Are older workers hogging jobs?

The short answer is no – factually and emphatically no! But here’s a longer answer that explains why this damaging claim is simply untrue.

There’s a dangerous intergenerational conflict bubbling away that threatens to diminish all age groups and benefit none. It’s the claim that older Australians are clinging onto work too long and, in so doing, damaging employment prospects for younger workers. This is one of the front and centre claims in Jennifer Rayner’s recent book Generation Less: How Australia is cheating the young. As you will guess from the title, this book is unlikely to offer a ringing endorsement of older Australians. Which is fine. But it makes some very sad claims which are both untrue and destructive. In particular, when it comes to jobs, Ms Rayner is forthright in her statement:

“…having more people working into their 60s and beyond also comes at a very real cost to younger Australians. In earlier years, our parents’ generation moved steadily through pay rises and promotions as people filed out of work at 55 and freed up the ranks above them. But having got old themselves, they’re not giving up on those great careers. (YourLifeChoices italicised for emphasis) That leaves me and my peers butting up against a grey ceiling that compresses our potential and frustrates our ambitions. Worse, it may well see us earning less throughout key periods of our working lives” (page 35).

Resisting a strong impulse to say ‘diddums’, it must be noted from the outset that this statement generalises all levels and layers of the workforce to ‘old’ and ‘young’. And in discussing possible wealth creation, completely ignores the fact that older workers have not had access to compulsory superannuation for a sufficient time to build reasonable retirement savings. Younger workers, by the very fact of their youth, will have sufficient time to accrue such savings.

But these points are a distraction from the real issue underlying the issue of unemployment, underemployment and who is hurting the most.

Australia’s official unemployment rate is currently 5.7 per cent. But this is a false measure, based on the number of people who have worked a minimum of one hour in the reference week (!).

It does not take into account the underemployed (estimated by Roy Morgan Research to be closer to nine per cent) – those workers who cannot get as many work hours as they would like or need, or those who have simply given up on the hope that they will ever get work again. Many older Australians fall into this category and are now described as ‘retired’ despite the fact that their preference is to be working.

But much of the current debate – including Ms Rayner’s conclusions – fails to centre on the difficulty older workers face in retaining or gaining meaningful paid work. This has been well documented by the Brotherhood of St Laurence, the Australian Human Rights Commission (AHRC) and in YourLifeChoices own Willing to Work survey responses.

Instead the popular media approach focuses on the way ‘greedy, rich baby boomers’ are ruining opportunities for future generations in the housing market, the share of government welfare and the job market. So YourLifeChoices has researched the question of who is taking jobs from whom in the labour market and found the notion of ‘stealing’ jobs is founded on false logic.

You simply cannot ‘rob a job’ from someone else, according to Professor Simon Biggs at the University of Melbourne. “It seems as though it should be true, but the ‘lump of labour’ fallacy has been researched and proves that there is no set amount of jobs in the Australian economy or any other”.

The lump of labour fallacy to which Professor Biggs refers is well described in an article in the Buttonwood column in the Economist magazine:

“So why don’t the oldies keep the youngsters out of jobs? For the same reason that women don’t keep men out of jobs. When people work for a living, they earn money. They spend that money on goods and services that are produced by other people, young and old, male and female.”

So it’s time to dispel the myth that there exists a finite pool of jobs and one worker will be hired at another worker’s expense. In fact, research in the UK suggests that extending the working life of everyone, by one year, would add 1 per cent, or £55 billion to the UK GDP. Said UK older workers advocate, Dr Ros Altmann “the idea that older workers took jobs from the young is a myth”. In Australia, according to research by the Centre of Excellence for Population Ageing Research (CEPAR) GDP could be improved by 2.4 per cent if all non-participating people over 55 who wanted to work, could do so.

Rather than slavishly follow the currently fashionable view that one generation is taking all from another, as Professor Biggs notes, the biggest unemployment challenges are more closely aligned to a struggle between those in work and those out. “Those in work tend to be experienced. Those who fall out of work during a recession are the less skilled and less experienced.”

This can often affect younger workers, but with a decline in traditional manufacturing industries, it can also have a major impact on more mature workers.

And once out of work, as we have previously reported, it is the older workers (over 45!) who take twice as long to be rehired.

Professor Biggs also refers to the ‘precarity’ of work in Australia and around the globe, where increasing casualisation, lower wages and higher incidence of part-time contracts adversely affect all ages and women in particular. This financial disadvantage, of course, becomes entrenched in retirement when lower lifetime wages result in lower super savings which, in turn, translate into a far lower standard of living in retirement.

So let’s agree to get over the lump of labour fallacy for once and for all. More people working means more income, more money flowing into the economy and a higher likelihood of jobs for all generations. Now wouldn’t that be good?

What do you think? Have the economists got it right? Or do you believe different generations are competing for one pool of jobs? Do you have personal experience of this work issue that you would like to share?

Read more about this subject:
UK Daily Telegraph 
Munnell & Wu  
Simon Biggs on old age precarity

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