The older you are, the harder it is to find a new job if you're laid
off. Older workers who are displaced often end up going on disability,
taking early retirement, or starting "consulting" businesses because
they find the salaried job market so unfriendly--after 55, labor market
participation starts declining rapidly.
This is often thought of as pure age discrimination, but it's more
complicated than that. Blue collar workers at 60 may not be able to
physically keep up with their old jobs. They don't slot well into
union shops that are designed to hoover up young workers and keep them
for life. And its harder for them to work for minimum wage, because
they have obligations.
This is even more true of white collar workers. Especially as they
move up the management tree, older workers get a lot more expensive.
This is in part because we've cut a sort of society-wide bargain in
which people in most jobs are paid more as they age to offset rising
expenses. But also, older workers have more skills.
In general, more skills is a good thing. But in an increasingly
specialized society, those skills are increasingly specific,. The more
skills you have, the fewer jobs there are that match them.
The New York Times chronicles the unbelievably extensive process
of finding a baby-boomer executive a new job in the current recession.
That's a story there will be a lot of in the next few months.
Expensive older executives are often first fired, last hired.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
I feel for people in these situations. Hopefully they've been doing something of real value and if they are unable to quickly prove their value they can venture out on their own and make things happen.
This makes me think, as a general rule its always best to be close to the "money making" so even if you are let go you'll have half a dozen ideas in your head to start on.
By being close to the money making I don't mean being a cashier watching money change hands, but someone involved in the production or management of production, management of sales, etc. You'll hopefully know how to create real value for yourself and your customers.
If not...well, that's probably the reason you got canned anyway. I feel for you though, because sometimes it seems like it could be any of us.
The article is behind a firewall, so alas, I cannot read it. But it strikes me that people of which you speak are in a perfect situation to strike out on their own. They should have a great many skills, they should know their business well, they should have some capital saved up, and their hypothetical new business will not suffer from all the obligations that tie down its existing competitors.
This topic was also covered in the Times "Room for Debate" Opinion section yesterday. Here's the link for those interested.
The other issue is one of mobility, as people get older they are less and less likely to be willing to move.
If you are a 28yo staff accountant and you get laid off in a mid-size city, there could be any number of contract/full time position available to you. However, the higher you go up the corporate ladder the smaller the number of available postions.
In theory one could respond to this problem by looking farther afield for a new job. If there are only 9 Fortune 500 treasurer jobs within 45min of your home and they are all filled, you might have to do a nationwide search to find the right fit. But, as people hit their 50's they don't want to move...
If you think that's bad.
Two income households become even less mobile as they age.
I've always found the hesitance to higher an older worker pretty odd, especially in jobs that don't require a lot of manual work. Training an employee and getting him up to speed both with corporate culture and specific business relationships is a massive investment for a company, and can often take a lot more than a year. When that person leaves, that investment is lost.
If you hire a qualified 55 year old, though, you've almost certainly got that position filled for at least a decade. There's no real worrying about turnover or headhunters or him leaving to take the next step up. I don't get why companies don't consider this a pretty big benefit.
I worked at temp job at a big four firm that took this tack. The average age in that department was probably 50.
A major culprit here is the law prohibiting age discrimination in employment. Laws like that don't seriously limit your ability to discriminate in hiring, but they make it risky, and expensive, to fire older workers. So the rational thing to do is not hire them in the first place. Similar effects seem to have occurred for handicapped workers because of the Americans with Disabilities Act; their employment levels declined after the act was adopted.
But, as people hit their 50's they don't want to move...
Not necessarily ... people that age are unlikely to still have children in school, which is a major factor that discourages moving.
Similar effects seem to have occurred for handicapped workers because of the Americans with Disabilities Act; their employment levels declined after the act was adopted.
To some extent that's a consequence of welfare reform. With welfare harder to get, some people falsely claim to be disabled in order to get SSDI.
I assume some part of the reluctance to hire older workers comes from concern about health issues. If you're a smallish company that provides health insurance, I think you have an incentive to keep your employees as young and healthy as possible, because that 50 year old overweight smoker is liable to make your insurance more expensive.
So how does this square with all those stories about recent college grads not being able to get jobs because all the older workers aren't leaving the workforce because their retirement savings have been gutted? We're also seeing many, many stories about how companies are loathe to lay off their most experienced employees (i.e. older workers), because they don't want to completely gut their human capital for when times get better.
Awesom0, it squares like this: Older workers are less likely to get laid off, but if they do get laid off, they have the hardest time finding a new job.
The unemployment rate in the 55+ group is 6.4%, quite a bit lower than the national average. But that 6.4% is having the hardest time finding a new job.
A good chunk of the difficulty is explained by a combination of firm specific knowledge and unwillingness of older workers to take a step down in pay.
An example. After 10 years at a company, you may have $75k worth of general knowledge (electrical engineering/project management). You probably also have $50k worth of firm-specific knowledge (knowledge about customer relationships, which VP to talk to about which problem, company-specific technologies, etc).
Your current company pays you $100k, pocketing $25k (splitting the value of your firm-specific knowledge with you).
If you get laid off, you are worth only $75k to another company. If you are unwilling to take less than $100k, you won't find a job.
Regarding the lack of mobility for older workers, perhaps this is a good reason to discourage home ownership.
The up-and-coming Baby Boomers did this very thing to their Silent Generation elders in the recession in the early 1990s, so it's hard to cry for them too hard now.
The question is, how do you provide the kind of career advancement that workers in their late 30s and 40s seem to require if you want them to stay around, while still keeping the experience and institutional memory of your veterans in their 50s and 60s? The old solution used be lots of layers of management. The new "solution," which does not work very well, is either to hollow out the middle layers of the organization or to lop off the top.
There has to be a better way. Perhaps it makes sense to let people step into more demanding (and higher paying) roles for five years or so, then revert to a lower salary and more normal hours so the next person can have a chance.
The only problem I can see with this is that it doesn't mesh well with the class-based, authoritarian approach a lot of people want to take in the workplace. How does someone manage his former boss?
For white collar workers the issue is still primarily one of age discrimination. The issue of health insurance cost to employers is significant as is the risk of age discrimination law suit. But the bias toward youthful workers and stereotypes about older workers who do not fit a precise profile of `success' remains strong.
The irony is that many older workers are in a financial position to work for lower wages and at lower levels of responsibility than they have had in the past. Many people simply enjoy the work they do as well as the social elements of the work environment. Why would and employer hire someone right out of college when it might get a person with decades of experience for the same salary.
And why, as we face the increasing financial burdem of Social Security and Medicare costs, would we not want to use tax incentives to make employers more willing to hire those who wish to work beyond 65?
"Why would and employer hire someone right out of college when it might get a person with decades of experience for the same salary."
Depends on the person and the job, I guess. There's a very pleasant retired guy at a local Barnes & Noble, a former Marine, who mentioned to me that he works there mainly because he enjoys keeping busy. On the other hand, there are a couple of middle aged women who work at a local Starbucks, and they are thoroughly miserable. Some people don't take to customer service jobs after a certain age, and this particular Starbucks would benefit from someone with less experience and less bitterness.
At 26, I don't really have much to say about older workers' issues or age discrimination, but I do have some pretty strong feelings about 'management' types who can't find a job because they won't take a pay cut: Screw yourselves. Your problem is the same as the problem of the financial sector: In the end, management and financial products don't produce value, meaning that they don't add value to raw materials even in the loosest sense of those words. Management is very important, but high salaries for management are a luxury. Nobody who doesn't produce value for a living is owed anything, no matter how old they are or how difficult their future prospects look. If you want steady employment and good wages, figure out how to produce things that people want. I'm not a socialist, I like the fact that the means of production are controlled by private individuals. But to think that somehow the people who are in control are getting screwed over because they all have to make less money is putting the cart way, way before the horse.
"In the end, management and financial products don't produce value, meaning that they don't add value to raw materials even in the loosest sense of those words."
This, in a nutshell, is the reason the Soviet Union collapsed. Marxists thought that the people who didn't make things were parasites, so they undervalued them and their contributions. Even during its famines, the Soviet Union's farmers produced lots of food. But it then rotted, because it would have taken competent "middlemen" to get it to people who could use it, and middlemen, who didn't make things, were treated with contempt. So, surprise, they had few good middlemen.
The US example might be General Motors and Chrysler. American workers build Toyotas, which are very good cars. But they didn't always build good cars for GM or Chrysler. That's not because people in Michigan are dumber than those in Tennessee; it's because Toyota had good management and GM and Chrysler didn't.
OGW says he's not a socialist, but this is as good an example of socialist thinking as one could ask for.
Alan - I assume that you mean 'socialist' in the Palin sense. Here's the first clause of the Wiki definition of Socialism:
Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods,
Nowhere in my post did I say anything about state control of anything. As to your contention that 'This, in a nutshell, is the reason the Soviet Union collapsed.'...Really? There have been multi-volume books written about why the USSR collapsed, but you're breaking the ground here that it was because they didn't value management enough? I don't think any one cause it to blame, and I certainly won't take your word for it.
I'd also like to point out a convenient conflation in your second paragraph. I was talking about 'management', then you went on about Russia's 'middlemen' as if the two were the same. They, of course, are not even the same category. Distribution and management are not the same thing, not even close.
Finally, let's take your example of the auto industry. First of all, American workers don't 'build' Toyotas, they 'assemble' them from parts generally made overseas. That is, THE VALUE IS ADDED overseas, after which they ship them to a plant in a non-union state for assembly. They make better cars because they save a bundle on labor, etc and put the money back into design and fab.
I agree that these people would be wise to take a pay cut over unemployment, obviously. That said, "do not produce value" is a statement made in profound ignorance. Financial markets aren't parasitic, they create value by letting businesses use stock issues to raise capital. Managers(well, good managers) aren't parasitic, they dramatically increase the productivity of their subordinates. You seem to acknowledge this on some level, when you say "Management is very important", but you haven't thought through the implications of that - if it is important it is valuable, and if it is valuable then it ought to be rewarded accordingly. A good CEO of a big company is worth his weight in gold(or far more, for a big enough company - if a Wal-Mart or Exxon CEO can hypothetically decrease costs 1%, he's worth over 2 billion dollars a year to the company). Yes, there are plenty of stinkers earning far more than their actual value, but the concept of executive payment is not an evil one - it is, on the contrary, necessary and valuable.
"Financial markets aren't parasitic, they create value by letting businesses use stock issues to raise capital. Managers(well, good managers) aren't parasitic, they dramatically increase the productivity of their subordinates."
I totally agree that the above sentences are the received wisdom propitiated by management themselves. But, in this country we've been richly rewarding and recruiting top management talent for decades...How's that worked out for us? I absolutely stand by my statement that managers 'do not produce value', and I don't think that it's irreconcilable with my other statement that 'management is important'. Remember, I'm not making a claim that we don't need management, or that our companies would be better off without management. I'm saying that nobody is irreplaceable, ESPECIALLY somebody in management. The idea that we're supposed to feel sorry for even good managers because they won't take a lesser job at a lesser wage...is crazy.
OG,
May I ask what industry you're in?
I'm an IT consultant and have worked on dozen of different projects and the amount that can be done by a group that is well managed is vastly more than one that is poorly managed.
I'm in the film industry, the one industry NOBODY is feeling sorry for or thinking about bailing out. (Even though the film industry employs thousands of skilled, unionized craftspeople and creates arguably the US's most important cultural export, and an export which generates billions in revenue annually. And, even though a simple economic analysis indicates that production of a film is one of the VERY BEST ways to stimulate an economy, since the money gets into circulation so quickly, etc.)
As someone who spends time both on sets and in boardrooms, I deeply understand the value of good management. In fact, good management is probably as important in the movie business as in any other industry in the world. Please keep in mind that I'm not disparaging management per se. What I'm saying is that, when business dries up, management gets fired and has to do something else. When it's the film business, nobody even remarks on it. The film business is FAMOUS for turnover in management. All I was trying to say with my original post is that nobody should feel sorry for somebody who has to take a lesser job because they spent their life telling other people what to do and how to do it instead of producing value with a skill or craft.
Now, there's been a lot of focus on 'producing value' and rightfully so. This is a critical distinction, and it's one that I'm not making lightly and want to try to insist on. It's a fallacy, put forth by management types themselves, that they do create tons of value and nothing could go on without them. Managers do not create value, they create EFFICIENCY: The maximization of the value created by others.
This efficiency is a good thing. But the thing is, when the slowdowns happen there is no longer much value to maximize, and lots of these managers have to be let go because there's nothing for them to do, because they themselves are not capable of producing value. So guess what, sorry guys, but you gotta go get a real job. It sucks. And I don't feel sorry for you at all.
If we ban chainsaws, then all the unemployed people can become lumberjacks with axes.
Doesn't matter if they can't do it very well, their labor has intrinsic value regardless of the value they produce.
Lol.
Management is where all the value comes from, actually. They are the ones that set up that factory for the guy who works real hard at whatever he gets told to do. Hard work alone gets you a thatch hovel and just enough potatoes to not die of starvation.
Management is where all the value comes from? Then I've got the perfect solution for all these companies going bankrupt: Fire all the worthless employees and just keep the managers. They'll have a whole lot of nothing left to manage.
As to the chainsaws comment: Uhh...what?
Administrators, Managers, and Leaders
This is a delightfully multifaceted discussion. Addenda:
The obvious general case is true enough, and common enough;
The Old Fogies just can't cut the mustard any more,
or can't learn new tricks.
The masked minority case, the object of Managerial Denial,
is the Old Pro who claims, correctly, that:
"I'm not young, and I'm not pretty, but I know how."
Often better than the manager.
This is why engineers are out at 40; They have gained
enough experience to say to a manager:
"Choosing a Graphics Subsystem supplier because you
play golf with their CEO is not a good idea."
Paraphrased another way:
"A good manager always has a few people on her staff
who can take over for her in an emergency -
A bad manager will not allow anyone who might replace her
to survive in her organization, let alone hire such a person."
How can such disfunctional management survive ?
Because, for as long as many of them have been alive,
there has been no real competition, no real downside
to mediocre performance, and an infinite number of
do-overs. No more.
Plus which, Employment Demographics says that
when the Boomers retire, all the Green-Card immigrants
on earth will not be enough to fill the gap;
There will be a growth industry in recruiting and
data-mining experienced senior staff, before senility
erases their accumulated experience.
I am _so_ looking forward to that. :)
P.S. There seem to be some stealth memes in action
here, perhaps:
1) A properly trained MBA can run any company.
2) An individual never accomplishes anything;
It takes a village to raise a child - or an IPO.
3) Skill and talent are synonymous; Opposite, actually:
Talent makes itself unnecessary by solving problems,
Skill stays employed by implementing the solution.
As an exercise, identify the Galt-Tall founders of the
aircraft industry - Not too hard, as most of the companies
still bear these men's names.
ah, but some of you are discussing the financial or service
branches of the economy, rather than the manufacturing side:
Why ?
What do either of those have to sell, that our creditors
want to buy ?
Bert:
You say the issue for white collar employees is age discrimination. Do you have evidence for this? It seems plausible, but I'm curious if anyone has hard numbers on this sort of thing. (It seems like it would be hard to collect numbers on this, because hardly anyone is going to admit to age discrimination, and old folks fired for being incompetent or annoying the boss or whatever have an incentive to claim age discrimination.)
If it's really true that irrational age discrimination is going on in a widespread way (maybe because younger managers don't really feel comfortable giving orders to people a lot older than they are), then there should be some huge bargain available to employers that can find a way to hire and use the talents of older employees. It seems like it might be worthwhile to look for examples of companies that are doing this--not just keeping their older employees, but hiring new ones to capture the value that others are throwing away.