Unemployment Insurance and Reemployment among Older Workers

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Presentation transcript:

Unemployment Insurance and Reemployment among Older Workers Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research www.upjohninstitute.org Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January 19-20, 2006, National Press Club, Washington, DC.

Unemployment Insurance and Reemployment among Older Workers 1. Background 2. Samples and Methodology 3. Reemployment of UI Applicants by Age 4. Reemployment Earnings by Age Reemployment Job Tenure by Age Summary and Conclusions

1. Background: Prospects for Older Workers Rising Risk of Job Loss Farber (1997) Greater Time to Reemployment and Earnings Loss Chan and Stevens (2001) Smaller Share of Jobless and Higher UI Recipiency O’Leary and Wandner (2001) Older and Longer Job Tenure, Human Capital Loss BLS (2004) Among UI applicants, how do older and younger Beneficiaries, non-Beneficiaries, and Exhaustees fare in terms of employment, earnings, and job stability?

Age Distribution of Labor Force, Unemployment, and UI Receipt in the United States, 2002 <=24 25-34 35-44 45-54 55-64 >=65 UI 9.7 23.6 26.6 24.0 12.6 2.9 LF 15.4 22.2 25.5 22.5 11.3 3.1 Un 32.0 22.6 20.2 15.7 7.6 1.9

2. Sample and Methodology UI Applicants in Ohio, 2001 Three years of quarterly follow-up data Data on Characteristics and Quarterly Earnings Descriptive Transition Matrices Based on Quarterly Earnings Records (Employment, Earnings, Employer Stability)

Outcomes and Characteristic Means for UI Beneficiaries Age 30-65 in Ohio, 2001 Overall Older Younger Sample Size (Claims) 287,780 78,549 209,231 Full-Time Equivalent Weeks of UI 14.9 14.7 Exhausted Regular UI 0.321 0.330 0.318 Fraction of Entitlement/Benefits Used 0.579 0.572 0.582 Employed One Quarter After Benefit Year Begin 0.651 0.642 0.655 Base Period Earnings $31,736 $35,854 $30,189 Entitlement Length (Weeks) 25.8 Weekly Benefit Amount 273 275 272 WBA at Maximum 0.216 0.192 0.225 Work Search Exempt 0.316 0.342 0.306

Characteristic Means for UI Beneficiaries Age 30-65 in Ohio, 2001 Overall Older Younger Age as of BYB 43.8 55.0 39.6 Gender, Female 0.330 0.326 0.331 Race, White (*1) 0.834 0.858 0.826 Race, African American 0.124 0.103 0.131 Race, Hispanic 0.020 0.015 0.021 Education, Less than High School 0.197 0.225 0.187 Education, High School Grad / GED 0.506 0.482 0.515 Education, Some College 0.190 0.200 Education, Bachelor Degree or Higher 0.099 0.098

3. Reemployment of UI Applicants by Age Ohio UI Beneficiaries Older have lower re-employment rates Ohio non-UI Beneficiaries Delay in re-employment greatly reduces subsequent probability of employment Ohio UI Exhaustees Recover from low early rates of reemployment

Ohio Regular UI Beneficiaries for 2001 Employment Probabilities for Older UI Beneficiaries in Ohio Gaining Reemployment t Quarters After UI Application 1 2 3 4 5 6 7 8 9 10 11 77,152 0.645 0.566 0.551 0.527 0.514 0.508 0.504 0.481 0.477 0.470 0.467 49,744 0.338 0.296 0.277 0.203 0.260 0.257 0.245 0.190 0.237 0.235 9,277 0.205 0.171 0.151 0.148 0.147 0.144 0.138 0.139 3,717 0.145 0.113 0.105 0.101 0.100 0.098 0.097 2,097 0.077 0.071 0.067 0.066 0.063 0.062 1,205 0.074 0.057 0.053 0.050 0.049 0.048 818 0.052 0.041 0.038 0.037 0.034 540 0.040 0.029 0.027 386 0.032 0.039 460 0.033 0.026 293 0.028

Ohio Regular UI Beneficiaries for 2001 Employment Probabilities for Younger UI Beneficiaries in Ohio Gaining Reemployment t Quarters After UI 1 2 3 4 5 6 7 8 9 10 11 186,682 0.653 0.582 0.572 0.553 0.545 0.541 0.523 0.527 0.531 0.529 121,979 0.402 0.364 0.342 0.259 0.324 0.320 0.309 0.251 0.308 26,010 0.267 0.228 0.203 0.201 0.200 0.194 0.187 0.190 0.192 10,312 0.205 0.165 0.156 0.150 0.148 0.143 0.142 0.141 5,821 0.139 0.112 0.104 0.097 0.095 0.093 0.091 3,138 0.114 0.084 0.078 0.081 0.076 2,221 0.087 0.070 0.062 0.060 0.059 1,488 0.065 0.053 0.048 0.046 1,027 0.049 0.045 913 0.052 0.042 710

3. Policy Issues on Employment UI Applicants who gain speedy return to work have a greatly increased chance of steady future employment. Employment handicap is particularly pronounced for non-UI Beneficiaries. Employment recovery is delayed for exhaustees. Those gaining reemployment more quickly are harmed less by job loss.

4. Reemployment Earnings by Age Relative to earnings before UI Application Earnings for older UI Beneficiaries are lower and recover less when reemployment is delayed Reemployment earnings for older non-UI Beneficiaries recover to exceed prior earnings Reemployment earnings of older UI exhaustees recover slower and less than younger UI exhaustees

Avg Pre Ratio of Post-to-Pre Earnings for Older Ohio UI Beneficiaries in 2001 for Those Re-Employed n Quarters After BYB Number Qtr Earn BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11 49,726 9,614 0.79 1.02 1.01 0.97 0.98 1.07 1.03 1.00 1.05 9,272 8,502 0.65 0.90 0.86 1.09 0.87 0.99 1.10 3,716 8,761 0.47 0.76 0.78 0.80 0.84 0.85 0.83 0.88 2,094 9,087 0.45 0.73 0.82 1,205 9,806 0.44 0.91 816 9,178 0.41 0.69 0.68 0.71 539 8,974 0.43 0.72 385 9,613 0.39 0.66 0.64 460 10,532 0.51 0.58 293 9,879 0.42 237 9,627 0.37

Avg Pre Ratio of Post-to-Pre Earnings for Younger Ohio UI Beneficiaries in 2001 for Those Re-Employed n Quarters After BYB Number Qtr Earn BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11 121,897 7,855 0.84 1.12 1.13 1.08 1.09 1.20 1.18 1.15 1.14 1.23 1.25 25,994 7,313 0.75 1.19 1.05 0.99 1.26 1.16 1.32 10,294 7,118 0.61 0.95 0.98 1.04 1.07 1.10 5,813 7,186 0.54 0.90 0.93 0.97 1.01 1.02 3,133 7,684 0.50 0.94 0.96 1.00 1.06 2,218 7,268 0.59 1.03 1,486 7,304 0.56 1,025 7,130 910 7,621 709 7,422 604 7,000 0.64

4. Policy Issues on Earnings Delay in reemployment delays earnings recovery Non-beneficiaries gaining reemployment show earnings gains Older UI exhaustees do not return to prior earnings levels Early reemployment of Applicants

5. Reemployment Job Tenure by Age Older UI Applicants who gain reemployment establish firmer attachments to hiring employers Employer attachment is stronger for those gaining reemployment sooner

2001 Probability of Older (50-65) Ohio UI Beneficiaries Staying with First Major Employer for those Re-Employed n Quarters After BYB Date Number BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11 77,152 49,744 9,277 3,717 2,097 1,205 818 540 386 460 293 239 1.00 0.87 0.80 0.74 0.71 0.68 0.66 0.64 0.62 0.60 0.59 0.83 0.61 0.57 0.46 0.52 0.50 0.81 0.55 0.51 0.48 0.45 0.43 0.56 0.47 0.72 0.65 0.88 0.73 0.67 0.89 0.76 0.69 0.85 0.79

2001 Probability of Younger (30-49) Ohio UI Beneficiaries Staying with First Major Employer for those Re-Employed n Quarters After BYB Date Number BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11 186,682 121,979 26,010 10,312 5,821 3,138 2,221 1,488 1,027 913 710 604 1.00 0.82 0.72 0.65 0.61 0.58 0.55 0.52 0.51 0.49 0.47 0.81 0.69 0.57 0.53 0.38 0.44 0.41 0.77 0.60 0.46 0.42 0.35 0.33 0.62 0.48 0.43 0.39 0.36 0.56 0.50 0.83 0.68 0.59 0.85 0.63 0.86

Ratio of Probability of Staying with First Major Employer for Older to Younger UI Beneficiaries Re-Employed n Quarters After BYB Date BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11 1.000 1.062 1.113 1.143 1.162 1.173 1.196 1.220 1.228 1.229 1.245 1.032 1.081 1.130 1.124 1.145 1.160 1.210 1.192 1.215 1.059 1.127 1.168 1.195 1.269 1.301 1.303 1.043 1.100 1.156 1.170 1.202 1.193 1.208 1.030 1.106 1.147 1.188 1.235 1.204 1.058 1.071 1.142 1.110 1.129 1.045 1.104 1.082 1.021 1.088 0.970 1.096 1.017

6. Summary and Conclusions UI Beneficiaries – Older have lower re-employment rates non-UI Beneficiaries – Delay in re-employment greatly reduces probability of employment UI Exhaustees – Recover quickly from low early rates of reemployment Earnings recovery is lower among older UI Applicants Employer attachment is stronger among older applicants gaining reemployment Early reemployment efforts could benefit all categories of UI applicants

Unemployment Insurance and Reemployment among Older Workers Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research www.upjohninstitute.org Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January 19-20, 2006, National Press Club, Washington, DC.