Older Workers Not Taking Jobs From Young People

Economists maintain extending the retirement age doesn’t take away jobs from younger workers, despite what logic might otherwise indicate.

January 07, 2014

CHICAGO – Despite assertions by many of today’s unemployed, older people remaining in the workforce later in life are not stealing jobs from younger people, the Associated Press reports.

"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.

Wu is referring to the “lump of labor,” a theory that dates to 1851 and resurfaces whenever there is high unemployment. The theory says if a group remains in the labor force beyond its normal retirement date or another group enters the workforce, others will be unable to work or will have their hours reduced.

Most economists dispute the theory, pointing to the period when women entered the workforce. There weren’t fewer jobs for men; rather, the economy expanded. They argue the same is true today with an older work force.

"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," Munnell said.

Economists say a macroeconomic view provides a clearer picture: Having older people active and employed benefits all age groups and spurs the creation of more jobs.

Others 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 spur openings for younger workers.

He said the argument that older workers help expand the economy doesn’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."

Jonathan Gruber, an economist at the Massachusetts Institute of Technology, said it's a frustrating reality of his profession: That the populace disputes those things he knows as facts.

"If you polled the average American they probably would think the opposite," he said. "There's a lot of things economists say that people don't get and this is just one of them."

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