Coronavirus’ Devastating Economic Impact on Workers Age 50-Plus
From: www.aarp.org
The case for emergency funds, paid leave and protection from discrimination
The devastating recent jobs numbers show that the coronavirus is taking a historic toll on workers of all ages. Over 10 million filed for unemployment in the last two weeks of March.
Among those affected are the 54 million U.S. workers age 50-plus. According to a federal jobs report released Friday, the unemployment rate for workers 55 and older rose from 2.6 percent in February to 3.3 percent in March. The report doesn’t capture the job loss of the last few weeks, so the number of unemployed is expected to grow dramatically in next month’s report.
For 50-plus workers, the crisis spotlights a range of challenges — some that they share with all workers and others unique to them. These challenges include limited emergency savings, the effects of age discrimination in the workplace, and lack of paid sick leave or extended paid family caregiving leave.
The COVID-19 crisis requires swift action and demonstrates the urgent need for long-term steps to ensure older Americans have the financial resilience to weather such storms — and to stay healthy. This includes action by federal, state and local governments, as well as employers and individuals.
An emergency in emergency funds
When a crisis hits, all workers need an emergency fund to help buffer the impact of unexpected expenses and lost pay. A buffer of just a few hundred dollars may prevent families from having to go without food or medicine. Emergency savings may also delay the need to turn to high-cost debt and retirement savings to cover living expenses.
But according to AARP’s Public Policy Institute, 51 percent of Americans over age 50 have no emergency savings account. Lack of liquid savings is a challenge for people at every income level; even among people with $150,000 or more in household income, 1 in 4 have no emergency savings account. The coronavirus may exact a greater toll on older workers without emergency savings because they have far fewer working years left to pay off debt and rebuild savings.
The most recent coronavirus relief package temporarily lifts penalties for early withdrawals from certain retirement accounts, such as 401(k) plans. While this is an understandable allowance, workers who spend down their nest eggs to cover a financial emergency may harm their future financial security.
Instead, policymakers should continue fortifying the social safety net. The private sector also has an important role to play. For instance, more employers could facilitate emergency savings through payroll deductions to help make it easy for employees to save for unexpected expenses.
Ageism hits hard in economic uncertainty
As unemployment numbers soar, workers age 50-plus are concerned about age discrimination. AARP research has found that older workers can be highly vulnerable to layoffs in times of economic uncertainty and have more difficulty getting rehired at previous wages when displaced. According to AARP’s Longevity Economy™ Outlook, age discrimination cost the U.S. 8.6 million jobs and $545 billion in lost wages and salaries in 2018 alone.
Ageism takes a massive toll on individual workers and their families and has a huge economic impact. According to AARP research, the U.S. economy missed out on $850 billion in economic activity in 2018 due to age discrimination. Ageism in the workplace leads to negative outcomes such as involuntary retirement, underemployment and unemployment.
More than 6 in 10 older workers report seeing or experiencing age discrimination on the job. More than half of older workers are forced out of a job before they intend to retire, and even if they find work again, 9 in 10 never match their prior earnings, according to AARP.
We’re already seeing the impact of coronavirus on the labor force, with a record-breaking number of unemployment claims in recent weeks. Age discrimination in the aftermath of the pandemic could grow even more rampant, with a flooded labor market. Policymakers should strengthen federal and state laws that protect against age discrimination and ensure victims have adequate remedies, including monetary damages.
Need for better sick leave
One of the earliest lessons of the pandemic is that large numbers of workers without access to paid leave posed a serious public health risk. Every day, workers in a wide range of occupations had to choose whether to stay home to ride out flu-like symptoms that might indicate coronavirus or go to work to collect the paycheck to ensure food on the family table.
This moral dilemma is especially acute for those on our new front lines — grocery store employees, direct care workers, gas station attendants and others providing critical services to keep us all safe and healthy.
According to the U.S. Department of Labor, 71 percent of American workers do not have the option of working from home. And many, especially older workers, live in areas where poor broadband access makes it difficult if not impossible to work remotely. Additionally, broadband access generally decreases with age, according to the U.S. Census Bureau.
Many older workers earn paychecks in hospitality, food and beverage, child and elder care services, retail, and health care. These service industries also are unlikely to provide paid sick or extended paid family caregiving leave.
The emergency coronavirus bill passed in mid-March does require certain businesses to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. But the package doesn’t cover all workers who may be caring for older relatives with the coronavirus, and the provisions are only a temporary response to the pandemic, rather than a permanent change to paid leave requirements.
The lack of sick leave hits low-income households hardest. Among the bottom 10 percent of wage earners, two-thirds don’t have paid sick leave, compared to just 7 percent without such leave among the highest earners. And the people in low-wage jobs without paid sick or caregiving leave are more likely to be women and minorities.
The $2 trillion stimulus bill also provides some relief to these workers, including expanded unemployment insurance. And some states are implementing new paid sick leave policies for workers. Some large global companies in technology, retail and hospitality have voluntarily implemented paid sick leave policies for hourly workers in response to the outbreak.
But paid sick leave should not be a temporary measure in response to a global pandemic. Policymakers should ensure that all employees are provided a reasonable amount of paid time off.
The economic impact of the coronavirus extends to family caregivers. An estimated 24 million family caregivers — about 60 percent of family caregivers of adults — are also working at a paying job. And half of employed caregivers are older workers themselves, age 50 and older, in their prime working years.
These caregivers may need to take time off from work if a spouse, parent or relative becomes ill from the coronavirus, meaning more lost wages. While the Family and Medical Leave Act requires some companies to provide unpaid leave for certain employees to care for a family member, just eight states and the District of Columbia have enacted paid family leave programs that include paid time off to care for a seriously ill family member.
This crisis is still unfolding, and policymakers will need to take a long view. As new policies are developed, the focus should include helping workers regain employment — and for older workers, protection from age discrimination — as well as expanding paid leave for employees across industries.
