How age may impact downsizing decisions

Watch out, you senior workers!

It used to be that the old axiom, "first hired, last fired," offered veteran employees some protection in an economic slump. Don't count on that pattern in the current downturn in the United States.

In the 1981-82 recession, the job-loss rates of older men (age 45-59) were 40 percent lower than those of younger men (25-39). In the 1990-91 recession, the job-loss rates of older workers were at least as high as those of younger workers, according to a study by the International Longevity Center - USA, a New York research group..

The same job peril could face older workers in today's rush of corporate layoffs, suspects one author of the study, economist Marjorie Honig. So seniority doesn't offer as much of a buffer against being laid off as it did prior to the 1990s. For one thing, fewer senior blue-collar workers are protected under union contracts. Perhaps the New Economy culture has less respect for seniors.

But for those 40 and over working for a firm with 20 or more employees, the 1967 Age Discrimination in Employment Act and subsequent legislation provides some legal protection for fair treatment in layoffs, retirement provisions, hiring, promotions, and benefits.

"The predominant effect of age discrimination legislation has been to reduce the likelihood that firms renege on long-term commitments to older, higher-paid workers and consequently to strengthen long-term relationships between workers and firms," reckons economist David Neumark, a visiting fellow at the Public Policy Institute of California, in San Francisco.

Also, federal and state laws banning age discrimination have boosted relative employment of older workers and reduced the retirement of older individuals, Mr. Neumark finds in a lengthy study for the National Bureau of Economic Research.

Nonetheless, Ellen Vargyas, legal counsel at the Equal Employment Opportunities Commission in Washington, says she's "constantly astonished" at what some employers do to their workers - despite the law.

The EEOC is already anticipating a jump in age-discrimination cases as layoffs multiply. EEOC spokesman David Grinberg notes that employers have become "more subtle" and "less overt" when discriminating against older Americans.

For instance, company officials don't tell a job applicant bluntly that he or she is "too old." They find some more proper excuse for not hiring the person.

Last year the EEOC received 16,008 charges of age discrimination, a typical number for this long economic expansion. That's about 20 percent of all the discrimination charges filed with the EEOC. It also deals with discrimination cases involving race or gender.

A benchmark case

One significant case has just advanced a step. The 34-million member American Association of Retired Persons had complained to the EEOC that a major executive search firm, Spencer Stuart Inc., in New York, was screening out job candidates over 45, as requested by some clients. This is illegal.

Last week the AARP got "a letter of determination" from the EEOC substantiating the charge. The EEOC now acts as a conciliator in the dispute. If no settlement is reached, the AARP can sue in court.

"We want to send a message to search firms nationwide that age discrimination is not to be tolerated," says AARP senior attorney Laurie McCann.

Company executives discriminate against older workers for a number of reasons.

One is that the veterans are frequently paid more than their younger colleagues, and may or may not be as productive. A company trying to cut back wage expenses may find it expedient to lay off its older employees and save on health insurance costs as well.

Discrimination can also result from old stereotypes that are most often not true. For example, that an old dog can't learn new tricks such as how to use a computer.

In all industrial nations, however, populations are becoming older on average. Aside from fairness issues, economists and officials figure their countries will need older workers to prosper and can't afford discrimination.

A battle in Europe

The European Commission issued a directive late last year to its 15 member-nations to pass laws within the next three years - six years at most - banning age discrimination. Unlike the US, Canada, or Australia, most of these nations either have no such laws or weak, ineffective laws. (Ireland is an exception.)

Many European nations are now scrambling to deal with the issue. Britain, for instance, is debating the question of mandatory retirement ages. (In the US, these are banned with some exceptions, such as those for judges, police, and fire fighters.)

(c) Copyright 2001. The Christian Science Monitor