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Will surge of older workers take jobs from young?

CHICAGO — It's an assertion that has been accepted as fact by droves of the unemployed: Older people remaining on the job later in life are stealing jobs from young people.

One problem, many economists say: It isn't supported by a wisp of fact.

"We all cannot believe that we have been fighting this theory for more than 150 years," said April Yanyuan Wu, a research economist at the Center for Retirement Research at Boston College, who co-authored a paper last year on the subject.

The commonly accepted vision of a surge of workers looks like this: A young post-doctoral student dreams of a full-time teaching job at their university, but there are no openings. An 80-something professor who has remained on the job long past what's considered "normal" retirement is blamed.

The problem with that vision is there are probably full-time teaching positions available elsewhere, or the person blocking the young grad student from the job is only 40, economists say. Further, the veteran professor's decision to stay employed and productive may stir other job growth. He may bring research grants to his university, allowing for other hiring, may take on assistants, and may be able to dine out and shop and fuel the economy more than if he weren't on the job.

None of that would have happened had he retired.

The theory Wu and other economists are fighting is known as "lump of labor," and it has maintained traction in the United States, particularly in a climate of high unemployment. The theory dates to 1851 and says that if a group enters the labor market — or in this case, remains in it beyond their normal retirement date — others will be unable to gain employment or will have their hours cut.

It's a line of thinking that has been used in the U.S. immigration debate and in Europe to validate early retirement programs, and it relies on a simple premise: that there are a fixed number of jobs available. In fact, most economists dispute this. When women entered the workforce, there weren't fewer jobs for men. The economy simply expanded.

The same is true with older workers, they argue.

"There's no evidence to support that increased employment by older people is going to hurt younger people in any way," said Alicia Munnell, director of the Center for Retirement Research and the co-author with Wu of Are Aging Baby Boomers Squeezing Young Workers Out of Jobs?

"It's not going to reduce their wages, it's not going to reduce their hours, it's not going to do anything bad to them," she said.

Scholars disagree

Still, many remain unconvinced.

James Galbraith, a professor of government at the University of Texas at Austin, has advocated for a temporary lowering of the age to qualify for Social Security and Medicare to allow older workers who don't want to remain on the job a way to exit and to spur openings for younger workers.

He doesn't buy the comparison of older workers to women entering the workforce and says others' arguments on older workers expanding the economy don't make sense when there are so many unemployed people.

"I can't imagine how you could refute that. The older worker retires, the employer looks around and hires another worker," he said. "It's like refuting elementary arithmetic."

Munnell and Wu analyzed Current Population Survey data to test for any changes in employment among those under 55 when those 55 and older worked in greater numbers. They found no evidence younger workers were losing work and in fact found the opposite: greater employment, reduced unemployment and yielded higher wages.

Munnell said outside of economists, the findings can be hard for people to understand when they think only of their own workplace.

"They just could not get in their heads this dynamism that is involved," she said. "You can't extrapolate from the experience of a single company to the economy as a whole."

Will surge of older workers take jobs from young? 01/03/14 [Last modified: Friday, January 3, 2014 9:01pm]
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