the great recession, the social safety net, and economic security for older americans richard w....
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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+
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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
Source: 2008 SIPP panel.
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