Dedicated to exposing hidden facts impacting the lives  of  people over age 55

DISCOURAGED OLDER WORKERS: THE HIDDEN UNEMPLOYED
 

Many politicians deny that labor market ageism is a serious  problem.  They say that  people over age 55 are retired or working, or if not working,  the problem is in the individuals, not systematic ageism. Their acknowledgement that workers over age 55 are dropped from the labor force-- because age barriers discourage them from searching for jobs -- conceivably would spawn messy issues that they want to avoid.  "Discouraged Older Worker" is a tabood word.

Ageism not only reflects  the prevailing poltical and social attitudes, but, as you will see on this page,  it also facilitates the balancing of market forces that influence the supply and demand of labor.

 Because, as a group, unemployed workers over age 55 are silent,  often agreeing they are retired in misguided efforts to save face,  they are invisible.  Hence,  our exodus from the labor force is easily ignored, discounted or camauflaged as due to voluntary retirement or disability.   Thus,  the distinction between older people who voluntarily drop out of the labor force( retire) and those who are driven out by age barriers remain blurred.
 

WHO ARE DISCOURAGED OLDER WORKERS?

Dr TERRY F. BUSS,  Professor of Urban Studies and Senior Research Associate at the Center for Urban Studies, University of Akron. and F. Stevens Redburn. an Economist with the United States Office of Management and Budget. define "Discouraged Workers" as follows:^-1
 

^"Discouraged workers are workers who would like to have
a job, but have tried unsuccessfully to find one in the past
and have given up looking.

Because they have stopped looking, discouraged workers
are not counted in the unemployment statistics"
 

To the extent that ageism significantly restricts or denies job options to workers over age 55,  older workers are likely to be discouraged by numerous unsuccessful efforts to find suitable employment.  But,  for obvious reasons, most politicians subscribe to the theory that they have chosen to retire.  As you will see in this article,  the role of the discouraged worker --  the hidden unemployed -- is critical to controlling the unemployment rates,  thereby, stabilizing the  the economy.

Figure 1 illustrates the relationship of discouraged workers to the labor force.

In  Figure 1,  the overlapping, hatched area shows that discouraged workers are not counted in the labor force; they do not actually fall into either the green(In The Labor Force) or the red(Out of the Labor Force).  They would gladly accept employment at the prevailing wage rates,  if  suitable  jobs were available to them.  However,  numerous unsuccessful attempts to secure jobs have discouraged their efforts. Whereas retirees have chosen to withdraw from the labor force,  discouraged older workers have not chosen to withdraw;  they are discouraged from searching for jobs because age barriers are excluding them.

Since their desires for work and search efforts are unknown, they are shed from the labor force. In other words, they are the hidden unemployed.

As emphasized by Dr. John Kane, Economics Professor at Oswego Univ., Integral to the concept of discouraged workers is the composition of the labor force. The labor force consists of all non-institutionalized employed people over age 16,  and unemployed workers who are known to be actively seeking work and willing to accept a job at the prevailing wage rate,  as defined in figure 2^-2

Fig 2

The following  formulas.  defining the Unemployment and Participation rates,  are integral to the concept of  discouraged workers ^-2
 

Fig 3

Fig 3a

He also alerts us to observations indicating  that when  unemployed workers become discouraged  and leave the labor force(discouraged workers),  the unemployment rate declines. Conversely,  if they become more optimistic and decide to re-enter the labor force, the unemployment rate may increase.  Table 1 illustrates this  function^-2

Explanatory Notes for Table 1
Remember;  the labor force consists of both the employed and unemployed  workers who are seeking and would accept jobs at prevailing wage rates(non- discouraged workers)  Thus, the number of discouraged workers we add to the unemployed in the numerator, we must add to the labor force in the denominator. The figures are small to simplify computations.  But the size of the percentages stay the same with larger samples.  if we multiply the numerators and denominators by equal amounts(eg: 10/100=0.1 =100/1000).

Observe in Table 1 what happens to the unemployment rate when we add discouraged workers to the unemployed in the labor force.
 
 

Based on our micro  labor force of 1,000 for a population of 2,000, the unemployment rate rose  as we added discouraged workers, from 8 percent ( before we added them) to 12.4%  with 50 added discouraged workers.  The participation rate rose from 50% to 52.5%, a much less noticeable change.  Thus, since discouraged older workers are not counted in the labor force, they are not counted as unemployed, and the unemployment rate is lower than it would be if they were counted.

THE HIDDEN OLDER UENEMPLOYED: HUMAN SACRIFICES FOR STABILIZING THE ECONOMY.

 While workers are  discouraged, they are  out of the labor force, and do not influence the unemploymnt rate.  If  they were were counted as unemployed,  the unemployment rate would rise Therefore, exclusion of discouraged workers from the labor force generates an under-represented  unemployment rate.

Why are policy makers  unlikely to be concerned about sacrificing workers over age 55 to stabilize the unemployment rates?    Primarily,  too many of our group are silent and allow  other people, often with adverse interests, to speak for us.   Hence, policy makers assume no risk in  labeling us retired,  unavailable for work, inadequetely skilled  or disabled.

USEFUL AS A SURPLUS LABOR MARKET

In tight labor markets or for short-term projects,  employers welcome "retirees" to fill marginal demand for labor. Since age barriers normally restrict options of older workers, they are not  perceived as forfeiting better options by taking  marginal jobs.

In  markets with a chronic scarcity of younger  workers  -- such as nursing aides, domestics, janitors, data entry operators  -- additional labor supply is needed to meet the demand and maintain wages at  tolerable levels.  Older workers  are recruited and trained for these jobs. Since these workers are in jobs not being filled by the counted unemployed, their employment is not raising the unemployment rate.  When they are no longer needed, they may be again dropped from the labor force as "retired".

Thus,  older workers are a surplus market, useful when needed, and expendable when their usefulness expires.  However, if more attractive options opened to them,  their availability and usefulness for these hard-to-fill or marginal jobs are expected to diminish.

THE HIDDEN ROLES OF GOVERNMENT FUNDED OLDER WORKERS PROGRAMS:

With intent to mitigate obstrusive impoverishment resulting from protracted unemployment,  to camauflage visible discouragement amoung older workers who want and need to work,  and  to provide a supply of cheap,  expendable labor for hard to fill jobs, the federal government pours millions of  dollars into programs that ostensibly are  intended to help poor, unemployed people over age 55 find employment.

These programs  provide training as nurses aides, home care workers, and data entry operators for some clients.  Most others are placed in part-time, minimum wage assignments in government or non-profit agencies and  maintained on the program caseloads.  It is interesting to note that most people over age 55 are recruited and retained as clients,  while most staff positions are filled with substantially younger candidates.

Client caseloads justify funding of these programs,  and age barriers to more attractive, unsubsidized job options generate captive caseloads.  Thus,  ageism provides clients who serve as commodities for justifying continued increasing funding for these programs and, thereby,  cultivate growing bureaucracies that secure and enhance career opportunities for the younger staff.

The obvious inadequacy of these government funded programs for alleviating age barriers is  due to government economic policies.  Unless there are enough jobs to accommodate additional labor supply,  additional workers would have to compete for jobs with the existing labor force  This would require replacing people in the labor force.  Since discouraged workers are not counted,  and the displaced workers would be counted as unemployed,  the unemployment rate would rise.  By limiting clients to hard to fill jobs or retaining them in created assignments,  these programs do not add to the unemployment rate.

Thus,  the government funded programs reflect policy makers' objectives -- to protect the labor force from rising unemployment rates(by influx of discouraged older workers) -- while camauflaging the harmful social symptoms of ageism.  These constraints prevent these programs from helping many discouraged older workers.

TOWARD PIERCING THE CONSPIRACY OF SILENCE

We can now see that ageism clearly drives older workers out of the labor force,  and this process serves to constrain the unemployment rates.   Hence, we must be truthful with ourselves as well as others..  Have  you chosen to  retire or are you excluded from the labor force, because you are discouraged by prospects available to older workers?

If  you have not chosen to retire,  consider this analogy:  Suppose that you  know someone is racking up debt on your credit card and you do nothing to stop it.  By default, you are presumed to consent to it,   although you might privately resent it.  Similarly, because people over age 55 are not publically protesting,  they are presumed,  by default,  to have chosen to leave the labor force or  are satisfied with the limited  options available to older workers.

We may think of  ageism as sustained by a conspiracy between policy makers, who condone it,  and silent discouraged older workers   By our silence, then, we are partners in a conspiracy of silence -- in which the victims are enabling co-conspirators.

Now that we have identified the problems, our solution should be obvious.   When enough of us publically refuse to co-conspire in policies detrimental to our welfare, the conspiracy must dissolve -- along with the oppression that we are allowing to be inflicted on us.  We can see clearly now what what we must do.

End Note:
I am not voluntarily retired and vehemently object to current, government-supported policies that severely limit my labor market opportunities,  due to my age.  Share your view with the world;  use the link buttons at the top of this article to post it in the Guest Book or Bulletin Board.

1. Terry F. Buss, Terry F.  and  Redburn,  F. Stevens,  Hidden Unemployment:Discouraged Workers and Public Policy,  Terry F. Buss is a Professor of Urban Studies and  Senior     Research  Associate at the Center for Urban Studies, The University of Akron.
F. Steven Rayburn is  an Economist with the United States Office of Management and      Budget.   http://business.semo.edu/redmond/CH11a/tsld021.htm

2.  Kane, John, Labor Economics,  Semester Notes, Chapt.2,  Labor Force and Unemployment,  Econ, 350, Fall, 1998  Dr. Kane is Professor at Department of Economics, Oswego Univ., Oswego, NY.   http://www.oswego.edu/~economic/eco350/chap2.htm