The Great Recession led to large increases in unemployment rates and unemployment durations for workers of all ages, but durations rose far more for older workers than for younger workers. This difference was apparent both during and after the recession, fueling speculation that age discrimination played a role. Research indicates that in states with stronger age discrimination protections, older-worker unemployment durations increased more relative to increases for younger workers. This suggests that state age discrimination laws may need to be modified to strengthen protections during downturns.
The sharp increases in the duration of unemployment for older workers during and after the Great Recession indicate that older individuals who lost their jobs because of the downturn or who were seeking new employment have had a harder time finding work than other workers have. Increasing unemployment duration for older workers has led to speculation that age discrimination may have played a role. Increased discrimination during poor labor markets might be expected because long queues of job applicants allow employers to apply more arbitrary selection criteria when making hiring decisions.
Many states offer stronger protection against age discrimination than does the federal Age Discrimination in Employment Act (ADEA). Furthermore, research suggests that these stronger age discrimination protections helped older workers in the years before the Great Recession. For example, these antidiscrimination measures are associated with shorter unemployment durations and greater hiring rates for older workers. This Economic Letter explores whether these stronger state-level age discrimination protections guarded older workers during and after the Great Recession, especially unemployed older workers seeking jobs.
Analysis
We focus on two features of state age discrimination laws. First, state laws vary on the minimum number of employees an employer must have for age discrimination laws to apply. States with lower minimums have stronger laws since some employees are covered who are not protected by the federal ADEA, which applies only to employers with 20 or more employees. During our 2003–11 sample period, 34 states had lower employer size minimums.
Second, some state age discrimination laws provide for larger damages than the ADEA by allowing compensatory or punitive damages. Federal law only allows for more than liquidated damages, that is, the actual cost of damages incurred, in cases of willful violation. During our sample period, 29 states allowed larger damages under less strict standards. Research has found that these two types of stronger protections enabled older workers to remain employed longer and may have increased hiring (see Neumark and Song 2013).
The available data do not tell whether the extent of age discrimination after the Great Recession varied across states depending on their age discrimination laws. However, we can ask whether these state protections were associated with less adverse effects of the recession on older workers compared with younger workers.
