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United States Government Accountability Office: 
GAO: 

Report to the Chairman, Special Committee on Aging, U.S. Senate: 

April 2012: 

Unemployed Older Workers: 

Many Experience Challenges Regaining Employment and Face Reduced 
Retirement Security: 

GAO-12-445: 

GAO Highlights: 

Highlights of GAO-12-445, a report to the Chairman, Special Committee 
on Aging, U.S. Senate. 

Why GAO Did This Study: 

The number of workers age 55 and over experiencing long-term 
unemployment has grown substantially since the recession began in 
2007. This raises concerns about how long-term unemployment will 
affect older workers’ reemployment prospects and future retirement 
income. 

In light of these developments, GAO examined (1) how older workers’ 
employment status has changed since the recession, (2) what risks 
unemployed older workers face and what challenges they experience in 
finding reemployment, (3) how long-term unemployment could affect 
older workers’ retirement income, and (4) what other policies might 
help them return to work and what steps the Department of Labor 
(Labor) has taken to help unemployed older workers. 

To conduct this work, GAO analyzed nationally representative datasets, 
led focus groups of unemployed older workers, modeled how job loss 
affects retirement income, and interviewed experts and federal and 
local officials. 

What GAO Found: 

As with many other demographic groups, older workers’ unemployment 
overall and long-term unemployment rates have increased dramatically 
since the recession began in 2007. In December 2011, the unemployment 
rate for older workers was 6.0 percent, up from 3.1 at the start of 
the recession, but down from its peak of 7.6 percent in February 2010. 
In particular, long-term unemployment rose substantially, and at a 
greater rate for older than younger workers. By 2011, 55 percent of 
unemployed older workers had been actively seeking a job for more than 
half a year (27 weeks or more). Meanwhile, the long-term trend of 
rising labor force participation rates among older workers has 
continued, with the recession possibly amplifying this trend. 
Long-term unemployment can put older workers at risk of deferring 
needed medical care, losing their homes, and accumulating debt. The 
experts and staff GAO interviewed at some one-stop career centers, as 
well as the unemployed older workers who participated in GAO’s focus 
groups, identified employer reluctance to hire older workers as a key 
challenge that older workers face in finding reemployment. They also 
identified out-of-date skills, discouragement and depression, and 
inexperience with online applications as reemployment barriers for 
older workers. Some one-stop staff who serve older workers told GAO 
that providing the type of assistance some older workers need to 
address these unique challenges can be very time-consuming. For audio 
clips from GAO’s focus groups with unemployed older workers, use this 
link: [hyperlink, 
http://www.gao.gov/multimedia/video/#video_id=590295]. 

Long-term unemployment can substantially diminish an older worker’s 
future retirement income in several ways. First, it can force a worker 
to stop working and stop saving for retirement earlier than the worker 
had planned. Second, long-term unemployment can lead individuals to 
draw down their retirement savings to cover living expenses while they 
are unemployed, which was a common life experience described by GAO’s 
focus group participants. GAO illustrated how a hypothetical worker 
who had $70,000 in retirement savings at age 55 and withdrew 50 
percent of those savings during a 2 year period of unemployment, would 
need about another 5½ years of work and saving to rebuild the 
retirement account to the level it had been before unemployment began. 
In addition, long-term unemployment can motivate older workers to 
claim early Social Security retirement benefits, which will result in 
lower monthly benefits for workers and their survivors for the rest of 
their lives. 

Experts GAO interviewed selected various policies that have been 
proposed to help address unemployed older workers’ reemployment 
challenges. Experts selected these policies from a broad list GAO 
compiled from previous academic studies. For example, two of the 
policies that experts selected would provide incentives such as 
temporary wage or training subsidies for employers to hire long-term 
unemployed older workers. In the current context of high unemployment 
and slow job creation, the impact of most of these policies is likely 
to be muted by limited job openings. After an interagency Taskforce 
issued its report on the aging of the American workforce in 2008, 
Labor implemented several strategies the report recommended, but since 
the recession started, Labor shifted focus to responding to increased 
demand for services. As the economy improves, Labor could refocus on 
older job seekers and consider what additional strategies would help 
address their unique reemployment challenges, in light of recent 
economic and technological changes. 

What GAO Recommends: 

To foster the employment of older workers, we recommend that the 
Secretary of Labor consider what strategies are needed to address the 
unique needs of older job seekers, in light of recent economic and 
technological changes. 

Labor agreed with our recommendation. GAO received technical comments 
on a draft of this report from Labor and the Social Security 
Administration, and incorporated them as appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-12-445]. For more 
information, contact Charlie Jeszeck at (202) 512-7215 
jeszeckc@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Older Workers' Employment Prospects Have Deteriorated: 

Unemployed Older Workers Face Many Challenges Coping with Unemployment 
and Regaining Employment: 

Job Loss Can Diminish Retirement Income Prospects: 

Experts Selected Policies to Consider as the Economy Recovers, and 
Labor Has Taken Some Steps to Help Older Workers: 

Conclusions: 

Recommendation: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Workforce Status of Workers Displaced between 2005-2007 
and 2007-2009 in January 2008 and January 2010: 

Appendix III: Additional Figure Notes for Employment Figures, 
Including Statistical Significance Tests: 

Appendix IV: Quotes from Focus Groups with Long-Term Unemployed Older 
Workers: 

Appendix V: Percentage of the Population 50 and Older, but Less than 
Full Retirement Age, with Initial Dispositions and Awards of Social 
Security Disability Insurance, 2000-2010: 

Appendix VI: Proposed Policies Presented to External Experts: 

Appendix VII: Comments from the Department of Labor: 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Experts' Views on Key Strengths and Limitations of Selected 
Policy Proposals to Help Address Perceived Employer Reluctance to Hire 
Older Workers: 

Table 2: Experts' Views on the Strengths and Limitations of Selected 
Policy Proposals to Enhance Reemployment Assistance Specifically 
Targeted to Older Workers: 

Table 3: Experts' Views on the Strengths and Limitations of Selected 
Policy Proposals to Encourage Older Workers to Obtain Reemployment as 
Quickly as Possible: 

Table 4: Comparison of Seasonally Adjusted and Unadjusted Unemployment 
Rates for Workers Age 55 and Older, Selected Months: 

Table 5: Selected Quotes from Focus Groups with Long-Term Unemployed 
Older Workers: 

Figures: 

Figure 1: Sources of Aggregate Income for Households with Someone Aged 
65 or Older, 2008: 

Figure 2: Estimated Unemployment Rates by Age, 2007-2011: 

Figure 3: Estimated Number of Unemployed and Underemployed Older 
Workers (55 and Over), 2007-2011: 

Figure 4: Growth in Estimated Long-Term Unemployment of Older Workers 
(55 and Over), 2007-2011: 

Figure 5: Difference between the Estimated Number of Unemployed of All 
Ages and the Estimated Number of Available Jobs, 2007-2011, and 
Various Explanations for High Unemployment: 

Figure 6: Estimated Duration of Unemployment for Older Workers (55 and 
Over) by Industry, 2007 and 2011: 

Figure 7: Estimated Unemployment Rates by Demographic Group for Older 
Workers (55 and Over), 2007 and 2011: 

Figure 8: Estimated Duration of Unemployment by Age and by Gender, 
2007 and 2011: 

Figure 9: Estimated Labor Force Participation Rates by Age, 1948-2011: 

Figure 10: Estimated Percentage of Reemployed Displaced Workers Who 
Earned Less on Their New Full-Time Jobs than on Their Previous Jobs, 
January 2010: 

Figure 11: Potential Effect That Fewer Years of Work Can Have on 
Retirement Benefits for Workers with Median-Level Retirement Benefits 
from Employer-Sponsored Plans and Median-Level Retirement Benefits 
from Social Security: 

Figure 12: Potential Effect That Fewer Years of Work Can Have on 
Social Security Retirement Benefits of Workers without Employer-
Sponsored Retirement Plans: 

Figure 13: Example of the Effect of Early Claiming on Monthly Social 
Security Retirement Benefits: 

Figure 14: How Drawdowns from Retirement Savings during Unemployment 
Can Affect Amounts Saved at Time of Retirement if a Worker Became 
Reemployed and Resumed Saving: 

Figure 15: Estimated Levels of Retirement Savings and Types of Plan 
Participation for Employed Workers 55 and Over and Their Households, 
2007: 

Abbreviations: 

AoA: Administration on Aging: 

BLS: Bureau of Labor Statistics: 

CMS: Centers for Medicare and Medicaid Services: 

CPS: Current Population Survey: 

DB: defined benefit: 

DC: defined contribution: 

DWS: Displaced Worker Supplement: 

EBRI: Employee Benefit Research Institute: 

GATE: Growing America Through Entrepreneurship: 

HRS: Health and Retirement Study: 

IRA: individual retirement account: 

JOLTS: Job Openings and Labor Turnover Survey: 

NBER: National Bureau of Economic Research: 

OASDI: Old-Age, Survivors, and Disability Insurance: 

SBA: Small Business Administration: 

SCF: Survey of Consumer Finances: 

SCSEP: Senior Community Service Employment Program: 

SSA: Social Security Administration: 

SSI: Supplemental Security Income: 

UI: Unemployment Insurance: 

WIA: Workforce Investment Act of 1998: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 25, 2012: 

The Honorable Herb Kohl: 
Chairman: 
Special Committee on Aging: 
United States Senate: 

Dear Mr. Chairman: 

The recent recession in 2007-2009 was the worst since the Great 
Depression, and has been characterized by historically high levels of 
long-term unemployment.[Footnote 1] While it is crucial that the 
nation help people of all ages return to work, long-term unemployment 
has particularly serious implications for older Americans (age 55 and 
over). Older workers’ job loss threatens not only their immediate 
financial security, but their ability to support themselves during 
retirement. While unemployed, older Americans may stop saving for 
retirement or tap into retirement savings to pay for critical living 
expenses. And while working longer may be the best solution for those 
approaching retirement with exhausted or otherwise inadequate savings, 
this strategy depends upon older workers being able to find and retain 
employment. To the extent that unemployed older workers face unique 
reemployment challenges, their ability to get the jobs they need to 
support themselves and protect or rebuild their retirement savings 
could be limited. 

Given your interest in the employment and retirement prospects of 
older workers-—those aged 55 and over-—since the onset of the 
recession, we examined (1) how the employment status of older workers 
has changed since the recession, (2) older workers’ financial risks 
from long-term unemployment and challenges in finding new jobs, (3) 
how periods of long-term unemployment might affect older workers’ 
retirement income, and (4) what other policies might help unemployed 
older workers regain employment and what steps the Department of Labor 
(Labor) has taken to help unemployed older workers. 

To examine changes in the employment status of older workers since the 
start of the recession, we analyzed nationally representative 
unemployment and demographic data from the Bureau of Labor Statistics 
(BLS), including 2007 through 2011 data from the Current Population 
Survey (CPS), the Job Openings and Labor Turnover Survey (JOLTS), and 
the 2008 and 2010 Displaced Worker Supplement (DWS). To learn about 
older workers’ financial risks from long-term unemployment and 
challenges in finding new jobs, we conducted focus groups with 
unemployed older workers in four metropolitan areas and also 
interviewed staff at one-stop career centers in each of the four 
areas.[Footnote 2] For audio clips from GAO’s focus groups with 
unemployed older workers, use this link: [hyperlink, 
http://www.gao.gov/multimedia/video/#video_id=590295]. Further, we 
interviewed experts on older workers’ issues and reviewed studies. To 
assess how periods of long-term unemployment might affect older workers’
retirement income, we used microsimulation models to estimate monthly 
retirement income for workers who stopped work at different ages. 
[Footnote 3] We also analyzed data on retirement savings from the 
nationally representative 2007 Survey of Consumer Finances and 
interviewed officials at the Social Security Administration (SSA). 
[Footnote 4] To identify what policies might help unemployed older 
workers regain employment and what Labor has done to help older 
workers, we interviewed experts on policy proposals previously 
identified through a review of the literature and interviewed Labor 
officials. 

We conducted this performance audit from October 2010 through April 
2012 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence we obtained provides a reasonable basis 
for our findings and conclusions based on our audit objectives. For 
more information on our scope and methodology, see appendix I. 

Background: 

Unemployment Insurance and Employment and Training Programs Serving 
Unemployed Older Workers: 

Several different programs, including the federal-state Unemployment 
Insurance (UI) program and employment and training programs 
administered by Labor, help unemployed workers, and one program is 
specifically for low-income individuals 55 and over. First, the UI 
program provides eligible unemployed individuals temporary benefits 
that partially replace their lost wages. The UI program is a federal-
state program that is generally funded through taxes on employers and, 
in some states, employee contributions. Eligibility requirements and 
benefit levels vary by state within federal guidelines, but a recently 
enacted federal law will require individuals to be able, available, 
and actively looking for work as a condition of eligibility for 
unemployment benefits.[Footnote 5] UI benefits are generally available 
to eligible unemployed workers for up to 26 weeks,[Footnote 6] but 
extended benefits are sometimes made available to those who exhaust 
these benefits, as has occurred during the recent recession.[Footnote 
7] 

Second, the Workforce Investment Act of 1998 (WIA) established the 
adult and dislocated worker programs, which authorize grants to states 
for a broad range of employment and training activities, including job 
search assistance, assessment, and training for eligible individuals. 
[Footnote 8] States that receive funds under WIA must report on the 
performance of these programs using performance measures that gauge 
program results for participants in the areas of job placement, 
retention, and earnings, among others.[Footnote 9] States are held 
accountable by Labor for their performance and may receive incentive 
funds or financial sanctions based on whether they meet expected 
performance levels for each measure.[Footnote 10] 

Last, the Senior Community Service Employment Program (SCSEP) provides 
subsidized, community service-based on-the-job training for low-income 
individuals age 55 and over who are unemployed, with an emphasis on 
those who have poor employment prospects.[Footnote 11] Labor evaluates 
the performance of state and local areas receiving SCSEP funds using 
performance measures similar to those used for the WIA adult and 
dislocated worker programs.[Footnote 12] 

Structural versus Cyclical Unemployment: 

Economists often classify involuntary unemployment as either 
structural or cyclical.[Footnote 13] Structural unemployment arises 
when barriers--such as skills or geographical mismatches--prevent 
workers from matching their skills to available jobs. In contrast, 
cyclical unemployment arises when there is a decrease in the overall 
demand for goods and services in an economy. As a result of such 
decreases, employers may temporarily lay off workers or cut back their 
employees' hours until the economy improves. Research suggests that 
much of the increase in unemployment since 2007 has been cyclical 
rather than structural.[Footnote 14] 

Labor's Taskforce Report on the Aging of the American Workforce: 

In 2006, Labor convened an interagency[Footnote 15] Taskforce on the 
Aging of the American Workforce (the Taskforce)[Footnote 16] and 
issued a report in 2008 highlighting strategies for increasing older 
Americans' workforce participation.[Footnote 17] The Taskforce 
considered a broad range of issues concerning the aging of the 
American workforce, including legal and regulatory barriers that could 
prevent older workers from participating in the workforce, flexible 
work arrangements, and tools and technical assistance to support older 
workers' employment. The Taskforce report recommended that Taskforce 
agencies continue to work together to implement strategies it had 
identified, such as to coordinate research and demonstration agendas 
and inventory legal and regulatory barriers that could limit older 
workers' employment. The Taskforce's recommendations mainly dealt with 
potential actions Taskforce agencies could undertake to help older 
Americans remain in or reenter the workforce or pursue self-employment. 

Sources of Retirement Income: 

While income in retirement comes from a variety of sources, in the 
aggregate, Social Security retirement benefits are the largest source 
of retirement income for households with someone aged 65 or older. 
Other financial assets such as income from employer-sponsored 
retirement plans, private savings, and assets such as home equity are 
important sources of retirement income for many. (See figure 1.) 

Figure 1: Sources of Aggregate Income for Households with Someone Aged 
65 or Older, 2008: 

[Refer to PDF for image: pie-chart] 

Social Security: 36.5%; 
Employment earnings: 29.7%; 
Pension and annuity: 18.4%; 
Income from assets: 12.7%; 
Cash public assistance: 0.6%; 
Other: 2.1%. 

Source: SSA; Office of Retirement and Disability Policy, Income of the 
Population 55 or Older, 2008. 

Note: "Household" here refers to what SSA identifies as aged units--
either a married couple living together or an unmarried person. The 
age of a married couple is the age of the husband if he is 55 or 
older; if the husband is younger than 55, the age of the married 
couple is the age of the wife. Thus a married couple is considered to 
be 65 or older if the husband is 65 or older or if the husband is 
younger than 55 and his wife is 65 or older. Data reported by SSA for 
pension income includes regular payments from defined benefit and 
defined contribution plans and from individual retirement accounts 
(IRA) and Keogh accounts, but nonregular (nonannuitized or lump sum) 
withdrawals from IRA, Keogh, and defined contribution plans are not 
included. Social Security income includes retirement, auxiliary (such 
as spousal), survivors, and disability benefits. Data reported for 
income from assets include interest income; income from dividends, 
rents, or royalties; and estates or trusts. Other income includes 
noncash benefits, veterans' benefits, UI benefits, workers' 
compensation, and personal contributions. Income from others is 
excluded. The 95 percent confidence intervals for the share of 
aggregate income are 35.9 to 37.1 percent for Social Security, 29.1 to 
30.3 for employment earnings, 17.9 to 18.9 for pension and annuity 
income, 12.3 to 13.1 for income from assets, 1.9 to 2.3 for other, and 
0.5 to 0.7 for cash public assistance. 

[End of figure] 

Social Security retirement benefits are paid to eligible workers under 
the Old-Age, Survivors, and Disability Insurance (OASDI) program 
administered by SSA. The level of monthly retirement benefits an 
individual will receive depends on factors such as work and earnings 
history and the age at which the beneficiary chooses to begin 
receiving benefits.[Footnote 18] Generally, individuals may begin 
receiving Social Security retirement benefits at age 62; however, the 
payments will be lower than if they wait to receive benefits at their 
full retirement age, which varies from 65 to 67, depending on the 
individual's birth year.[Footnote 19] In contrast, the monthly benefit 
is increased for workers who delay receiving benefits beyond their 
full retirement age up to age 70.[Footnote 20] Employees and employers 
pay payroll taxes that finance Social Security benefits. Social 
Security also provides benefits to eligible workers who become 
disabled before reaching retirement age, as well as children, spouses, 
and widow(er)s of eligible workers. Benefits are based upon a common 
formula but are calculated differently for the different beneficiary 
types.[Footnote 21] 

Employer-sponsored retirement plans fall into two broad categories: 
defined benefit (DB) plans and defined contribution (DC) plans. DB 
plans promise to provide a benefit that is determined by a formula 
based on particular factors specified by the plan, such as salary or 
years of service. Typically, DB plans provide annuity payments to 
retirees on a monthly basis that continue as long as the recipient 
lives.[Footnote 22] Under DC plans, workers and employers may make 
contributions into individual accounts.[Footnote 23] At retirement, 
participants' distribution options vary depending on the plan, but 
often include leaving their money in the plan, taking a full or 
partial distribution, or purchasing an annuity. In order to preserve 
the tax benefits from their DC plan savings, many participants chose 
to roll plan savings into an individual retirement account (IRA). IRAs 
are personal retirement savings arrangements that allow individuals to 
make contributions to an individual account and receive favorable tax 
treatment.[Footnote 24] 

Older Workers' Employment Prospects Have Deteriorated: 

Like many other demographic groups, older workers have faced dramatic 
increases in unemployment and long-term unemployment since the 
recession began in 2007. For example, only about a third of older 
workers displaced from 2007 to 2009 had found full-time work by 2010, 
and those who did sustained greater earnings losses than did 
reemployed younger workers. Nonetheless, older workers' labor force 
participation has continued to increase despite the worst labor market 
in decades. For example, the proportion of displaced workers age 65 or 
over who retired was substantially lower among those displaced during 
the recession than among those displaced prior to the recession. 
[Footnote 25] 

Multiple Measures Show Unemployment among Older Workers Rose 
Dramatically after 2007: 

Unemployment rates for workers of all ages, including those 55 and 
over, have risen dramatically since the start of the recent recession 
in December 2007. As shown in figure 2, the seasonally unadjusted 
unemployment rate for older workers increased from 3.1 percent in 
December 2007 to a high of 7.6 percent in February 2010, before it 
decreased to 6.0 percent in December 2011.[Footnote 26] Further, as 
shown in figure 3, the seasonally unadjusted number of unemployed 
older workers peaked at 2.3 million in February 2010 and decreased to 
approximately 1.9 million by December 2011, compared with around 
839,000 when the recession began in December 2007. As in prior 
recessions, smaller percentages of workers age 55 and over became 
unemployed. Some researchers attribute older workers' lower 
unemployment rates to the fact that older workers tend to have longer 
job tenure and are consequently less likely to be laid off than 
younger workers.[Footnote 27] 

Figure 2: Estimated Unemployment Rates by Age, 2007-2011: 

[Refer to PDF for image: multiple line graph] 

Monthly unemployment rate: 

Year: 2007; 

January: 
All workers (age 16 and over): 5%; 
Age 25 to 54: 4.1%; 
Age 55 and over: 3.7%. 

February: 
All workers (age 16 and over): 4.9%; 
Age 25 to 54: 4.1%; 
Age 55 and over: 3.3%. 

March: 
All workers (age 16 and over): 4.5%; 
Age 25 to 54: 3.8%; 
Age 55 and over: 3.3%. 

April: 
All workers (age 16 and over): 4.3%; 
Age 25 to 54: 3.5%; 
Age 55 and over: 2.9%. 

May: 
All workers (age 16 and over): 4.3%; 
Age 25 to 54: 3.4%; 
Age 55 and over: 2.9%. 

June: 
All workers (age 16 and over): 4.7%; 
Age 25 to 54: 3.5%; 
Age 55 and over: 3%. 

July: 
All workers (age 16 and over): 4.9%; 
Age 25 to 54: 3.9%; 
Age 55 and over: 3.4%. 

August: 
All workers (age 16 and over): 4.6%; 
Age 25 to 54: 3.7%; 
Age 55 and over: 3.2%. 

September: 
All workers (age 16 and over): 4.5%; 
Age 25 to 54: 3.6%; 
Age 55 and over: 3%. 

October: 
All workers (age 16 and over): 4.4%; 
Age 25 to 54: 3.6%; 
Age 55 and over: 2.9%. 

November: 
All workers (age 16 and over): 4.5%; 
Age 25 to 54: 3.7%; 
Age 55 and over: 2.9%. 

[Recession period: December 2007 through June 2009] 

December: 
All workers (age 16 and over): 4.8%; 
Age 25 to 54: 4%; 
Age 55 and over: 3.1%. 

Year: 2008; 

January: 
All workers (age 16 and over): 5.4%; 
Age 25 to 54: 4.4%; 
Age 55 and over: 3.6%. 

February: 
All workers (age 16 and over): 5.2%; 
Age 25 to 54: 4.3%; 
Age 55 and over: 3.5%. 

March: 
All workers (age 16 and over): 5.2%; 
Age 25 to 54: 4.5%; 
Age 55 and over: 3.6%. 

April: 
All workers (age 16 and over): 4.8%; 
Age 25 to 54: 4.1%; 
Age 55 and over: 2.9%. 

May: 
All workers (age 16 and over): 5.2%; 
Age 25 to 54: 4.1%; 
Age 55 and over: 3%. 

June: 
All workers (age 16 and over): 5.7%; 
Age 25 to 54: 4.4%; 
Age 55 and over: 3.3%. 

July: 
All workers (age 16 and over): 6%; 
Age 25 to 54: 4.7%; 
Age 55 and over: 3.9%. 

August: 
All workers (age 16 and over): 6.1%; 
Age 25 to 54: 5.1%; 
Age 55 and over: 4.2%. 

September: 
All workers (age 16 and over): 6%; 
Age 25 to 54: 4.9%; 
Age 55 and over: 4%. 

October: 
All workers (age 16 and over): 6.1%; 
Age 25 to 54: 5.2%; 
Age 55 and over: 4.3%. 

November: 
All workers (age 16 and over): 6.5%; 
Age 25 to 54: 5.6%; 
Age 55 and over: 4.6%. 

December: 
All workers (age 16 and over): 7.1%; 
Age 25 to 54: 6.4%; 
Age 55 and over: 4.9%. 

Year: 2009; 

January: 
All workers (age 16 and over): 8.5%; 
Age 25 to 54: 7.7%; 
Age 55 and over: 5.9%. 

February: 
All workers (age 16 and over): 8.9%; 
Age 25 to 54: 8.2%; 
Age 55 and over: 6.1%. 

March: 
All workers (age 16 and over): 9%; 
Age 25 to 54: 8.3%; 
Age 55 and over: 6.6%. 

April: 
All workers (age 16 and over): 8.6%; 
Age 25 to 54: 7.8%; 
Age 55 and over: 6.2%. 

May: 
All workers (age 16 and over): 9.1%; 
Age 25 to 54: 8%; 
Age 55 and over: 6.3%. 

June: 
All workers (age 16 and over): 9.7%; 
Age 25 to 54: 8.2%; 
Age 55 and over: 6.8%. 

[End Recession period: December 2007 through June 2009] 

July: 
All workers (age 16 and over): 9.7%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 7.2%. 

August: 
All workers (age 16 and over): 9.6%; 
Age 25 to 54: 8.5%; 
Age 55 and over: 6.9%. 

September: 
All workers (age 16 and over): 9.5%; 
Age 25 to 54: 8.6%; 
Age 55 and over: 6.5%. 

October: 
All workers (age 16 and over): 9.5%; 
Age 25 to 54: 8.5%; 
Age 55 and over: 6.6%. 

November: 
All workers (age 16 and over): 9.4%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 6.8%. 

December: 
All workers (age 16 and over): 9.7%; 
Age 25 to 54: 8.9%; 
Age 55 and over: 7%. 

Year: 2010; 

January: 
All workers (age 16 and over): 10.6%; 
Age 25 to 54: 9.6%; 
Age 55 and over: 7.5%. 

February: 
All workers (age 16 and over): 10.4%; 
Age 25 to 54: 9.5%; 
Age 55 and over: 7.6%. 

March: 
All workers (age 16 and over): 10.2%; 
Age 25 to 54: 9.5%; 
Age 55 and over: 7.2%. 

April: 
All workers (age 16 and over): 9.5%; 
Age 25 to 54: 8.5%; 
Age 55 and over: 6.7%. 

May: 
All workers (age 16 and over): 9.3%; 
Age 25 to 54: 8.3%; 
Age 55 and over: 6.6%. 

June: 
All workers (age 16 and over): 9.6%; 
Age 25 to 54: 8.2%; 
Age 55 and over: 6.7%. 

July: 
All workers (age 16 and over): 9.7%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 7.3%. 

August: 
All workers (age 16 and over): 9.5%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 7.5%. 

September: 
All workers (age 16 and over): 9.2%; 
Age 25 to 54: 8.2%; 
Age 55 and over: 6.9%. 

October: 
All workers (age 16 and over): 9%; 
Age 25 to 54: 7.9%; 
Age 55 and over: 6.8%. 

November: 
All workers (age 16 and over): 9.3%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 7%. 

December: 
All workers (age 16 and over): 9.1%; 
Age 25 to 54: 8.4%; 
Age 55 and over: 6.7%. 

Year: 2011; 

January: 
All workers (age 16 and over): 9.8%; 
Age 25 to 54: 8.7%; 
Age 55 and over: 7.3%. 

February: 
All workers (age 16 and over): 9.5%; 
Age 25 to 54: 8.6%; 
Age 55 and over: 6.9%. 

March: 
All workers (age 16 and over): 9.2%; 
Age 25 to 54: 8.3%; 
Age 55 and over: 6.7%. 

April: 
All workers (age 16 and over): 8.7%; 
Age 25 to 54: 7.8%; 
Age 55 and over: 6.2%. 

May: 
All workers (age 16 and over): 8.7%; 
Age 25 to 54: 7.7%; 
Age 55 and over: 6.3%. 

June: 
All workers (age 16 and over): 9.3%; 
Age 25 to 54: 8%; 
Age 55 and over: 6.8%. 

July: 
All workers (age 16 and over): 9.3%; 
Age 25 to 54: 8%; 
Age 55 and over: 7.3%. 

August: 
All workers (age 16 and over): 9.1%; 
Age 25 to 54: 8%; 
Age 55 and over: 6.8%. 

September: 
All workers (age 16 and over): 8.8%; 
Age 25 to 54: 7.8%; 
Age 55 and over: 6.4%. 

October: 
All workers (age 16 and over): 8.5%; 
Age 25 to 54: 7.5%; 
Age 55 and over: 6.6%. 

November: 
All workers (age 16 and over): 8.2%; 
Age 25 to 54: 7.3%; 
Age 55 and over: 6.2%. 

December: 
All workers (age 16 and over): 8.3%; 
Age 25 to 54: 7.5%; 
Age 55 and over: 6%. 

Source: GAO analysis of CPS data, 2007-2011. 

Note: Estimates have 95 percent confidence intervals within plus or 
minus 0.5 percentage points of the estimate itself. Recession dates 
obtained from NBER. Estimates are not seasonally adjusted. 

[End of figure] 

Alternative measures show that the number of discouraged and 
underemployed older workers has also increased dramatically since the 
start of the 2007-2009 recession. According to the broadest measure, 
approximately 4.2 million older workers were unemployed or 
underemployed in January 2011, and approximately 3.65 million remained 
unemployed or underemployed in December 2011 (see figure 3). In 
addition to the officially unemployed, this measure includes 
individuals who wanted to work and were available for work but did not 
actively seek employment in the last month for various reasons, 
[Footnote 28] such as believing no jobs were available.[Footnote 29] 
It also includes part-time workers who would prefer full-time work. 
[Footnote 30] 

Figure 3: Estimated Number of Unemployed and Underemployed Older 
Workers (55 and Over), 2007-2011: 

[Refer to PDF for image: stacked multiple line graph] 

Number of people age 55 and over, in millions: 

Broader measure of people affected by unemployment and 
underemployment: Worker employed part-time for economic reasons. 

Year: 2007:  

January: 
Unemployed workers: 0.96 million;
Discouraged workers: 1.05 million;
Other workers marginally attached to the labor force: 1.21 million;
Worker employed part-time for economic reasons: 1.9 million. 

February: 
Unemployed workers: 0.86 million;
Discouraged workers: 0.89 million;
Other workers marginally attached to the labor force: 1.04 million;
Worker employed part-time for economic reasons: 1.57 million. 

March: 
Unemployed workers: 0.86 million;
Discouraged workers: 0.92 million;
Other workers marginally attached to the labor force: 1.06 million;
Worker employed part-time for economic reasons: 1.63 million. 

April: 
Unemployed workers: 0.76 million;
Discouraged workers: 0.82 million;
Other workers marginally attached to the labor force: 1 million;
Worker employed part-time for economic reasons: 1.58 million. 

May: 
Unemployed workers: 0.78 million;
Discouraged workers: 0.82 million;
Other workers marginally attached to the labor force: 0.94 million;
Worker employed part-time for economic reasons: 1.56 million. 

June: 
Unemployed workers: 0.79 million;
Discouraged workers: 0.86 million;
Other workers marginally attached to the labor force: 1.03 million;
Worker employed part-time for economic reasons: 1.57 million. 

July: 
Unemployed workers: 0.9 million;
Discouraged workers: 0.96 million;
Other workers marginally attached to the labor force: 1.11 million;
Worker employed part-time for economic reasons: 1.68 million. 

August: 
Unemployed workers: 0.86 million;
Discouraged workers: 0.93 million;
Other workers marginally attached to the labor force: 1.07 million;
Worker employed part-time for economic reasons: 1.73 million. 

September: 
Unemployed workers: 0.81 million;
Discouraged workers: 0.86 million;
Other workers marginally attached to the labor force: 1.02 million;
Worker employed part-time for economic reasons: 1.54 million. 

October: 
Unemployed workers: 0.78 million;
Discouraged workers: 0.88 million;
Other workers marginally attached to the labor force: 1.06 million;
Worker employed part-time for economic reasons: 1.57 million. 

November: 
Unemployed workers: 0.79 million;
Discouraged workers: 0.83 million;
Other workers marginally attached to the labor force: 0.95 million;
Worker employed part-time for economic reasons: 1.6 million. 

[Begin recession period] 

December: 
Unemployed workers: 0.84 million;
Discouraged workers: 0.89 million;
Other workers marginally attached to the labor force: 1.03 million;
Worker employed part-time for economic reasons: 1.66 million. 

Year: 2008; 

January: 
Unemployed workers: 0.99 million;
Discouraged workers: 1.09 million;
Other workers marginally attached to the labor force: 1.26 million;
Worker employed part-time for economic reasons: 1.99 million. 

February: 
Unemployed workers: 0.95 million;
Discouraged workers: 1.03 million;
Other workers marginally attached to the labor force: 1.22 million;
Worker employed part-time for economic reasons: 1.92 million. 

March: 
Unemployed workers: 0.99 million;
Discouraged workers: 1.06 million;
Other workers marginally attached to the labor force: 1.24 million;
Worker employed part-time for economic reasons: 2 million. 

April: 
Unemployed workers: 0.8 million;
Discouraged workers: 0.9 million;
Other workers marginally attached to the labor force: 1.08 million;
Worker employed part-time for economic reasons: 1.81 million. 

May: 
Unemployed workers: 0.83 million;
Discouraged workers: 0.92 million;
Other workers marginally attached to the labor force: 1.09 million;
Worker employed part-time for economic reasons: 1.75 million. 

June: 
Unemployed workers: 0.9 million;
Discouraged workers: 0.97 million;
Other workers marginally attached to the labor force: 1.14 million;
Worker employed part-time for economic reasons: 1.9 million. 

July: 
Unemployed workers: 1.09 million;
Discouraged workers: 1.16 million;
Other workers marginally attached to the labor force: 1.33 million;
Worker employed part-time for economic reasons: 2.16 million. 

August: 
Unemployed workers: 1.18 million;
Discouraged workers: 1.24 million;
Other workers marginally attached to the labor force: 1.43 million;
Worker employed part-time for economic reasons: 2.28 million. 

September: 
Unemployed workers: 1.14 million;
Discouraged workers: 1.22 million;
Other workers marginally attached to the labor force: 1.41 million;
Worker employed part-time for economic reasons: 2.28 million. 

October: 
Unemployed workers: 1.22 million;
Discouraged workers: 1.3 million;
Other workers marginally attached to the labor force: 1.45 million;
Worker employed part-time for economic reasons: 2.29 million. 

November: 
Unemployed workers: 1.32 million;
Discouraged workers: 1.44 million;
Other workers marginally attached to the labor force: 1.65 million;
Worker employed part-time for economic reasons: 2.68 million. 

December: 
Unemployed workers: 1.4 million;
Discouraged workers: 1.56 million;
Other workers marginally attached to the labor force: 1.7 million;
Worker employed part-time for economic reasons: 2.86 million. 

Year: 2009; 

January: 
Unemployed workers: 1.71 million;
Discouraged workers: 1.84 million;
Other workers marginally attached to the labor force: 2.07 million;
Worker employed part-time for economic reasons: 3.37 million. 

February: 
Unemployed workers: 1.75 million;
Discouraged workers: 1.93 million;
Other workers marginally attached to the labor force: 2.19 million;
Worker employed part-time for economic reasons: 3.6 million. 

March: 
Unemployed workers: 1.9 million;
Discouraged workers: 2.03 million;
Other workers marginally attached to the labor force: 2.27 million;
Worker employed part-time for economic reasons: 3.6 million. 

April: 
Unemployed workers: 1.79 million;
Discouraged workers: 1.97 million;
Other workers marginally attached to the labor force: 2.17 million;
Worker employed part-time for economic reasons: 3.46 million. 

May: 
Unemployed workers: 1.82 million;
Discouraged workers: 1.98 million;
Other workers marginally attached to the labor force: 2.17 million;
Worker employed part-time for economic reasons: 3.5 million. 

June: 
Unemployed workers: 1.97 million;
Discouraged workers: 2.09 million;
Other workers marginally attached to the labor force: 2.28 million;
Worker employed part-time for economic reasons: 3.5 million. 

[End recession period] 

July: 
Unemployed workers: 2.08 million;
Discouraged workers: 2.21 million;
Other workers marginally attached to the labor force: 2.45 million;
Worker employed part-time for economic reasons: 3.56 million. 

August: 
Unemployed workers: 1.99 million;
Discouraged workers: 2.14 million;
Other workers marginally attached to the labor force: 2.42 million;
Worker employed part-time for economic reasons: 3.63 million. 

September: 
Unemployed workers: 1.9 million;
Discouraged workers: 1.99 million;
Other workers marginally attached to the labor force: 2.25 million;
Worker employed part-time for economic reasons: 3.43 million. 

October: 
Unemployed workers: 1.92 million;
Discouraged workers: 2.05 million;
Other workers marginally attached to the labor force: 2.31 million;
Worker employed part-time for economic reasons: 3.56 million. 

November: 
Unemployed workers: 1.99 million;
Discouraged workers: 2.19 million;
Other workers marginally attached to the labor force: 2.46 million;
Worker employed part-time for economic reasons: 3.82 million. 

December: 
Unemployed workers: 2.06 million;
Discouraged workers: 2.26 million;
Other workers marginally attached to the labor force: 2.54 million;
Worker employed part-time for economic reasons: 3.98 million. 

Year: 2010; 

January: 
Unemployed workers: 2.21 million;
Discouraged workers: 2.45 million;
Other workers marginally attached to the labor force: 2.68 million;
Worker employed part-time for economic reasons: 4.13 million. 

February: 
Unemployed workers: 2.26 million;
Discouraged workers: 2.55 million;
Other workers marginally attached to the labor force: 2.72 million;
Worker employed part-time for economic reasons: 4.16 million. 

March: 
Unemployed workers: 2.15 million;
Discouraged workers: 2.41 million;
Other workers marginally attached to the labor force: 2.63 million;
Worker employed part-time for economic reasons: 4.12 million. 

April: 
Unemployed workers: 2 million;
Discouraged workers: 2.34 million;
Other workers marginally attached to the labor force: 2.49 million;
Worker employed part-time for economic reasons: 3.84 million. 

May: 
Unemployed workers: 2 million;
Discouraged workers: 2.25 million;
Other workers marginally attached to the labor force: 2.41 million;
Worker employed part-time for economic reasons: 3.62 million. 

June: 
Unemployed workers: 2 million;
Discouraged workers: 2.29 million;
Other workers marginally attached to the labor force: 2.56 million;
Worker employed part-time for economic reasons: 3.85 million. 

July: 
Unemployed workers: 2.18 million;
Discouraged workers: 2.45 million;
Other workers marginally attached to the labor force: 2.66 million;
Worker employed part-time for economic reasons: 3.95 million. 

August: 
Unemployed workers: 2.26 million;
Discouraged workers: 2.52 million;
Other workers marginally attached to the labor force: 2.7 million;
Worker employed part-time for economic reasons: 3.97 million. 

September: 
Unemployed workers: 2.08 million;
Discouraged workers: 2.41 million;
Other workers marginally attached to the labor force: 2.62 million;
Worker employed part-time for economic reasons: 3.95 million. 

October: 
Unemployed workers: 2.04 million;
Discouraged workers: 2.38 million;
Other workers marginally attached to the labor force: 2.58 million;
Worker employed part-time for economic reasons: 3.75 million. 

November: 
Unemployed workers: 2.1 million;
Discouraged workers: 2.38 million;
Other workers marginally attached to the labor force: 2.59 million;
Worker employed part-time for economic reasons: 3.88 million. 

December: 
Unemployed workers: 2.03 million;
Discouraged workers: 2.33 million;
Other workers marginally attached to the labor force: 2.53 million;
Worker employed part-time for economic reasons: 3.96 million. 

Year: 2011; 

January: 
Unemployed workers: 2.22 million;
Discouraged workers: 2.42 million;
Other workers marginally attached to the labor force: 2.74 million;
Worker employed part-time for economic reasons: 4.22 million. 

February: 
Unemployed workers: 2.11 million;
Discouraged workers: 2.35 million;
Other workers marginally attached to the labor force: 2.62 million;
Worker employed part-time for economic reasons: 4.07 million. 

March: 
Unemployed workers: 2.07 million;
Discouraged workers: 2.33 million;
Other workers marginally attached to the labor force: 2.58 million;
Worker employed part-time for economic reasons: 3.93 million. 

April: 
Unemployed workers: 1.9 million;
Discouraged workers: 2.17 million;
Other workers marginally attached to the labor force: 2.42 million;
3.71 million. 

May: 
Unemployed workers: 1.95 million;
Discouraged workers: 2.18 million;
Other workers marginally attached to the labor force: 2.49 million;
Worker employed part-time for economic reasons: 3.79 million. 

June: 
Unemployed workers: 2.07 million;
Discouraged workers: 2.3 million;
Other workers marginally attached to the labor force: 2.58 million;
Worker employed part-time for economic reasons: 3.82 million. 

July: 
Unemployed workers: 2.23 million;
Discouraged workers: 2.46 million;
Other workers marginally attached to the labor force: 2.74 million;
Worker employed part-time for economic reasons: 4.01 million. 

August: 
Unemployed workers: 2.1 million;
Discouraged workers: 2.39 million;
Other workers marginally attached to the labor force: 2.7 million;
Worker employed part-time for economic reasons: 4.03 million. 

September: 
Unemployed workers: 2.01 million;
Discouraged workers: 2.27 million;
Other workers marginally attached to the labor force: 2.57 million;
Worker employed part-time for economic reasons: 3.99 million. 

October: 
Unemployed workers: 2.08 million;
Discouraged workers: 2.34 million;
Other workers marginally attached to the labor force: 2.63 million;
Worker employed part-time for economic reasons: 3.85 million. 

November: 
Unemployed workers: 1.92 million;
Discouraged workers: 2.23 million;
Other workers marginally attached to the labor force: 2.45 million;
Worker employed part-time for economic reasons: 3.65 million. 

December: 
Unemployed workers: 1.87 million;
Discouraged workers: 2.08 million;
Other workers marginally attached to the labor force: 2.39 million;
Worker employed part-time for economic reasons: 3.65 million. 

Source: GAO analysis of 2007-2011 CPS data. 

Note: (1) Estimates have 95 percent confidence intervals within plus 
or minus 12 percent of the estimate itself. (2) See appendix II for 
BLS's definitions of unemployed workers, discouraged workers, workers 
marginally attached to the labor force, and part-time for economic 
reasons. Our "broader measure of people affected by unemployment and 
underemployment" is the same as measure U-6 in BLS's alternative 
measures of labor underutilization. Estimates are not seasonally 
adjusted. 

[End of figure] 

Long-Term Unemployment for Older Workers Has Increased Substantially 
since the Start of the Recession: 

Although older workers are less likely than younger workers to lose 
their jobs, it generally takes older job seekers longer to find new 
work.[Footnote 31] Since 2007, many job seekers of all ages have 
experienced long-term unemployment,[Footnote 32] but individuals age 
55 and over have consistently experienced longer durations of 
unemployment than younger workers. Moreover, the median length of 
unemployment has more than tripled for older workers since the 
recession started, increasing at a greater rate than that of younger 
workers. Prior to the recession, the median duration of unemployment 
for job seekers age 55 and over was 10 weeks compared with 9 weeks for 
job seekers aged 25-54. By 2011, the median duration of unemployment 
for older job seekers had increased to 35 weeks compared with 26 weeks 
for younger job seekers. 

Since 2007, the number and percentage of long-term unemployed older 
workers--those out of work for more than half a year (27 weeks or 
more)--has increased substantially. In 2007, less than a quarter of 
unemployed older workers were unemployed for longer than 27 weeks, as 
shown in figure 4. By 2011, this number had increased to 55 percent. 
Moreover, by 2011 over one-third of all unemployed older workers had 
been unemployed for over a year. Data from the Displaced Worker 
Supplement of the CPS corroborate that many older workers who lose 
their jobs struggle to regain employment. Specifically, the data show 
that only 31 percent of those older workers age 55-64 who were 
displaced between 2007 and 2009 had regained full-time employment by 
January 2010 (see appendix II). 

Figure 4: Growth in Estimated Long-Term Unemployment of Older Workers 
(55 and Over), 2007-2011: 

[Refer to PDF for image: stacked horizontal bar graph] 

Year: 2007; 
Short-term unemployed (less than 27 weeks): 
Less than 5 weeks: 137,440 (17%); 
5 to 14 weeks: 247,390 (30%); 
15 to 26 weeks: 258,280 (31%); 
Total: 77%; 
Long-term unemployed (27 weeks or more): 
27 weeks to a year: 99,860 (12%); 
More than a year: 88,690 (11%); 
Total: 23%. 

Year: 2008; 
Short-term unemployed (less than 27 weeks): 
Less than 5 weeks: 176,920 (17%); 
5 to 14 weeks: 312,190 (29%); 
15 to 26 weeks: 303,770 (28%); 
Total: 74%; 
Long-term unemployed (27 weeks or more): 
27 weeks to a year: 160,290 (15%); 
More than a year: 113,679 )11%); 
Total: 26%. 

Year: 2009; 
Short-term unemployed (less than 27 weeks): 
Less than 5 weeks: 354,930 (19%); 
5 to 14 weeks: 433,050 (23%); 
15 to 26 weeks: 368,820 (19%); 
Total: 61%; 
Long-term unemployed (27 weeks or more): 
27 weeks to a year: 434,010 (23%); 
More than a year: 316,596 (17%); 
Total: 40%. 

Year: 2010; 
Short-term unemployed (less than 27 weeks): 
Less than 5 weeks: 301,000 (14%); 
5 to 14 weeks: 377,750 (18%); 
15 to 26 weeks: 298,680 (14%); 
Total: 46%; 
Long-term unemployed (27 weeks or more): 
27 weeks to a year: 484,390 (23%); 
More than a year: 648,031 (31%); 
Total: 54%. 

Year: 2011; 
Short-term unemployed (less than 27 weeks): 
Less than 5 weeks: 265,760 (13%); 
5 to 14 weeks: 334,380 (16%); 
15 to 26 weeks: 317,270 (16%); 
Total: 45%; 
Long-term unemployed (27 weeks or more): 
27 weeks to a year: 385,340 (19%); 
More than a year: 741,610 (36%); 
Total: 55%. 

Source: GAO analysis of CPS data, 2007-2011. 

Note: All estimates in this figure have 95 percent confidence 
intervals within plus or minus 3 percentage points of the estimate 
itself. See appendix III for statistical comparisons of estimates 
across years. Some bars do not sum to 100 percent because of rounding. 

[End of figure] 

The dramatic increase in long-term unemployment bodes poorly for the 
reemployment prospects of older workers; several studies suggest that 
unemployment erodes workers' skills and reemployment prospects, 
[Footnote 33] and several experts we interviewed said long-term 
unemployment diminishes the likelihood older workers will ever be 
reemployed.[Footnote 34] Thus, older workers who lose their jobs may 
face both immediate and long-term financial challenges. Long-term 
unemployed older workers who exhaust unemployment benefits before 
turning 62 are particularly at risk of compromising their future 
retirement security. (For some potential causes of long-term 
unemployment, see figure 5.) 

Figure 5: Difference between the Estimated Number of Unemployed of All 
Ages and the Estimated Number of Available Jobs, 2007-2011, and 
Various Explanations for High Unemployment: 

[Refer to PDF for image: multiple line graph and associated 
information] 

* Magnitude of the recession: 
Unemployed workers Some researchers primarily blame the large number 
of jobs lost during the recession on weak aggregate demand and slow 
job creation. 

* Structural unemployment: 
The media sometimes highlight individual employers who lack qualified 
applicants for job openings, which would suggest structural 
unemployment; however, unemployment rates have risen across a wide 
range of industries during the recession, suggesting that an overall 
decline in demand caused much of the recent unemployment increases. 

* Other causes less likely:
Studies suggest that other possible explanations, such as the extended 
availability of UI benefits or a geographical mismatch between 
available jobs and job seekers, have only modestly affected long-term
unemployment rates. 

Estimated total number of job openings compared to estimated total 
number of unemployed, 2007-2011: 

Year: 2007; 

January: 
Job openings: 4.94 million; 
Unemployed workers: 7.65 million. 

February: 
Job openings: 4.3 million; 
Unemployed workers: 7.4 million. 

March: 
Job openings: 4.69 million; 
Unemployed workers: 6.91 million. 

April: 
Job openings: 5.13 million; 
Unemployed workers: 6.53 million. 

May: 
Job openings: 4.59 million; 
Unemployed workers: 6.49 million. 

June: 
Job openings: 4.64 million; 
Unemployed workers: 7.29 million. 

July: 
Job openings: 4.8 million; 
Unemployed workers: 7.56 million. 

August: 
Job openings: 4.7 million; 
Unemployed workers: 7.09 million. 

September: 
Job openings: 4.54 million; 
Unemployed workers: 6.95 million. 

October: 
Job openings: 4.54 million; 
Unemployed workers: 6.77 million. 

November: 
Job openings: 3.99 million; 
Unemployed workers: 6.92 million. 

December: 
Job openings: 3.86 million; 
Unemployed workers: 7.37 million. 

Year: 2008; 

January: 
Job openings: 4.64 million; 
Unemployed workers: 8.22 million. 

February: 
Job openings: 3.94 million; 
Unemployed workers: 7.95 million. 

March: 
Job openings: 4.02 million; 
Unemployed workers: 8.03 million. 

April: 
Job openings: 4.02 million; 
Unemployed workers: 7.29 million. 

May: 
Job openings: 4 million; 
Unemployed workers: 8.08 million. 

June: 
Job openings: 3.63 million; 
Unemployed workers: 8.93 million. 

July: 
Job openings: 3.74 million; 
Unemployed workers: 9.43 million. 

August: 
Job openings: 3.65 million; 
Unemployed workers: 9.48 million. 

September: 
Job openings: 3.18 million; 
Unemployed workers: 9.2 million. 

October: 
Job openings: 3.13 million; 
Unemployed workers: 9.47 million. 

November: 
Job openings: 2.74 million; 
Unemployed workers: 10.02 million. 

December: 
Job openings: 2.61 million; 
Unemployed workers: 11 million. 

Year: 2009; 

January: 
Job openings: 2.69 million; 
Unemployed workers: 13.01 million. 

February: 
Job openings: 2.67 million; 
Unemployed workers: 13.7 million. 

March: 
Job openings: 2.51 million; 
Unemployed workers: 13.9 million. 

April: 
Job openings: 2.45 million; 
Unemployed workers: 13.25 million. 

May: 
Job openings: 2.4 million; 
Unemployed workers: 13.97 million. 

June: 
Job openings: 2.39 million; 
Unemployed workers: 15.09 million. 

July: 
Job openings: 2.22 million; 
Unemployed workers: 15.2 million. 

August: 
Job openings: 2.29 million; 
Unemployed workers: 14.82 million. 

September: 
Job openings: 2.47 million; 
Unemployed workers: 14.54 million. 

October: 
Job openings: 2.36 million; 
Unemployed workers: 14.55 million. 

November: 
Job openings: 2.04 million; 
Unemployed workers: 14.41 million. 

December: 
Job openings: 2.11 million; 
Unemployed workers: 14.74 million. 

Year: 2010; 

January: 
Job openings: 2.54 million; 
Unemployed workers: 16.15 million. 

February: 
Job openings: 2.44 million; 
Unemployed workers: 15.99 million. 

March: 
Job openings: 2.69 million; 
Unemployed workers: 15.68 million. 

April: 
Job openings: 3.3 million; 
Unemployed workers: 14.61 million. 

May: 
Job openings: 2.84 million; 
Unemployed workers: 14.37 million. 

June: 
Job openings: 2.65 million; 
Unemployed workers: 14.88 million. 

July: 
Job openings: 2.99 million; 
Unemployed workers: 15.14 million. 

August: 
Job openings: 2.95 million; 
Unemployed workers: 14.76 million. 

September: 
Job openings: 2.76 million; 
Unemployed workers: 14.14 million. 

October: 
Job openings: 2.98 million; 
Unemployed workers: 13.9 million. 

November: 
Job openings: 2.67 million; 
Unemployed workers: 14.28 million. 

December: 
Job openings: 2.58 million; 
Unemployed workers: 14 million. 

Year: 2011; 

January: 
Job openings: 2.87 million; 
Unemployed workers: 14.94 million. 

February: 
Job openings: 2.95 million; 
Unemployed workers: 14.54 million. 

March: 
Job openings: 3.14 million; 
Unemployed workers: 14.06 million. 

April: 
Job openings: 3.22 million; 
Unemployed workers: 13.24 million. 

May: 
Job openings: 3.08 million; 
Unemployed workers: 13.42 million. 

June: 
Job openings: 3.19 million; 
Unemployed workers: 14.41 million. 

July: 
Job openings: 3.39 million; 
Unemployed workers: 14.43 million. 

August: 
Job openings: 3.22 million; 
Unemployed workers: 14.01 million. 

September: 
Job openings: 3.45 million; 
Unemployed workers: 13.52 million. 

October: 
Job openings: 3.32 million; 
Unemployed workers: 13.1 million. 

November: 
Job openings: 2.81 million; 
Unemployed workers: 12.61 million. 

December: 
Job openings: 3 million; 
Unemployed workers: 12.69 million. 

Source: GAO analysis of JOLTS survey and CPS data.  

Note: Estimates for the number of unemployed workers have 95 percent 
confidence intervals within plus or minus 5 percent of the estimate 
itself. Estimates for the number of job openings have confidence 
intervals within plus or minus 10 percent of the estimate itself. 

[End of figure] 

Some Subgroups of Older Workers Continue to Face Longer Spells of 
Unemployment than Others: 

The length of time older workers remained unemployed varied across 
industries (see figure 6). Nearly two-thirds of unemployed older 
workers in the manufacturing and financial service industries were out 
of work for 27 or more weeks in 2011. In fact, in 2011, 20 percent of 
unemployed older workers within manufacturing had been out of work for 
more than 2 years. In contrast, less than half of unemployed older 
workers in the education and health services or leisure and 
hospitality industries had been out of work for 27 weeks or more. Even 
though the education and health services and leisure and hospitality 
industries had lower levels of long-term unemployment, the percentage 
of older workers in these industries who experienced long-term 
unemployment also grew significantly from 2007 to 2011. 

Figure 6: Estimated Duration of Unemployment for Older Workers (55 and 
Over) by Industry, 2007 and 2011: 

[Refer to PDF for image: 2 stacked horizontal bar graphs] 

Pre-recession (2007): 

Education and health services: 
Less than 27 weeks: 83%; 
27 to 52 weeks: 10%; 
More than a year but less than 2 years: 5%; 
More than 2 years: 2%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 17%. 

Manufacturing: 
Less than 27 weeks: 65%; 
27 to 52 weeks: 17%; 
More than a year but less than 2 years: 15%; 
More than 2 years: 3%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 35%. 

Wholesale and retail trade: 
Less than 27 weeks: 78%; 
27 to 52 weeks: 13%; 
More than a year but less than 2 years: 6%; 
More than 2 years: 2%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 22%. 

Professional and business services: 
Less than 27 weeks: 79%; 
27 to 52 weeks: 9%; 
More than a year but less than 2 years: 11%; 
More than 2 years: 1%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 21%. 

Construction: 
Less than 27 weeks: 81%; 
27 to 52 weeks: 9%; 
More than a year but less than 2 years: 9%; 
More than 2 years: 1%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 19%. 

Financial activities: 
Less than 27 weeks: 83%; 
27 to 52 weeks: 9%; 
More than a year but less than 2 years: 6%; 
More than 2 years: 2%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 17%. 

Leisure and hospitality: 
Less than 27 weeks: 80%; 
27 to 52 weeks: 13%; 
More than a year but less than 2 years: 6%; 
More than 2 years: 1%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 20%. 

Transportation and utilities: 
Less than 27 weeks: 72%; 
27 to 52 weeks: 19%; 
More than a year but less than 2 years: 8%; 
More than 2 years: 1%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 28%. 

All other industries: 
Less than 27 weeks: 75%; 
27 to 52 weeks: 11%; 
More than a year but less than 2 years: 10%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 25%. 

Post-recession (2011): 

Education and health services: 
Less than 27 weeks: 54%; 
27 to 52 weeks: 18%; 
More than a year but less than 2 years: 17%; 
More than 2 years: 11%; 
Total, 27 weeks or more: 46%. 

Manufacturing: 
Less than 27 weeks: 34%; 
27 to 52 weeks: 17%; 
More than a year but less than 2 years: 29%; 
More than 2 years: 29%; 
Total, 27 weeks or more: 66%. 

Wholesale and retail trade: 
Less than 27 weeks: 45%; 
27 to 52 weeks: 17%; 
More than a year but less than 2 years: 24%; 
More than 2 years: 14%; 
Total, 27 weeks or more: 55%. 

Professional and business services: 
Less than 27 weeks: 45%; 
27 to 52 weeks: 17%; 
More than a year but less than 2 years: 21%; 
More than 2 years: 17%; 
Total, 27 weeks or more: 55%. 

Construction: 
Less than 27 weeks: 45%; 
27 to 52 weeks: 21%; 
More than a year but less than 2 years: 19%; 
More than 2 years: 15%; 
Total, 27 weeks or more: 55%. 

Financial activities: 
Less than 27 weeks: 37%; 
27 to 52 weeks: 21%; 
More than a year but less than 2 years: 27%; 
More than 2 years: 14%; 
Total, 27 weeks or more: 63%. 

Leisure and hospitality: 
Less than 27 weeks: 53%; 
27 to 52 weeks: 21%; 
More than a year but less than 2 years: 16%; 
More than 2 years: 10%; 
Total, 27 weeks or more: 47%. 

Transportation and utilities: 
Less than 27 weeks: 45%; 
27 to 52 weeks: 19%; 
More than a year but less than 2 years: 20%; 
More than 2 years: 16%; 
Total, 27 weeks or more: 55%. 

All other industries: 
Less than 27 weeks: 45%; 
27 to 52 weeks: 21%; 
More than a year but less than 2 years: 20%; 
More than 2 years: 14%; 
Total, 27 weeks or more: 55%. 

Source: GAO analysis of 2007 and 2011 CPS data. 

Note: The "all other industries" category includes public 
administration; "other services"; agriculture, forestry, fishing and 
mining; and information and a small number of civilians employed in 
the armed forces. All estimates in this figure have 95 percent 
confidence intervals within plus or minus 11 percentage points of the 
estimate itself. For information about the reliability of estimate and 
statistical comparisons of the estimates across different groups and 
years, see appendix III. 

[End of figure] 

Rates of unemployment differed across demographic groups. For example, 
as shown in figure 7, unemployment rates for older men and women were 
comparable in 2007 but increased more for men than women after 2007, 
and were significantly higher for men than women by 2011.[Footnote 35] 
In addition, older workers who were black or Hispanic had 
significantly higher unemployment rates than white older workers in 
both 2007 and 2011. Regarding education level, older workers without a 
high school diploma were more likely to be unemployed before and after 
the recession than those with a high school diploma.[Footnote 36] 
However, the unemployment rate for workers with at least a bachelor's 
degree approximately doubled by 2011 from its 2007 level, just as it 
did for those older workers with less education. 

Figure 7: Estimated Unemployment Rates by Demographic Group for Older 
Workers (55 and Over), 2007 and 2011: 

[Refer to PDF for image: horizontal bar graph] 

Gender: 

Men: 
Prerecession (2007): 3.2%; 
Postrecession (2011): 7.0%. 
Women: 
Prerecession (2007): 3.0%; 
Postrecession (2011): 6.2%. 

Race and ethnicity: 

White: 
Prerecession (2007): 3.0%; 
Postrecession (2011): 6.2%. 

Black: 
Prerecession (2007): 4.4%; 
Postrecession (2011): 9.5%. 

All other races: 
Prerecession (2007): 3.4%; 
Postrecession (2011): 9.5%. 

Hispanic (any race): 
Prerecession (2007): 4.5%; 
Postrecession (2011): 9.5%. 

Education: 

No high school diploma: 
Prerecession (2007): 5.1%; 
Postrecession (2011): 9.9%. 

High school diploma: 
Prerecession (2007): 3.3%; 
Postrecession (2011): 7.1%. 

Some college: 
Prerecession (2007): 3.4%; 
Postrecession (2011): 7.4%. 

Bachelors' degree or higher: 
Prerecession (2007): 2.3%; 
Postrecession (2011): 5.0%. 

Source: GAO analysis of 2007 and 2011 CPS data. 

Note: All estimates in this figure have 95 percent confidence 
intervals within plus or minus 1 percentage point of the estimate 
itself. For statistical comparisons of the estimates across different 
groups and years, see appendix III. 

[End of figure] 

Across several different demographic groups, once unemployed, older 
workers were similarly likely to remain unemployed for more than half 
a year (27 weeks or more) in 2011. For example, in 2011, older 
unemployed workers with at least a bachelor's degree were similarly 
likely to face long-term unemployment as those older workers with less 
education. In addition, older workers in each racial or ethnic group 
who became unemployed were equally likely to face long-term 
unemployment in 2011. Even older women--who in 2007 had lower rates of 
long-term unemployment than men--were similarly likely to face long-
term unemployment after the recession, as shown in figure 8. Finally, 
while long-term unemployment increased for both younger and older 
workers, a higher percentage of older workers were long-term 
unemployed--approximately 55 percent of unemployed older workers were 
out of work for over half a year, compared with approximately 47 
percent of workers age 25-54 in 2011. 

Figure 8: Estimated Duration of Unemployment by Age and by Gender, 
2007 and 2011: 

[Refer to PDF for image: 2 horizontal bar graphs] 

Prerecession (2007): 

Age: 25-55; 
Less than 27 weeks: 80%; 
27 to 52 weeks: 12%; 
More than a year to 2 years: 6%; 
More than 2 years: 1%; 
Total, 27 weeks or more: 20%. 

Age: Older than 55; 
Less than 27 weeks: 77%; 
27 to 52 weeks: 12%; 
More than a year but less than 2 years: 9%; 
More than 2 years: 2%; 
Total, 27 weeks or more: 23%. 

Gender (age 55 and over): Men; 
Less than 27 weeks: 74%; 
27 to 52 weeks: 13%; 
More than a year to 2 years: 10%; 
More than 2 years: 3%; 
Total, 27 weeks or more: 26%. 

Gender (age 55 and over): Women; 
Less than 27 weeks: 80%; 
27 to 52 weeks: 11%; 
More than a year but less than 2 years: 7%; 
More than 2 years: 2%; 
Total, 27 weeks or more: 20%. 

Postrecession (2011): 

Age: 25-55; 
Less than 27 weeks: 53%; 
27 to 52 weeks: 20%; 
More than a year to 2 years: 17%; 
More than 2 years: 10%; 
Total, 27 weeks or more: 47%. 

Age: Older than 55; 
Less than 27 weeks: 45%; 
27 to 52 weeks: 19%; 
More than a year but less than 2 years: 21%; 
More than 2 years: 13%; 
Total, 27 weeks or more: 55%. 

Gender (age 55 and over): Men; 
Less than 27 weeks: 44%; 
27 to 52 weeks: 19%; 
More than a year to 2 years: 22%; 
More than 2 years: 16%; 
Total, 27 weeks or more: 56%. 

Gender (age 55 and over): Women; 
Less than 27 weeks: 47%; 
27 to 52 weeks: 19%; 
More than a year but less than 2 years: 21%; 
More than 2 years: 13%; 
Total, 27 weeks or more: 53%. 

Source: GAO analysis of 2007 and 2011 CPS data. 

Note: Estimates in this figure have 95 percent confidence intervals 
within plus or minus 3 percentage points of the estimate itself. For 
statistical comparisons of the estimates across different groups and 
years, see appendix III. 

[End of figure] 

Older Workers' Labor Force Participation Nonetheless Continued to Rise: 

Despite high levels of unemployment and longer spells of unemployment, 
older workers' labor force participation rate--the proportion of the 
population that is employed or actively seeking employment--increased 
throughout the 2007-2009 recession, continuing historic trends. In 
contrast, as shown in figure 9, the labor force participation rate for 
younger workers aged 16-24 has decreased since the recession began in 
2007, while the participation of workers aged 25-54 generally 
decreased, but to a lesser degree.[Footnote 37] Older workers' 
increased labor force participation during the recession continued a 
long-term trend that began in the 1990s, and thus cannot be attributed 
solely to the 2007-2009 recession or declines in financial markets. 
Researchers have identified a number of factors contributing to this 
historic increase. For example, research indicates that improved 
health and longer life expectancies could increase older workers' 
labor force participation. Researchers also note that rising labor 
force participation among older women is an important factor in the 
increase in labor force participation among older workers in recent 
years. In addition, researchers have noted that some older workers may 
remain in the labor force to retain health care benefits until they 
become eligible for Medicare at age 65--particularly since fewer 
employers now provide retiree health care coverage.[Footnote 38] 

Figure 9: Estimated Labor Force Participation Rates by Age, 1948-2011: 

[Refer to PDF for image: multiple lime graph] 

Percentage of age group in the labor force: 

Year: 1950; 
Workers agee 16 to 24: 59.9%; 
Workers age 25 to 54: 65.7%; 
Workers age 55 and over: 43%. 

Year: 1955; 
Workers agee 16 to 24: 56.1%; 
Workers age 25 to 54: 67.6%; 
Workers age 55 and over: 42.1%. 

Year: 1960; 
Workers agee 16 to 24: 56.4%; 
Workers age 25 to 54: 68.9%; 
Workers age 55 and over: 40.9%. 

Year: 1965; 
Workers agee 16 to 24: 55.8%; 
Workers age 25 to 54: 69.9%; 
Workers age 55 and over: 39.4%. 

Year: 1970; 
Workers agee 16 to 24: 59.8%; 
Workers age 25 to 54: 72%; 
Workers age 55 and over: 38.9%. 

Year: 1975; 
Workers agee 16 to 24: 64.6%; 
Workers age 25 to 54: 74.1%; 
Workers age 55 and over: 34.7%. 

Year: 1980; 
Workers agee 16 to 24: 68.1%; 
Workers age 25 to 54: 78.6%; 
Workers age 55 and over: 32.8%. 

Year: 1985; 
Workers agee 16 to 24: 68.3%; 
Workers age 25 to 54: 81.5%; 
Workers age 55 and over: 30.3%. 

Year: 1990; 
Workers agee 16 to 24: 67.3%; 
Workers age 25 to 54: 83.5%; 
Workers age 55 and over: 30.1%. 

Year: 1995; 
Workers agee 16 to 24: 66.3%; 
Workers age 25 to 54: 83.5%; 
Workers age 55 and over: 30%. 

Year: 2000; 
Workers agee 16 to 24: 65.8%; 
Workers age 25 to 54: 84%; 
Workers age 55 and over: 32.4%. 

Year: 2005; 
Workers agee 16 to 24: 60.8%; 
Workers age 25 to 54: 82.8%; 
Workers age 55 and over: 37.2%. 

Year: 2010; 
Workers agee 16 to 24: 55.2%; 
Workers age 25 to 54: 82.2%; 
Workers age 55 and over: 40.2%. 

Year: 2010; 
Workers agee 16 to 24: 55%; 
Workers age 25 to 54: 81.6%; 
Workers age 55 and over: 40.2%. 

Also depicted on the graph are 10 periods of recession. 

Source: GAO analysis of BLS and NBER data. 

Note: All estimates in this figure have 95 percent confidence 
intervals within plus or minus 0.7 percentage points of the estimate 
itself. 

[End of figure] 

One recent report found that as a result of the recession, some older 
workers decided to remain in the labor force longer than previously 
planned, while others reentered the labor force, likely to bolster 
their income after the financial crisis.[Footnote 39] In fact, several 
one-stop career center staff we interviewed told us that they were 
serving increasing numbers of older individuals who had reentered the 
workforce from retirement. (For more information on the potential 
implications of older workers' increased labor force participation on 
younger workers, see the following text box.) 

[Text box: Does Labor Force Participation by Older Workers Diminish 
Employment Opportunities for Younger Workers? 

Results of recent academic studies contradict a popular notion that 
labor force participation by older workers diminishes employment 
opportunities for younger workers. This notion assumes a zero sum game 
with regard to employment; that is, that there are a fixed number of 
jobs available at any given time and employment of one group results 
in unemployment for another group. However, according to a recent 
study of employment data from numerous countries over several 
decades,[A] increased employment of older workers has not been 
associated with decreased employment of younger workers. The study 
found that when employment of older workers increased, employment of 
younger workers also increased, and this relationship remained even 
when the researchers took account of overall economic growth. The 
study also analyzed what happened to younger workers' employment rates 
in some European countries during specific time periods after 
increased numbers of older workers retired early, not because of 
changes in the economy, but because of changes in national retirement 
policies. The researchers found the opposite of what the popular 
notion of a zero sum game would assume; they found that when more 
older workers left their jobs to retire early, more younger workers 
became unemployed. The researchers concluded that "the evidence 
suggests that greater labor force participation of older persons is 
associated with greater youth employment and with reduced youth 
unemployment."[B] An additional study of multiple countries' economic 
data also found that employment of older workers does not adversely 
affect the employment of younger workers.[C] Two possible explanations 
for the results of these studies are that (1) over time, entire 
economies grow as more workers enter the workforce, increasing the 
demand for all goods and services and also for workers, and (2) some 
jobs held by younger workers complement jobs held by older workers so 
that having one position filled leads to hiring for another position. 
For example, having a senior researcher may create the need for 
research assistants. 

[A] Jonathan Gruber, Kevin Milligan, and David A. Wise, Social 
Security Programs and Retirement Around the World: The Relationship to 
Youth Employment, Introduction and Summary, Working Paper 14647, 
[hyperlink, http://www.nber.org/papers/w14647], NBER (Cambridge, MA: 
2009). The 12 countries covered in this study were Belgium, Canada, 
Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, 
Sweden, the United Kingdom, and the United States. 

[B] For more information on this research, see Jonathan Gruber and 
David A. Wise, eds., Social Security Programs and Retirement Around 
the World: The Relationship to Youth Employment, University of Chicago 
Press, February 2010. 

[C] Adriaan Kalwij, Arie Kapteyn, and Klaas De Vos, "Retirement of 
Older Workers and Employment of the Young" De Economist (2010) 158:341-
359. The 22 countries covered by this study were Australia, Austria, 
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, 
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, 
Spain, Sweden, Switzerland, the United Kingdom, and the United States. 
End of text box] 

Among displaced workers[Footnote 40] aged 65 and over, a significantly 
larger fraction of those who lost their job during the recession years 
chose to remain in the workforce, compared with those who lost their 
jobs during the prerecession period. Specifically, the percentage of 
displaced workers aged 65 and over who retired and left the labor 
force declined from 61 percent in the prerecession period to 35 
percent in the recession years. At the same time, the percentage of 
displaced workers age 65 and over who chose to remain in the workforce 
but were unemployed increased from 15 percent prior to the recession 
to 33 percent during the recession (see appendix II).[Footnote 41] 
This could indicate that increasing numbers of older workers recognize 
that they are not well positioned for retirement. In addition, the 
increased availability of extended UI benefits could have caused some 
workers to remain in the labor force,[Footnote 42] although several 
researchers estimate this has had only a modest effect.[Footnote 43] 

Those older workers displaced from 2007 to 2009 who successfully 
regained employment by January 2010 generally sustained greater 
earnings losses than did younger workers. When comparing earnings 
before and after displacement, the median earnings replacement rate 
for workers aged 55-64 who were displaced from 2007 to 2009 was only 
85 percent, compared with approximately 95 percent for workers aged 25-
54 and over 100 percent for workers aged 20-24.[Footnote 44] Indeed, 
as shown in figure 10, an estimated 70 percent of reemployed displaced 
older workers sustained earnings losses (an earnings replacement rate 
of less than 100 percent) compared with 53 percent of reemployed 
individuals aged 25-54. Other researchers have also found that 
displaced older workers suffer greater wage losses than younger 
workers,[Footnote 45] and that the effects of job loss are likely to 
be long-lasting--including being more likely to lose subsequent jobs 
and experience additional unemployment spells.[Footnote 46] 

Figure 10: Estimated Percentage of Reemployed Displaced Workers Who 
Earned Less on Their New Full-Time Jobs than on Their Previous Jobs, 
January 2010: 

[Refer to PDF for image: horizontal bar graph] 

Prerecession: workers displaced 2005-2007: 
Age 25 to 54: 44%; 
Age 55 and over: 49%. 

Recession: workers displaced 2007-2009: 
Age 25 to 54: 53%; 
Age 55 and over: 70%. 

Source: GAO analysis of CPS Displaced Worker Supplement 2008 and 2010. 

Note: Estimates in this figure have 95 percent confidence intervals 
within plus or minus 7 percentage points of the estimate itself. 
Analysis is restricted to long-tenured displaced workers (workers with 
3 or more years of tenure on the job they lost or left) who lost full-
time, salaried jobs and were reemployed in full-time, salaried jobs at 
the time of the survey. For statistical comparisons of the estimates 
across different groups and years, see appendix III. 

[End of figure] 

Unemployed Older Workers Face Many Challenges Coping with Unemployment 
and Regaining Employment: 

Since the start of the recession, workers of all ages have struggled 
to cope with unemployment. However, older workers generally face 
longer periods of unemployment than do younger workers and may face 
unique reemployment challenges. According to experts and one-stop 
career center staff we interviewed, such challenges include employer 
reluctance to hire older workers, out-of-date skills, and 
unfamiliarity with online applications, which can be particularly 
common for older workers with limited technological skills. 

Unemployed Older Workers Have Difficulty Meeting Financial Obligations: 

[Side bar: "I don't even want to go to the doctor to find out there's 
something wrong because then we can't afford to have it fixed." 
— 56-year-old woman. End of side bar] 

Unemployed older workers in our focus groups wanted to return to work 
so they could pay for critical living expenses and contribute to their 
families and communities.[Footnote 47] They told us that losing their 
jobs had taken a toll on their sense of self-worth, reduced their 
standard of living, and put them at risk of long-term financial 
hardship. 

Older workers cited difficulty paying for health care and health 
insurance as a key financial challenge since they lost their jobs. 
[Footnote 48] Specifically, many focus group participants described 
struggling to pay health insurance premiums and some said they had 
found it difficult to secure private insurance because of high costs 
or preexisting conditions. Many focus group participants said they had 
forgone seeking medical care or taking prescribed medications because 
they could not afford them. See appendix IV for examples of specific 
quotes from focus group participants regarding risks associated with 
long-term unemployment. 

Many focus group participants said that being unemployed had made it 
difficult to afford mortgage or rent payments.[Footnote 49] In 
addition, some focus group participants told us they had lost or were 
at risk of losing their homes. Others had taken in roommates, moved in 
with friends or family, or moved to a more affordable apartment to 
reduce their housing expenses. For example, one focus group 
participant told us his son had moved back home so that he could give 
his parents money for rent. 

[Side bar: "Your bills don't stop when you get unemployed; I have a 
mortgage, I have a special needs son, I have medical issues myself."
— 59-year-old man. 

"My daughter who is now divorced and unemployed just moved back in 
with me. My son just graduated college after 6 years in the Air Force 
...and he can't find a job." — 58-year-old woman. End of side bar] 

Most of our focus group participants had relied on UI benefits to help 
pay for critical living expenses while they were unemployed, and many 
said that without UI benefits they would have been in much greater 
financial jeopardy. Specifically, many focus group participants said 
that without UI benefits they would have lost their homes or even 
become homeless. However, some participants said they had already 
exhausted their UI benefits or would soon exhaust their benefits. Some 
focus group participants indicated that, since losing their jobs, they 
had received public assistance, such as through the Supplemental 
Nutrition Assistance Program (formerly known as food stamps).[Footnote 
50] 

Even with UI, many focus group participants said they had drawn down 
retirement savings, increased their credit card debt, or tapped into 
their home equity to cover living expenses while unemployed. Others 
reported borrowing money from family or friends or selling possessions 
to meet their financial needs.[Footnote 51] A majority of those who 
were old enough to claim early Social Security retirement benefits had 
already done so. 

In addition, focus group participants said they had struggled to 
fulfill family financial obligations they had been able to meet in the 
past. Several mentioned that they were attempting to pay their 
children's college tuition or were helping to pay unemployed adult 
children's living expenses. They also frequently expressed general 
concern about high unemployment among younger generations. Some said 
they were supporting their children's employment by taking care of 
their grandchildren during the workday. Others mentioned that they 
were caring for their aging parents. 

Unemployed Older Workers Face Many Challenges in Becoming Reemployed: 

Perceived Employer Reluctance to Hire Older Workers: 

Many experts, one-stop career center staff, and other workforce 
professionals we interviewed said that some employers are reluctant to 
hire older workers.[Footnote 52] Because of legal prohibitions against 
age discrimination, employers are unlikely to explicitly express a 
lack of interest in hiring older workers;[Footnote 53] however, one 
workforce professional told us that local employers had asked her to 
screen out all applicants over the age of 40.[Footnote 54] Focus group 
participants perceived employer reluctance to hire older workers as 
their primary reemployment challenge, and several cited job interview 
experiences that had convinced them that age discrimination was 
limiting their ability to find a new job. 

According to experts we interviewed, a key reason employers are 
reluctant to hire older workers is that they expect providing health 
benefits to older workers would be costly. Several employer surveys 
corroborate this concern.[Footnote 55] In addition, a few focus group 
participants who had handled their previous employer's health 
insurance or had been involved in hiring decisions said they had seen 
that older workers substantially increased insurance costs, which 
provided a disincentive to hire older workers. For example, one focus 
group participant told us that his prior employer had told him not to 
hire anyone older than him. 

[Side bar: "It's like you get older and people just toss you aside"
— 65-year-old woman. End of side bar] 

The higher wages that older workers previously earned also make some 
employers hesitant to hire them, according to experts, workforce 
professionals, and our focus group participants.[Footnote 56] For 
example, employers may expect that an older worker who accepts a job 
paying significantly less than the worker had previously earned might 
continue to search for a higher-paying job and might leave the job if 
a better offer became available. Also, according to experts we 
interviewed, employers may believe that an older worker who previously 
held a high-level position will be overqualified and therefore unhappy 
in a lower-level position. Further, some experts we interviewed said 
employers may believe that an older worker may not be happy working 
for a younger, less experienced supervisor, which could cause 
interpersonal conflicts. Some focus group participants said potential 
employers had specifically mentioned these concerns during job 
interviews. Many of our focus group participants said they had great 
financial need for a new job and expected to take a significant pay 
cut to get one. See appendix IV for examples of specific quotes from 
focus group participants regarding challenges they experienced in 
becoming reemployed. 

Lack of Up-to-Date Skills and Diminished Skills: 

Workforce professionals we interviewed said that many older workers 
lack up-to-date skills with computers and other technology, and this 
puts them at a disadvantage in becoming reemployed. Some noted that 
after a long spell of unemployment, even those older workers who had 
previously been proficient with computer technology might find their 
technology skills outdated. Some experts we interviewed said that 
employers might hesitate to hire and retrain older workers because 
they assume that older workers will not want to work much longer, so 
the employer would not get a good return on the training investment. 
Some workforce professionals also said that, according to their 
observations, employers have increased the number of skills they 
require applicants to possess, even for low-level positions. For 
example, a workforce professional told us one job posting for a 
receptionist stated that the applicant needed to be able to manage the 
employer's website in addition to completing more typical 
administrative duties. Some focus group participants said that they 
were at a disadvantage in finding new jobs because injuries or other 
health problems prevented them from performing the type of work they 
had done in the past or meeting requirements of available jobs in 
other fields. 

Challenges in the Online Job Application Process: 

According to workforce professionals, an ongoing trend among 
employers--to require job seekers to submit all applications and 
résumés online--creates difficulties for many older workers, 
particularly those with few or no computer skills. Further, workforce 
professionals told us that many online job applications require 
applicants to disclose information that readily reveals the 
applicant's age, such as the year the job seeker graduated from high 
school, and that applications cannot be submitted until such fields 
are completed. Such information would make it possible for employers 
to screen out older workers, if the employer wanted to do so. 
Workforce professionals also said that even workers seeking jobs that 
require little or no computer use could get those jobs only by 
completing a long online application. For example, workforce 
professionals in two locations told us that individuals seeking 
positions as maids and janitors in national chain hotels could apply 
for these positions only online and that the older workers seeking 
these positions often were unfamiliar with such applications. 

Moreover, workforce professionals and focus group participants noted 
that online applications can vary widely among employers, cutting and 
pasting is sometimes not an option, and each application can take 
hours to complete. They also told us that many online applications cut 
off if an applicant has not completed or saved the work within a 
certain amount of time. This makes applying for jobs more difficult 
for workers with limited computer skills. 

Emotional Challenges That Result from Long-Term Unemployment: 

Workforce professionals at the four one-stop career centers we visited 
and some other experts said that some older workers experience 
depression and discouragement because of their long-term unemployment. 
While this challenge is not limited to older workers, depressed and 
discouraged older workers may not search for jobs as intensely as they 
might have otherwise and their performance in interviews may also be 
compromised.[Footnote 57] For example, workforce professionals said 
that depressed or discouraged job seekers may show up at interviews 
looking disheveled or may become short-tempered during interviews. A 
workforce professional in Falls Church, Virginia, said that employers 
have told him they had decided against hiring an older job applicant 
because the applicant had appeared too desperate for a job. Many of 
our focus group participants said they had been discouraged or 
depressed because of their continued unemployment. 

Older Workers Need Reemployment Services That Address Their Unique 
Challenges: 

Workforce professionals identified different types of services that 
older workers need from the workforce system to help address their 
reemployment challenges, such as employers' reluctance to hire them. 
For example, workforce professionals said older workers need services 
that help them: 

* learn how to present their skills and experiences to potential 
employers in a way that does not draw attention to their age, 
extensive years of experience, and past high-level positions; 

* develop interview responses that can diffuse employer concerns about 
hiring older workers, such as whether the job seeker would be a good 
fit, be willing to work for less pay, or be okay with reporting to a 
younger manager; 

* understand how to adjust their physical appearance to make a better 
impression on prospective employers; 

* develop skills, including technological skills, that employers 
currently expect their employees to possess; and: 

* complete and submit online job applications. 

One-stop career center staff told us they offer classes and other 
support for workers to help with résumé writing, job interviewing, and 
computer skills. Some one-stop career center staff members told us 
that they perform mock interviews to help older job seekers learn how 
to gracefully respond to blunt questions that employers may ask older 
job applicants. Staff at two of the one-stop career centers we visited 
told us they had studied the details of some large employers' online 
applications to help job seekers avoid having their applications 
automatically rejected because of blank fields or inappropriate 
responses. 

One-stop career center staff also told us that providing the type of 
assistance that some older workers need can be very time-consuming. 
For example, one-stop career center staff said that helping some older 
workers understand that their physical appearance or discouraged 
demeanor hurts their reemployment prospects usually requires sensitive 
one-on-one discussions. Also, one-stop career center staff told us 
they sometimes have to work individually with older workers for long 
periods of time to help them complete online applications. 

Job Loss Can Diminish Retirement Income Prospects: 

Older workers who saved for retirement but lost their jobs following 
the recession could face reduced retirement security because of long-
term unemployment, in part because they have fewer years to accrue 
additional benefits or make additional contributions, and they might 
rely upon their retirement savings to cover expenses incurred while 
they are unemployed. Furthermore, a long period of unemployment could 
lead older workers to claim early Social Security retirement benefits, 
which would reduce their monthly benefits for the rest of their lives. 

Job Loss Can Lead to Lower Private Retirement Income, Early Social 
Security Claims, and Exhaustion of Retirement Savings: 

Long-term unemployment can reduce an older worker's future monthly 
retirement income in numerous ways, such as by reducing the number of 
years the worker can accumulate DB plan retirement benefits or DC plan 
savings, by motivating Social Security claims at an earlier age than 
the worker otherwise would have chosen, and by leading workers to draw 
down retirement savings to pay for expenses during unemployment. 

Fewer Years of Work Can Lower Retirement Income: 

Job loss can result in fewer years of work over a worker's lifetime, 
which can lower the worker's retirement income in several ways. For 
example, fewer years of work can prevent a worker covered by a 
traditional DB plan from having enough years of work with an employer 
to vest in (that is, earn a nonforfeitable right to receive) employer-
funded retirement benefits, thus preventing the worker from having any 
retirement benefits from the employer.[Footnote 58] Fewer years of 
work can also reduce a worker's final retirement benefit from a 
traditional DB plan if the number of years worked is used in the 
formula for calculating retirement benefits. For workers with DC 
plans, having fewer years of work can limit the amount of yearly 
employee and employer contributions that accumulate in a worker's 
account and reduce the earnings from those contributions. Further, 
having fewer years of work gives a worker less time to move up the 
salary ladder and achieve higher levels of pay. For a worker with a 
traditional DB plan, this will result in lower benefits if salary 
levels are included in the formula for calculating benefits, and, for 
a worker with a DC plan, this can reduce the worker's ability to 
increase contributions to the plan over time. Social Security 
retirement benefits may be reduced as a result of fewer years of work 
because the benefits are based, in part, on a calculation of the 
worker's average monthly earnings over 35 years. The 35 years used for 
the calculation are the worker's highest earnings years, adjusted for 
changes in wage levels. If a worker has less than 35 years of 
earnings, then zeros would be used for earnings in the missing years, 
and this will result in a lower calculated benefit. Even if the worker 
had already worked for 35 years, losing work could reduce the worker's 
Social Security retirement benefits because the worker did not have 
the opportunity to achieve higher earnings to replace low-earnings 
years in the benefit calculation.[Footnote 59] 

Our simulations of how job loss and a forced early retirement would 
affect an older worker's retirement income show that workers who had 
been participating in an employer-sponsored retirement plan would lose 
more retirement income because of job loss than workers who relied 
exclusively on Social Security retirement benefits.[Footnote 60] 
Workers with employer-sponsored retirement plans are in the best 
position to save for retirement because their retirement saving is 
facilitated and may be supplemented by their employers. Also, workers 
with access to employer-sponsored plans typically have higher average 
earnings than workers without access to such plans, and higher 
earnings will generally result in higher Social Security retirement 
benefits and generally in a greater ability to save for retirement. 
These workers also have the most retirement income to lose by becoming 
unemployed. 

We simulated how losing years of work as well as losing coverage by an 
employer-sponsored retirement plan between ages 55 and 62 could affect 
retirement income. Specifically our simulation estimated pretax 
monthly retirement income beginning at age 62 for groups forced to 
leave work at ages 55 and 58, and we compared future retirement income 
of these groups with our simulation results for a group who stopped 
work at age 62. The simulations show that retirement benefits from 
employer-sponsored plans are reduced much more than Social Security 
retirement benefits as a result of having fewer years of work. For 
example, median-level retirement benefits from employer-sponsored 
plans are 39 percent lower--$500 compared with $817--for workers with 
a DC plan (and no DB plan) who leave work at age 55 compared with 
similar workers who work until age 62. For these same groups of 
workers, median Social Security retirement benefits are only 13 
percent lower--$1,273 compared with $1,467--for those who stopped 
working at age 55. Also, according to our simulations, the median 
Social Security retirement benefit for workers who leave work at age 
55 or 58 with only a DC or a DB plan (but not both) is higher than the 
median benefits for such workers from an employer-sponsored retirement 
plan.[Footnote 61] 

The simulations also show that some workers with employer-sponsored 
retirement plans who lose their jobs in their 50s are likely to end up 
either not vesting in the plans or cashing out their savings when they 
lose their jobs. On the other hand, the simulations demonstrate that 
workers who have benefits from both a DB and a DC plan are in the best 
financial position for retirement. At the median level of benefits, 
even those who were forced to retire at age 55 would have higher 
monthly retirement income than workers with only a DB or DC plan who 
worked until age 62. Figure 11 shows the simulations' results at the 
median level (middle value in distribution) of benefits for workers 
who had been participating in employer-sponsored plans. 

The older workers from our simulations in figure 11 are better 
positioned for retirement than many other older workers because (1) 
they were fortunate enough to be working for an employer that offered 
a retirement plan before they lost their job, and (2) their retirement 
benefits are at the median level, which means their benefits are 
higher than those of almost half of the other workers in their group 
with similar retirement plans. Workers with benefits in the lower 
range (25th percentile) have substantially lower benefits. For 
example, a worker with benefits from a DC plan at the 25th percentile 
level will receive only about $136 per month from the DC plan at age 
62 if the worker stops working at age 58, and such a worker will 
receive only $239 if he or she stops working at age 62. The results of 
our simulation show a best-case scenario for workers with DC plans 
because the simulation assumes the workers do not draw down any DC 
plan savings before age 62. 

Finally, the simulations demonstrate that workers with both a DB and 
DC plan are in the best financial position for retirement. At the 
median level of benefits, even those who were forced to retire at age 
55 would have higher monthly retirement income than workers with only 
a DB or DC plan who worked until age 62. 

Figure 11: Potential Effect That Fewer Years of Work Can Have on 
Retirement Benefits for Workers with Median-Level Retirement Benefits 
from Employer-Sponsored Plans and Median-Level Retirement Benefits 
from Social Security: 

[Refer to PDF for image: 2 horizontal bar graphs] 

Pretax monthly retirement benefits claimed at age 62: 

Workers with defined contribution plan only, who stopped work at: 
Age 55: 
Social Security retirement (median monthly benefit): $1,273; 
Employer-sponsored retirement plan (median monthly income): $500. 

Workers with defined contribution plan only, who stopped work at: 
Age 58: 
Social Security retirement (median monthly benefit): $1,377; 
Employer-sponsored retirement plan (median monthly income): $640. 

Workers with defined contribution plan only, who stopped work at: 
Age 62: 
Social Security retirement (median monthly benefit): $1,467; 
Employer-sponsored retirement plan (median monthly income): $817. 

Workers with defined benefit plan only, who stopped work at: 
Age 55: 
Social Security retirement (median monthly benefit): $1,131; 
Employer-sponsored retirement plan (median monthly income): $671. 

Workers with defined benefit plan only, who stopped work at: 
Age 58: 
Social Security retirement (median monthly benefit): $1,180; 
Employer-sponsored retirement plan (median monthly income): $905. 

Workers with defined benefit plan only, who stopped work at: 
Age 62: 
Social Security retirement (median monthly benefit): $1,230; 
Employer-sponsored retirement plan (median monthly income): $1,273. 

Workers with both types of plans, who stopped work at: 
Age 55: 
Social Security retirement (median monthly benefit): $1,351; 
Employer-sponsored retirement plan (median monthly income): $1,426. 

Workers with both types of plans, who stopped work at: 
Age 58: 
Social Security retirement (median monthly benefit): $1,438; 
Employer-sponsored retirement plan (median monthly income): $1,688. 

Workers with both types of plans, who stopped work at: 
Age 62: 
Social Security retirement (median monthly benefit): $1,537. 
Employer-sponsored retirement plan (median monthly income): $2,263. 

Source: GAO analysis using the Policy Simulation Group's 
microsimulation models. 

Note: The cohort used from the simulation models comprises individuals 
who were age 55 in 2010 and were participating in a retirement plan at 
their current employer. The models simulated retirement benefits at 
age 62 after all individuals in the cohort stopped working at ages 55, 
58, and 62. The graphic shows the median level of benefits from 
employer-sponsored plans (including benefits from prior employers) 
based on the type of plan the individuals were participating in at the 
time of job loss. The medians for private retirement benefits and for 
Social Security retirement benefits were calculated separately and 
cannot be combined to get a median for total retirement income. The 
models assumed that all participants who vested in benefits and did 
not cash out their benefits when they left the job before age 62 used 
DC plan savings to purchase an annuity at age 62. 

[End of figure] 

Our simulations showed that workers with only Social Security 
retirement benefits have a comparatively small reduction in retirement 
income because of job loss, but, given their low monthly retirement 
income levels, the approximately $30 to $60 reduction could become 
problematic as retirees age and if health care costs and premiums 
continue to increase. Also, these workers may have great difficulty 
paying for living expenses while they are unemployed before they are 
old enough to claim Social Security retirement benefits because, if 
they do not have retirement savings, they may not have other savings 
to help them through a period of long-term unemployment. Figure 12 
shows the simulations' results at the median level of benefits for 
workers who stopped working at different ages and had only Social 
Security retirement benefits. 

Figure 12: Potential Effect That Fewer Years of Work Can Have on 
Social Security Retirement Benefits of Workers without Employer-
Sponsored Retirement Plans: 

[Refer to PDF for image: horizontal bar graph] 

Age stopped working: 55; 
Pretax monthly income at age 62 (in 2011 dollars): $855. 

Age stopped working: 58; 
Pretax monthly income at age 62 (in 2011 dollars): $873; 

Age stopped working: 62; 
Pretax monthly income at age 62 (in 2011 dollars): $909. 

Source: GAO analysis using the Policy Simulation Group's 
microsimulation models. 

Note: Benefit amounts shown are for claims filed at age 62. The cohort 
used from the simulation models comprises individuals who were age 55 
in 2010 and did not have retirement benefits from an employer-
sponsored plan or IRA at age 62. 

[End of figure] 

Unemployment Can Motivate Older Workers to Claim Social Security 
Retirement Benefits Early: 

[Side bar: "I couldn't find any meaningful employment that would last 
any length of time. So I got tired of looking ... you just kind of get 
worn out and say, 'I'll just take early Social Security and call it a 
day." — 63-year-old man. End of side bar] 

The responses of our focus group participants, academic research, and 
a recent spike in Social Security claims indicate that long-term 
unemployment can motivate older workers to file for early Social 
Security retirement benefits, which will result in those workers and 
their survivors receiving lower monthly retirement benefits for the 
rest of their lives than if the workers had waited to claim benefits 
at full retirement age.[Footnote 62] Many unemployed older workers in 
our focus groups said that they were planning to claim Social Security 
retirement benefits as soon as they were eligible or had already done 
so. They said that they could not find a job and needed a source of 
income to help pay for living expenses, and therefore decided to claim 
Social Security retirement benefits early. Some focus group 
participants also expressed the notion that they needed to claim 
Social Security retirement benefits as soon as possible because they 
were afraid of changes Congress might make in Social Security benefits 
and wanted to ensure they were grandfathered into the program before 
the changes were made. A few older workers in our focus groups who 
were too young to claim Social Security retirement benefits but had 
health problems that affected their ability to work said they applied 
for Social Security disability benefits to help pay for living 
expenses after they became unemployed. 

Claiming Social Security retirement benefits at age 62 will cause an 
older worker to receive lower monthly benefits than if the worker had 
waited until full retirement age to claim benefits. Because Social 
Security retirement benefits are adjusted to provide approximately the 
same estimated value of lifetime benefits regardless of when the 
benefits are claimed, claiming benefits early results in a reduction 
to the monthly benefit amount because the benefits are paid out over a 
longer period of time. Therefore, older workers who claim Social 
Security retirement benefits early will have less income from Social 
Security each month to pay for living expenses for the rest of their 
lives. Figure 13 shows how an older worker's monthly Social Security 
retirement benefit would differ depending on the age at which the 
worker claimed the benefits. 

Figure 13: Example of the Effect of Early Claiming on Monthly Social 
Security Retirement Benefits: 

[Refer to PDF for image: horizontal bar graph] 

Age Social Security benefit first claimed: 62. 
Pretax monthly income (in 2011 dollars): $909. 

Age Social Security benefit first claimed: 64; 
Pretax monthly income (in 2011 dollars): $1,051. 

Age Social Security benefit first claimed: 66; 
Pretax monthly income (in 2011 dollars): $1,212. 

Age Social Security benefit first claimed: 68; 
Pretax monthly income (in 2011 dollars): $1,406. 

Age Social Security benefit first claimed: 70; 
Pretax monthly income (in 2011 dollars): $1,600. 

Source: GAO. 

Note: For this analysis, GAO applied Social Security retirement 
benefit formulas for delayed and early claiming to the age 62 benefit 
amount derived from the analysis used in the preceding figure (figure 
12). The illustration is based on an individual who worked until age 
62. The individual used in the illustration (1) is from a subset of 
the cohort used in the simulation models comprising individuals who 
were age 55 in 2010 and did not have retirement benefits from an 
employer-sponsored plan at age 62, and (2) had Social Security 
retirement benefits at the median level for the subset. 

[End of figure] 

Academic studies have found that unemployment can lead workers to 
retire. A study published in 2009 covering 30 years of data on 
employment and retirement decisions found that during times when 
obtaining a new job is difficult, older workers were likely to retire 
in response to becoming unemployed.[Footnote 63] Regarding the then-
ongoing recession of 2007-2009, the study estimated that more older 
workers would retire early because of unemployment than would delay 
retirement in an attempt to rebuild savings after the downturn in the 
financial market. Also, a 2012 study found that high unemployment 
increases Social Security retirement claims among men with limited 
education.[Footnote 64] The spike in claims for Social Security 
retirement benefits that occurred in 2009 after large increases in 
unemployment rates offers support for the study's findings. According 
to estimates from SSA's Office of the Chief Actuary, in fiscal year 
2009 about 139,500 (about 6 percent) more older workers applied for 
Social Security retirement benefits than would have been expected in 
the absence of a recession.[Footnote 65] 

The recession also led to an increase in applications for disability 
benefits from the Social Security Disability Insurance program. In 
2009, SSA received approximately 205,000 (12 percent) more 
applications for disability benefits because of the recession, and 
applications also rose in 2010 because of the recession, according to 
estimates by the Office of the Chief Actuary.[Footnote 66] While we do 
not know the percentage of these additional applications that were 
filed by older workers, the majority of disability awards (approved 
applications) are for individuals age 50 and over. Also, for 
individuals age 50 and over, awards for disability benefits, as well 
as the percentage of individuals in the population who have been 
awarded disability benefits have increased since the recession 
started.[Footnote 67] (See appendix V for information on the increase 
in disability benefit awards.) 

Older workers who lost their jobs in the recession had significant 
injuries or health problems, and were not old enough to claim Social 
Security retirement benefits have strong incentive to apply for Social 
Security disability benefits. If they are awarded benefits, they will 
receive monthly payments and, after a 24-month waiting period, they 
will be eligible for health insurance from the Medicare 
program.[Footnote 68] Also, receiving Social Security disability 
benefits gives unemployed older workers an alternative to claiming 
Social Security retirement benefits early. This is because individuals 
who are awarded Social Security disability benefits and remain 
eligible for those benefits can continue receiving them up until full 
retirement age, when they can begin receiving full retirement benefits. 

An increase in the number of individuals receiving disability benefits 
is costly for the OASDI trust funds.[Footnote 69] According to the 
Office of the Chief Actuary, some workers who applied for disability 
benefits as a result of the recession probably would have applied 
eventually, but job loss or other effects of the recession motivated 
them to apply earlier. However, other workers may never have applied 
for disability benefits if they had not lost their jobs, and the trust 
fund would not have made disability payments to those workers. 

Unemployment Can Lead Older Workers to Use Their Private Retirement 
Savings Early: 

[Side bar: "I had $150,000-$175,000 in my 401(k) retirement, and after 
2 years of being unemployed, ifs down to $25,000." — 61-year-old man. 

"Hopefully, I don't live for another 10 years because I will be broke 
in 10 years." — 61-year-old man. 

"Its gone from some hope of retiring to I hope I can survive." 
— 63-year-old man. End of side bar] 

Unemployment can also lead an older worker who has a retirement 
account to use some or all of those savings to cover living expenses 
while unemployed. Slightly over half of the older workers in our focus 
groups who reported having retirement savings in an IRA or DC plan 
also reported that they had used some or all of these savings to pay 
for expenses while they were unemployed. For example, focus group 
participants described using retirement savings to cover expenses such 
as mortgage and car payments, medical bills, a child's college 
tuition, and moving to more affordable housing. A survey of unemployed 
workers conducted in March 2010 also found that a high percentage 
reported using savings set aside for retirement or other purposes to 
help make ends meet.[Footnote 70] In addition, an October 2010 survey 
of workers age 50 and over found that nearly a quarter reported that 
they had used all their savings during the past 3 years.[Footnote 71] 

The earlier a worker stops working and cashes out DC plan savings, the 
lower the savings will be and the shorter the period that the savings 
are likely to last. Depending on the level of savings, the length of 
time the worker spends unemployed, and the worker's other financial 
resources, a worker may be at risk of using a large percentage of DC 
savings during unemployment. If the worker is fortunate enough to find 
another job that includes an employer-sponsored retirement plan or 
pays enough to enable the worker to save some earnings in an IRA, the 
worker will be able to resume saving for retirement. Figure 14 
illustrates how a worker's retirement savings of $70,000 in a 401(k) 
plan could change after 2 years of unemployment, depending on how much 
the worker withdrew from the account while unemployed.[Footnote 72] 
The figure also shows how the account value could increase if the 
worker became reemployed and resumed saving for retirement. As shown 
in figure 14, if the worker did not make any withdrawals during the 
period of unemployment, savings could have reached nearly $110,000 by 
age 62, after becoming reemployed. On the other hand, if the worker 
withdrew 50 percent of the retirement account balance while unemployed 
but then found a job and saved for another 5 years, the worker would 
still have less savings than before unemployment began. 

Figure 14: How Drawdowns from Retirement Savings during Unemployment 
Can Affect Amounts Saved at Time of Retirement if a Worker Became 
Reemployed and Resumed Saving: 

[Refer to PDF for image: illustrated vertical bar graph] 

Age 55: 
A worker loses job and stops making contributions to retirement 
account: 
Initial value of account: $70,000. 

Unemployed: 

Age 57: 
After 2 years of unemployment and no additional contributions, the 
value of the retirement account depends on how much was withdrawn 
during the time without a job. 

No withdrawal: $74,694; 
Withdrew 25% of account: $56,021; 
Withdrew 50% of account: $37,347; 
Withdrew 75% of account: $18,674; 
Withdrew 25% of account: $0. 

Reemployed after two years: 

Age 62: 
After 5 years of added contributions at a new job, any withdrawals 
made during unemployment continue to affect the value of the 
retirement account. 

No withdrawal: $109,694; 
Withdrew 25% of account: $87,478; 
Withdrew 50% of account: $65,062 
Withdrew 75% of account: $42,646; 
Withdrew 25% of account: $20,229. 

Value without unemployment: 

Age 62: which would have been worth thousands more dollars: 

Without a gap in contributions: $119,262. 

Source: GAO. 

Note: This illustration is based on an individual who was born at the 
beginning of 1953, turns 55 in 2008, and retires at age 62 in 2015. To 
calculate changes in the account balance over time, we used the 
interest and rate-of-return assumptions as reported in past and 
projected under the intermediate cost assumptions in the 2011 Annual 
Report of the Board of Trustees of the Federal Old-Age and Survivors 
Insurance and Federal Disability Insurance Trust Funds (also known as 
the OASDI Trustees' Report). We used scaled earnings for medium annual 
earners as reported in past and projected in the 2011 OASDI Trustees' 
Report. We assumed the employee contributions to the retirement 
account are 6 percent of the individual's wages and received a 3 
percent employer matching contribution. 

[End of figure] 

If the individual shown in figure 14 worked beyond the age of 62, the 
worker could continue to increase the savings and postpone the time 
when the savings would need to be used. If the worker worked until age 
65, savings could reach about $139,500, if no withdrawals were made 
while unemployed. But, if substantial withdrawals were made while 
unemployed, the worker would need to work past age 62 just to get back 
to the level of savings in the account before the unemployment began. 
On the basis of our estimates, if the worker withdrew 50 percent of 
the retirement account balance while unemployed and became reemployed 
at age 57, it would take about 5 ½ more years of saving (age 62 ½) 
until the account balance got back to the level it was when the worker 
was 55. 

Before the Recession, Many Older Workers Had Little or No Retirement 
Savings: 

In the period shortly before the recession started, we estimate that 
40 percent of employed individuals age 55 and over had no DB plan and 
no retirement savings or savings below $50,000.[Footnote 73] 
Specifically, we estimate that 22 percent of older workers had no 
private retirement savings and did not participate in a retirement 
plan, and an additional 18 percent only had retirement savings of less 
than $50,000 in a DC plan or IRA. Another 23 percent had total 
retirement savings of $50,000 or more in a DC plan or IRA and did not 
participate in a DB plan. We estimate that 37 percent of older workers 
were participating in a DB plan at their current employer or had 
earned the right to receive benefits from a past employer's DB plan, 
and about half of these (19 percent of all older workers) had both a 
DB and a DC plan.[Footnote 74] See figure 15 for the results of our 
analysis, based on data from the 2007 Survey of Consumer Finances. 

When older workers' retirement plans and retirement savings are 
combined with those of their spouses, the resulting estimates indicate 
that more households than individuals have private retirement savings 
or plan participation. For households with at least one spouse over 
age 55, an estimated 16 percent had no retirement savings or plan 
participation, and an additional 13 percent had savings of less than 
$50,000. Figure 15 shows the estimated percentage of part-or full-time 
employed individuals age 55 and older and their households according 
to the type of retirement plans or savings they had at the time of the 
2007 survey. The percentage of those shown as participating in a DC or 
DB plan includes those who were participating at their current 
employers or who had accumulated benefits from a prior employer. 

Figure 15: Estimated Levels of Retirement Savings and Types of Plan 
Participation for Employed Workers 55 and Over and Their Households, 
2007: 

[Refer to PDF for image: 2 pie-charts with subcharts] 

Individuals: 
No retirement savings: 22%; 
Both DC and DB: 19%; 
DB: 18%; 
IRA only: 13%; 
DC: 28%. 

Of those with either an IRA or a DC plan, and no DB plan: 

Total value of retirement savings: 
Less than %50,000: 18%; 
$50,000-$99,999: 9%; 
$100,000-$199,999: 5%; 
$200,000-$499,999: 5%; 
$500,000 or more: 4%. 

Households: 
No retirement savings: 16%; 
Both DC and DB: 27%; 
DB: 21%; 
IRA only: 8%; 
DC: 28%. 

Of those with either an IRA or a DC plan, and no DB plan: 

Total value of retirement savings: 
Less than %50,000: 13%; 
$50,000-$99,999: 8%; 
$100,000-$199,999: 5%; 
$200,000-$499,999: 6%; 
$500,000 or more: 5%. 

Source: GAO analysis of 2007 Survey of Consumer Finances data. 

Note: For the purpose of this figure, retirement savings are 
considered to be participation in a DB or DC plan at a current 
employer, earned DB benefits from a past employer, a DC account from a 
past employer, a Keogh account, or an IRA. In this figure, rollover 
IRAs--IRAs that were started with funds rolled over from a DC plan 
account--are counted as DC savings, not IRAs. Also, Keogh accounts are 
counted as IRAs. Our analysis of households only includes the 
retirement savings and plan participation of the head of household and 
the spouse and does not include the retirement savings or retirement 
plan participation of additional family members. Percentage estimates 
in this figure have 95 percent confidence intervals that are within 
plus or minus 3.2 percent of the estimate itself. Because of rounding, 
percentages for "total value of retirement savings" for households 
does not sum to the corresponding combined value for categories "IRA 
only" and "DC." 

[End of figure] 

Changes that have occurred since 2007, including job losses and 
financial market declines, have likely reduced retirement savings for 
some older workers.[Footnote 75] Also, after the start of the 
recession in 2007, to cut costs, some employers suspended 
contributions to their employees' DC accounts, which will ultimately 
reduce employees' retirement income. According to the Employee Benefit 
Research Institute's (EBRI) annual Retirement Confidence Survey, 
workers' confidence in being able to afford a comfortable retirement 
has eroded since 2007.[Footnote 76] For example, in 2007, according to 
EBRI estimates, 11 percent of workers age 55 and over said they were 
not at all confident about having enough money to live comfortably in 
retirement. By 2011, that percentage had increased to 22 percent. In 
addition to the impact of the 2007-2009 recession and ensuing 
financial downturn, these changes may indicate that more older workers 
are becoming aware that they do not have enough savings to retire and 
need to keep working to increase their income or save more for 
retirement. This may help explain why the proportion of older workers 
participating in the workforce has continued to increase. Also, since 
the onset of the recession, more workers have reported that they 
expect to retire at older ages than in the past. EBRI conducted an 
analysis of expected retirement ages of workers age 50 and over using 
2006, 2008, and 2010 data from the University of Michigan's Health and 
Retirement Study. EBRI found increases from 2006 to 2010 in the 
percentage of workers age 50 and over who expected to retire after age 
65.[Footnote 77] However, workers' reports about plans to delay 
retirement should be considered with some skepticism because EBRI has 
found that a large percentage of workers retire earlier than they 
expected for various reasons, including health problems, downsizing or 
closure of their company, and having to care for a spouse or other 
family member. 

Experts Selected Policies to Consider as the Economy Recovers, and 
Labor Has Taken Some Steps to Help Older Workers: 

Experts we interviewed most frequently selected a range of policy 
proposals that could potentially help unemployed older workers regain 
employment as the economy improves.[Footnote 78] In the current 
context of high unemployment and slow job creation, the impact of such 
policies is likely to be muted by limited job openings. Nonetheless, 
experts we spoke to said these policies could potentially help some 
older workers obtain reemployment. Labor has taken some steps to help 
older workers by implementing several strategies proposed in its 2008 
Taskforce report. 

Proposed Policies to Help Older Workers as the Economy Recovers: 

Experts we interviewed most frequently selected a variety of policy 
options that could help address unemployed older workers' reemployment 
challenges. Experts selected these policies from a broader list of 
proposals we compiled from previous studies,[Footnote 79] many of 
which were conducted before the recession. (For a complete list of the 
proposals we presented to experts, see appendix VI.) While there was 
no consensus among experts and each proposal had advantages and 
disadvantages, several experts we spoke to said implementing several 
policies in combination would likely improve older workers' employment 
levels more than implementing any of the policies in isolation. 
Experts differed on whether they believed the policies should be 
narrowly targeted at older workers or more broadly applied to all long-
term unemployed workers. Some experts suggested all long-term 
unemployed workers--not just those who are older--should qualify to 
receive assistance under some proposed policies. Others said that 
policies specifically targeted to older workers could help "level the 
playing field" and contain federal costs. Finally, experts said that 
implementing many of the policies would increase federal spending and 
involve legislative changes, and would therefore need to be considered 
carefully in the context of our nation's current long-term fiscal 
challenges. 

The eight policy proposals experts most frequently selected fall into 
three categories, organized by the underlying issue they are meant to 
address: (1) employer reluctance to hire older workers, (2) the need 
to enhance reemployment assistance targeted specifically to older 
workers, and (3) the need to encourage older workers to obtain 
reemployment as quickly as possible. However, some of the policy 
proposals experts selected will be of limited effectiveness as long as 
the number of job seekers greatly outnumbers the number of available 
jobs. Further, the effectiveness of some proposed policies could be 
limited if older workers' unemployment is caused by structural rather 
than cyclical changes. However, experts we spoke to said these 
policies could potentially help older workers obtain reemployment. 

Of the eight proposed policies most frequently selected, three aim to 
address employer reluctance to hire older workers (see table 1). As 
discussed previously, almost all of the experts and workforce 
professionals we interviewed said that some employers are reluctant to 
hire older workers. When explaining why this might be the case, many 
experts cited older workers' higher health care costs and salary 
expectations. Many experts we interviewed said that eliminating the 
requirement that Medicare generally be the secondary payer for 
benefits for workers age 65 and over covered by an employer group 
health plan could improve employers' willingness to hire older 
workers.[Footnote 80] However, the experts also acknowledged that 
implementing such a policy would shift health insurance costs from 
employers to the public system and exacerbate Medicare's current 
financial challenges. Two of the other proposed policies experts most 
frequently selected would provide incentives to employers to encourage 
them to hire long-term unemployed older workers, such as by offering 
temporary wage or training subsidies. 

Table 1: Experts' Views on Key Strengths and Limitations of Selected 
Policy Proposals to Help Address Perceived Employer Reluctance to Hire 
Older Workers: 

Experts' favored policy proposals to help address perceived employer 
reluctance to hire older workers: 

Eliminate the requirement that Medicare generally be the secondary 
payer for workers covered by an employer group health plan[A]; 

Key strengths as identified by experts: 
* Could minimize younger workers' cost advantage to employers because 
of their lower health care costs, and by doing so would make hiring 
older workers more attractive to employers; 
* Could be justified on the grounds of fairness, since working 
individuals 65 and over have paid their Medicare taxes and are 
entitled to the benefit. 

Key weaknesses as identified by experts: 
* Might not help that many older workers, or the neediest among them, 
because it would apply only to those 65 and over, who can typically 
collect Social Security retirement benefits, and not those 55-64; 
* This would represent a cost to the government and exacerbate 
Medicare's financial challenges, although it is unclear by how much. 
The cost might be limited because workers 65 and over tend to be in 
better health--and therefore less expensive to cover--than nonworkers 
65 and over; 
* May not increase the employment rate of those 65 and over very much, 
since many work part-time and are not covered by their employers' 
health insurance plans. 

Congress could offer temporary wage subsidies to employers that hire 
older workers who have experienced long-term unemployment (27 or more 
weeks); 

Key strengths as identified by experts: 
* Could influence employers' behavior to make them more likely to hire 
older workers; 
* Limiting eligibility to older workers makes the policy more 
efficient by reducing the likelihood that the government would be 
subsidizing individuals that employers would have hired anyway; 
* Could be cost-effective when the costs of long-term unemployment and 
entitlement programs are taken into account. 

Key weaknesses as identified by experts: 
* May lead some employers to postpone hiring to get the benefit, 
because it would make older workers unemployed for 27 or more weeks 
cheaper than those unemployed for a shorter period; 
* May influence the type of workers employers hire, rather than 
increasing overall employment levels; 
* May want to expand eligibility to all unemployed older workers, not 
just those unemployed for 27 or more weeks, because evidence indicates 
that unemployed older workers tend to remain unemployed for long 
periods of time; 
* Potential for employer windfalls if employers would have hired the 
older worker even without the subsidies. 

Congress could offer training subsidies to employers that hire older 
workers who experienced long-term unemployment (27 weeks or more). To 
be eligible for the training subsidy, employers would have to commit 
to retaining these workers for a certain amount of time (e.g., 6 
months to a year); 

Key strengths as identified by experts: 
* May increase older workers' employment levels because the training 
subsidies would be led by employer demand and tied to an actual job; 
* Could help prevent older workers' skills from atrophying because of 
prolonged unemployment and help return them to their pre-unemployment 
productivity levels; 
* Limiting eligibility to older workers makes the policy more 
efficient by reducing the likelihood that the government would be 
subsidizing individuals that employers would have hired anyway. 

Key weaknesses as identified by experts: 
* Would need to ensure that current employees of organizations 
receiving subsidies are given comparable levels of training so they 
are not at risk of subsequent displacement; 
* Could pose equity issues, since workers of all ages have been 
affected by increased long-term unemployment; 
* Potential for employer windfalls if employers would have provided 
this training even without the subsidies. 

Source: GAO summary of experts' views on policy proposals selected by 
four or more experts. 

[A] For workers aged 65 or over and covered by their own or their 
spouse's employer's group health plan, federal law generally requires 
that the employer's group health plan be the primary payer and 
Medicare be the secondary payer for benefits. 42 U.S.C. § 
1395y(b)(2)(A); 42 C.F.R. §§ 411.170, .172, .175. 

[End of table] 

Experts most frequently selected three proposed policies to enhance 
the reemployment assistance the federal workforce development system 
currently provides to older workers (see table 2). One of these 
policies proposes that Labor develop a job search assistance program 
specifically targeted to older workers to provide training in basic 
computer skills, résumé writing, and online application filing. The 
second proposed policy would involve changing the WIA and SCSEP 
performance measures to remove a potential disincentive for serving 
older workers.[Footnote 81] The third policy proposes increasing 
funding for the SCSEP program to reflect increases in the older worker 
population. 

Table 2: Experts' Views on the Strengths and Limitations of Selected 
Policy Proposals to Enhance Reemployment Assistance Specifically 
Targeted to Older Workers: 

Experts' favored policy proposals to help enhance reemployment 
assistance specifically targeted to older workers: 

Labor could develop a job search assistance program specifically 
targeted to older workers that provides training in basic computer 
skills, résumé writing, online application filing, and other areas 
where older workers may require specialized assistance; 

Key strengths as identified by experts: 
* Could help older workers navigate the new, more advanced job search 
technologies that may be unfamiliar to them because they have not 
searched for a job in many years; 
* Job search assistance has proven beneficial to older workers and is 
generally more valuable to them than training, given their time left 
in the labor force; 
* Could be efficient because of a potentially large take-up rate, ease 
of program development and implementation, and low costs. 

Key weaknesses as identified by experts: 
* May overlap somewhat with services already offered to the general 
unemployed population; 
* Does not address what is perceived as employers' reluctance to hire 
older workers, which likely affects their reemployment prospects more 
than whether their job search skills are up to date. 

Congress could change WIA and SCSEP performance measures to eliminate 
any disincentives to placing older workers in part-time employment: 

Key strengths as identified by experts: 
* Could level the playing field for older workers, who may be 
penalized by the current measures, and make it easier to serve older 
workers through the one-stop career center system, especially those 
seeking part-time work; 
* Could be implemented at a low cost because it primarily involves an 
administrative or technical change. 

Key weaknesses as identified by experts: 
* Unlikely to reduce unemployment by very much, since WIA and SCSEP 
serve only a fraction of eligible individuals in need of job search 
assistance; 
* Could mean fewer younger workers will get services at one-stop 
career centers if funding levels do not increase; however, this is not 
a serious limitation if current measures unfairly penalize older 
workers. 

Congress could expand funding for SCSEP to take into account increases 
in the older worker population: 

Key strengths as identified by experts: 
* Increased funding could help meet the employment needs of a very 
disadvantaged and underserved population that many employers are 
unlikely to employ in the absence of severe labor shortages; 
* Only a small percentage of eligible individuals are currently served 
by SCSEP; expanding funding to keep up with the aging population could 
help keep this percentage from declining; 
* Research has shown that SCSEP has done a reasonably good job at 
accomplishing its goals. 

Key weaknesses as identified by experts: 
* Expanding the SCSEP program would cost money and could be difficult 
given the current budget environment; 
* SCSEP is designed to serve the neediest older workers, and as a 
result, other subgroups of older workers that have been negatively 
affected by the recession would not benefit from this policy option. 

Source: GAO summary of experts' views on policy proposals selected by 
four or more experts. 

[End of table] 

Finally, as previously discussed, the longer older workers remain 
unemployed, the greater their risk of losing relevant skills or of 
dropping out of the labor force. Consequently, several proposed 
policies aim to encourage older workers to obtain reemployment as 
quickly as possible or build their job skills to better position them 
for reemployment. Experts we interviewed most frequently selected two 
such policy proposals (see table 3). Specifically, a number of experts 
we interviewed believed that implementing a wage insurance program 
could help unemployed older workers accept new full-time jobs that pay 
less than they had previously earned. In addition, a number of experts 
favored a policy that would require the long-term unemployed to enroll 
in training to remain eligible for UI benefits. 

Table 3: Experts' Views on the Strengths and Limitations of Selected 
Policy Proposals to Encourage Older Workers to Obtain Reemployment as 
Quickly as Possible: 

Experts' favored policy proposals to encourage older workers to regain 
employment as quickly as possible: 

Congress could enact a wage insurance program that temporarily 
compensates older workers--up to a specified maximum benefit--for 
accepting new full-time jobs that pay less than their previous jobs 
within a given time frame: 

Key strengths as identified by experts: 
* Could help older workers transition to the lower wages they will 
likely receive upon becoming reemployed and reduce the likelihood of 
premature withdrawal from the labor force: 
* Could help protect older workers' retirement security and lessen 
their reliance on government assistance by reducing the likelihood 
that they will use retirement savings to replace lost income because 
of lower wages; 
* Could result in less spending on UI for older workers, and those 
savings could help fund the wage insurance program. 

Key weaknesses as identified by experts: 
* Could be expensive for the government, since unemployed older 
workers almost always take a pay cut when they become reemployed; 
* Might not affect older workers' reemployment significantly, since 
the problem may be that they are unable to find work at any wage; 
* May encourage older workers to settle for low-wage, less promising 
employment that increases the probability of a subsequent period of 
unemployment; 
* May stigmatize unemployed older workers by putting them in a 
separate class of workers than everyone else. 

Congress could require long-term unemployed individuals (27 or more 
weeks) to enroll in publicly funded retraining programs or publicly 
subsidized on-the-job training programs as a condition of receiving UI 
benefits. Some of the training funds could be obtained by redirecting 
a portion of individuals' UI benefits for these purposes: 

Key strengths as identified by experts: 
* Could help prevent older workers' skills from eroding because of 
long-term unemployment and alleviate concerns that UI benefits are 
simply a government handout; 
* Could potentially be less expensive for the government in the long 
run than providing UI benefits without conditions for retraining; 
* Could help older workers adjust to the fact that today many job 
losses are permanent rather than temporary and that they may need to 
obtain new skills to become reemployed. 

Key weaknesses as identified by experts: 
* The United States may lack the necessary training infrastructure and 
funding to launch a major training program that sufficiently prepares 
workers for jobs that pay decent wages and benefits; 
* Would require an enhanced understanding of reemployment barriers and 
employers' training needs before the policy could be implemented; 
* Would need to ensure that the training provided is linked to actual 
employment opportunities to justify the financial investment in 
training; 
* Requiring all long-term unemployed older workers to enroll in 
training may not make sense financially, particularly for those with a 
short remaining work life. 

Source: GAO summary of experts' views on policy proposals selected by 
four or more experts. 

[End of table] 

Labor Implemented Some Proposed Strategies to Help Older Workers, but 
Has Shifted Priorities since the Recession: 

Labor officials told us that Labor has taken several steps to 
implement selected strategies recommended in 2008 by the Taskforce on 
the Aging of the American Workforce. These steps included awarding 
approximately $10 million in grants to 10 organizations in 2009 
through the Aging Worker Initiative demonstration project to test new 
ways of providing training and other services to connect older 
Americans with employment opportunities in high-growth, high-demand 
industries. Labor is currently in the process of evaluating these 
grants.[Footnote 82] Also, in 2008, Labor expanded a demonstration 
project designed to assist individuals in creating or expanding their 
own businesses, which addresses the Taskforce's recommendation to 
facilitate self-employment for older workers. Specifically, Labor 
awarded a second round of grants to four demonstration sites through 
this project--Project GATE (Growing America Through Entrepreneurship). 
In addition, Labor officials told us that they had taken steps to 
connect one-stop career centers to Aging and Disability Resource 
Centers (which serve adults with disabilities, including the elderly) 
to enhance communication.[Footnote 83] In addition, Labor officials 
told us that since the recession began, the department has taken 
various steps to help the long-term unemployed, many of whom are older 
job seekers. Labor also continues to sponsor National Employ Older 
Workers Week, an event held annually in September in localities 
throughout the country.[Footnote 84] 

As Labor officials we interviewed noted, the Taskforce conducted its 
work under different economic circumstances, when the workforce 
community was primarily focused on avoiding potential labor shortages. 
Since then, the number of unemployed individuals per job opening has 
greatly increased and technology has continued to change the job 
search and application process. Consequently, some issues may have 
assumed greater importance since the Taskforce issued its report, 
especially employer reluctance to hire older workers and the 
prevalence of online applications. 

According to Labor officials, the onset of the 2007-2009 recession 
shifted Labor's focus away from implementing strategies recommended in 
the Taskforce report to responding to greatly increased demand for 
services. As more Americans lost jobs and struggled to find 
reemployment, increasing numbers sought reemployment services through 
the one-stop career center system, according to Labor officials. 
Administrative data Labor provided show that from 2007 to 2010 the 
overall number of all WIA adult and dislocated worker program 
participants the one-stop career centers served nearly tripled--from 
over a million participants in 2007 to over 3 million in 2010. 
[Footnote 85] The number of older workers served by these programs 
from 2007 to 2010 increased at an even greater rate--over 3.5 times--
from approximately 124,000 in 2007 to around 441,000 in 2010. 

Conclusions: 

Although long-term unemployment hurts job seekers of all ages, it 
poses some greater challenges for older workers. Specifically, once 
unemployed, older workers tend to stay unemployed longer, and those 
who regain employment generally sustain greater wage losses than do 
younger workers. The challenges older workers face once they lose 
their jobs also highlight the increased fragility of retirement 
security in this country. Long-term unemployment can reduce retirement 
income, and older Americans have fewer years to recover from such 
losses. A long spell of unemployment may even force some older 
Americans to leave the labor market and retire earlier than they had 
hoped. The high costs of long-term unemployment--overlaid upon the 
retirement insecurity facing so many workers--explain the different 
paths older workers are taking. Thus, some are using their retirement 
savings and taking Social Security retirement benefits early in 
response to this extended joblessness. Yet it is striking that other 
older workers are choosing to remain in the labor force longer as 
older workers' labor force participation continues to rise despite the 
worst labor market in generations. At least part of this trend may be 
due to inadequate retirement savings or accounts that suffered losses 
from the financial crisis. 

According to experts we interviewed, some proposed policy options 
could help older workers regain employment as the economy continues to 
improve. In addition, a renewed focus by Labor on older workers' needs 
could help workforce professionals better address the unique needs of 
older job seekers. While Labor took steps to implement some of the 
2008 Taskforce recommendations, Labor officials understandably shifted 
their focus away from the report's findings when the recent recession 
caused a dramatic increase in demand for workforce services. Now, a 
renewed focus on the needs of unemployed older workers is needed to 
identify strategies to help address older workers' significant 
reemployment challenges because older workers remain a critical and 
growing segment of the workforce. This effort could include examining 
what has been learned since 2008 about addressing older workers' 
employment needs in light of a changed economy, the shift to online 
employment applications, and employers' altered expectations. Without 
a renewed focus on the unique needs of older job seekers, many 
unemployed older Americans may face difficulty regaining the 
employment they need to support themselves and their families in the 
short term, while also facing long-term financial hardship in 
retirement. 

Recommendation: 

To foster the employment of older workers, we recommend that the 
Secretary of Labor consider what strategies are needed to address the 
unique needs of older job seekers, in light of recent economic and 
technological changes. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Labor and the 
Social Security Administration. Labor provided a written response (see 
appendix VII). Both agencies provided technical comments, which we 
incorporated as appropriate. Labor agreed with our recommendation and 
noted a couple of its initiatives focused on the employment of older 
workers. Specifically, Labor cited its current evaluation of the Aging 
Worker Initiative demonstration project, which will assess the success 
of new interventions used by 10 local grantees to help connect aging 
workers with employment opportunities. In addition, Labor cited its 
sponsorship of the annual National Employ Older Workers Week that 
provides outreach opportunities for SCSEP grantees. 

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution until 30 days after the date 
of this letter. At that time, we will send copies of this report to 
the Secretary of Labor and the Commissioner of Social Security, and 
other interested parties. In addition, this report will be available 
at no charge on GAO's website at [hyperlink, http://www.gao.gov]. If 
you or your staff have any questions concerning this report, please 
contact me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix VIII. 

Sincerely yours, 

Signed by: 

Charles Jeszeck: 
Director, Education, Workforce, and Income Security: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this study were to examine (1) how the employment 
status of older workers has changed since the recession, (2) older 
workers' financial risks from long-term unemployment and challenges in 
finding new jobs, (3) how periods of long-term unemployment might 
affect older workers' retirement income, and (4) what other policies 
might help unemployed older workers regain employment and what steps 
the Department of Labor (Labor) has taken to help unemployed older 
workers. We conducted this performance audit from October 2010 through 
April 2012 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence we obtained provides a reasonable basis 
for our findings and conclusions based on our audit objectives. We 
determined that the data that we analyzed were sufficiently reliable 
for the purposes of this report. 

To obtain background information on older workers' employment and 
retirement prospects, we reviewed numerous studies, reports, and 
surveys of older workers. We interviewed officials from Labor and the 
Social Security Administration (SSA) and reviewed relevant data from 
those agencies. 

Analysis of Employment Data on Older Workers: 

To examine changes in the employment prospects of older workers since 
the start of the recession, we analyzed monthly data for 2007 through 
2011 from the Current Population Survey (CPS) produced by the Bureau 
of Labor Statistics (BLS). We also analyzed data from the 2008 and 
2010 Displaced Worker Supplement to the CPS. 

We selected the CPS mainly because it is nationally representative and 
contains large sample sizes, demographic and industry information, and 
data directly relevant to unemployment and underemployment. 

Similarly, we analyzed the 2008 and 2010 Displaced Worker Supplement 
to the CPS because this supplement contains data on the employment and 
earnings status of displaced workers before and after their job loss. 
Displaced workers are defined as persons 20 years or older who lost or 
left jobs within the past 3 years for the following reasons: because 
their plant or company closed or moved, there was insufficient work 
for them to do, their position or shift was abolished, or similar 
economic reasons. The Displaced Worker Survey (DWS) is administered 
every 2 years as a supplement to the CPS. In the 2008 DWS, people are 
identified as displaced if they lost or left their jobs for one of the 
specified reasons between January 2005 and December 2007. In the 2010 
DWS, people are identified as displaced if they lost or left their 
jobs for one of the specified reasons between January 2007 and 
December 2009. Displaced workers have lost a job in the past 3 years; 
however, they may be unemployed, employed, or not in the labor market 
at the time of the survey. 

We use the following labor force definitions in this report: 

* Unemployed workers are all jobless persons who are available to take 
a job and have actively sought work in the past 4 weeks. 

* Marginally attached workers are persons who are not in the labor 
force, who want and are available for work, and have looked for work 
in the past 12 months. They are not counted as unemployed because they 
had not searched for work in the prior 4 weeks. 

* Discouraged workers are a subset of the marginally attached who 
indicate that they have not searched for work in the prior 4 weeks for 
the specific reason that they believed no jobs were available for them. 

* Workers employed part-time for economic reasons are those employed 
less than 35 hours per week who want and are available for, but are 
unable to find, full-time work, and those who prefer full-time work 
but had their hours reduced by their employer because of business 
conditions. 

We assessed the reliability of the CPS generally and of data elements 
that were critical to our analyses and determined that they were 
sufficiently reliable for our analyses. Specifically, we: 

* reviewed documentation on the general design and methods of the CPS 
and on the specific elements of the CPS data that were used in our 
analyses, 

* interviewed BLS officials knowledgeable about the CPS data and 
consulted these officials periodically throughout the course of our 
study, and: 

* completed our own electronic data testing to assess the accuracy and 
completeness of the data used in our analyses. To the extent possible, 
we compared our estimates against published reports using the CPS 
data, such as BLS reports. 

As a result of our assessment, we identified a limitation with the CPS 
basic monthly data. Specifically, beginning in January 2011, labor 
force estimates based on microdata diverge slightly from BLS published 
labor force estimates. According to Census Bureau officials, these 
discrepancies result from new steps that CPS implemented in 2011 to 
help prevent the inadvertent disclosure of individuals in the public 
use files. While some primary topside labor force estimates will 
agree, all others will be slightly off. This is solely the result of 
these disclosure protection procedures. Census Bureau officials told 
us that the masking procedures implemented in 2011 are random and are 
applied to all records on the file identically; they do not create any 
systematic biases that would affect our analysis of older workers. 

Throughout this report, when monthly data are presented, the estimates 
are not seasonally adjusted. We were advised by Census Bureau 
officials not to attempt to seasonally adjust our analyses of CPS 
microdata, because the sample sizes in the age groups we present are 
relatively small. Most of the data in this report are annual averages, 
for which seasonal adjustments are irrelevant. Where monthly data are 
presented, unadjusted estimates and seasonally adjusted estimates do 
not necessarily diverge by a large amount. For example, this table 
shows seasonally adjusted data for figure 2, compared with the 
unadjusted data shown in table 4. 

Table 4: Comparison of Seasonally Adjusted and Unadjusted Unemployment 
Rates for Workers Age 55 and Older, Selected Months: 

December 2007; 
Unemployment rate, age 55 and older, unadjusted: 3.1%; 
Unemployment rate, age 55 and older, seasonally adjusted: 3.2%. 

June 2009; 
Unemployment rate, age 55 and older, unadjusted: 6.8%; 
Unemployment rate, age 55 and older, seasonally adjusted: 7.0%. 

February 2010; 
Unemployment rate, age 55 and older, unadjusted: 7.6%; 
Unemployment rate, age 55 and older, seasonally adjusted: 7.2%. 

December 2011; 
Unemployment rate, age 55 and older, unadjusted: 6.0%; 
Unemployment rate, age 55 and older, seasonally adjusted: 6.2%. 

Source: GAO analysis of CPS public use microdata and published data 
series downloaded from BLS website. 

Note: Estimates of unadjusted unemployment rates calculated by GAO 
using CPS public use microdata. These estimates are identical to BLS's 
published unadjusted unemployment rates for workers age 55 and older. 
Estimates of seasonally adjusted unemployment rates for workers age 55 
and older are downloaded from BLS's website. 

[End of table] 

We also use nationally representative data from the Job Openings and 
Labor Turnover Survey (JOLTS), a monthly survey developed by BLS to 
address the need for data on job openings, hires, and separations. We 
use the JOLTS data to present a comparison of the number of unemployed 
persons with the number of job openings over the period January 2007 
to December 2011. This is the only national data source available to 
measure job openings in the United States. 

Focus Groups with Older Workers and Interviews with One-Stop Staff and 
Other Experts: 

To learn about older workers' financial risks from long-term 
unemployment and challenges in finding new jobs, we conducted 10 focus 
group sessions with a total of 77 long-term unemployed older workers 
aged 55 or over at four locations. These sessions involved structured 
small-group discussions designed to gain more in-depth information 
about specific issues that cannot easily be obtained from another 
method, such as a survey or individual interviews. Consistent with 
typical focus group methodologies, our design included multiple groups 
with varying characteristics but some similarity on one or two 
homogeneous characteristics. All but one of the groups involved 8 to 
10 participants; the remaining group had only 5 participants because 
of poor attendance. 

Our overall objective in using a focus group approach was to obtain 
views, insights, and feelings of older workers who had been looking 
for a job for more than half a year. Specifically, we wanted to learn 
what challenges they had faced since becoming unemployed, what 
barriers they perceived as hindering their ability to become 
reemployed, and their views on how their spell of unemployment had 
affected or would likely affect their retirement income and decisions. 
By including long-term unemployed older workers with and without 
employer-sponsored retirement plans, we intended to gather a range of 
perspectives regarding how unemployment might affect retirement 
prospects. 

We conducted 10 separate focus group sessions with long-term 
unemployed older workers. Specifically, focus group participation was 
limited to individuals 55 or older who had been unemployed for 27 
weeks or more and who had worked for their previous employer for at 
least 3 years before losing their job. We held three sessions with 
individuals aged 55-61 who did not have an employer-sponsored 
retirement plan at the job they lost, three sessions with individuals 
aged 55-61 who did have an employer-sponsored retirement plan at the 
job they lost, and three sessions with individuals aged 62-67 
regardless of their retirement plan coverage. We also conducted one 
focus group session in Falls Church, Virginia. We conducted this 
session as a pretest, but because we did not need to significantly 
change our focus group guide after the session, we decided to include 
the results of the pretest in our focus group analysis. 

We selected three cities--in addition to our pretest location in Falls 
Church, Virginia--in which to conduct focus groups. We selected these 
locations based on metropolitan areas' unemployment rates, geographic 
diversity, and the estimated costs for travel and securing focus group 
facilities. We conducted three sessions in each of the following three 
cities--Baltimore, Maryland; San Jose, California; and St. Louis, 
Missouri. Additionally, we used criteria in selecting participants 
that ensured a mix of gender and that accounted for the race and 
ethnicity of the area in which the focus groups were located. 

Discussions were structured, guided by a moderator who used a 
standardized list of questions to encourage participants to share 
their thoughts and experiences. During the sessions, we informed 
participants that their names would not be used in the published 
report. We conducted one pretest focus group session prior to 
beginning our travel for the sessions. 

Each of the 10 focus groups was recorded and transcriptions were 
created, which served as the record for each group. Those transcripts 
were then evaluated using content analysis to develop our findings. 
The analysis was conducted in two steps. In the first step, three 
analysts jointly developed a set of codes to track the incidence of 
various responses and themes during focus group sessions. In the 
second step, each transcript was coded by an analyst and then those 
codes were verified by a second analyst. Any coding discrepancies were 
resolved by both analysts agreeing on what the codes should be. In 
addition to focus group sessions, we conducted one-on-one interviews 
with selected long-term unemployed individuals in three of our four 
focus group locations. 

Methodologically, focus groups are not designed to (1) demonstrate the 
extent of a problem or to generalize results to a larger population, 
(2) develop a consensus to arrive at an agreed-upon plan or make 
decisions about what actions to take, or (3) provide statistically 
representative samples or reliable quantitative estimates. Instead, 
they are intended to generate in-depth information about the reasons 
for the focus group participants' attitudes on specific topics and to 
offer insights into their concerns about and support for an issue. The 
projectability of the information produced by our focus groups is 
limited for several reasons. First, the information includes only the 
responses from long-term unemployed older workers from the 10 selected 
groups. Second, while the composition of the groups was designed to 
ensure a range of age, retirement plan coverage, and racial 
background, the groups were not randomly sampled. Third, participants 
were asked questions about their experiences or expectations, and 
other long-term unemployed older workers not in the focus groups may 
have had other experiences or expectations. Because of these 
limitations, we did not rely entirely on focus groups, but rather used 
several different methods to corroborate and support our conclusions. 

We also interviewed staff at one-stop career centers in each of the 
locations where we conducted focus groups to learn more about 
challenges unemployed older workers face in finding employment. 
Further, we interviewed experts about older workers' reemployment 
challenges. We selected these experts based on their knowledge of 
older workers' issues, labor economics, and the workforce development 
system. Specifically, we used several criteria to select experts to 
interview, such as (1) having conducted research and published studies 
on relevant topics (including older workers, the workforce development 
system, labor economics, or retirement issues) or (2) representing 
associations with highly established awareness or knowledge of issues 
relevant to the employment and retirement prospects of older workers. 

How Unemployment Might Affect Retirement Income: 

To assess how periods of long-term unemployment might affect older 
workers' retirement income, we used the Policy Simulation Group's 
(PSG) microsimulation models to simulate Social Security benefits and 
retirement plan income. For our simulations, we used PSG's Social 
Security and Accounts Simulator (SSASIM), Genuine Microsimulation of 
Social Security Acounts (GEMINI), and Pension Simulator (PENSIM) 
simulation models. GEMINI simulates Social Security benefits and taxes 
for large, representative samples of people born in the same year. 
GEMINI simulates all types of Social Security benefits, including 
retired workers', spouses', survivors', and disability benefits. It 
can be used to model a variety of changes to Social Security. GEMINI 
uses inputs from SSASIM, which has been used in numerous GAO reports, 
and PENSIM, which was developed for the Department of Labor. GEMINI 
relies on SSASIM for economic and demographic projections and relies 
on PENSIM for simulated life histories of large, representative 
samples of people born in the same year and their spouses.[Footnote 
86] Life histories include educational attainment, labor force 
participation, earnings, job mobility, marriage, disability, 
childbirth, retirement, and death. Life histories are validated 
against data from the Survey of Income and Program Participation, the 
Current Population Survey, Modeling Income in the Near Term (MINT3), 
[Footnote 87] and the Panel Study of Income Dynamics. Additionally, 
any projected statistics (such as life expectancy, employment 
patterns, and marital status at age 60) are, where possible, 
consistent with intermediate cost projections from the Social Security 
Administration's Office of the Chief Actuary. At their best, such 
models can provide only very rough estimates of future incomes. 
However, these estimates may be useful for comparing future incomes 
across alternative policy scenarios and over time. 

In order to compare pretax retirement benefits accumulated at 
different ages, we simulated and analyzed retirement benefits for 
three cohorts of individuals born in 1955. For the first cohort, we 
conducted the simulation to have all individuals stop work at age 55 
and estimated the retirement benefits earned by that age for each 
individual in the cohort. Similarly, for the second and third cohorts, 
we simulated that all individuals in the cohort stopped working at 
ages 58 and 62, respectively, and estimated pretax retirement benefits 
earned by those ages. In the simulations, for each cohort, we had all 
individuals claim their benefits at age 62, regardless of when they 
stopped working. We determined the median level of benefits from 
employer-sponsored retirement plans and Social Security using all 
individuals in each cohort, including those who would have had no 
retirement benefits from an employer-sponsored plan because they did 
not vest in benefits or they cashed out of their retirement plan when 
they stopped working. To compare how job loss at different ages may 
affect retirement benefits, we compared the retirement benefits for 
the individual at the median level of retirement benefits in each 
cohort. For our analysis of how job loss might affect retirement 
benefits for those participating in employer-sponsored plans, we only 
included individuals who were participating in an employer-sponsored 
retirement plan at the job they had when they stopped working. Our 
analysis took into consideration retirement benefits earned by 
individuals in the cohort and retirement benefits for the surviving 
spouse of someone who vested in a DB plan. Our analysis includes 
retirement income from employer-sponsored retirement plans and Social 
Security retirement benefits and does not include retirement income 
from other sources. 

PENSIM uses several different asset allocations for defined 
contribution (DC) accounts and assigns each type of allocation to a 
portion of individuals in the cohort, based on existing research on 
actual use of different asset allocations. For our analysis, the 
PENSIM model used the assumption that all individuals who vested in 
employer-sponsored retirement benefits and did not cash out their 
benefits when they left the job before age 62 used DC plan savings to 
purchase an annuity at age 62. In the model the annuity prices are 
based on projected mortality and interest rates using annuity price 
loading factors that ensure that the cost of providing these annuities 
equals the revenue generated by selling them at those prices. 

We used nationally representative 2007 Survey of Consumer Finances 
(SCF) data from the Board of Governors of the Federal Reserve to 
estimate the percentage of employed individuals age 55 and older 
(working full-or part-time) who were participating in employer-
sponsored retirement plans or had private retirement savings before 
the recession caused substantial job losses.[Footnote 88] In addition 
to providing household-level data, the SCF also provides detailed 
individual-level economic information about an economically dominant 
single individual or couple in the household. To estimate the 
percentage of older workers with defined benefit (DB) plans, we 
included in our analysis any employed older worker who (1) was 
participating in an employer-sponsored DB plan at a current job, (2) 
had participated in an employer-sponsored DB plan at a past job and 
was expecting to receive retirement benefits from the plan, or (3) was 
already receiving payments from an employer-sponsored DB plan. 
Similarly, to estimate the percentage of older workers with a DC plan, 
we included any older workers with an account from a DC plan from a 
current or past employer, and we counted rollover individual 
retirement accounts (IRA) as DC accounts. We produced analogous 
estimates for households with an employed head of household or spouse 
age 55 or over. Our estimates for households only include retirement 
benefits and savings of the head of household and a spouse or partner 
and do not include retirement benefits or savings held by additional 
family members. 

We assessed the reliability of the SCF generally and of data elements 
that were critical to our analyses and determined that they were 
sufficiently reliable for our analyses. Specifically, we reviewed 
documentation on the general design and methods of the SCF and on the 
specific elements of the SCF data that were used in our analyses and 
completed our own electronic data testing to assess the accuracy and 
completeness of the data used in our analyses. 

To illustrate how drawdowns from retirement savings before retirement 
can affect amounts saved by the time of retirement, we developed a 
model to tabulate retirement account balances for a hypothetical 
individual. For this, we used an individual who was born at the 
beginning of 1953, turns 55 in 2008, and retires at age 62 in 2015. We 
used $70,000 as the starting point for this illustration because it is 
about the median level of DC plan savings for employed workers age 55 
and over who have a DC plan account from a current or past employer, 
based on 2007 SCF data. To calculate changes in the account balance 
over time, we used the intermediate interest and rate-of-return 
assumptions as reported in past and projected under the intermediate 
cost assumptions in Social Security's 2011 Annual Report of the Board 
of Trustees of the Federal Old-Age and Survivors Insurance and Federal 
Disability Insurance Trust Funds (also known as the OASDI [Old-Age, 
Survivors, and Disability] Trustees' Report). We used scaled earnings 
for medium annual earners as reported in past and projected in the 
2011 OASDI Trustees' Report. We assumed the employee's contributions 
to the retirement account to be 6 percent of the individual's wages 
and the employee received a 3 percent employer matching contribution. 

Experts' Views on Policies to Help Unemployed Older Workers and Steps 
Taken by Labor to Help Unemployed Older Workers: 

The 12 experts we interviewed primarily work in academia and think 
tanks, and were selected based on their expertise on older workers, 
workforce development, or retirement policy. We selected a group of 
experts to help ensure a range of viewpoints. To identify policies 
that could help unemployed older workers become reemployed, we 
compiled a list of 21 proposed policy options from the relevant 
literature. (See appendix VI for the list of 21 policy options.) In 
many cases, the policy options on the list we compiled were proposed 
before the recession started in 2007. Prior to interviewing the 
experts, we sent them a list of the 21 policy proposals we had 
compiled and asked them to select the five policies that merited the 
most serious consideration because they were either relevant in the 
current economy or could be relevant as the economy recovers. We also 
asked these experts to assess the strengths and weaknesses of policy 
proposals to help long-term unemployed older workers regain employment. 

After interviewing all 12 experts, we tallied the number of votes each 
policy proposal had received. The 8 proposed policies addressed in the 
body of the report are those that received votes from 4 or more of the 
12 experts we interviewed. The expert discussion cited in this report 
should be interpreted in the context of two key limitations and 
qualifications. First, although we were able to secure the 
participation of a balanced, highly qualified group of experts, other 
experts in this field could not be included because we needed to limit 
the size of the group. Although many points of view were represented, 
the group of experts we interviewed was not representative of all 
potential views. While we conducted preliminary research and heard 
from national experts in their fields by conducting these expert 
interviews, these discussions cannot represent the full variety of 
opinions on the policy proposals. More thought, discussion, and 
research must be done to develop greater agreement on what we really 
know, what needs to be done, and how to do it. These two key 
limitations and qualifications provide contextual boundaries. 
Nevertheless, the experts we interviewed provided insightful comments 
in responding to the questions they were asked. 

To identify what steps Labor has taken to help unemployed older 
workers, we interviewed Labor officials. 

Sampling Variability: 

As noted above, we relied on estimates from several surveys, including 
the CPS, the Displaced Worker Supplement to the CPS, SCF, and JOLTS. 
Because these surveys are probability samples based on random 
selections, the specific sample selected is only one of a large number 
of samples that might have been drawn. Since each sample could have 
provided different estimates, we express our confidence in the 
precision of our particular sample's results as a 95 percent 
confidence interval (for example, plus or minus 7 percentage points). 
This is the interval that would contain the actual population value 
for 95 percent of the samples that could have been selected. In this 
report, 95 percent confidence intervals are provided along with sample-
based estimates where used. We calculated standard errors for 
estimates from the CPS using the Census generalized variance 
functions, as published in the BLS technical notes to the household 
survey data published in the Employment and Earnings monthly 
publication. 

[End of section] 

Appendix II: Workforce Status of Workers Displaced between 2005-2007 
and 2007-2009 in January 2008 and January 2010: 

[Refer to PDF for image: 2 horizontal bar graphs] 

Labor force status in January 2008: 

Age: 25-54; 
Discouraged, disabled, or other (not in labor force): 11%; 
Retired (not in labor force): 0%; 
Unemployed: 19%; 
Percentage not working: 31%; 
Employed part-time: 10%; 
Employed full-time: 59%; 
Percentage working: 69%. 

Age: 55-64; 
Discouraged, disabled, or other (not in labor force): 11%; 
Retired (not in labor force): 8%; 
Unemployed: 22%; 
Percentage not working: 41%; 
Employed part-time: 11%; 
Employed full-time: 48%; 
Percentage working: 59%. 

Age: 65 or older; 
Discouraged, disabled, or other (not in labor force): 6%; 
Retired (not in labor force): 61%; 
Unemployed: 15%; 
Percentage not working: 81%; 
Employed part-time: 9%; 
Employed full-time: 10%; 
Percentage working: 19%. 

Labor force status in January 2010: 

Age: 25-54; 
Discouraged, disabled, or other (not in labor force): 11%; 
Retired (not in labor force): 0%; 
Unemployed: 37%; 
Percentage not working: 48%; 
Employed part-time: 11%; 
Employed full-time: 41%; 
Percentage working: 52%. 

Age: 55-64; 
Discouraged, disabled, or other (not in labor force): 13%; 
Retired (not in labor force): 8%; 
Unemployed: 38%; 
Percentage not working: 59%; 
Employed part-time: 10%; 
Employed full-time: 31%; 
Percentage working: 41%. 

Age: 65 or older; 
Discouraged, disabled, or other (not in labor force): 12%; 
Retired (not in labor force): 35%; 
Unemployed: 33%; 
Percentage not working: 79%; 
Employed part-time: 13%; 
Employed full-time: 8%; 
Percentage working: 21%. 

Source: GAO analysis of CPS Displaced Worker Supplement, 2008 and 2010. 

Note: (1) Estimates for 25-to 54-year-olds and 55-to 64-year-olds have 
95 percent confidence intervals within 5 percentage points of the 
estimate itself; estimates for people 65 and older have confidence 
intervals within 10 percentage points of the estimate itself. The 
following estimates have margins of error greater than or equal to 30 
percent of the estimates: for people 55-64, the "percentage retired" 
in 2008, for people 65 and older, the percentage employed full-time, 
percentage employed part-time, and percentage not in the labor force 
(other) in both 2008 and 2010. For statistical comparisons of the 
estimates across different groups and years, see appendix III. 

[End of figure] 

[End of section] 

Appendix III: Additional Figure Notes for Employment Figures, 
Including Statistical Significance Tests: 

Figure 3: Estimated Number of Unemployed and Underemployed Older 
Workers (55 and Over), 2007-2011: 

* Appendix I includes the definitions used in the report of unemployed 
workers, marginally attached workers, discouraged workers, and workers 
employed part-time for economic reasons. 

Figure 4: Growth in Estimated Long-Term Unemployment of Older Workers 
(55 and Over), 2007-2011: 

* There was a statistically significant change in the proportion of 
unemployed older workers in each of the categories shown in the figure 
between 2007 and 2011. Specifically: 

* The proportion of unemployed older workers who were unemployed for 
under 5 weeks, for 5-14 weeks, and for 15-26 weeks each declined 
significantly from 2007 to 2011. 

* The proportion of unemployed older workers who were unemployed for 
27 weeks to a year, and for more than 1 year, each increased 
significantly from 2007 to 2011. 

Figure 6: Estimated Duration of Unemployment for Older Workers (55 and 
Over) by Industry, 2007 and 2011: 

* Because of the smaller number of persons with long durations of 
unemployment in 2007, some of the estimates for duration of 
unemployment by industry are unreliable in 2007 (the margins of error 
for the estimates are high relative to the value of the estimates.) 
For 2007, the following estimates have margins of error that exceed 30 
percent of the estimate itself: the percentage unemployed for 27 weeks 
or more for all industries except wholesale and retail trade, 
manufacturing, and "all other industries"; and for the percentage 
employed for 27-52 weeks, 53-104 weeks, and 105 or more weeks for all 
industries. In 2011 the following estimates in the figure have margins 
of error that exceed 30 percent of the estimate itself: the percentage 
unemployed for 53-104 weeks in leisure and hospitality, and the 
percentage unemployed for 105 or more weeks in: transportation and 
utilities, financial activities, and leisure and hospitality. 

* For each industry in the figure, the percentage of unemployed 
workers who have been unemployed for 27 weeks or more is significantly 
higher in 2011 than in 2007. 

Figure 7: Estimated Unemployment Rates by Demographic Group for Older 
Workers (55 and Over), 2007 and 2011: 

* Differences in unemployment rates between 2007 and 2011 are 
statistically significant for all groups in this figure. 

* Differences in unemployment rates between men and women are 
statistically significant in 2011, but not in 2007. 

* Differences in unemployment rates between whites and blacks, and 
between whites and Hispanics, are statistically significant in both 
2007 and 2011; however, differences between whites and the "all other 
races" group are significant only in 2011. 

* Differences in unemployment rates between those with no high school 
diploma and each of the other education groups are statistically 
significant in both 2007 and 2011. 

Figure 8: Estimated Duration of Unemployment by Age and by Gender, 
2007 and 2011: 

* Differences between younger and older workers in the percentage 
unemployed for 27 weeks or longer were significant in both 2007 and 
2011. 

* Differences between men and women in the percentage unemployed for 
27 weeks or longer were statistically significant in 2007, but not in 
2011. 

Figure 10: Estimated Percentage of Reemployed Displaced Workers Who 
Earned Less on Their New Full-Time Jobs than on Their Previous Jobs, 
January 2010: 

* Differences between younger workers and older workers are 
statistically significant in the 2010 survey, but not in the 2008 
survey. 

* For both younger workers and older workers, there was a 
statistically significant increase in the percentage of workers with 
earnings replacement rates less than 100 percent between the 2008 
survey and the 2010 survey. 

Appendix II: Workforce Status of Workers Displaced between 2005-2007 
and 2007-2009 in January 2008 and January 2010: 

* For 25-to 54-year-olds and 55-to 64-year-olds, the following 
estimates are significantly different between 2008 and 2010: 

- the percentage unemployed, 

- the percentage working full-time, and: 

- the overall percentage working/not working. 

* For people 65 and older, the following estimates are significantly 
different between 2008 and 2010: 

- the percentage unemployed, 

- the percentage retired, and: 

- the percentage not in the labor force (other). 

[End of section] 

Appendix IV: Quotes from Focus Groups with Long-Term Unemployed Older 
Workers: 

The following table provides examples of specific focus group quotes 
organized by topic. These selected quotes further exemplify our 
findings on the risks long-term unemployed older workers face, the 
challenges they experience becoming reemployed, and how long-term 
unemployment has affected their plans for retirement. (For audio clips 
from GAO's focus groups with unemployed older workers, use this 
[hyperlink, http://www.gao.gov/multimedia/video/#video_id=590295]). 

Table 5: Selected Quotes from Focus Groups with Long-Term Unemployed 
Older Workers: 

Topic: Some unemployed older workers want to work and have difficulty 
meeting financial obligations. 

Quote: That's our culture. We want to work. We need to work; 
Focus group participant characteristics: 56-year-old man. 

Quote: You've got to support a family, so you're still out there on 
the pavement or the Internet looking for a job; 
Focus group participant characteristics: 55-year-old man. 

Quote: I was used to a 70-hour week, and then to go from that to 
nothing, your sense of self-worth isn't there; 
Focus group participant characteristics: 58-year-old woman. 

Quote: Medical can cost you $1,000 a month. When you think about 
Social Security at my age group--my Social Security is $1,300 a month. 
Medical is $1,000, where is my mortgage and food? 
Focus group participant characteristics: 64-year-old woman. 

Quote: I don't have medical insurance right now. Any medical 
insurance. Because it is too expensive; 
Focus group participant characteristics: 63-year-old woman. 

Quote: I'll never retire. I still have a kid in college. My son lost 
his job about 6 months after I did, so my wife and I are paying his 
mortgage, his car insurance, and everything he has, electric, all that 
stuff; 
Focus group participant characteristics: 55-year-old man. 

Topic: Perceived employer reluctance to hire older workers. 

Quote: The interview was going really, really well and … she went, "Oh 
no!" and I said, "What is it?" [And she said], "Oh nothing, nothing, I 
just noticed what year you graduated high school"; 
Focus group participant characteristics: 59-year-old man. 

Quote: They asked me one question that always knocked me out of the 
game--they're not allowed to ask how old you are, but they wanted to 
know when I graduated from college; 
Focus group participant characteristics: 62-year-old man. 

Quote: I would sacrifice pay to start somewhere else. I say, "I'll 
start at rock bottom ... whatever it takes"; 
Focus group participant characteristics: 59-year-old man. 

Quote: I need a job. I have to pay insurance for me and my wife. I 
have seven kids. I'm trying to get them through college. I'll take 
that $10 job. I need a job that bad; 
Focus group participant characteristics: 64-year-old man. 

Topic: Emotional challenges that result from long-term unemployment. 

Quote: When you're not working, you don't feel very good, you are 
depressed. You feel discouraged. Your self-esteem is about an inch 
high; 
Focus group participant characteristics: 62-year-old woman. 

Quote: One of the most devastating things with becoming unemployed was 
with losing my identity. I was one thing and then I was nothing; 
Focus group participant characteristics: 58-year-old woman. 

Topic: Claiming Social Security retirement benefits as soon as 
possible. 

Quote: I'm turning 62 in a few days, and I'm like "What am I going to 
do?" You can't find a job out there so I might as well retire; 
Focus group participant characteristics: 61-year-old man. 

Quote: I just turned 62 in January, and I just filed for my Social 
Security so that I would have some kind of income to fall back on, 
because unemployment was exhausted; 
Focus group participant characteristics: 62-year-old woman. 

Quote: If I don't find a job, I'll claim at 62 because of, you know, 
unemployment will be long gone by then. And if I do sell that house, 
anything I have left after the sale will be gone by then, too. So, if 
I find a job, I won't claim unless or until I have to for health 
reasons or whatever; 
Focus group participant characteristics: 59-year-old woman. 

Quote: I want to secure my place because if the eligibility 
requirement on that changed, then you're out of luck, too. It's scary; 
Focus group participant characteristics: 58-year-old woman. 

Quote: They're talking about cutting it off, so I think anybody that's 
eligible for it, they need to try and go and apply for it; 
Focus group participant characteristics: 66-year-old woman. 

Topic: Using retirement savings to cover expenses during long-term 
unemployment. 

Quote: Coping financially has been really rough, because even though I 
had a retirement plan, it's not enough to pay my mortgage and my car 
payment.... So then you tap into what you have saved ... you see that 
dwindle down to nothing and then you still got to make it to 62, and 
you don't have enough to make it to 62; 
Focus group participant characteristics: 59-year-old woman. 

Quote: When I got laid off ... my daughter was in college at the time 
... I wanted her to finish school so, of course, I depleted all of my 
savings, my 401(k); 
Focus group participant characteristics: 55-year-old woman. 

Source: Transcripts of focus groups GAO conducted with long-term 
unemployed older workers. 

[End of table] 

[End of section] 

Appendix V: Percentage of the Population 50 and Older, but Less than 
Full Retirement Age, with Initial Dispositions and Awards of Social 
Security Disability Insurance, 2000-2010: 

[Refer to PDF for image: vertical bar graph] 

Year: 2000; 
Initial dispositions: 1.20%; 
Awards: 0.81%. 

Year: 2001; 
Initial dispositions: 1.28%; 
Awards: 0.84%. 

Year: 2002; 
Initial dispositions: 1.37%; 
Awards: 0.90%. 

Year: 2003; 
Initial dispositions: 1.40%; 
Awards: 0.91%. 

Year: 2004; 
Initial dispositions: 1.42%; 
Awards: 0.91%. 

Year: 2005; 
Initial dispositions: 1.37%; 
Awards: 0.94%. 

Year: 2006; 
Initial dispositions: 1.34%; 
Awards: 0.89%. 

Year: 2007; 
Initial dispositions: 1.30%; 
Awards: 0.82%. 

Year: 2008; 
Initial dispositions: 1.29%; 
Awards: 0.87%. 

Year: 2009; 
Initial dispositions: 1.37%; 
Awards: 0.95%. 

Year: 2010; 
Initial dispositions: 1.49%; 
Awards: 1.00%. 

Source: Social Security Administration] 

[End of figure] 

[End of section] 

Appendix VI: Proposed Policies Presented to External Experts: 

Policies to help address perceived employer reluctance to hire older 
workers: 

Policy option: 1. Labor could develop a comprehensive and highly 
visible campaign to educate employers on the strengths of older 
workers as potential employees and their important role in the 21st 
century economy; 
Selected by at least four experts: No. 

Policy option: 2. Congress could offer temporary wage subsidies to 
employers that hire older workers who have experienced long-term 
unemployment (27 or more weeks); 
Selected by at least four experts: Yes. 

Policy option: 3. Congress could offer training subsidies to employers 
that hire older workers who experienced long-term unemployment (27 
weeks or more). To be eligible for the training subsidy, employers 
would have to commit to retaining these workers for a certain amount 
of time, for example, 6 months to a year; 
Selected by at least four experts: Yes. 

Policy option: 4. Congress could offer a tax credit--that applies to 
the first year of employment--to employers that hire older workers who 
experienced long-term unemployment (27 weeks or more); 
Selected by at least four experts: No. 

Policy option: 5. To reduce the potentially high cost to employers of 
providing health insurance benefits to older workers, Congress could 
eliminate the requirement that Medicare generally be the secondary 
payer for workers 65 and over who are covered by an employer group 
health plan; 
Selected by at least four experts: Yes. 

Policy option: 6. Congress could allow older workers and their 
employers to opt out of paying the Social Security payroll tax once 
the worker has accumulated 35 years of covered earnings; 
Selected by at least four experts: No. 

Policy option: 7. Congress could provide tax credits to new small 
businesses that are owned by older workers and employ a high 
percentage of older workers (such as 50 percent or more); 
Selected by at least four experts: No. 

Policy option: 8. Congress could pass legislation (such as the 
proposed Fair Employment Opportunity Act of 2011) that prohibits 
employers and employment agencies from screening workers out of the 
candidate pool solely because they are unemployed; 
Selected by at least four experts: No. 

Policy option: 9. To alleviate employer concerns about declining 
productivity and increased health care costs at older ages (at or near 
Social Security's full retirement age), Congress could allow employers 
to set a mandatory retirement age (of 66 or greater) for new hires who 
were within 10 years of reaching this age (e.g., 56 or older); 
Selected by at least four experts: No. 

Policy option: 10. In partnership with other federal agencies, Labor 
could identify the legal and regulatory barriers to the employment of 
older workers and determine (1) whether legal and regulatory changes 
are needed and (2) the impact of potential changes; 
Selected by at least four experts: No. 

Policies to help enhance reemployment assistance specifically targeted 
to older workers: 

Policy option: 11. Labor could collect and disseminate information on 
the most effective strategies for serving older workers through the 
workforce investment system; 
Selected by at least four experts: No. 

Policy option: 12. Labor could develop job search assistance programs 
that address skill deficiencies common among seniors, such as 
deficiencies in basic computer skills, résumé writing, and online 
application filing; 
Selected by at least four experts: Yes. 

Policy option: 13. Labor could encourage partnerships between one-stop 
career centers and the Small Business Administration (SBA) to provide 
entrepreneurial development services to older job seekers. As part of 
this effort to link older workers with SBA's programs and services, 
SBA could provide targeted information to older workers regarding 
entrepreneurial resources, counseling, and training on its website; 
Selected by at least four experts: No. 

Policy option: 14. To directly assist older workers who wish to start 
their own businesses, Labor could replicate Project GATE (Growing 
America Through Entrepreneurship) at one-stop career centers, targeted 
specifically to older workers; 
Selected by at least four experts: No. 

Policy option: 15. Labor could direct the Bureau of Labor Statistics 
to work with the Census Bureau to (1) add specific questions to the 
CPS about older workers and their labor force participation, and (2) 
request a special tabulation of census data on older workers designed 
to match workforce investment areas. These data would allow one-stop 
staff to better target services to the different types of older 
workers within their jurisdiction; 
Selected by at least four experts: No. 

Policy option: 16. Congress could change Workforce Investment Act of 
1998 (WIA) and Senior Community Service Employment Program (SCSEP) 
performance measures to eliminate any disincentives to placing older 
workers in part-time employment; 
Selected by at least four experts: Yes. 

Policy option: 17. Congress could expand funding for SCSEP to take 
into account increases in the older worker population; 
Selected by at least four experts: Yes. 

Policies to help encourage older workers to obtain reemployment as 
quickly as possible: 

Policy option: 18. Congress could enact a reemployment bonus program 
that provides a low-value bonus (for example, approximately $1,000) to 
Unemployment Insurance (UI) claimants who accept new jobs within a 
given time period (for example, 3-6 months). The program could target 
UI claimants with an above average likelihood of exhausting their UI 
benefits; 
Selected by at least four experts: No. 

Policy option: 19. Congress could enact a wage insurance program that 
temporarily compensates older workers for accepting new full-time jobs 
that pay less than their previous jobs within a specified time frame. 
For example, the program could pay older workers 50 percent of the 
difference between their old and new wages over a period of 2 years 
(up to a specified maximum benefit). The subsidy could be limited to 
individuals making less than $50,000 at their new jobs and who 
accepted their new jobs within 27 weeks of filing for UI; 
Selected by at least four experts: Yes. 

Policy option: 20. Labor could encourage one-stop career centers to 
prioritize job-matching services (i.e., matching older workers' 
existing skills with available jobs) rather than training or 
retraining services; 
Selected by at least four experts: No. 

Policy option: 21. Congress could require long-term unemployed 
individuals (those unemployed for 27 or more weeks) to enroll in 
publicly funded retraining programs or publicly subsidized on-the-job-
training programs as a condition of receiving Unemployment Insurance. 
Some of the training funds could be obtained by redirecting a portion 
of individuals' unemployment benefits for these purposes; 
Selected by at least four experts: Yes. 

Source: GAO. 

Note: To compile this list of policy options, we reviewed the 
literature, including academic studies, past GAO reports, and federal 
agency reports, to identify policies that have been proposed to help 
unemployed older workers regain employment. We presented these options 
to 12 experts in areas such as older workers' issues, labor economics, 
and the workforce development system, and asked the experts to select 
the five policies that they believed merited serious consideration. 
Policies that were selected by 4 or more experts are described in more 
detail in the body of the report. 

[End of table] 

[End of section] 

Appendix VII: Comments from the Department of Labor: 

U.S. Department of Labor: 
Employment and Training: 
Washington, DC 20210: 

April 17, 2012: 

Mr. Charles A. Jeszeck: 
Director: 
Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. Jeszeck: 

Thank you for the opportunity to review the Government Accountability 
Office (GAO) draft report entitled: Unemployed Older Workers: Many 
Experience Challenges Regaining Employment and Face Reduced Retirement 
Security (GAO-12-445). The report is both important and timely 
considering the many unique challenges faced by older workers, the 
impact that the recession has had on them, and the longer term 
implications for the older workers and the overall economy. 

The Department of Labor (Department) agrees with the report's 
recommendation to the Secretary of Labor to consider what strategies 
are needed to address the unique needs of older jobseekers. in light 
of recent economic and technological changes and to foster the 
employment of older workers, and will be considering the various 
strategies articulated in the report. 

The Department continues to work on a number of initiatives focused on 
the employment of older workers. For example, we are currently in the 
process of evaluating the Aging Worker Initiative demonstration 
project, a multi-site project designed to create new approaches to 
helping workers aged 55 and older in preparing for and accessing jobs 
in high-growth, high-demand industries. In July 2009, the Department's 
Employment and Training Administration awarded S I 0 million in grants 
to ten local organizations to test new ways of providing training and 
other services to connect older Americans with employment 
opportunities. The evaluation examines implementation of the grants, 
documents the various types of interventions, assesses attributes of 
the treatments, estimates how successful they were in assisting aging 
workers in becoming employed or re-employed, and determines the 
potential for implementation of various methods in the broader 
workforce system. The final report is expected in December 2012, and 
we would be more than happy to provide it to you when it becomes 
available. 

The Department also continues to sponsor National Employ Older Workers 
Week. an event held annually in September in localities throughout the 
country. It provides Senior Community Service Employment Program 
grantees with an opportunity to reach out to employers and the whole 
community as they recognize the vital role of older workers and their 
employers in the workforce. 

Again, thank you for the opportunity to review the draft report. 
Please find enclosed technical comments for your reference. If you 
would like additional information, please do not hesitate to call me 
at (202) 693-2700. 

Sincerely, 

Signed by: 

Jane Oates: 
Assistant Secretary: 

Enclosure: 

[End of section] 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

GAO contact: 

Charles Jeszeck, (202) 512-7215 or jeszeckc@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Laura J. Heald, Assistant 
Director; Lucas Alvarez; Laurel E. Beedon; James E. Bennett; Amy Buck; 
David M. Chrisinger; William Colvin; Sarah C. Cornetto; Cynthia L. 
Grant; Gene G. Kuehneman Jr.; Kathy D. Leslie; Douglas A. Manor; 
Jaclyn Nidoh; Rhiannon Patterson; Kathy Peyman; Mark F. Ramage; David 
M. Reed; Nyree M. Ryder Tee; Aron E. Szapiro, Frank Todisco; and 
Walter Vance made key contributions to this report. 

[End of section] 

Related GAO Products: 

Income Security: Older Adults and the 2007-2009 Recession. [hyperlink, 
http://www.gao.gov/products/GAO-12-76]. Washington, D.C.: October 17, 
2011. 

Retirement Income: Ensuring Income throughout Retirement Requires 
Difficult Choices. [hyperlink, 
http://www.gao.gov/products/GAO-11-400]. Washington, D.C.: June 7, 
2011. 

Private Pensions: Some Key Features Lead to an Uneven Distribution of 
Benefits. [hyperlink, http://www.gao.gov/products/GAO-11-333]. 
Washington, D.C.: March 30, 2011. 

Social Security Reform: Raising the Retirement Ages Would Have 
Implications for Older Workers and SSA Disability Rolls. [hyperlink, 
http://www.gao.gov/products/GAO-11-125]. Washington, D.C.: November 
18, 2010. 

Private Pensions: Alternative Approaches Could Address Retirement 
Risks Faced by Workers but Pose Trade-Offs. [hyperlink, 
http://www.gao.gov/products/GAO-09-642]. Washington, D.C.: July 24, 
2009. 

Employment and Training: Most One-Stop Career Centers Are Taking 
Multiple Actions to Link Employers and Older Workers. [hyperlink, 
http://www.gao.gov/products/GAO-08-548]. Washington, D.C.: April 21, 
2008. 

401(k) Plans: Policy Changes Could Reduce the Long-term Effects of 
Leakage on Workers' Retirement Savings. [hyperlink, 
http://www.gao.gov/products/GAO-09-715]. Washington, D.C.: August 28, 
2009. 

Private Pensions: Low Defined Contribution Plan Savings May Pose 
Challenges to Retirement Security, Especially for Many Low-Income 
Workers. [hyperlink, http://www.gao.gov/products/GAO-08-8]. 
Washington, D.C.: November 29, 2007. 

Retirement Security: Women Face Challenges in Ensuring Financial 
Security in Retirement. [hyperlink, 
http://www.gao.gov/products/GAO-08-105]. Washington, D.C.: October 11, 
2007. 

Highlights of a GAO Forum: Engaging and Retaining Older Workers. 
G[hyperlink, http://www.gao.gov/products/AO-07-438SP]. Washington, 
D.C.: February 28, 2007. 

Senior Community Service Employment Program: Labor Has Made Progress 
Implementing Older Americans Act Amendments of 2000, but Challenges 
Remain. [hyperlink, http://www.gao.gov/products/GAO-06-549T]. 
Washington, D.C.: April 6, 2006. 

Older Workers: Employment Assistance Focuses on Subsidized Jobs and 
Job Search, but Revised Performance Measures Could Improve Access to 
Other Services. [hyperlink, http://www.gao.gov/products/GAO-03-350]. 
Washington, D.C.: January 24, 2003. 

[End of section] 

Footnotes: 

[1] The recession of 2007-2009 started in December 2007 and ended in 
June 2009, according to the Business Cycle Dating Committee of the 
National Bureau of Economic Research (NBER). According to NBER, "a 
recession is a significant decline in economic activity spread across 
the economy, lasting more than a few months, normally visible in 
production, employment, real income, and other indicators. A recession 
begins when the economy reaches a peak of activity and ends when the 
economy reaches its trough." In addition, this recession occurred in 
the context of a significant decline in major financial markets, which 
dramatically reduced the value of major assets. 

[2] The Workforce Investment Act of 1998 provided for the 
establishment of local one-stop centers to provide access to 
employment and training services under a number of programs, including 
those administered by the Departments of Labor, Education, Health and 
Human Services, and Housing and Urban Development. Pub. L. No. 105-
220, § 121, 112 Stat. 936, 963. 

[3] Our simulations of retirement income include income from employer-
sponsored retirement plans and Social Security retirement benefits. We 
used microsimulation models under license from the Policy Simulation 
Group, a private contractor. More information about these 
microsimulation models is at [hyperlink, http://www.polsim.com]. 

[4] For our analysis of retirement savings using the 2007 Survey of 
Consumer Finances, we counted participation in a defined benefit or 
defined contribution plan at a current employer, earned benefits from 
a defined benefit plan from a past employer, a defined contribution 
account from a past employer, a Keogh account, or an individual 
retirement account. 

[5] This requirement, added by the Middle Class Tax Relief and Job 
Creation Act of 2012, Pub. L. No. 112-96, § 2101, 126 Stat. 156, 159, 
will take effect after the end of the first session of each state 
legislature that begins after the date of enactment, February 22, 2012. 

[6] For evidence that unemployment benefits are generally available 
for up to 26 weeks, see David Bradley, Benjamin Collins, Katelin 
Isaacs, Janemarie Mulvey, Federal Programs Available to Unemployed 
Workers. Congressional Research Service, RL34251 (Washington D.C., 
January 2012). However, the actual duration of UI benefits will vary 
by state and by individual. See GAO, Unemployment Insurance: Economic 
Circumstances of Individuals Who Exhausted Benefits, [hyperlink, 
http://www.gao.gov/products/GAO-12-408] (Washington, D.C.: Feb. 17, 
2012). 

[7] Congress has extended the maximum period for receiving UI benefits 
through temporary federal programs during a number of economic 
downturns, including the recent recession. Congress also provided for 
increased weekly UI benefit amounts and increased federal support to 
states to finance extended UI benefits under the American Reinvestment 
and Recovery Act of 2009 (Recovery Act). Pub. L. No. 111-5, §§ 2002-
05, 123 Stat. 115, 437-44. During the recession of 2007-2009, Congress 
increased the maximum period for receipt of UI benefits; as a result, 
some long-term unemployed workers in certain states may be eligible to 
receive UI benefits for up to 99 weeks. The Middle Class Tax Relief 
and Job Creation Act of 2012, enacted on February 22, 2012, will 
reduce this maximum to 93 from 99. The reduction will be phased in 
between May and September 2012. Pub. L. No. 112-96, § 2122, 126 Stat. 
156, 163-66 (2012). For more information on UI and the Recovery Act, 
see GAO, Worker and Family Assistance: Unemployment Insurance Measures 
Included in the American Recovery and Reinvestment Act of 2009, as of 
July 2009, [hyperlink, http://www.gao.gov/products/GAO-09-942R] 
(Washington, D.C.: July 27, 2009). 

[8] Under WIA, dislocated workers include, among others, individuals 
who (1) have been terminated or laid off or who have received a notice 
of termination or layoff, (2) are eligible for or have exhausted UI 
benefits or have demonstrated attachment to the workforce but are 
ineligible for UI benefits because of insufficient earnings or having 
worked for a noncovered employer, and (3) are unlikely to return to a 
previous industry or occupation. Dislocated workers also include 
individuals who were self-employed but are unemployed as a result of 
general economic conditions or natural disasters. For the complete 
definition, see 29 U.S.C. § 2801(9). 

[9] 29 U.S.C. § 2871(b),(d). 

[10] 29 U.S.C. § 2871(g); 20 U.S.C. § 9273. 

[11] To be eligible to participate in SCSEP, individuals must have a 
family income of no more than 125 percent of the federal poverty 
guidelines prepared by the Department of Health and Human Services and 
approved by the Office of Management and Budget. 42 U.S.C. § 
3056p(a)(3), 20 C.F.R. § 641.500. In 2012, an individual living in the 
48 contiguous states and D.C. must have an income of not more than 
$13,963 to be eligible to participate in SCSEP. Household income for 
an individual in a household of two must not be more than $18,913 in 
order for the individual to be eligible to participate in the program. 

[12] 42 U.S.C. § 3056k. 

[13] Another type of unemployment--frictional unemployment--is 
generally due to voluntary job shifts and typically involves shorter 
unemployment spells. 

[14] Linda Levine, The Increase in Unemployment since 2007: Is it 
Cyclical or Structural? Congressional Research Service, R41785 
(Washington, D.C.: November 2011). 

[15] The Taskforce included senior representatives from nine federal 
agencies whose activities affect the lives of older Americans. These 
agencies were the Departments of Commerce, Education, Health and Human 
Services, Labor, Transportation, and the Treasury, along with the 
Equal Employment Opportunity Commission, the Small Business 
Administration, and SSA. 

[16] Labor officials convened this task force to respond to a request 
from the U.S. Senate Special Committee on Aging and GAO 
recommendations in two reports: GAO, Older Workers: Demographic Trends 
Pose Challenges for Employers and Workers, [hyperlink, 
http://www.gao.gov/products/GAO-02-85] (Washington, D.C.: Nov. 16, 
2001), and Older Workers: Labor Can Help Employers and Employees Plan 
Better for the Future, [hyperlink, 
http://www.gao.gov/products/GAO-06-80] (Washington, D.C.: Dec. 5, 
2005). 

[17] In 2008, this task force published its final report, Report of 
the Taskforce on the Aging of the American Workforce (Washington, 
D.C.: February 2008) [hyperlink, 
http://www.doleta.gov/reports/FINAL_Taskforce_Report_2-11-08.pdf]. 

[18] 42 U.S.C. §§ 402, 415. 

[19] 42 U.S.C. § 402(q)(1); 20 C.F.R. §§ 404.409 to 404.410. 

[20] 42 U.S.C. § 402(w); 20 C.F.R. § 404.313. 

[21] In this report we use the term "Social Security retirement 
benefits" to refer to an individual's retirement (old-age) benefits, 
and not other Social Security benefits such as spousal benefits or 
disability benefits, unless otherwise noted. 

[22] A DB plan may also provide benefits to a surviving spouse, if the 
plan participant is married and took these benefits. 

[23] The most common type of DC plan is the 401(k) plan, which 
typically allows workers to choose to contribute a portion of their 
pretax compensation to the plan. Some 401(k) plans may also provide 
for employer contributions, and Roth 401(k) plans may accept after-tax 
employee contributions. 

[24] The tax treatment differs depending on the type of IRA. For 
example, with traditional IRAs, individuals who meet certain 
conditions can take an income tax deduction on some or all of the 
contributions they make to their IRAs, but they must pay taxes on 
amounts they withdraw from the IRA. Individuals below certain income 
limits may also contribute to Roth IRAs, which do not provide an 
income tax deduction on contributions, but permit tax-free withdrawals. 

[25] In this report, displaced workers are defined as persons 20 years 
or older who lost or left jobs because their plant or company closed 
or moved, there was insufficient work for them to do, or their 
position or shift was abolished. We analyzed displaced workers using 
the CPS Displaced Worker Supplement (DWS). Displaced workers have lost 
a job in the past 3 years; however, they may be unemployed, employed, 
or not in the labor market at the time of the survey. See appendix I 
for more information about displaced workers and the DWS. In our 
analysis of displaced workers, "retired" is defined to include only 
people who are no longer in the labor force. Therefore, this 
definition does not include retired persons who have part-time work. 
See appendix II for more data on the labor force status of displaced 
workers in 2008 and 2010. 

[26] This figure, along with all others describing characteristics of 
workers, is based on sample data and subject to sampling error. For 
example, we are 95 percent confident that the unemployment rate for 
workers age 55 and older was between 5.5 and 6.4 percent in December 
2011. See appendix I for a description of sampling error and the 
surveys relied upon. In this report, confidence intervals for 
estimates and statistical tests for differences between estimates are 
presented in graphs, tables, or footnotes in the more detailed 
sections presenting the estimates, or in appendix III when indicated. 
Estimated labor force statistics in this report are based on analysis 
of microdata, which beginning in January 2011 may diverge slightly 
from BLS published estimates; see appendix I for more information. 
Estimated labor force statistics in this report are based on analysis 
of microdata, which beginning in January 2011 may diverge slightly 
from BLS published estimates; see appendix I for more information. 
Because we analyze a variety of labor force outcomes for several 
subgroups of the population in this report, we did not attempt to 
seasonally adjust any of the estimates. See appendix I for more 
information about seasonally unadjusted data. 

[27] A recent study, however, suggests that older workers with less 
than 4.6 years of tenure are actually more likely to be laid off than 
their otherwise similar younger counterparts. See Richard Johnson and 
Corinna Mommaerts, Age Differences in Job Loss, Job Search, and 
Reemployment, the Urban Institute (Washington D.C.: January 2011). 

[28] BLS considers workers who want work and are available for work 
but who did not actively seek work in the past month as "marginally 
attached to the labor force." BLS records the reason given for not 
actively seeking work in the past month: for example, some marginally 
attached workers indicate family obligations, such as caring for an 
aging parent or a sick child as the reason they did not look for work. 

[29] BLS defines workers who want work and are available for work, but 
did not actively seek work in the past month because they thought no 
jobs were available, as "discouraged workers." Discouraged workers are 
a subset of those marginally attached to the labor force. 

[30] BLS identifies such workers as part-time for economic reasons, 
defined as those employed less than 35 hours per week who want and are 
available for, but are unable to find, full-time work, as well as 
people who prefer full-time hours of work but had their hours reduced 
by their employer. In this report GAO includes these workers in the 
term "underemployed," along with marginally attached workers. 

[31] In this report, we use the phrase "job seekers" to refer to the 
unemployed. 

[32] BLS defines long-term unemployment as being unemployed for more 
than half a year (27 weeks or more). 

[33] Rob Valetta and Katherine Kuang. Why is Unemployment Duration So 
Long? Federal Reserve Bank of San Francisco Economic Letter 2012-03 
(San Francisco, CA, January 2012), 1, and Linda Levine, The Increase 
in Unemployment since 2007: Is it Cyclical or Structural? Linda Levine 
and Gerald Meyer, Long-term Unemployment and Recessions (Washington, 
D.C.: May 2010). 

[34] One expert believed that many older workers "face the real 
prospect of never working again, certainly not at their former wage 
levels." See What to do about the New Unemployment, Urban Institute 
(Washington, D.C.: June 2011). 

[35] One possible explanation for men's greater increase in 
unemployment since 2007 is the particularly steep increase in 
unemployment in the manufacturing and construction industries, which 
tend to employ higher percentages of men than women. 

[36] One possible explanation of the unemployment increase among less 
educated older workers is that unemployment rates in manufacturing and 
construction increased dramatically in the recent recession, and these 
industries tend to employ a higher percentage of less educated workers 
than do many other industries. Also, a recent study of the long-term 
unemployed aged 18-64 also found that the long-term unemployed are 
less likely to hold a college degree. Kaiser Family Foundation/NPR 
Long-Term Unemployed Survey. 

[37] Research suggests the long-term decline in young adults' (aged 20-
24) labor force participation is associated with increased school 
enrollment. Regarding individuals aged 25-54, the decline in labor 
force participation is driven by men, particularly those with less 
education. The demand for less educated workers has fallen 
significantly over the past three decades. Similarly, inflation-
adjusted wages for men with less than a high school diploma have also 
fallen. Some studies have suggested that increased access to Social 
Security disability benefits might also explain some of the historic 
decline in the labor force participation of men aged 25-54. See 
Abraham Mosisa and Steven Hipple, "Trends in Labor Force Participation 
in the United States," Monthly Labor Review, October 2006, 35-57. 
Also, Chinhui Juhn and Simon Potter, "Changes in Labor Force 
Participation in the United States," Journal of Economic Perspectives, 
Vol. 20, No. 3, Summer 2006, 27-46. 

[38] Mosisa and Hipple, "Trends in Labor Force Participation in the 
United States," 35-57; Craig Copeland, Labor-Force Participation Rates 
of the Population Age 55 and Older: What did the Recession Do to the 
Trends? EBRI Notes Vol. 32, No. 2, Employee Benefit Research Institute 
(Washington, D.C.: February 2011), and Murray Gendell, "Older Workers: 
Increasing Their Labor Force Participation and Hours of Work," Bureau 
of Labor Statistics, Monthly Labor Review, January 2008. 

[39] Kristie M. Engemann and Howard J. Wall, "The Effects of 
Recessions Across Demographic Groups," Federal Reserve Bank of St. 
Louis Review, St. Louis, MO, January/February 2010, 92(1), 1-26. 

[40] Displaced workers are those who indicated that they lost a job 
for economic reasons (such as plant closures or their position being 
eliminated) during the previous 3 calendar years. Displaced workers 
are surveyed by the Census Bureau every 2 years, with the most recent 
survey interviewing people who lost their job during the recession 
period (January 2007-December 2009), and the previous survey 
interviewing people who predominantly lost their jobs prior to the 
recent recession (January 2005-December 2007). Older displaced workers 
may choose to stay in the workforce--becoming either employed or 
unemployed--or to exit the workforce, possibly into retirement. 

[41] One study indicates this increase suggests that growing concerns 
about the adequacy of retirement savings and the 2008 stock market 
collapse may have discouraged early retirement and prompted more older 
workers to remain in the labor force after losing their jobs. Richard 
Johnson, Rising Senior Unemployment and the Need to Work at Older 
Ages, Urban Institute (Washington, D.C.: September 2009). 

[42] Research indicates extended UI benefits could increase the 
unemployment rate in two ways: (1) by keeping older workers who would 
otherwise have dropped out of the labor force attached to the labor 
market or (2) by allowing the unemployed to turn down job offers they 
would have accepted had UI benefits not been available. See Jesse 
Rothstein, Unemployment and Job Search in the Great Recession, NBER 
(Cambridge, MA: October 2011). 

[43] See Gary Burtless and Adam Looney, Growth through Innovation: The 
Immediate Jobs Crisis and Our Long-Run Labor Market Problem. Brookings 
Institution (Washington, D.C.: January 2012); Jesse Rothstein, 
Unemployment and Job Search in the Great Recession NBER (Cambridge, 
MA: October 2111); and Rob Valetta and Katherine Kuang, Why is 
Unemployment Duration So Long? Federal Reserve Bank of San Francisco, 
(San Francisco, CA: January 2012); The Increase in Unemployment since 
2007: Is it Cyclical or Structural? Levine and Meyer, Long-term 
Unemployment and Recessions. 

[44] This analysis is restricted to long-tenured displaced workers 
(workers with 3 or more years of tenure on the job they lost or left) 
who lost full-time, salaried jobs and were reemployed in full-time, 
salaried jobs at the time of the survey. 

[45] A recent study using data from the Survey of Income and Program 
Participation found that between 1996 and 2007, the median hourly wage 
earned by displaced men aged 50 to 61 who become reemployed at ages 50 
to 61 was 20 percent lower than the median wage on the prior job. For 
those reemployed at age 62 or older, the median wage for the new job 
was 36 percent below the median wage for the prior job. In contrast, 
the study found that younger men's median wages fell by only 4 percent 
for men aged 35 to 49 and 2 percent for those aged 25 to 34. The study 
found that reemployed older displaced women also suffered wage losses, 
but these differences were not as significant as those for men. See 
Johnson and Mommaerts, "Age Differences in Job Loss, Job Search, and 
Reemployment." 

[46] A recent study using data from the Health and Retirement Study 
(HRS) found that individuals who lost a job between ages 50 and 56 had 
"messy post-displacement employment histories." Specifically, such 
workers were "more likely to job-hop, to suffer further involuntary 
job losses, and to experience subsequent unemployment than those who 
were still working for their age-50 employer at age 56." See Steven A. 
Sass and Anthony Webb, Is the Reduction in Older Workers' Job Tenure a 
Cause for Concern? Center for Retirement Research at Boston College 
(December 2010). 

[47] GAO conducted focus groups in Baltimore, Maryland; Falls Church, 
Virginia; San Jose, California; and St. Louis, Missouri. GAO selected 
these locations based on metropolitan areas' unemployment rates, 
geographic diversity, and the estimated costs for travel and securing 
focus group facilities. In total GAO conducted 10 focus group 
sessions. Methodologically, focus groups are not designed to (1) 
demonstrate the extent of a problem or to generalize results to a 
larger population, (2) develop a consensus to arrive at an agreed-upon 
plan or make decisions about what actions to take, or (3) provide 
statistically representative samples or reliable quantitative 
estimates. Instead, they are intended to generate in-depth information 
about the reasons for the focus group participants' attitudes on 
specific topics and to offer insights into their concerns about and 
support for an issue. Please see appendix I for further details on our 
focus group methodology. 

[48] A survey of workers unemployed during the recession also found 
that some unemployed individuals age 55 and over had no health 
insurance or had gone without medical care. See M. Heidkamp, N. Corre, 
and C. Van Horn, The "New Unemployables" Older Jobseekers Struggle to 
Find Work During the Great Recession, Sloan Center on Aging and Work, 
Boston College (Chestnut Hill, MA: 2010). A recent survey of long-term 
unemployed and underemployed individuals age 18-64 also found that 
many of the long-term unemployed individuals reported difficulty 
paying for health insurance or health care. See Kaiser Family 
Foundation/NPR Long-Term Unemployed Survey. 

[49] A recent survey of long-term unemployed and underemployed 
individuals aged 18-64 also found that many long-term unemployed 
individuals reported difficulty paying for housing. See Kaiser Family 
Foundation/NPR Long-Term Unemployed Survey. 

[50] A recent GAO report examines how many workers who lost their jobs 
during the recent recession received and exhausted UI benefits, the 
economic circumstances of those UI recipients who exhausted their 
benefits and whether they received support from other government 
programs, and the extent to which UI agencies refer those exhausting 
UI to other support programs. According to the report, 15 percent of 
these UI exhaustees had received benefits through the Supplemental 
Nutrition Assistance Program. See GAO, Unemployment Insurance: 
Economic Circumstances of Individuals Who Exhausted Benefits, 
[hyperlink, http://www.gao.gov/products/GAO-12-408] (Washington, D.C.: 
Feb. 17, 2012). 

[51] A survey of unemployed older workers age 55 and over also found 
that unemployed older workers have increased credit card debt; sold 
possessions; borrowed money from family, friends, or adult children; 
or moved to a different house or apartment. See Heidkamp, M., Corre, 
and Van Horn, The "New Unemployables:" Older Jobseekers Struggle to 
Find Work During the Great Recession. Another survey of long-term 
unemployed and underemployed individuals ages 18-64 also found that 
many had taken money out of savings or retirement funds to pay bills, 
sold personal belongings, or borrowed money from relatives and 
friends. See Kaiser Family Foundation/NPR Long-Term Unemployed Survey. 

[52] In some cases, our interviews with one-stop career center staff 
also included individuals who worked for other organizations, such as 
nonprofits, to help older workers overcome their employment 
challenges. In this report, we refer to these individuals and the one-
stop career center staff as "workforce professionals." 

[53] The Age Discrimination in Employment Act of 1967, as amended, 
prohibits employment practices that discriminate against people who 
are age 40 or older. Pub. L. No. 90-202, 81 Stat. 602, codified at 29 
U.S.C. §§ 621-634. 

[54] For information about evidence that employers discriminate 
against older job applicants, see Joanna N. Lahey, "Do Older Workers 
Face Discrimination?" Center for Retirement Research at Boston 
College, Issue Brief Number 33, July 2005. 

[55] See Marcie Pitt-Catsouphes, Michael A. Smyer, Christina Matz-
Costa, and Katherine Kane, "The National Study Report: Phase II of the 
National Study of Business Strategy and Workforce Development," Center 
on Aging and Work/Workplace Flexibility at Boston College Research 
Highlight 04, March, 2007, 21. Also, see The Real Talent Debate: Will 
Aging Boomers Deplete the Workforce? A WorldatWork Research Report, 
April 2007, 4. 

[56] A recent study using data from the Survey of Income and Program 
Participation found that between 1996 and 2007, the median hourly wage 
for reemployed displaced workers was lower at ages 50 to 61 than at 
ages 35 to 49. The authors of the study suggest that "concern over the 
expense of hiring older workers may be overblown." See Johnson and 
Mommaerts, Age Differences in Job Loss, Job Search, and Reemployment. 

[57] A recent survey of long-term unemployed and underemployed 
individuals ages 18-64 also found that many of these long-term 
unemployed individuals reported negative impacts on their mental and 
physical health. See Kaiser Family Foundation/NPR Long-Term Unemployed 
Survey. 

[58] The terms of an employer-sponsored retirement plan may specify 
when the employee has earned a nonforfeitable right to employer-funded 
benefits (called vesting), typically after the employee reaches a 
certain age or has completed a certain period of service. Federal 
vesting requirements may apply to some plans. For example, to qualify 
for favorable tax treatment, private sector DB plans are generally 
required to vest within a maximum of 7 years if they use graded 
vesting, in which the employee is vested in an increasing percentage 
of the benefits over time. If the plan does not use graded vesting, 
employees must be 100 percent vested within 5 years. In addition, 
employees must be vested upon reaching retirement age (typically age 
65 or earlier, if defined by the plan), and federal law limits the 
ability of plans to disregard an employee's prior years of service 
after breaks in service of less than 5 years. 29 U.S.C. § 1053(a)-(b). 
However, plans sponsored by public sector employers are not generally 
subject to these requirements, although state laws may apply. 

[59] For more information on how Social Security retirement benefits 
are calculated, see online illustration at [hyperlink, 
http://www.ssa.gov/oact/ProgData/retirebenefit1.html]. 

[60] Our simulations of how job loss and a forced early retirement 
would affect an older worker's retirement income cover retirement 
income from employer-sponsored retirement plans and Social Security 
retirement benefits but not retirement income from other sources. 

[61] Over time, the percentage of a worker's retirement income coming 
from Social Security compared with private sources may increase 
because Social Security retirement benefits are subject to cost-of-
living adjustments based on the Consumer Price Index for Urban Wage 
Earners and Clerical Workers published by the Bureau of Labor 
Statistics; however, retirement benefits from private sources may not 
be inflation-adjusted. 

[62] The full retirement age is the age at which an individual is 
eligible to receive unreduced retirement benefits. This age ranges 
from 65 to 67 depending on the year the recipient was born. 42 U.S.C. 
§ 416(l); 20 C.F.R. § 404.409(a). 

[63] Courtney Coile and Phillip B. Levine, The Market Crash and Mass 
Layoffs: How the Current Economic Crisis May Affect Retirement, 
Working Paper 15395, [hyperlink, http://www.nber.org/papers/w15395], 
NBER (Cambridge, MA: 2009) . 

[64] The researchers estimate that the recession of 2007-2009 
increased Social Security retirement claiming for men with limited 
education by about 40 percent. See Owen Haaga and Richard W. Johnson, 
Social Security Claiming: Trends and Business Cycle Effects, Center 
for Retirement Research at Boston College (Chestnut Hill, MA: February 
2012). 

[65] When the Office of the Chief Actuary made estimates in December 
2008 for the number of retirement benefit claims SSA would receive in 
fiscal year 2009, it did not factor recessionary effects into the 
estimates because, at that time, it did not know if the recession 
would increase or reduce the number of applications SSA would receive 
for retirement benefits. Therefore, according to the Office of the 
Chief Actuary, comparing the estimates for retirement benefits 
applications for fiscal year 2009 that were made in December 2008 with 
the actual number of applications received in fiscal year 2009 
provides a reasonable estimate of the effect of the recession on 
Social Security applications in fiscal year 2009. 

[66] When the Office of the Chief Actuary made estimates in April 2008 
for the number of OASDI disability applications SSA would receive in 
fiscal year 2009, it was not recognized within the United States that 
the economy was in recession, and a recession was not expected. 
Therefore, the Office of the Chief Actuary did not factor recessionary 
effects into the April 2008 estimates. According to the Office of the 
Chief Actuary, comparing the estimates for OASDI disability benefits 
applications for fiscal year 2009 that were made in April 2008 with 
the actual number of applications received provides a reasonable 
estimate of the increase in applications due to the recession. 

[67] According to the Office of the Chief Actuary, applications did 
not increase as a result of the recession for Aged benefits under the 
Social Security Supplemental Security Income (SSI) program. To be 
eligible for SSI Aged benefits, individuals must be 65 or over and 
have very low income and few assets. Such individuals may have already 
been unemployed before the recession, which could help explain why the 
recession did not increase applications for SSI Aged benefits. 

[68] Receipt of disability benefits is generally subject to a 5-month 
waiting period beginning with the month the applicant was both insured 
for disability and disabled, as defined by statute. 42 U.S.C. § 423, 
20 C.F.R. § 404.315. 

[69] Unlike Social Security disability benefits, early Social Security 
retirement benefits do not increase expenditures from the OASDI trust 
funds. This is because retirement benefits are actuarially adjusted 
based on the age the benefits are claimed. 

[70] Heidkamp, Corre, and Van Horn, The "New Unemployables", Older Job 
Seekers Struggle to Find Work During the Great Recession. 

[71] Sara E. Rix, AARP Public Policy Institute, "Recovering from the 
Great Recession: Long Struggle Ahead for Older Americans" (Washington, 
D.C.: May 2011). This study surveyed adults aged 50 and over who had 
been in the labor force at some point during the previous 3 years. 

[72] We used $70,000 as the starting point for this illustration 
because it is about the median level of DC plan savings for employed 
workers age 55 and over who have a DC plan account from a current or 
past employer. For purposes of this illustration, we decided to round 
this median to the nearest $10,000. Based on 2007 Survey of Consumer 
Finances data, the estimated median is $70,800 and its 95 percent 
confidence interval is within plus or minus $13,204, or between 
$57,596 and $84,004. 

[73] Percentage estimates based on the 2007 Survey of Consumer 
Finances have 95 percent confidence intervals of within plus or minus 
3.4 percentage points of the estimate itself. See appendix I for 
additional information about this survey and estimates. 

[74] Our analysis does not cover the dollar value of benefits that 
individuals expect to receive from DB plans because these data are not 
collected in the Survey of Consumer Finances. 

[75] According to a recent study using data from the Health and 
Retirement Study, "The retirement wealth held by those ages 53 to 58 
before the onset of the recession in 2006 declined by a relatively 
modest 2.8 percentage points by 2010. In more normal times, their 
wealth would have increased over these 4 years." See Alan L. Gustman, 
Thomas L. Steinmeier, and Nahid Tabatabai, "How Did the Recession of 
2007-2009 Affect the Wealth and Retirement of the Near Retirement Age 
Population in the Health and Retirement Study?" NBER Working Paper 
17547, [hyperlink, http://www.nber.org/papers/w17547] (Cambridge, MA: 
October 2011). 

[76] Ruth Helman, Craig Copeland, and Jack VanDerhei, Issue Brief No. 
355: The 2011 Retirement Confidence Survey: Confidence Drops to Record 
Lows, Reflecting "the New Normal," Employee Benefit Research Institute 
(Washington, D.C.: 2011). 

[77] Sudipto Banerjee, "Retirement Age Expectations of Older Americans 
Between 2006 and 2010," Employee Benefit Research Institute, Notes 
Vol. 32, No. 12, Dec. 2011, 2-12. 

[78] The 12 experts we interviewed primarily work in academia and 
think tanks, and were selected based on their expertise on older 
workers, workforce development, or retirement policy. We selected a 
group of experts to help ensure a range of viewpoints. We asked these 
experts if they would be willing to assess the strengths and 
weaknesses of policy proposals to help long-term unemployed older 
workers regain employment. Prior to interviewing the experts, we sent 
them a list of the 21 policy proposals we had compiled from previously 
published studies and reports. We asked the experts to select those 5 
policies they believed merited serious consideration. The 8 policies 
addressed in this section are those that received votes from 4 or more 
of the 12 experts we interviewed. The expert discussion cited in this 
report should be interpreted in the context of two key limitations and 
qualifications. First, although we were able to secure the 
participation of a balanced, highly qualified group of experts, other 
experts in this field could not be included because we needed to limit 
the size of the panel. Second, although many points of view were 
represented, the panel was not representative of all potential views. 

[79] Before interviewing experts, we reviewed the literature, 
including past GAO reports, academic studies, and federal agency 
reports, to identify policies that have been proposed to help 
unemployed older workers regain employment. The eight policies that 
received votes from at least 4 of the 12 experts are listed in tables 
1 to 3 along with experts' comments on the policies' strengths and 
limitations. 

[80] For workers aged 65 or over and covered by their own or their 
spouse's employer's group health plan, federal law generally requires 
that the employer's group health plan be the primary payer and 
Medicare be the secondary payer for benefits. 42 U.S.C. § 
1395y(b)(2)(A); 42 C.F.R. §§ 411.170, .172, .175. 

[81] Each state receiving funds under WIA is required to report 
annually the state's and local areas' progress on several performance 
measures based on indicators such as participants' earnings, and Labor 
uses these measures to determine fiscal incentives and sanctions. 29 
U.S.C. § 2871, 20 U.S.C. § 9273. The SCSEP program is subject to 
similar performance measures, 42 U.S.C. § 3056k, but does take the 
unique characteristics of the SCSEP population into account when 
setting performance goals for SCSEP grantees, according to Labor 
officials. For example, Labor officials said the average earnings 
performance goals set for SCSEP grantees reflects average earnings 
that result from more likely part-time work. In a previous GAO report, 
we found that Labor's calculation of the earnings measure, which 
compares pre-and post enrollment earnings for participants in WIA 
adult and dislocated worker programs, could be a barrier to enrolling 
older workers because older workers' high prior wages and their 
tendency to work part-time could negatively affect a local area's 
performance on the earnings measure. Although Labor has changed the 
earnings measure so it no longer compares pre-and post enrollment 
earnings, the measure could still provide a disincentive for serving 
older workers because older workers may be more likely to work part-
time and could still have lower earnings after exiting the program 
than other adults, since older dislocated workers generally suffer 
greater earnings losses than do younger workers. See GAO, Older 
Workers: Employment Assistance Focuses on Subsidized Jobs and Job 
Search, but Revised Performance Measures Could Improve Access to Other 
Services, [hyperlink, http://www.gao.gov/products/GAO-03-350] 
(Washington, D.C.: Jan. 24, 2003). 

[82] According to Labor officials, the evaluation examines the 
implementation of the grants, documents the various types of 
interventions, assesses attributes of the treatments, estimates how 
successful they were in assisting aging workers in becoming employed 
or reemployed, and determines the potential for implementation of 
various methods in the broader workforce system. The final report is 
expected in December 2012, according to Labor officials. 

[83] Aging and Disability Resource Centers are designed to serve as 
"one-stop shops" for individuals and their families who need 
information about or access to long-term support services. The centers 
are part of a collaborative effort led by the Administration on Aging 
(AoA) and Centers for Medicare and Medicaid Services (CMS). Other 
Aging and Disability Resource Center partners include the Department 
of Health and Human Services Office on Disability, the Administration 
for Developmental Disabilities, the Department of Education, and the 
Veterans Administration. 

[84] According to Labor officials, National Employ Older Workers Week 
"provides Senior Community Service Employment Program grantees with an 
opportunity to reach out to employers and the whole community as they 
recognize the vital role of older workers and their employers in the 
workforce." 

[85] The administrative data from Labor for WIA adult and dislocated 
worker program participation is for program year 2007, starting April 
1, 2007, through program year 2010, ending on March 31, 2011. In 
addition to increased demand for services, additional funding provided 
under the Recovery Act contributed to this increase in the number of 
individuals the programs served. Specifically, the Recovery Act 
provided an additional $500 million in funding for grants to the 
states for adult employment and training activities, and $1.25 billion 
for grants to the states for dislocated worker employment and training 
activities. Pub. L.No. 111-5, tit. VIII, 123 Stat. 115, 172-73 (2009). 

[86] While these models use sample data, our report, like others using 
these models, does not address the issue of sampling errors. The 
results of the analysis reflect outcomes for individuals in the 
simulated populations and do not attempt to estimate outcomes for an 
actual population. 

[87] MINT3 is a detailed microsimulation model developed jointly by 
SSA, the Brookings Institution, RAND, and the Urban Institute to 
project the distribution of income in retirement for the 1931 to 1960 
birth cohorts. 

[88] The Survey of Consumer Finances data that we used were collected 
from May 2007 to March 2008. The collection period includes a few 
months of the recession that started in December 2007; however, the 
significant increases in unemployment that followed the onset of the 
recession had not yet occurred. 

[89] Scaled earnings are earnings levels that have been scaled up or 
down to reflect the average patterns of work and earnings of actual 
insured workers over their careers. 

[End of section] 

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