For the Unemployed Over 50, Fears of Never Working Again (updated)

[ProSense]

For the Unemployed Over 50, Fears of Never Working Again

By MOTOKO RICH

VASHON ISLAND, Wash. — Patricia Reid is not in her 70s, an age when many Americans continue to work. She is not even in her 60s. She is just 57.

But four years after losing her job she cannot, in her darkest moments, escape a nagging thought: she may never work again.

College educated, with a degree in business administration, she is experienced, having worked for two decades as an internal auditor and analyst at Boeing before losing that job.

But that does not seem to matter, not for her and not for a growing number of people in their 50s and 60s who desperately want or need to work to pay for retirement and who are starting to worry that they may be discarded from the work force — forever.

Since the economic collapse, there are not enough jobs being created for the population as a whole, much less for those in the twilight of their careers.

Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.

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Updated to add...

Calculated Risk:

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It is hard for people in their 50s to change careers, or rebuild their savings after a long period of unemployment. And, as in the story, they may end up taking Social Security early - just to get by - and that means they will receive a significantly lower monthly payout than if they waited until 66. A very tough situation.

Mark Thoma:

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People need jobs, or more social support until jobs appear, and both the Congress and the Fed are failing to do all that they can do to help. Apparently, imagined fears of deficits and inflation are more important than the real struggles of the unemployed.

[kirby]

1. Most likely due to Health Care

An employers having to provide Health Care for someone in their 50's is just too expensive. Maybe in 2014 when the exchanges open up,
the larger pools with lower costs for businesses, but I wont hold my breath - plus the lady in the article will be in her 60's then.

[Vincardog]

2. More likely it is CHEAPER to hire someone just off the boat from India who will work for free

[phantom power]

5. forget India, it's cheaper to hire young people period...

RCGs make a fraction of the salary a person with seniority does. And their skills may be more up to date. And they are more likely to be single, making it easy to work long hours.

And there's just plain age-ism.

I'd say the decade of 50-60 is yet another "donut hole" in our system. Too young to retire, too old to re-hire. At least in an economy with 16% unemployment, where it's a hire-er's market.

[ProSense]

3. Yeah, businesses

were anticipating that health care reform would pass so they took a early jump on things in 2007, leading to more than 8 million people losing their jobs. Also, we know that the increase in executive pay is because you have to pay people at the top excessive amounts and cut their taxes before any hiring can be done.

[kirby]

4. Most new jobs...

are created by small businesses. Most small businesses do not have the massive executive pay issue. Most small businesses simply cannot afford health care to hire new workers. If they need to hire, they are very sensitive to the age/health of the worker because the premiums can bankrupt the company. I don't think the anticipation of health care 'reform' passing had anything to do with people losing their jobs--that was due to a whole different set of issues, namely the bursting of the housing bubble which choked off consumer consumption spending.

[ProSense]

6. No

"If they need to hire, they are very sensitive to the age/health of the worker because the premiums can bankrupt the company."

Health Care Relief for Small Businesses

By TARA PARKER-POPE

Small businesses struggling to provide health benefits to workers may win some much needed relief under the new health reform law, reports Walecia Konrad in today’s Patient Money column.

Just over one-third of Americans work for small businesses with fewer than 100 employees. If you’re one of those workers, you know that very few small companies offer comprehensive health insurance — or, for that matter, any health insurance at all. Even when they do, premiums can be prohibitively expensive, because small businesses can’t negotiate the discounts given to large group plans.

To help close that gap, the government this year is offering a tax credit to companies with fewer than 25 full-time workers and average wages of less than $50,000 a year…. Not every small shop will qualify for the credits, but a recent study by two advocacy groups, Small Business Majority and Families USA, estimated that 84 percent of small businesses were eligible.

To learn more, read the full column, “As Small Businesses Struggle to Pay Health Premiums, Tax Credit Will Lighten the Load,” and then please join the discussion below.

So there is significant relief this year (that wouldn't be there without reform) and this long before the full requirements are implemented.

[kirby]

7. Yes...

Many small businesses do not base their planning on a 'tax credit' because they will not see that money until a year later. Many of the high-tech growth industries pay wages higher than $50,000 and are exempt from the tax credit provision. Rates have been going up 20-30% per year for businesses. The tax credit is phased out for wages between $25,000-$50000. For those who qualify, a tax credit of up to 35% helps, but does not address the underlying issue. The business still has to pay a much larger premium for older worker as opposed to a younger worker. Older workers typically earn more which means they bring up the average wage of the company and reduce/eliminate the tax credit.

Even worse, the tax credit is calculated based on the 'average small group market' in your state. It is not based on what your specific business actually pays.

[ProSense]

8. Hmmmm?

"Many small businesses do not base their planning on a 'tax credit' because they will not see that money until a year later."

What does that have to do with them hiring and trying to provide health care? There is a lot of money small businesses don't see immediately. If they consciously want to provide their employees with health care, they're going to take advantage of the breaks. Again, these are breaks they didn't have last year.

The health care law doesn't go into effect until 2014 so there is no requirement that any small business offer health care.

[kirby]

9. Well..

When a business owner is making a decision of whether to expand by hiring an additional employee or not, they consider these things. If their only incentive is a complicated tax credit (believe me, I've read the IRS stuff on this) that will not materialize until next years tax return, they might not hire. And if they do, they might choose to hire the younger person. That whole point of this discussion/original post was why people in the 50's are having trouble getting a job and I am trying to explain one major reason.

I would think many people on unemployment (due to lay-off) would rather stay unemployed in order to continue to qualify for COBRA benefits than take a job that does not offer health care. So the 50 year old are looking specifically for jobs that provide health benefits.

[ProSense]

10. You're making excuses to justify why businesses aren't hiring

but none of them have anything to do with the current situation. Businesses did not have these tax breaks for health care prior to the law, and any difficulty in making hiring decision prior to that were dealt with.

They will now get tax breaks to offset health care costs. Dealt with it. Life is rough for a lot of Americans. If business want to use the recession as an excuse to not hiring, then that's on them. They can blame insurance companies for continuning to jack up premiums year after year.

They can't blame it on the health care law, which provides relief to make their decision making a little easier.

[kirby]

11. Wow...

"If business want to use the recession as an excuse to not hiring"

That statement is laughable.

"They will now get tax breaks to offset health care costs."

I just finished posting earlier how limited these credits are, how they are not addressing the continuing massive yearly increases, how the 35% tax-credit is phased out if the average payroll is over $25,000, how the tax-credit is calculated based on the 'average' premium in a state, not the businesses actual costs, etc. The tax credit cannot be used for small family businesses, etc.

I'm sorry I ever tried to engage in a discussion with you.

[ProSense]

12. Sorry, I meant:

If business want to use the recession as an excuse for not hiring


You: "I just finished posting earlier how limited these credits are, how they are not addressing the continuing massive yearly increases, how the 35% tax-credit is phased out if the average payroll is over $25,000, how the tax-credit is calculated based on the 'average' premium in a state, not the businesses actual costs, etc. The tax credit cannot be used for small family businesses, etc."

Who cares how limited they are? What were these businesses doing before? How did they manage? How would they have managed if reform had failed?

Claiming that the health care law, which offers a tax break, is making it more difficult is preposterous.

From the NYT article:

But premium increases in recent years were so astronomical that health care costs had been eating up 30 percent of the store’s revenue, about $78,000 a year. “That’s just not sustainable for any business,” Ms. Burton said.

<...>

After sorting through the somewhat complicated requirements, Ms. Burton discovered her store was eligible for the full credit, which will give the business a rebate of $21,000 this tax year. So for now, the King’s English is still in business, and Ms. Burton and her employees have kept their insurance.

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To help close that gap, the government this year is offering a tax credit to companies with fewer than 25 full-time workers and average wages of less than $50,000 a year. To qualify, employers must pay at least 50 percent of their employees’ health care premiums.

Small businesses with 10 full-time employees or fewer earning an average of $25,000 or less are eligible for the largest credit, 35 percent of their health insurance premium costs. Companies with larger numbers of employees earning more receive smaller credits on a sliding scale.

[kirby]

13. As I said...

"Who cares how limited they are? What were these business doing before? How did they manage? How would they have managed if reform had failed?"

The difference was that they were not in the middle of a recession! Previously, we were in a bubble economy that was artificially growing. 'Consumers' had money to spend and businesses were able to hire to meet that demand. Since the recession hit they either laid people off or maintained their current level of employees. However, each year keeping those employees is more and more expensive because of rising health care costs. The decision to hire additional employees is even more strained for all these reasons.

"Claiming that the health care law, which offers a tax break, is making it more difficult is preposterous. "

And where did I claim that the tax break was making it more difficult? You are putting words in my mouth. I said that rising health care costs during a recession are making it almost impossible for older job seekers (those in their 50's) to find a job.