The Wall Street Journal reports that ageism has been turned on its head: younger workers are being laid off at higher rates than older workers. While reality TV producers might rejoice that their target audience has more time on its hands to enjoy their high quality programming, the U.S. economy should not.
From the article:
Employees in their 20s and 30s are finding themselves more at risk of a layoff, according to labor lawyers, as employers look to avoid age-discrimination lawsuits by adopting a "last one in, first one out" policy and turn to tenure as a means of conducting layoffs. In some cases, young, childless professionals say they feel they're being targeted in layoffs, while employees who have families to support are given special consideration.
That was certainly the case when I worked in financial services for most of 2008. 20- and 30-somethings were regularly sacked at greater proportions, despite being generally more productive than older employees and much less expensive due to smaller salaries. This behavior might be good for avoiding lawsuits, but it makes the big economic picture even uglier.
For starters, this trend will likely cause unemployment to be higher and last longer. Let's say a company hopes to save $300,000 in labor costs. They can either fire four workers making $75,000 or six workers making $50,000. Since younger workers tend to make less, it's easy to see that by targeting younger workers, you would have to lay more people off. Consequently, the nation's unemployment rate will be higher. It will also be harder for these younger workers to find new jobs, as the labor market will be flooded with less experienced workers all fighting for the few job slots they might be qualified for. That means high unemployment is also likely to last longer.
How about productivity? This depends on the assumption that younger workers are more productive. Some might dispute this, but that's certainly been my experience - and I would imagine younger workers having higher productivity would be even more pronounced in manufacturing jobs. With this assumption, the productivity of the nation on a whole will be lower than if older workers received more pink slips.
There may also be negative consequences for long-term growth. Will older workers spurn more growth and innovation? Maybe, but I think the safer bet is on younger, fresher minds. Moreover, leaving younger people in the workforce provides them with greater training and experience, which will also more favorably contribute to long-term growth.
But the news might not be all bad. If you fire people without families and mortgages, that might make the toll on society a little easier than the alternative. After all, they could always move back in with their parents who are 55 or older and still have a job. Unless, of course, their parents had a subprime mortgage.
The fear of age discrimination law-suits is a bit overstated. Employers are very good at protecting themselves from these lawsuits by carefully avoiding any written or verbal statements which allude to age. Employers that want to shove older workers out the door can do so through a variety of easy tactics, such as writing negative performance reviews and giving them highly unpleasant work. Victims of age-discrimination have tremendous difficulty making a legal case that they were discriminated against even when it occurs.
I think there are several more important reasons why younger workers are laid-off more frequently than older workers that were not listed above:
1) The people making the decisions to lay-off workers are more senior employees. It is much easier to lay-off workers whom the boss does not know rather than close associates whom the boss has worked with for years. Workers who are the bottom of the totem pole with less seniority have much weaker relationships to the people in power.
2) Older workers are much more likely to have specialized skills and information that are hard to replace. Companies would much rather lay-off a young, productive worker who can be more easily replaced than an older, relatively unproductive worker who is hard to replace. Older workers are far more likely to be experts in their particular field or department and will be much harder to replace when the economy picks up again.
3) Younger workers are freuqently less productive than older workers. While I don't have any solid statistics on this, from personal experience I would say younger workers are far more likely to be goofing around on the internet, coming in late after a night of drinking, chatting with their friends online, and doing other unproductive activities on the job.
My experience has been that productivity depends more upon the individual, with good and poor examples across the age spectrum. I also have not seen any decisions due to fear of lawsuits. Companies I have been with do a decent job of cutting lower productive workers first.
I do think that because of the traditional yearly raise, that good young workers represent the best value. I also think that whether a person has a family is factored in with close calls -- which I think is OK. The disruption is much higher for a family of four, than for a single renter.
I also infer based on their writing, that Daniel falls into the young crowd (a touch of sour grapes?) and ez into the older crowd (a touch of entitlement?).