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Age-bias law backfires on boomers

[Originally appeared in USA Today, August 26, 1997]

Britain’s new Labor government has vowed to introduce a law that would forbid U.K. employers from discriminating against older workers, along the lines of this country’s Age Discrimination in Employment Act. Such a bill would ban the custom of automatic retirement from a company at 65 or any other age, as we’ve banned it here. “The employers in the U.S. can cope with the so-called cost burden, so why can’t we?” said Lawrence Davies, a British lawyer pressing for the change. “It seems to me that the U.S. is thirty years ahead of us.”

Memo to Prime Minister Tony Blair: don’t rush into this.

From across the Atlantic, age-bias law may look simple and straightforward. American politicians endorse it almost unanimously with a nod to the powerful American Association of Retired Persons. Big employers emit few protests. There’s a vague sense that anyone remaining skeptical must be in some way hostile to the elderly -- much as anyone dubious about covering the disabled, gays or people with accents with bias laws is thought to be somehow against those groups.

But there’s a problem: signs are mounting that this law makes things worse for many of the workers it’s meant to help.

And there are more of them than you think. Most baby boomers, those over 40, are “protected” by these laws.

Originally passed by Congress in 1967 and toughened since then, the age-discrimination law was supposed to help older workers stay at their jobs longer, bring their talents renewed respect at the workplace, and put in their own hands the timing of their retirement decision. The opposite has happened on every front.

There’s widespread evidence that older workers are losing relative ground in hiring. The federal Bureau of Labor Statistics observes that they face “greater labor market difficulties” than younger colleagues when displaced from an old job.

Rates of full-time employment for older men have dropped, not risen, since the law came in.

Big employers increasingly prune their payrolls via “buyout” offers targeted at older employees. So far has this process gone that in some lines of work, being bought out now begins to seem like the normal way to end a career. But buyouts tend to flush longtime workers out of their jobs earlier, not later, than they would have departed under the old system.

Morale has plunged for veteran workers, who feel less welcome. For example, firms have quietly but steadily done away with the awards and ceremonies by which they used to honor milestones such as 20 or 25 years of service.

Are all these developments mere coincidence? Almost everything but the law gets blamed. “Older employees are perceived as less flexible and adaptable,” says an AARP analyst, while a Washington Post report cites such possible hurdles as “unfamiliarity with changing technologies; a lack of networking and interviewing skills; not knowing the latest way to effectively write or circulate a resume,” and so forth. But most of these problems have been there all along. Why should they have gotten worse?

Consider another possibility: Older applicants now pose a heightened legal danger to employers. If they don’t work out, or if advancing age soon takes a toll on their ability, they may require an expensive buyout. Simply firing them is a recipe for getting a lawsuit: and employers see age cases as “the most dangerous type of discrimination case to take to trial,” reports the Employee Relations Law Journal. Lawsuits over age bring much higher payoffs than those over race or sex, thanks in part to the virtually automatic doubling of damages. (Result: the juiciest monetary rewards of bias law -- in verdicts, settlements and buyouts -- go to middle-aged white males, especially those in executive and managerial posts. Did someone say ironic?)

Of course, no individual employer would admit to tilting against older job applicants; that would be legally suicidal, since hiring bias remains flatly unlawful. And since backers of age-bias law aren’t eager to have people think their pet cause has backfired, there’s a sort of community of interest in downplaying the problem.

One obvious comeback is that if employers are reluctant to hire older workers because of the perceived legal hazards, the answer is to crack down on them by taking them to court. Easier said than done: as long as managers have not let slip interview questions, stray remarks or jotted notes that a clever lawyer can in some way link to matters of age, it’s quite hard for any single applicant to make a case.

The other possibility would be to ask courts to scrutinize overall hiring numbers, which is exactly what we let them do in the case of the hiring of minorities and women, and which does indeed provide a definite incentive -- for better or worse -- for employers to hire members of those groups to stay out of trouble. But no one has the stomach to push quota pressure for older job applicants. It’s just too obvious that in no world this side of the absurd would, say, over-55s get hired proportionally as lifeguards, bicycle messengers and MTV announcers. So today’s older job applicant gets the worst of both worlds: legally hazardous to hire but not especially hazardous to turn away in the first place.

So what do older workers get from our new system? Well, you might say, they get lucrative buyouts. Yet no rational worker would ever have designed today’s buyout plan on purpose as a fringe benefit. Because companies typically spring offers as a surprise, they keep workers not knowing when they’ll retire, thus unable to plan their futures. Buyouts also dish out cash windfalls unevenly and unfairly among equally deserving employees. (Workers who are highly paid in the first place are most likely to bag generous sums, while most blue-collar laborers can expect no buyouts at all.)

Even well-off professionals, the ones most likely to pocket early retirement offers, can hardly expect a free lunch. At some point employers must begin factoring the cost of eventual buyouts into their calculations how much to pay such workers in the first place.

“Despite all the age-discrimination laws,” observed the normally shrewd Forbes in June, “employers are often motivated to get rid of older workers.” Despite? Try “because of”. Before Britain heads down the same path, it might want to take a hard look at the unintended consequences of our experiment.