With a labor shortage, why are so many older workers still unemployed?

In the early months of the pandemic, nearly 1.7 million workers over the age of 55 dropped out of the job market. With a public health crisis taking a heavy toll on older people, many retired early or simply quit in order to stay safe.

An additional 4 million workers age 55 and over lost their jobs right after the pandemic began, usually through furloughs or layoffs.

Nearly two-thirds of those jobs have come back, though older workers as a group are recovering at a much slower rate than the rest of the working population. That’s disappointing, given that employers are complaining about a labor shortage and many older Americans haven’t saved enough for retirement.

"In most recessions, younger workers tend to lose jobs, but this one was different," said Jennifer Schramm, a senior strategic policy adviser at the AARP Public Policy Institute. "Now, many months into a recovery, the big distinguishing factor has been the duration of unemployment."

It’s taking a lot longer for older workers to get rehired — twice as long for certain age groups.

It took 20 weeks for an unemployed 25- to 34-year-old to get hired, according to the latest federal data compiled by AARP. For those 55 to 64, the median length of unemployment was over 32 weeks, and for those over age 65, the median time out of a job surpassed 46 weeks.

Here’s another way to look at the data. Among those 16 to 54 looking for work, 36% were unemployed for 27 weeks or longer. Among those 55 and over, a whopping 55% were unemployed for that long.

Experiencing age bias

Many older workers see age discrimination, and those perceptions soared during the pandemic.

In a December survey by AARP, 78% of older workers reported having seen or experienced age discrimination in the workplace. That’s up from 61% in 2018, and it’s the highest mark since AARP started surveying the issue in 2003.

Part of the increase may stem from the pandemic hitting older Americans so hard. They’re more vulnerable to serious illness and death, and it’s only natural that employers would take steps to keep them safe.

The pandemic also coincided with a big push to bring more diversity and inclusion to the workplace, in part as a response to the murder of George Floyd by a Minneapolis police officer.

"Is it their age, race, gender?" said Tom Murphy, a longtime certified financial planner in North Dallas, of older job seekers. "I can’t tell you except to say they’re not getting jobs."

A different skill set

Sometimes the explanation is simpler. He recently met with two friends who have their own companies, and each wanted to hire 10 people immediately — but only if they were experienced in the right computer language.

"Those jobs exist and they’re being posted online, but most older workers don’t have the skill sets," Murphy said.

The vast majority are willing to learn, including 77% who expressed strong interest in computer and technology training, according to another AARP survey. That’s promising, especially if employers continue to offer more flexibility in the workplace, as they did during the pandemic.

More than half of the 1,900 companies surveyed in late 2020 allowed flexible hours and remote working, according to a Transamerica Institute report released last month. With that recent history and the labor shortage, more seniors could be drawn back to the workplace — or persuaded to stay longer.

"In many ways, this could bode very well for older workers," said Catherine Collinson, CEO of the nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies. "Some employers will have to get really aggressive in recruiting, and they may realize this is a segment of the workforce they’ve overlooked. It’s a terrific untapped opportunity."