The Job Jam

The Shaky Economy Is Swelling The Ranks Of Workers Age 55 And Older And Fueling A Jobless Rate Among Young People Not Seen In 60 Years.

Issues In The Workplace

August 30, 2009|By Jay Hancock | Jay Hancock,Jay.hancock@

Patrice Brown and Jerry Bannister don't know each other, but they're on opposite sides of an economic canyon that divides young from old and makes this recession different from any other in the last six decades.

Even as employers lay off millions and unemployment soars, more people 55 and older hold jobs today than did a year ago. Folks such as Bannister, 67, the maintenance director at Mays Chapel Ridge retirement community, are working longer than they once expected because of disappointing pensions, stock-market losses or the need for health insurance.

Meanwhile finance graduate Brown, 25, and other young people have trouble breaking into the workplace, partly because the older generation can't or won't retire.

"People over the age of 55 are not dropping off the payrolls to retire early as they had been doing for years," says David Rosenberg, chief economist at Gluskin Sheff in Toronto and one of the first to identify the developing employment gap. "And then there are those who did drop out of the labor force who are coming back to secure work."

Meanwhile, he says, "we're creating massive pools of unemployment among 20-somethings."

Not long ago, Bannister's retirement looked secure and comfortable.

He had put in more than three decades at Bethlehem Steel's Sparrows Point mill. The early 2000s found him facilitating construction at the Baltimore County plant and filling in on cranes and forklifts when regular operators were unavailable. He qualified for a great pension and retirement health care.

But the future dimmed after Bethlehem entered bankruptcy proceedings. The mill passed from one owner to another to another. The pension plan was seized by government. The health plan got scrapped.

"They had a great health plan. I lost it all. That's one big reason why I'm still working," Bannister says. Need for income is another reason, although he makes less at the Timonium retirement community than what he took home from the mill.

He was supposed to receive pension payments of $2,100 a month, he says. Because the government guarantees only so much after a plan fails, that got cut to $1,800. Then it went down to $1,700. Now it's even less. Recently, he got a letter saying that previous payments were too high and that the pension agency will reclaim the difference in future checks.

And his 401(k) plan has lost a fourth of its value, he says.

It has been several years since Bannister decided to extend his career, but the economic collapse has increased pressure on older folks to keep or seek employment. In an AARP survey published in May, nearly a fifth of people 45 and older said they planned to postpone retirement. More than one in 10 between the ages of 45 and 65 said they had returned to work in recent months after previously retiring.

"Clearly, there is a significant change in plans in terms of being able to retire," said Deborah Russell, director of workforce issues for AARP. "People are delaying retirement because their portfolio did not look like it did a few years ago."

Employers value older workers with previous careers not only for their experience but also their willingness to work for less than the going rate. Savings or pensions from former positions, however inadequate for retirement, subsidize their lower pay at new jobs.

"These people are willing to take a pay cut," Rosenberg said.

But employment stretching into the golden years leaves fewer openings for people just out of school. Unemployment among 16- to 24-year-olds is 17.8 percent - close to a 60-year high and nearly twice the overall rate of 9.4 percent. Unemployment among those 25 to 29 is also higher than for the workforce as a whole.

Patrice Brown graduated from Morgan State University in 2006. She took a couple temporary bookkeeping jobs, including a 14-month internship in accounts payable at a nonprofit. But that expired in July, and she's back in the market.

She posted her credentials on CareerBuilder, Monster and Craigslist. Three interviews so far. Conversations with job agencies. But no job. Unemployment benefits help cover her rent, but they won't last forever. She has no medical coverage.

"I try to be careful as I can," she says of her health. The job market, she adds, "is not as good compared with when I first graduated. The pay rate is a lot lower. There are a lot of part-time positions that are available now instead of full-time."

Even so, she doesn't blame older workers for sticking around.

"That's the way the economy goes," she said. "These are our grandparents. They're taking care of their kids as well who came back into their house. I don't resent them at all. They do what they have to do."

Young friends are also having trouble landing something, Brown said. They're moving back in with parents. Or they're taking jobs as sales clerks or receptionists that have nothing to do with their training.

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