The Age Factor: Older Workers in the Twin Cities

by Rachel Vilsack - rachel.vilsack@state.mn.us
April 2009

The Age Factor: Older Workers in the Twin Cities

The labor market is dynamic. Every day individuals find new jobs, lose jobs, or leave the labor market altogether. For those who become unemployed and begin to search for a new job, their education, experience, and transferable skills will often dictate their success. Undoubtedly unemployed workers age 55 or older may face different challenges than their younger counterparts. Those who’ve been displaced after a lengthy tenure with one employer may find their resume, networking, and interviewing skills need an update. Those investigating a new career field may find themselves competing with younger workers with high levels of education and knowledge of current technologies related to a particular field. Whatever their situation, displaced older workers may find that their age is a factor in their job search, whether an advantage or disadvantage.

Here, There and Everywhere 

The sheer size of the baby-boom generation ensures that older workers are employed across all occupational and industrial sectors. As they age, their impact on the labor market has become more noticeable. The percent of older workers employed in the Twin Cities increased over the last eight years. Between the first quarters of 2000 and 2008 the number of workers 55 and older in the Twin Cities grew by 83,200, an increase from 11 percent of the regional workforce in first quarter 2000 to 15.9 percent in first quarter 2008 (see Table 1). Older workers outnumbered workers under the age of 25, a group that accounted for 14.5 percent of the Twin Cities workforce in the first quarter of 2008.

The participation of older workers in the labor market has also remained strong. Table 2 displays the size of the population, labor force, employment, and unemployment of Minnesotans age 55 to 64 and age 65 and over.[ 1] The labor force participation rate for Minnesotans age 55 to 64 grew from 64.7 percent in 2000 to 71.6 percent in 2008. Participation rates for people 65 and older are considerably less, as many people in this age category are retired or not a part of the labor force. In 2000, 19.7 percent of Minnesotans age 65 and over were engaged in the labor force, including 4,000 people available and actively seeking employment. By 2008 the labor force participation rate fell to 15.9 percent, with 2,000 individuals 65 and older seeking employment.

Unemployment rates for older workers are generally well below the rates of younger workers. In 2008 Minnesota’s annual unemployment rate for individuals 55 to 64 years old was 4.2 percent compared to 5.5 percent among all workers. For people age 65 and older the unemployment rate was 2.3 percent, the lowest among all age categories.

Low unemployment rates for older workers may be related partly to job tenure or the length of time spent at one particular employer. Nationally in 2004, 52 percent of workers age 55 to 64 had 10 or more years at their current employer, 38 percent had 15 or more years, and 27 percent had 20 or more years of tenure. [2]

Tenure may actually lessen older worker job displacement or job elimination caused by a shift in product demand. The Center for Retirement Research at Boston College found that tenure, not age, reduced the probability of displacement for older workers. [3] It may not be prudent to change jobs late in one’s career, as age may not insulate a worker from being displaced.

The impact of the recent recession on older workers’ ability to find employment may not be fully represented in the 2008 average unemployment rate statistics. Minnesota’s monthly unemployment rates increased rapidly in late 2008 compared to earlier in the year. Nationally, unemployment rates for men age 65 and older reached 7.6 percent in February 2009, the highest level recorded since 1948. [4] This is a troubling trend for workers who may need to stay in the workforce longer than they originally anticipated because of increased health care costs, access to health insurance, or changes to the values of their 401(k) or retirement accounts. And for older workers who planned to retire and become self-employed, the financial crisis may limit their access to credit needed to get these small businesses off the ground.

Goodbye, Hello 

The U.S. Census Bureau’s Local Employment Dynamics program allows for a quarterly comparison of industrial employment by various demographic characteristics for counties in Minnesota. In addition to total employment the movement of people out of or into jobs with a particular employer can be tracked. Total employment, separations, and new hires can be analyzed by age categories to determine the rates at which older workers are leaving their jobs or acquiring new ones.

Separations measure the total number of workers who were employed by a business in the current quarter but not in the subsequent quarter. Reasons for worker separations are varied and could include: job elimination, termination, or voluntary resignation. It does not, however, include an individual’s movement to a different position within the same company.

On the other hand, new hires reflect the number of firm-level accessions that were not employed by that employer during the previous four quarters. New hires include individuals who have not worked at that employer in the past year and are different than individuals who may have been laid off from their job and recalled.

In the first quarter of 2008 workers 55 and over numbered 255,500, or 15.9 percent of the total employment in the Twin Cities region. More than 26,800 workers 55 and over separated from their employer that quarter and, therefore, were not employed at the same firm in second quarter 2008, representing 11.5 percent of all separations in the Twin Cities. Approximately 8.5 percent of all new hires in the Twin Cities were people 55 years of age and older in first quarter 2008 (see Figure 1).

While the concentration of older workers as a percent of total employment, separations and new hires has increased, the concentration of separations and new hires by age group has also changed (see Figures 2 and 3). The number of workers separated from their jobs during first quarter 2000 was approximately 364,100, compared to 232,600 in first quarter 2008. Workers 55 to 64 made up 6.1 percent of separations in first quarter 2000 and 8.7 percent in first quarter 2008. Separations for workers 65 and older also followed an upward trend; they comprised 2.1 percent of separations in first quarter 2000 and 2.9 percent of separations in first quarter 2008.

While the number of separations declined, it is not known if the remaining separations are from displacement or the voluntary movements of individuals out of employment and into new jobs, job searching, or retirement. The decision to quit a job may be more difficult for an individual as the regional economy sheds jobs during a recession, as there may be fewer job opportunities for the newly unemployed person. And employers who are reducing their workforce because of a shift in the demand for goods or services do not have replacement needs.

Fewer new hires occurred over this same time period; there were almost 192,500 new hires in the Twin Cities in first quarter 2008, compared to more than 329,000 in first quarter 2000. Workers 65 and older accounted for 1.6 percent of new hires in both years. The concentration of workers age 55 to 64 that were new hires increased from 4.7 percent in first quarter 2000 to 6.9 percent in first quarter 2008. So, despite an increase in the concentration of separations, the concentration of older worker new hires also increased.

When I’m Sixty-Four

The question of whether or not older workers are delaying retirement is surprisingly difficult to answer. There is no national definition of retirement. Social Security benefits may be obtained as early as age 62 or as late as age 70, but the Social Security Administration’s “normal” retirement age for full benefits is 66 if born between 1943 and 1954, and 67 if born in 1960 or later. [5] In the case of labor market statistics, no designation identifies those who may have retired from their primary career and later reentered the labor market in either a part- or full-time job. Essentially, you are counted in labor market statistics if you are employed or are available to work and actively seeking work.

As life expectancies have increased over time, and as economic conditions have changed, an individual may need to work longer than previous generations. So the number of older workers in the labor force is a good indication of the trends. Labor force participation increased for Minnesotans age 55 to 64 from 64.7 percent in 2000 to 71.6 percent in 2008, an increase of 119,000 individuals (see Table 2). The number of individuals age 65 and over in the labor force also increased by 5,000 between 2000 and 2008 but not as a percentage of the population. The labor force participation rate for that age group actually fell. In general, labor force participation falls significantly for people in their 70s relative to the population in that age range.

The Minnesota State Demographic Center estimates that the fastest growing segment of the labor force between 2010 and 2030 will be people 65 years of age and older. In the Twin Cities this translates into the addition of 78,900 people in the labor force, a growth rate of 130 percent. [7] While age may not prevent an individual from being dislocated from their job when the economy weakens, the need to work may lead to an increase in older job seekers. Their ease in finding suitable employment will include a combination of the skills and abilities they bring to an employer and the employer’s willingness to recognize those skills and abilities.