Study Warns that Employers are Using the Covid Economic Slump to Purge Older Workers

New research from the National Bureau of Economic Research finds that, yes, age discrimination rises hand in hand with the unemployment rate. Older workers tend to be the first to be fired and the last to be hired back. 

Economists Gordon Dalh of the University of California, San Diego, and Matthew Knepper of the University of Georgia ran the numbers on age-discrimination complaints filed with the Equal Employment Opportunity Commission and compared them with the unemployment rates in the relevant industry and U.S. state at the time.

They found that for each 1 percentage point increase in a state-industry’s monthly unemployment rate, the volume of age discrimination firing and hiring charges increases by 4.8% and 3.4%, respectively.

And that was even more true when they eliminated weaker or possibly frivolous complaints, and looked only at those that the EEOC deemed had merit and deserved further investigation. “Even though the incentive to file weaker claims is stronger when unemployment is high, they found that the fraction of meritorious claims also increases significantly when labor market conditions deteriorate.

They also ran analyses of a study conducted in 2012 that sent out fake (female) résumés across the country in response to job openings. That analysis found that each percentage point increase in the local unemployment rate reduces the callback rate for older women by 1.7 % relative to younger women. That equates to a 16% relative decline in callback rates for each percentage point added to the unemployment rate.

The bottom line is that the higher the unemployment rate, the likelier employers are to favor younger women applicants over older women applicants. “All else equal, an older female is 6.8% less likely to receive a callback when she is competing against two additional younger female applicants, which translates to a 63% reduction relative to the mean.

They summarize their findings this way: “Taken together, our two analyses provide compelling evidence that age discrimination rises as labor markets deteriorate. As far as we know, this is the first direct evidence for age discrimination varying with the business cycle, both for the firing and hiring margins.”

Read More: Age Discrimination Across the Business Cycle