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A Fact Sheet on the Economics of Aging in Canada

·         It has become a commonplace that work has been transformed over the last decade. What is not so widely recognized is that the down side of this transformation has been disproportionately felt by older workers. Women continue to suffer more from discrimination (see next section), but men have been most impacted by recent structural changes. On the low end, they are overrepresented in the traditional primary and secondary industries which have been hardest hit by a changing global economy. On the high end, they are overrepresented in the mid-to-upper management levels which have been decimated by restructuring. The low average education of both genders, moreover, is a particular disadvantage given the increased premium on skills. [15, 29, 35, 40, 41, 47, 51, 61, 64]

·         Older workers have also been disproportionately affected by the recent enormous burgeoning of contingent forms of work. (Almost 75% of the jobs added to the economy in the nineties were non-standard types.) Between 1976 and 1998, the number of older workers in part-time jobs increased by more than 70%, roughly one and one half times the rate of increase for all ages. Although some of this is a matter of choice,15 to 20% of the change in mode of participation is estimated to be involuntary. In 1993, 41% of employed men and 27% of employed women 45-69 who were working part-time would have preferred otherwise. The likelihood of self-employment also increases with age. Again some of this is elective, especially among better educated males. For the swelling number of women and blue-collar workers in the category, however, the shift is more likely to reflect a lack of viable alternatives. For involuntary contingent workers, the penalties may be considerable. The vast majority of jobs in this class are characterized by short tenure, irregular hours, low pay, no benefits, and a great deal of uncertainty. [6, 14, 17, 22, 25, 32, 38, 56, 61, 70, 75]

·         If employment has changed for older workers in recent years, the unemployment picture has changed even more so. Members of this cohort used to be protected by their experience and seniority. In the late 1970s, only about 5% of employed individuals 55-64 experienced a permanent layoff, the lowest proportion of any age group. By the mid-nineties, however, the risk of a permanent layoff among older workers had risen by two full percentage points, putting it above the risk for prime-aged individuals. How did this happen? Some of it may be attributed to restructuring, particularly the tendency to leaner, meaner workplaces. The big difference between the recession of the early eighties and the recession of the early nineties was that many of the jobs lost in the later period never came back. Some of it may be attributed to the cohort disadvantages mentioned previously. Whatever the causes, the result was that the unemployment rate increased more for older workers over the nineties than for any other age group. In 1994, the percentage of unemployed in the 55-64 category jumped by 2.1%, compared with an increase of 1.3% for 15 to 24-year-olds and 1.7%-1.8% for all other cohorts. From a broader vantage, between 1976 and 1998, the relative unemployment rates of workers aged 55 to 59 increased by 50%, that of those aged 60-64 by 30. But even this underrepresents the problem. Increases notwithstanding, compared with, say, 15-24-year-olds, strictly on the numbers older workers still seem to be doing fairly well. If one looks at those who are “not working” rather than limiting one’s purview to those who are technically unemployed, though, the figures swell enormously. In 1996, employment rates for Canadian men 55-59 and 60-64 were only 67% and 41% respectively. Comparable figures for women were 45% and 22%. [15, 18, 34, 45, 61, 69, 72, 75]

·         At the same time as the likelihood of unemployment has been increasing for older workers, the likelihood of re-employment has been plummeting. While the rising job loss risk factors are not to be sneezed at, the real problem for the cohort is that the duration of unemployment increases with age. Duration for men 45+ rose from 18 weeks in 1976 to 32 in 1985 to 35 in 1994, compared with 17 weeks for men 15-24. Duration for women has traditionally been lower than for men, but has been increasing at a faster rate. According to one government report, between 1984-86 and 1994-96 women’s average jobless spells lengthened from 3.7 to 4.1 months, an increase of over 10%. Duration rates for all older workers rose by 67% between 1976 and 1998, compared with a 47% increase for all ages. In 1998, the incidence of long-term unemployment among older workers was twice that in the labour market as a whole. In 1993, approximately 25% of men and 17% of women 45+ who were unemployed had been so for more than a year. This compares with 16% of unemployed men and 12% of unemployed women aged 15-24. To put these data in perspective, it is important to realize that high duration means more than simply a prolongation of misery. Studies show that the longer a person is jobless, the lower the probability that s/he will find work at all. More than a statistical artifact, this effect – called “scarring” – has been related to the depreciation of human capital over the jobless spell and the stigmatization of the long-term unemployed in the eyes of employers. [26, 28, 34, 39, 40, 46, 61, 69, 70, 75, 84]

·         Ironically, it is possible that scarring may affect older people less than younger ones. This is not as positive as it may sound. Reflecting vividly on the differentials detailed in the foregoing paragraphs is the fact that employers are likely to stigmatize older workers no matter what their employment history. In a 1997 survey of employment agencies, 77% of respondents agreed, strongly or moderately, that employers discriminate against older workers in their hiring practices. In a survey of federally run Human Resource Centres, 91% of respondents with an older client mix agreed, strongly or moderately, that employers discriminate against older workers. In a survey of employers, 40-50% of respondents felt that older workers were unable to do heavy physical work, had trouble with shift work, were too cautious, and were not interested in technological change. Twenty-nine percent of respondents from small companies and 32% from large companies said that there was an age (ranging from 57 to 60) at which they considered someone as being too old to hire. In all companies, age was seen as a greater barrier to hiring than all other personal characteristics except for disability. [66, 81, 86, 87, 88]

·         Ageism also contributes to the “real” problems of low education and outdated experience. Common sense suggests that older workers are more likely to need upgrading than others. In fact, access to both privately and publicly funded training decreases sharply with age. According to the 1994 Adult Education Survey, individuals over 55 are three times less likely to get job-related training than prime-aged workers. In part this is because of the reduced “pay-back” time. An even bigger factor, however, is the widespread perception that older workers are unwilling or unable to learn new skills. The same perception may also explain the government’s attitude toward the cohort. The only recent non-local program intended specifically for older workers was the Program for Older Worker Adjustment (POWA), an early nineties initiative designed to help victims of major permanent layoffs. Criticized by Labour because of its unduly narrow eligibility requirements, POWA’s arguably more serious flaw was the extent to which it implicitly labelled its clients as hopeless cases. Built around the notion of providing income support to tide recipients over until pension-age, it offered nothing tangible to help those who still wanted to work enhance their employability. POWA was terminated in 1997, when HRDC indicated that its priority target for employment assistance would be youth. [37, 42, 75, 76, 78]

·         Given the picture painted in the foregoing pages, one would expect age discrimination issues to loom large in Canadian human rights law. Certainly this is the case in the U.S., where similar facts spurred the development of a separate federal statute to deal with the phenomenon, the Age Discrimination in Employment Act of 1967. In Canada, in contrast, judging by the legal response, age discrimination might hardly exist. Of all the standard areas commonly covered by anti-discrimination laws, age is consistently the least visible and the most under considered. According to the 1997-98 Ontario Human Rights Commission Annual Report, only 81 age-related complaints were received in the employment category out of a total of 1628. In the same year, out of 99 age-related complaints closed, almost 75% were dismissed, withdrawn or abandoned. The number of cases reaching the higher courts is even scanter. The age chapter in a standard text on human rights law cites only two dozen decisions, almost all involving male plaintiffs and almost all on the issue of mandatory retirement. Despite the trends one must infer from the foregoing statistics, cases concerning workplace discrimination, discrimination in hiring, or unjustified dismissal are notably absent from the record. [52a]

·         The dearth of case law is not a benign coincidence – the victims of age discrimination actually do have less legal recourse than the victims of other kinds of discrimination. Although age is among the enumerated grounds in the Canadian Charter of Rights and Freedoms, arguably because of the success of the business lobby in protecting employer discretion it is given only qualified protection in human rights legislation. As of this writing, four provincial jurisdictions – B.C., Saskatchewan, Ontario and Newfoundland – prohibit age discrimination in employment only between the ages of 18 or 19 and 65. [52a]

·         To what extent are attitudes about older worker liabilities justified by the “facts”? Research shows that older workers are no less productive on the average than younger ones. Whatever changes take place in physical or mental makeup are more than offset by the gains that come with experience. The pace may be slower, but older individuals tend to carry out routine tasks more economically and to make fewer mistakes. Counter popular myths, moreover, there is no evidence whatsoever that such individuals are either resistant to or incapable of training. Even health is not particularly a problem. A 1996 Statistics Canada study shows that full-time working men and women 50-64 are as much masters of their faculties – hearing, memory, problem-solving, dexterity, mobility – as men and women in their thirties. They live with more pain than younger workers and are more likely to suffer from long-term medical conditions, but even the commonest of these chronic ailments affect fewer than one in five. Older workers would also seem to be more stoic than their younger cohorts. In the two weeks preceding the survey only 8% of older men and 10% of older women had taken time off work for health reasons, compared to 14% of men and 15% of women in their thirties. Contributing to the difference among males is the fact that younger men are twice as likely as older men – 22% versus 12% – to suffer injuries. Despite this evidence of reliability, if experience, technical competence, and education are held constant, older workers tend to be laid off first. [19, 58, 74, 79, 85]

·         One of the most serious forms of unemployment is displacement. This is the term used when jobs and even whole occupations disappear due to mass layoffs or plant closures. Thanks to restructuring, the rate of displacement in Canada increased radically from the eighties into the nineties. Among all workers who left employment involuntarily between 1991 and 1996, fully one quarter were displaced. Many of these were older workers in declining sectors of the economy. It has been estimated that almost 250,000 older Canadians were displaced from their jobs in 1991-92 alone. The reason this is important is that, statistically speaking, displacement radically decreases chances of successful reentry. Once displaced, individuals can look forward to longer durations of joblessness, lower earnings on re-employment, and higher risk of repeating. Older workers are disproportionately hard hit on every axis. [32, 34, 40, 69, 70, 75]

·         Many displaced older workers never do find new jobs. According to a mid-nineties report excerpted on the HRDC website, among 55-64-year-olds, 52% of those losing jobs due to displacement were unable to find reemployment. When comparisons are made, the disadvantage emerges even more strikingly. A 1986 survey of displacements during the 1981-84 recession revealed that only 39% of the older (55+) cohort had found jobs, compared with 65% of 25-54-year-olds, while 41% had left the labour force. Of those who do work again, moreover, the older the individual, the worse (in terms of hours, conditions, and stability) the job is likely to be. The financial consequences of this are, needless to say, considerable. According to a 1999 study of older worker adjustment, the average annual earnings from employment after layoff was $11-12K among those laid off in the 45-49 year old age group, $8-9K among those in the 50-54 year old age group, $3-4K for the 55-59 year old group, and $.5-2K for those 60-64 years old. These figures represent drops ranging from about 50% for the youngest subgroup to over 90% for the oldest one. [15, 32, 42, 69, 75]

·         Adding insult to the injury faced by older workers in respect of their employment opportunities is the fact that the cohort is rather poorly served by the unemployment insurance regime. Part of the problem is long-seated. Even before recent changes, it was statistically inevitable that older unemployed individuals would fare less well than others in a system governed by blanket rules which take no account of cohort-specific prospects and problems. The already systemic disadvantage was much exacerbated, however, by the mid-nineties reform initiative. Everything that progressive critics have said about the new rules penalizing women and the poor goes in spades for older workers. Tighter eligibility rules, shorter benefit durations, and penalties for repeat users are naturally going to impact more on those whose economic cushion is thin and whose employability is marginal. It makes no difference that many of these people have been paying into the system for 20 or 30 years. Say that a displaced 55-year-old with a hitherto impeccable record is forced into low-hours contingency work or displaced for a second time within a year of reemployment (a far from unusual scenario) – s/he has exactly the same rights as a laid-off twentysomething burger-flipper who has never had, or wanted, a job that lasted more than a few months. If s/he turns in desperation to self-employment, s/he has no rights to EI at all. [52b]

·         Once an older worker has “used up” his/her EI eligibility, with the high threshold requirements for re-entrants (910 hours versus 420-700 hours for regular applicants) there is a good chance that s/he will never be able to qualify again, even if s/he goes on working to the extent s/he is able. It is notable in this respect that one result of the recent changes was that EI coverage dropped from 74% in 1989 to 36% in 1997. In plain English, this means that only one in three unemployed people are now eligible for benefits, less than half of the number who were eligible a decade ago. Among older workers, the coverage decline has been masked by escalating “retirement” rates (see below) but is still over 40%. What happens to people who fall out of the system like this? Without access to EI, an involuntarily unemployed individual under the age of 60 has few options besides welfare. Even apart from the stigma, in order to qualify for the latter, one must deplete most of one’s liquifiable assets such as cash, RRSPs, and GICs. In 1991, approximately 604,000 Canadians under 65 cashed in $3.3 billion of their RRSP savings. About 20% of the withdrawers did not have any employment income or EI insurance benefits in the year of tax-filing. For an older worker forced to take involuntary “early retirement”, a lifetime of thrift may be wiped out before his/her pension kicks in. [1, 26, 32, 42, 50, 52b, 69, 72]

·         Without diminishing the individual losses detailed in the preceding paragraphs, it is worth noting that older worker unemployment also extracts a heavy cost from the public purse. In 1990, 691,000 Canadians aged 45 to 69 claimed EI benefits worth $2.9 billion. In 1991, $2.3 billion was paid to technically employable persons between 45 and 64 in various forms of social assistance. In 1994, over $14 billion in earnings were foregone to the Canadian economy because of older worker unemployment. The loss in tax revenues was $4 billion. The social costs are equally staggering. Studies show a strong positive correlation between unemployment and increased levels of physical, mental, and social dysfunction – all of which suck up public money. As an illustration of the kinds of figures we are talking about here, one government researcher cites the finding that actual expenditures related to the rise in homicide, suicide, heart disease, admission to psychiatric hospitals, imprisonment and mortality due to unemployment totalled $7.4 billion in 1982. Given the increase in the numbers that we have seen over the last two decades, it may be assumed that these costs have risen across the board. While full data is lacking, we get an indication of the extent of the problem from the fact that in 1997 there were approximately 221,000 social assistance recipients between the ages of 55 and 64, up 14.5% from 1996. With this increase, the category accounted for 16.8% of total outlays on social assistance across the country. [5, 33, 60, 69, 70, 75]