the great recession, the social safety net, and economic security for older americans richard w....

The Great Recession, the Social Safety Net, and Economic Security for Older

Americans

Richard W. Johnson and Karen E. Smith

Urban Institute

Presented at the 17th Annual RRC Conference

August 7, 2015

How Did the Great Recession Affect Older Adults?

• We examine trends in labor force statistics, income, wealth, Social Security claiming behavior• compare outcomes in various datasets

• We model Social Security claiming behavior • use administrative data from 1980 to 2011

linked to household surveys

How Did Unemployment Affect Older Workers and Their Families during the Great Recession

and Recovery?• We measure:• unemployment • time to

reemployment• earnings • income level and source • poverty

• How effective were various types of insurance and income supports?• unemployment insurance• retirement and disability benefits• other income supports (SNAP)• family (spousal earnings)

• Compare outcome by age, before and after recession

Measuring Unemployment

• Restrict sample to adults ages 25+ who were employed for at least one full month in first 6 months of survey• requires fairly strong attachment to labor force• workers younger than 25 are excluded

• Unemployment spell begins when a worker has been (1) out of work and (2) on layoff or looking for work for an entire month• more stringent criteria than official

unemployment rate

• Unemployment spell continues until worker receives earnings• captures discouraged workers

Survey of Income and Program Participation

• SIPP interviews respondents every 4 months

• We track workers for 45 months before and after the recession• Before: 2004 panel (Jan. 2004 – Sept. 2007)• After: 2008 panel (Aug. 2008 – April 2012)

• Compare outcomes by age• 25 – 34• 35 – 49• 50 – 61• 62+

• Focus on long-term unemployed workers• out of work for at least 6 months

The Recession Substantially Increased the Likelihood of a Long-Term Unemployment Spell

Any 6+ months 12+ months

9%

2%1%

14%

6%

3%

Share of Workers Ages 25+ Ever Unemployed over a

45-Month Period

Before Re-cession

After Recession

Source: 2008 SIPP panel.

Younger Workers Were More Likely than Older Workers to Become Unemployed During the

Recession and Recovery

Any 6+ months 12+ months

17%

6%

2%

14%

6%

3%

12%

6%

3%

7%

3%2%

Share of Workers Ages 25+ Ever Unemployed between Aug. 2008 and April 2012, by Age

25-34

35-49

50-61

62+


Older Unemployed Workers Spent More Time out of Work than Their Younger Counterparts

25+ 25-34 35-49 50-61 62+

4.5 4.2 4.5 5.1

7.77.56.3

7.38.7

Median Length of Unemployment Spell by Age, before and after Recession (months)

Before Recession

After Re-cession

> 24


Unemployment Spells Were Nearly Twice as Likely to Last 12+ Months after the Start of the Recession as

Before

25+ 25-34 35-49 50-61 62+

20%17% 17%

25%

47%

37%32%

36%

43%

63%

Share of Unemployment Spells that Lasted at Least

12 Months by Age, before and after Recession

Before Recession

After Re-cession


Yet, Long-Term Unemployed Workers Were Less Likely to Become Impoverished during the Recession

25+ 25-34 35-49 50-61 62+

44%

54%

47%

34%

12%

37%

44%39%

29%

13%

Share of Long-Term Unemployed Workers in Poverty,

by Age

Before Recession

After Re-cession


Unemployment Insurance Extensions Substantially Increased the Program’s Reach during the Recession

25+ 25-34 35-49 50-61 62+

22%

15%

26%22%

24%

48%

38%

50%

56%

44%

Share of Long-Term Unemployed Workers Col-lecting Unemployment Insurance Benefits, by

Age

Before Recession

After Re-cession


Unemployment Benefits Still Generally Replace Less than Half of Lost Earnings

25+ 25-34 35-49 50-61 62+

41%44%

40%38%

44%44%48%

44%41% 42%

Median Share of Earnings Replaced by Un-employment Insurance for Long-Term Unem-

ployed Workers, by Age

Before Recession

After Re-cession


Supplemental Nutrition Assistance Program Benefits and Other Government Help Became More Common at Older

Ages

25+ 25-34 35-49 50-61 62+

23%

36%

24%

11%

5%

25%

34%

26%

17%

11%

Share of Long-Term Unemployed Workers Receiving SNAP and Other Government As-

sistance, by Age

Before Recession

After Re-cession


Spousal Earnings Protected Many Long-Term Unemployed Workers Ages 62+ during the Recession

25+ 25-34 35-49 50-61 62+

33%

25%

40%36%

18%

34%

27%

38% 38%

28%

Share of Long-Term Unemployed Workers with Spousal Earnings, by Age

Before Recession

After Re-cession


Single Long-Term Unemployed Workers Are Much More Likely to Fall Into Poverty than Their Married

Counterparts

7% 8%

20% 17%

28% 26%

58%

48%

Share of Long-Term Unemployed Workers in Poverty,

by Marital Status

One month before un-employment spell

Six months after spell began

Married Single


Retirement and Disability Benefits Helped Fewer Older Unemployed Workers than in the Past

25+ 25-34 35-49 50-61 62+

12%

2% 4%

19%

86%

9%2% 3%

11%

78%

Share of Long-Term Unemployed Workers Receiving Retirement or Disability Benefits,

by Age

Before Recession

After Re-cession


Many Unemployed Workers Suffered Large Earnings Losses When They Became Reemployed during the

Recession

25+ 25-34 35-49 50-61 62+

11%

8%10%

18%20%

16%

9%

17%

23%

33%

Median Percent Decline in Monthly Earnings for Unemployed Workers Who Become Reem-

ployed, by Age

Before Recession

After Re-cession


Conclusions

• Unemployment insurance extensions expanded the program’s reach during the Great Recession and its aftermath • helped keep the poverty rate relatively low

• Spousal earnings protected many workers who lost their jobs

• Social Security kept many unemployed workers ages 62+ out of poverty

• But wage penalties associated with unemployment suggest longer-term consequences

the great recession, the social safety net, and economic security for older americans richard w....

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