The Gray-Hair Pink-Slip Blues

Job loss packs a punch for older workers.

Job loss can have a profound and long-lasting effect on older workers, according to research by UW–Madison Professor Thomas DeLeire and the University of Chicago’s Ariel Kalil ’91. They found that older workers who suffer involuntary job loss are substantially less satisfied with life, and that significant loss of satisfaction persists for at least five years.

DeLeire, director of the UW’s La Follette School of Public Affairs, and Kalil studied data from more than 11,000 survey respondents over the age of 50.

“We know a lot less about the psychological impacts of job loss compared to the economic impacts,” says Kalil, “but government leaders are increasingly calling for the establishment of a ‘national index’ of positive well-being as a key indicator of a nation’s wealth and health.”

The employment landscape is changing rapidly for older workers. Those over 55 are projected to have the fastest growth in workforce participation rates of any age group in the coming decade, according to the study. At the same time, unemployment for those over 55 increased from 3.1 percent at the start of the Great Recession in December 2007 to 7 percent in February 2010, with the length of unemployment also increasing for older workers.

But the news from DeLeire and Kalil’s study is not all bad. Older workers retained their sense of purpose in life even in the face of job loss. And new research suggests that people who maintain that sense of purpose as they age, according to professor Carol Ryff, director of UW–Madison’s Institute on Aging, “are more likely to remain cognitively intact, have better mental health, and even live longer than people who focus on achieving feelings of happiness.”

Understanding the emotional effects of job loss on older workers is important in crafting public-policy solutions, DeLeire and Kalil suggest. Efforts to help displaced older workers often focus on economic solutions, including unemployment insurance and re-training efforts, but this research shows the importance of solutions that focus on older workers’ psychological health and well-being.

“Employment appears to not only provide financial support, but also social connections and perhaps a sense of purpose for older workers. Thus a lost job means more than just lost income,” says DeLeire.

Published in the Summer 2013 issue