 1984-2004 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey. Not statistically significant Statistically significant

14. Using the HRS also shows that tenure matters, not age. 13 Probability of Displacement for Older Workers by Tenure and Age, HRS 1994-2004 Source: Authors’ calculations of the University of Michigan. 1994-2004. Health and Retirement Study. Tenure: 10 or more years Tenure: 5-9 years Tenure: 1-4 years Age: 60-64 Age: 55-59 Age: 50-54 Not statistically significant Statistically significant

15. HRS also reveals that pensions have a modest negative effect on displacement. 14 Probability of Displacement by Type of Pension Plan, HRS 1994-2004 Source: Authors’ calculations of the University of Michigan. 1994-2004. Health and Retirement Study. Not statistically significant Statistically significant

16. HRS also shows displacement has permanent effects on work. 15 Probability of Working, HRS 1994-2004 Source: Authors’ calculations of the University of Michigan. 1994-2004. Health and Retirement Study. -21% Laid off

17. DWS also shows that finding a new job is more difficult for older workers. 16 Probability of Re-employment for Displaced Workers Age 50-64 Compared to Workers Age 20-49, 1984-2004 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey.

18. However, DWS suggests that age is not a significant factor in size of wage loss. 17 Percentage Change in Real Weekly Earnings for Reemployed Workers Age 50- 64 Compared to Workers Age 20-49, 1984-2004 Source: Authors’ calculations of the U.S. Bureau of Labor Statistics. 1984-2004. Current Population Survey and Displaced Workers Survey. Not statistically significant Statistically significant

19. Conclusion 18 Workers need to work longer. Job displacement of older workers has lasting effects. Displacement has not increased in two decades. But job tenure, not age, drives displacement trends. And declining job tenure suggests older workers could be imore vulnerable in the future.