Crs Report for Congress

This is one in a series of papers that explore issues of our aging society. This report examines how unemployment has a different impact on the older worker. As workers age, negative – but previously temporary – events such as unemployment may push otherwise firmly entrenched workers out of the labor force. While older workers are less likely than others to experience a spell of unemployment, those older workers who do experience unemployment have a higher incidence of withdrawing from the labor market. Some studies have found that unemployment in older workers contributes up to a one-third increase in the probability of retirement. The pattern of unemployment leading to unexpectedly early retirement is not a new development. Rather, it is the relative scale of the phenomenon to the overall workforce that is new. The shifting demographics of the workforce have made what was once a fairly small policy issue grow in importance. Depending on the age of the older unemployed workers, new alternative income sources such as retirement benefits and early Social Security benefits may be used while previous pillars of support such as unemployment compensation become less helpful in replacing income. Facing lowered expected wages and lower chances of …