July 29, 2020

WHY UBI IS INEVITABLE:

Bye, boomer: the coming cull of workers over 50 (Brett Arends, 7/29/20, Market Watch)

New research from the National Bureau of Economic Research finds that, yes, age discrimination rises hand in hand with the unemployment rate. Older workers tend to be the last hired back and the first fired. And while the unemployment rate has been dropping back down for the last two months, after the initial COVID shock, you're a fool if you think it's over. (OK, that was the '70s.)

Economists Gordon Dalh of the University of California, San Diego, and Matthew Knepper of the University of Georgia ran the numbers on age-discrimination complaints filed with the Equal Employment Opportunity Commission and compared them with the unemployment rates in the relevant industry and U.S. state at the time.

"For each 1 percentage point increase in a state-industry's monthly unemployment rate, the volume of age discrimination firing and hiring charges increases by 4.8% and 3.4%, respectively," they found.

And that was even more true when they eliminated weaker or possibly frivolous complaints, and looked only at those that the EEOC deemed had merit and deserved further investigation. "Even though the incentive to file weaker claims is stronger when unemployment is high, the fraction of meritorious claims also increases significantly when labor market conditions deteriorate," they write.

Just for good measure, they also ran analyses of a study conducted in 2012 which sent out fake (female) résumés across the country in response to job openings. Their findings? "Each one percentage point increase in the local unemployment rate reduces the callback rate for older women by 1.7 percentage points (off a baseline 10.8% callback rate), relative to younger women," they conclude. That's about a 16% relative decline in callback rates for each percentage point added to the unemployment rate. (The younger "applicants" were allegedly aged 35 to 42, the older ones over 50, they say.)

Bottom line: The higher the unemployment rate, the likelier employers are to favor younger women applicants over older women applicants. "All else equal, an older female is 6.8 percentage points less likely to receive a callback when she is competing against two additional younger female applicants, which translates to a 63% reduction relative to the mean."

They conclude: "Taken together, our two analyses provide compelling evidence that age discrimination rises as labor markets deteriorate. As far as we know, this is the first direct evidence for age discrimination varying with the business cycle, both for the firing and hiring margins."

There's no such thing as a social program that's too expensive if it helps older white people.

Posted by at July 29, 2020 5:48 PM

  

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