Unemployment Insurance and Reemployment among Older Workers

Unemployment Insurance and Reemployment among Older Workers

Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research

www.upjohninstitute.org

Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January

19-20, 2006, National Press Club, Washington, DC.


1. Background

2. Samples and Methodology

3. Reemployment of UI Applicants by Age

4. Reemployment Earnings by Age

5. Reemployment Job Tenure by Age

6. Summary and Conclusions

1. Background: Prospects for Older Workers

• Rising Risk of Job Loss Farber (1997)

• Greater Time to Reemployment and Earnings LossChan and Stevens (2001)

• Smaller Share of Jobless and Higher UI RecipiencyO’Leary and Wandner (2001)

• Older and Longer Job Tenure, Human Capital LossBLS (2004)

• Among UI applicants, how do older and younger Beneficiaries, non-Beneficiaries, and Exhaustees fare in terms of employment, earnings, and job stability?

Age <=24 25-34 35-44 45-54 55-64 >=65

UI 9.7 23.6 26.6 24.0 12.6 2.9

LF 15.4 22.2 25.5 22.5 11.3 3.1

Un 32.0 22.6 20.2 15.7 7.6 1.9

Age Distribution of Labor Force, Unemployment, and UI Receipt in the United States, 2002

<=2425-34

35-4445-54

55-64>=65

Pct of UI Recipients

Pct of LF

Pct of Unemployed0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Age Distribution of Labor Force, Unemployment, and UI Receipt in the United States, 2002

2. Sample and Methodology

• UI Applicants in Ohio, 2001• Three years of quarterly follow-up data• Data on Characteristics and Quarterly Earnings

• Descriptive Transition Matrices• Based on Quarterly Earnings Records

(Employment, Earnings, Employer Stability)

Outcomes and Characteristic Means for UI Beneficiaries Age 30-65 in Ohio, 2001

Overall Older Younger

Sample Size (Claims) 287,780 78,549 209,231

Full-Time Equivalent Weeks of UI 14.9 14.7 14.9

Exhausted Regular UI 0.321 0.330 0.318

Fraction of Entitlement/Benefits Used 0.579 0.572 0.582

Employed One Quarter After Benefit Year Begin 0.651 0.642 0.655

Base Period Earnings $31,736 $35,854 $30,189

Entitlement Length (Weeks) 25.8 25.8 25.8

Weekly Benefit Amount 273 275 272

WBA at Maximum 0.216 0.192 0.225

Work Search Exempt 0.316 0.342 0.306

Characteristic Means for UI Beneficiaries Age 30-65 in Ohio, 2001

Overall Older Younger

Age as of BYB 43.8 55.0 39.6

Gender, Female 0.330 0.326 0.331

Race, White (*1) 0.834 0.858 0.826

Race, African American 0.124 0.103 0.131

Race, Hispanic 0.020 0.015 0.021

Education, Less than High School 0.197 0.225 0.187

Education, High School Grad / GED 0.506 0.482 0.515

Education, Some College 0.197 0.190 0.200

Education, Bachelor Degree or Higher 0.099 0.103 0.098

3. Reemployment of UI Applicants by Age

• Ohio UI Beneficiaries – Older have lower re-employment rates

• Ohio non-UI Beneficiaries– Delay in re-employment greatly reduces

subsequent probability of employment

• Ohio UI Exhaustees – Recover from low early rates of reemployment

Ohio Regular UI Beneficiaries for 2001

Employment Probabilities for Older UI Beneficiaries in Ohio Gaining Reemployment t Quarters After UI Application

1 2 3 4 5 6 7 8 9 10 11

77,152 0.645 0.566 0.551 0.527 0.514 0.508 0.504 0.481 0.477 0.470 0.467

49,744 0.338 0.296 0.277 0.203 0.260 0.257 0.245 0.190 0.237 0.235

9,277 0.205 0.171 0.151 0.148 0.147 0.144 0.138 0.138 0.139

3,717 0.145 0.113 0.105 0.101 0.100 0.098 0.097 0.097

2,097 0.098 0.077 0.071 0.067 0.066 0.063 0.062

1,205 0.074 0.057 0.053 0.050 0.049 0.048

818 0.052 0.041 0.038 0.037 0.034

540 0.040 0.034 0.029 0.027

386 0.049 0.032 0.039

460 0.033 0.026

293 0.028

Ohio Regular UI Beneficiaries for 2001

Employment Probabilities for Younger UI Beneficiaries in Ohio Gaining Reemployment t Quarters After UI

1 2 3 4 5 6 7 8 9 10 11

186,682 0.653 0.582 0.572 0.553 0.545 0.545 0.541 0.523 0.527 0.531 0.529

121,979 0.402 0.364 0.342 0.259 0.324 0.320 0.309 0.251 0.309 0.308

26,010 0.267 0.228 0.203 0.201 0.200 0.194 0.187 0.190 0.192

10,312 0.205 0.165 0.156 0.150 0.148 0.143 0.142 0.141

5,821 0.139 0.112 0.104 0.097 0.095 0.093 0.091

3,138 0.114 0.093 0.084 0.078 0.081 0.076

2,221 0.087 0.070 0.062 0.060 0.059

1,488 0.065 0.053 0.048 0.046

1,027 0.062 0.049 0.045

913 0.052 0.042

710 0.046

Employment Rates Among Older UI Beneficiaries in Ohio, 2001

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1 2 3 4 5 6 7 8 9 10 11

Quarters After Benefit Year Begin Date

Em

plo

ym

en

t R

ate

Employment Rates Among Younger UI Beneficiaries in Ohio, 2001

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1 2 3 4 5 6 7 8 9 10 11


Em

plo

ym

en

t R

ate

Ratio of Older-to-Younger Employment Rates for UI Beneficiaries in Ohio, 2001

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1 2 3 4 5 6 7 8 9 10 11


Ra

tio

of

Em

plo

ym

en

t R

ate

s

Reemployment Probabilities Among UI Beneficiaries in Ohio, 2001

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

1 2 3 4 5 6 7 8 9 10 11


Ree

mpl

oym

ent P

roba

bilit

y

Old, Ben

Yng, Ben

Employment Rates Among Older Non-UI Beneficiaries in Ohio, 2001

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1 2 3 4 5 6 7 8 9 10 11


Em

plo

ym

en

t R

ate

Employment Rates Among Younger Non-UI Beneficiaries in Ohio, 2001

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1 2 3 4 5 6 7 8 9 10 11


Em

plo

ym

en

t R

ate

Ratio of Older-to-Younger Employment Rates for Non-UI Beneficiaries in Ohio, 2001

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1 2 3 4 5 6 7 8 9 10 11


Ra

tio

of

Em

plo

ym

en

t R

ate

s

Reemployment Probabilities Among Beneficiaries and Non-Beneficiaries in Ohio, 2001

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

1 2 3 4 5 6 7 8 9 10 11


Re

em

plo

ym

en

t P

rob

ab

ility

Old, Ben

Yng, Ben

Old, Non

Yng, Non

Reemployment Probabilities Among Beneficiaries, Non-Beneficiares and Exhaustees in Ohio, 2001

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

1 2 3 4 5 6 7 8 9 10 11

Quarters AFter Benefit Year Begin Date

Re

em

plo

ym

en

t P

rob

ab

ility

Old, Ben

Yng, Ben

Old, Non

Yng, Non

Old, Exh

Yng, Exh

3. Policy Issues on Employment• UI Applicants who gain speedy return to work

have a greatly increased chance of steady future employment.

• Employment handicap is particularly pronounced for non-UI Beneficiaries.

• Employment recovery is delayed for exhaustees.

• Those gaining reemployment more quickly are harmed less by job loss.

4. Reemployment Earnings by Age

• Relative to earnings before UI Application– Earnings for older UI Beneficiaries are lower

and recover less when reemployment is delayed

– Reemployment earnings for older non-UI Beneficiaries recover to exceed prior earnings

– Reemployment earnings of older UI exhaustees recover slower and less than younger UI exhaustees

Avg Pre Ratio of Post-to-Pre Earnings for Older Ohio UI Beneficiaries in 2001 for Those Re-Employed n Quarters After BYB

NumberQtr

Earn BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11

49,726 9,614 0.79 1.02 1.01 0.97 0.98 1.07 1.03 1.00 0.98 1.05 1.07

9,272 8,502 0.65 1.05 0.90 0.86 0.98 1.09 0.97 0.87 0.99 1.10

3,716 8,761 0.47 0.76 0.78 0.80 0.84 0.85 0.83 0.84 0.88

2,094 9,087 0.45 0.73 0.82 0.78 0.80 0.79 0.84 0.86

1,205 9,806 0.44 0.82 0.83 0.86 0.83 0.87 0.91

816 9,178 0.41 0.69 0.68 0.68 0.71 0.79

539 8,974 0.43 0.72 0.69 0.71 0.82

385 9,613 0.39 0.66 0.64 0.66

460 10,532 0.51 0.76 0.58

293 9,879 0.42 0.66

237 9,627 0.37

Avg Pre Ratio of Post-to-Pre Earnings for Younger Ohio UI Beneficiaries in 2001 for Those Re-Employed n Quarters After BYB

NumberQtr

Earn BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11

121,897 7,855 0.84 1.12 1.13 1.08 1.09 1.20 1.18 1.15 1.14 1.23 1.25

25,994 7,313 0.75 1.19 1.05 0.99 1.13 1.26 1.16 1.08 1.19 1.32

10,294 7,118 0.61 0.95 0.95 0.98 1.04 1.08 1.07 1.10 1.16

5,813 7,186 0.54 0.90 0.93 0.97 1.01 1.02 1.05 1.07

3,133 7,684 0.50 0.93 0.94 0.96 1.00 1.06 1.09

2,218 7,268 0.59 1.00 1.02 1.04 1.03 1.16

1,486 7,304 0.56 0.97 0.96 1.05 1.05

1,025 7,130 0.59 1.04 1.07 1.16

910 7,621 0.54 0.93 0.93

709 7,422 0.54 0.94

604 7,000 0.64

Ratio of Post-to-Pre Earnings for Older UI Beneficiaries Reemployed n Quarters After BYB in Ohio, 2001

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1 2 3 4 5 6 7 8 9 10 11


Ra

tio

of

Po

st-

to-P

re E

arn

ing

s

Ratio of Post-to-Pre Unemployment Earnings for Younger UI Beneficiaries Reemployed n Quarters After BYB in Ohio, 2001

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1 2 3 4 5 6 7 8 9 10 11


Rat

io o

f Pos

t-to-

Pre

Ear

ning

s

Ratio of Older-to-Younger Post-to-Pre Earnings for UI Beneficiaries Reemployed n Quarters After BYB in Ohio, 2001

0.75

0.80

0.85

0.90

0.95

1.00

1 2 3 4 5 6 7 8 9 10 11


Old

er-

to-Y

ou

ng

er

Ra

tio

4. Policy Issues on Earnings

• Delay in reemployment delays earnings recovery

• Non-beneficiaries gaining reemployment show earnings gains

• Older UI exhaustees do not return to prior earnings levels

• Early reemployment of Applicants

5. Reemployment Job Tenure by Age

• Older UI Applicants who gain reemployment establish firmer attachments to hiring employers

• Employer attachment is stronger for those gaining reemployment sooner

2001 Probability of Older (50-65) Ohio UI Beneficiaries Staying with First Major Employer for those Re-Employed n Quarters After BYB Date

Number BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11

77,152 49,744 9,277 3,717 2,097 1,205 818 540 386 460 293 239

49,744 1.00 0.87 0.80 0.74 0.71 0.68 0.66 0.64 0.62 0.60 0.59

9,277 1.00 0.83 0.74 0.62 0.64 0.61 0.57 0.46 0.52 0.50

3,717 1.00 0.81 0.68 0.60 0.55 0.51 0.48 0.45 0.43

2,097 1.00 0.81 0.68 0.61 0.56 0.51 0.47 0.43

1,205 1.00 0.83 0.72 0.65 0.59 0.56 0.51

818 1.00 0.88 0.73 0.67 0.61 0.56

540 1.00 0.89 0.76 0.69 0.62

386 1.00 0.85 0.74 0.67

460 1.00 0.83 0.79

293 1.00 0.88

239 1.00

2001Probability of Younger (30-49) Ohio UI Beneficiaries Staying with First Major Employer for those Re-Employed n Quarters After BYB

Date

Number BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11

186,682 121,979 26,010 10,312 5,821 3,138 2,221 1,488 1,027 913 710 604

121,979 1.00 0.82 0.72 0.65 0.61 0.58 0.55 0.52 0.51 0.49 0.47

26,010 1.00 0.81 0.69 0.55 0.57 0.53 0.49 0.38 0.44 0.41

10,312 1.00 0.77 0.60 0.51 0.46 0.42 0.38 0.35 0.33

5,821 1.00 0.77 0.62 0.53 0.48 0.43 0.39 0.36

3,138 1.00 0.81 0.65 0.56 0.50 0.46 0.42

2,221 1.00 0.83 0.68 0.59 0.55 0.50

1,488 1.00 0.85 0.72 0.63 0.57

1,027 1.00 0.83 0.68 0.59

913 1.00 0.86 0.72

710 1.00 0.86

604 1.00

Ratio of Probability of Staying with First Major Employer for Older to Younger UI Beneficiaries Re-Employed n Quarters After BYB Date

BYB+1 BYB+2 BYB+3 BYB+4 BYB+5 BYB+6 BYB+7 BYB+8 BYB+9 BYB+10 BYB+11

1.000 1.062 1.113 1.143 1.162 1.173 1.196 1.220 1.228 1.229 1.245

1.000 1.032 1.081 1.130 1.124 1.145 1.160 1.210 1.192 1.215

1.000 1.059 1.127 1.168 1.195 1.215 1.269 1.301 1.303

1.000 1.043 1.100 1.156 1.170 1.202 1.193 1.208

1.000 1.030 1.106 1.147 1.188 1.235 1.204

1.000 1.058 1.071 1.142 1.110 1.129

1.000 1.045 1.058 1.104 1.082

1.000 1.021 1.088 1.130

1.000 0.970 1.096

1.000 1.017

1.000

Probability of Staying with the First Major Employer for Older UI Beneficiaries in Ohio, 2001

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1 2 3 4 5 6 7 8 9 10 11


Pro

ba

bili

ty o

f S

tay

ing

Probability of Staying with the First Major Employer for Younger UI Beneficiaries in Ohio, 2001

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1 2 3 4 5 6 7 8 9 10 11


Pro

ba

bili

ty

Ratio of the Probability of Staying with the First Major Employer for Older-to-Younger UI Beneficiaries in Ohio, 2001

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1 2 3 4 5 6 7 8 9 10 11


Ra

tio

of

Pro

ba

bili

tie

s

6. Summary and Conclusions

• UI Beneficiaries – Older have lower re-employment rates• non-UI Beneficiaries – Delay in re-employment greatly

reduces probability of employment• UI Exhaustees – Recover quickly from low early rates of

reemployment• Earnings recovery is lower among older UI Applicants• Employer attachment is stronger among older applicants

gaining reemployment

• Early reemployment efforts could benefit all categories of UI applicants


Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research

www.upjohninstitute.org

Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January

19-20, 2006, National Press Club, Washington, DC.

Documents

Unemployment Insurance and Reemployment among Older Workers