UNEMPLOYED 

OLDER WORKERS

Many Experience 

Challenges Regaining 

Employment and Face 

Reduced Retirement 

Security

Report to the Chairman, Special 

Committee on Aging, U.S. Senate

April 2012

GAO-12-445

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-445, a report to the 

Chairman, Special Committee on Aging, U.S. 

Senate

April 2012

UNEMPLOYED OLDER WORKERS

Many Experience Challenges Regaining Employment 

and Face Reduced Retirement Security

Why GAO Did This Study

The number of workers age 55 and 

over experiencing long-term 

unemployment has grown substantially 

since the recession began in 2007. 

This raises concerns about how longterm unemployment will affect older 

workers’ reemployment prospects and 

future retirement income.

In light of these developments, GAO 

examined (1) how older workers’ 

employment status has changed since 

the recession, (2) what risks 

unemployed older workers face and 

what challenges they experience in 

finding reemployment, (3) how longterm unemployment could affect older 

workers’ retirement income, and (4) 

what other policies might help them 

return to work and what steps the 

Department of Labor (Labor) has taken 

to help unemployed older workers.

To conduct this work, GAO analyzed 

nationally representative datasets, led 

focus groups of unemployed older 

workers, modeled how job loss affects

retirement income, and interviewed 

experts and federal and local officials. 

What GAO Recommends

To foster the employment of older 

workers, we recommend that the 

Secretary of Labor consider what 

strategies are needed to address the 

unique needs of older job seekers, in 

light of recent economic and 

technological changes. 

Labor agreed with our 

recommendation. GAO received 

technical comments on a draft of

this report from Labor and the Social 

Security Administration, and 

incorporated them as appropriate.

What GAO Found

As with many other demographic groups, older workers’ unemployment overall and 

long-term unemployment rates have increased dramatically since the recession 

began in 2007. In December 2011, the unemployment rate for older workers was 6.0 

percent, up from 3.1 at the start of the recession, but down from its peak of 7.6 

percent in February 2010. In particular, long-term unemployment rose substantially, 

and at a greater rate for older than younger workers. By 2011, 55 percent of 

unemployed older workers had been actively seeking a job for more than half a year 

(27 weeks or more). Meanwhile, the long-term trend of rising labor force participation 

rates among older workers has continued, with the recession possibly amplifying this 

trend. 

Long-term unemployment can put older workers at risk of deferring needed medical 

care, losing their homes, and accumulating debt. The experts and staff GAO 

interviewed at some one-stop career centers, as well as the unemployed older 

workers who participated in GAO’s focus groups, identified employer reluctance to 

hire older workers as a key challenge that older workers face in finding 

reemployment. They also identified out-of-date skills, discouragement and 

depression, and inexperience with online applications as reemployment barriers for 

older workers. Some one-stop staff who serve older workers told GAO that providing 

the type of assistance some older workers need to address these unique challenges 

can be very time-consuming. (For audio clips from GAO’s focus groups with 

unemployed older workers, use this link:

http://www.gao.gov/multimedia/video/#video_id=590295)

Long-term unemployment can substantially diminish an older worker’s future 

retirement income in several ways. First, it can force a worker to stop working and 

stop saving for retirement earlier than the worker had planned. Second, long-term 

unemployment can lead individuals to draw down their retirement savings to cover 

living expenses while they are unemployed, which was a common life experience 

described by GAO’s focus group participants. GAO illustrated how a hypothetical 

worker who had $70,000 in retirement savings at age 55 and withdrew 50 percent of 

those savings during a 2 year period of unemployment, would need about another 5 

1⁄2 years of work and saving to rebuild the retirement account to the level it had been 

before unemployment began. In addition, long-term unemployment can motivate 

older workers to claim early Social Security retirement benefits, which will result in 

lower monthly benefits for workers and their survivors for the rest of their lives.

Experts GAO interviewed selected various policies that have been proposed to help

address unemployed older workers’ reemployment challenges. Experts selected 

these policies from a broad list GAO compiled from previous academic studies. For 

example, two of the policies that experts selected would provide incentives such as 

temporary wage or training subsidies for employers to hire long-term unemployed 

older workers. In the current context of high unemployment and slow job creation, the 

impact of most of these policies is likely to be muted by limited job openings. After an 

interagency Taskforce issued its report on the aging of the American workforce in 

2008, Labor implemented several strategies the report recommended, but since the 

recession started, Labor shifted focus to responding to increased demand for 

services. As the economy improves, Labor could refocus on older job seekers and 

consider what additional strategies would help address their unique reemployment

challenges, in light of recent economic and technological changes. View GAO-12-445. For more information, 

contact Charlie Jeszeck at (202) 512-7215 

jeszeckc@gao.gov. 
Page i GAO-12-445 Unemployed Older Workers

Letter 1 

Background 3

Older Workers’ Employment Prospects Have Deteriorated 9

Unemployed Older Workers Face Many Challenges Coping with 

Unemployment and Regaining Employment 26

Job Loss Can Diminish Retirement Income Prospects 33

Experts Selected Policies to Consider as the Economy Recovers, 

and Labor Has Taken Some Steps to Help Older Workers 47

Conclusions 56

Recommendation 57

Agency Comments and Our Evaluation 57

Appendix I Objectives, Scope, and Methodology 59

Appendix II Workforce Status of Workers Displaced between 2005-2007 and 

2007-2009 in January 2008 and January 2010 70

Appendix III Additional Figure Notes for Employment Figures, Including 

Statistical Significance Tests 71

Appendix IV Quotes from Focus Groups with Long-Term Unemployed Older 

Workers 74

Appendix V Percentage of the Population 50 and Older, but Less than Full 

Retirement Age, with Initial Dispositions and Awards of Social 

Security Disability Insurance, 2000-2010 76

Appendix VI Proposed Policies Presented to External Experts 77

Contents
Page ii GAO-12-445 Unemployed Older Workers

Appendix VII Comments from the Department of Labor 79

Appendix VIII GAO Contact and Staff Acknowledgments 81

Related GAO Products 82

Tables

Table 1: Experts’ Views on Key Strengths and Limitations of 

Selected Policy Proposals to Help Address Perceived 

Employer Reluctance to Hire Older Workers 49

Table 2: Experts’ Views on the Strengths and Limitations of 

Selected Policy Proposals to Enhance Reemployment 

Assistance Specifically Targeted to Older Workers 51

Table 3: Experts’ Views on the Strengths and Limitations of 

Selected Policy Proposals to Encourage Older Workers to 

Obtain Reemployment as Quickly as Possible 53

Table 4: Comparison of Seasonally Adjusted and Unadjusted 

Unemployment Rates for Workers Age 55 and Older, 

Selected Months 61

Table 5: Selected Quotes from Focus Groups with Long-Term 

Unemployed Older Workers 74

Figures

Figure 1: Sources of Aggregate Income for Households with 

Someone Aged 65 or Older, 2008 7

Figure 2: Estimated Unemployment Rates by Age, 2007-2011 11

Figure 3: Estimated Number of Unemployed and Underemployed 

Older Workers (55 and Over), 2007-2011 13

Figure 4: Growth in Estimated Long-Term Unemployment of Older 

Workers (55 and Over), 2007-2011 15

Figure 5: Difference between the Estimated Number of 

Unemployed of All Ages and the Estimated Number of 

Available Jobs, 2007-2011, and Various Explanations for 

High Unemployment 16
Page iii GAO-12-445 Unemployed Older Workers

Figure 6: Estimated Duration of Unemployment for Older Workers 

(55 and Over) by Industry, 2007 and 2011 17

Figure 7: Estimated Unemployment Rates by Demographic Group 

for Older Workers (55 and Over), 2007 and 2011 19

Figure 8: Estimated Duration of Unemployment by Age and by 

Gender, 2007 and 2011 20

Figure 9: Estimated Labor Force Participation Rates by Age, 1948-

2011 22

Figure 10: Estimated Percentage of Reemployed Displaced 

Workers Who Earned Less on Their New Full-Time Jobs 

than on Their Previous Jobs, January 2010 26

Figure 11: Potential Effect That Fewer Years of Work Can Have on 

Retirement Benefits for Workers with Median-Level 

Retirement Benefits from Employer-Sponsored Plans and 

Median-Level Retirement Benefits from Social Security 37

Figure 12: Potential Effect That Fewer Years of Work Can Have on 

Social Security Retirement Benefits of Workers without 

Employer-Sponsored Retirement Plans 38

Figure 13: Example of the Effect of Early Claiming on Monthly 

Social Security Retirement Benefits 39

Figure 14: How Drawdowns from Retirement Savings during 

Unemployment Can Affect Amounts Saved at Time of 

Retirement if a Worker Became Reemployed and 

Resumed Saving 43

Figure 15: Estimated Levels of Retirement Savings and Types of 

Plan Participation for Employed Workers 55 and Over and 

Their Households, 2007 45
Page iv GAO-12-445 Unemployed Older Workers

Abbreviations

AoA Administration on Aging

BLS Bureau of Labor Statistics

CMS Centers for Medicare and Medicaid Services

CPS Current Population Survey

DB defined benefit

DC defined contribution

DWS Displaced Worker Supplement

EBRI Employee Benefit Research Institute

GATE Growing America Through Entrepreneurship

HRS Health and Retirement Study

IRA individual retirement account

JOLTS Job Openings and Labor Turnover Survey

NBER National Bureau of Economic Research

OASDI Old-Age, Survivors, and Disability Insurance

SBA Small Business Administration

SCF Survey of Consumer Finances

SCSEP Senior Community Service Employment Program

SSA Social Security Administration

SSI Supplemental Security Income

UI Unemployment Insurance

WIA Workforce Investment Act of 1998

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-12-445 Unemployed Older Workers

United States Government Accountability Office

Washington, DC 20548

April 25, 2012

The Honorable Herb Kohl

Chairman

Special Committee on Aging

United States Senate

Dear Mr. Chairman:

The recent recession in 2007-2009 was the worst since the Great 

Depression, and has been characterized by historically high levels of 

long-term unemployment.1

Given your interest in the employment and retirement prospects of older 

workers—those aged 55 and over—since the onset of the recession, we 

examined (1) how the employment status of older workers has changed 

since the recession, (2) older workers’ financial risks from long-term 

unemployment and challenges in finding new jobs, (3) how periods of 

long-term unemployment might affect older workers’ retirement income, 

and (4) what other policies might help unemployed older workers regain 

While it is crucial that the nation help people of 

all ages return to work, long-term unemployment has particularly serious 

implications for older Americans (age 55 and over). Older workers’ job 

loss threatens not only their immediate financial security, but their ability 

to support themselves during retirement. While unemployed, older 

Americans may stop saving for retirement or tap into retirement savings 

to pay for critical living expenses. And while working longer may be the 

best solution for those approaching retirement with exhausted or 

otherwise inadequate savings, this strategy depends upon older workers 

being able to find and retain employment. To the extent that unemployed 

older workers face unique reemployment challenges, their ability to get 

the jobs they need to support themselves and protect or rebuild their 

retirement savings could be limited.

 

1

The recession of 2007-2009 started in December 2007 and ended in June 2009, 

according to the Business Cycle Dating Committee of the National Bureau of Economic 

Research (NBER). According to NBER, “a recession is a significant decline in economic 

activity spread across the economy, lasting more than a few months, normally visible in 

production, employment, real income, and other indicators. A recession begins when the 

economy reaches a peak of activity and ends when the economy reaches its trough.” In 

addition, this recession occurred in the context of a significant decline in major financial 

markets, which dramatically reduced the value of major assets. 

 
 

Page 2 GAO-12-445 Unemployed Older Workers

employment and what steps the Department of Labor (Labor) has taken 

to help unemployed older workers.

To examine changes in the employment status of older workers since the 

start of the recession, we analyzed nationally representative 

unemployment and demographic data from the Bureau of Labor Statistics 

(BLS), including 2007 through 2011 data from the Current Population 

Survey (CPS), the Job Openings and Labor Turnover Survey (JOLTS), 

and the 2008 and 2010 Displaced Worker Supplement (DWS). To learn 

about older workers’ financial risks from long-term unemployment and 

challenges in finding new jobs, we conducted focus groups with 

unemployed older workers in four metropolitan areas and also 

interviewed staff at one-stop career centers in each of the four areas.2

http://www.gao.gov/multimedia/video/#video_id=590295

(For audio clips from GAO’s focus groups with unemployed older workers, 

use this link: .) 

Further, we interviewed experts on older workers’ issues and reviewed 

studies. To assess how periods of long-term unemployment might affect 

older workers’ retirement income, we used microsimulation models to 

estimate monthly retirement income for workers who stopped work at 

different ages.3 We also analyzed data on retirement savings from the 

nationally representative 2007 Survey of Consumer Finances and 

interviewed officials at the Social Security Administration (SSA).4

 

2

The Workforce Investment Act of 1998 provided for the establishment of local one-stop 

centers to provide access to employment and training services under a number of 

programs, including those administered by the Departments of Labor, Education, Health 

and Human Services, and Housing and Urban Development. Pub. L. No. 105-220, § 121, 

112 Stat. 936, 963.

To 

identify what policies might help unemployed older workers regain 

employment and what Labor has done to help older workers, we 

interviewed experts on policy proposals previously identified through a 

review of the literature and interviewed Labor officials.

3

Our simulations of retirement income include income from employer-sponsored 

retirement plans and Social Security retirement benefits. We used microsimulation models 

under license from the Policy Simulation Group, a private contractor. More information 

about these microsimulation models is at www.polsim.com. 

4

For our analysis of retirement savings using the 2007 Survey of Consumer Finances, we 

counted participation in a defined benefit or defined contribution plan at a current 

employer, earned benefits from a defined benefit plan from a past employer, a defined 

contribution account from a past employer, a Keogh account, or an individual retirement 

account.
 

Page 3 GAO-12-445 Unemployed Older Workers

We conducted this performance audit from October 2010 through April 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence we obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. For more 

information on our scope and methodology, see appendix I.

Several different programs, including the federal-state Unemployment 

Insurance (UI) program and employment and training programs 

administered by Labor, help unemployed workers, and one program is 

specifically for low-income individuals 55 and over. First, the UI program 

provides eligible unemployed individuals temporary benefits that partially 

replace their lost wages. The UI program is a federal-state program that is 

generally funded through taxes on employers and, in some states, 

employee contributions. Eligibility requirements and benefit levels vary by 

state within federal guidelines, but a recently enacted federal law will 

require individuals to be able, available, and actively looking for work as a 

condition of eligibility for unemployment benefits.5 UI benefits are 

generally available to eligible unemployed workers for up to 26 weeks,6

 

5

This requirement, added by the Middle Class Tax Relief and Job Creation Act of 2012, 

Pub. L. No. 112-96, § 2101, 126 Stat. 156, 159, will take effect after the end of the first 

session of each state legislature that begins after the date of enactment, February 22,

2012. 

6

For evidence that unemployment benefits are generally available for up to 26 weeks, see 

David Bradley, Benjamin Collins, Katelin Isaacs, Janemarie Mulvey, Federal Programs 

Available to Unemployed Workers. Congressional Research Service, RL34251 

(Washington D.C., January 2012). However, the actual duration of UI benefits will vary by 

state and by individual. See GAO, Unemployment Insurance: Economic Circumstances of 

Individuals Who Exhausted Benefits, GAO-12-408 (Washington, D.C.: Feb. 17, 2012).

Background 

Unemployment Insurance 

and Employment and 

Training Programs Serving 

Unemployed Older 

Workers
 

Page 4 GAO-12-445 Unemployed Older Workers

but extended benefits are sometimes made available to those who 

exhaust these benefits, as has occurred during the recent recession.7

Second, the Workforce Investment Act of 1998 (WIA) established the 

adult and dislocated worker programs, which authorize grants to states 

for a broad range of employment and training activities, including job 

search assistance, assessment, and training for eligible individuals.8

States that receive funds under WIA must report on the performance of 

these programs using performance measures that gauge program results 

for participants in the areas of job placement, retention, and earnings, 

among others.9 States are held accountable by Labor for their 

performance and may receive incentive funds or financial sanctions 

based on whether they meet expected performance levels for each 

measure.10

Last, the Senior Community Service Employment Program (SCSEP) 

provides subsidized, community service-based on-the-job training for lowincome individuals age 55 and over who are unemployed, with an 

 

7

Congress has extended the maximum period for receiving UI benefits through temporary 

federal programs during a number of economic downturns, including the recent recession.

Congress also provided for increased weekly UI benefit amounts and increased federal 

support to states to finance extended UI benefits under the American Reinvestment and 

Recovery Act of 2009 (Recovery Act). Pub. L. No. 111-5, §§ 2002-05, 123 Stat. 115, 437-

44. During the recession of 2007-2009, Congress increased the maximum period for 

receipt of UI benefits; as a result, some long-term unemployed workers in certain states 

may be eligible to receive UI benefits for up to 99 weeks. The Middle Class Tax Relief and 

Job Creation Act of 2012, enacted on February 22, 2012, will reduce this maximum to 93 

from 99. The reduction will be phased in between May and September 2012. Pub. L. No. 

112-96, § 2122, 126 Stat. 156, 163-66 (2012). For more information on UI and the 

Recovery Act, see GAO, Worker and Family Assistance: Unemployment Insurance 

Measures Included in the American Recovery and Reinvestment Act of 2009, as of July 

2009, GAO-09-942R (Washington, D.C.: July 27, 2009). 

8

Under WIA, dislocated workers include, among others, individuals who (1) have been 

terminated or laid off or who have received a notice of termination or layoff, (2) are eligible 

for or have exhausted UI benefits or have demonstrated attachment to the workforce but 

are ineligible for UI benefits because of insufficient earnings or having worked for a 

noncovered employer, and (3) are unlikely to return to a previous industry or occupation. 

Dislocated workers also include individuals who were self-employed but are unemployed 

as a result of general economic conditions or natural disasters. For the complete 

definition, see 29 U.S.C. § 2801(9).

9

29 U.S.C. § 2871(b),(d).

1029 U.S.C. § 2871(g); 20 U.S.C. § 9273.
 

Page 5 GAO-12-445 Unemployed Older Workers

emphasis on those who have poor employment prospects.11 Labor 

evaluates the performance of state and local areas receiving SCSEP 

funds using performance measures similar to those used for the WIA 

adult and dislocated worker programs.12

Economists often classify involuntary unemployment as either structural 

or cyclical.13 Structural unemployment arises when barriers—such as 

skills or geographical mismatches—prevent workers from matching their 

skills to available jobs. In contrast, cyclical unemployment arises when 

there is a decrease in the overall demand for goods and services in an 

economy. As a result of such decreases, employers may temporarily lay 

off workers or cut back their employees’ hours until the economy 

improves. Research suggests that much of the increase in unemployment 

since 2007 has been cyclical rather than structural.14

 

11To be eligible to participate in SCSEP, individuals must have a family income of no more 

than 125 percent of the federal poverty guidelines prepared by the Department of Health 

and Human Services and approved by the Office of Management and Budget. 42 U.S.C. § 

3056p(a)(3), 20 C.F.R. § 641.500. In 2012, an individual living in the 48 contiguous states 

and D.C. must have an income of not more than $13,963 to be eligible to participate in 

SCSEP. Household income for an individual in a household of two must not be more than 

$18,913 in order for the individual to be eligible to participate in the program. 

1242 U.S.C. § 3056k.

13Another type of unemployment—frictional unemployment—is generally due to voluntary 

job shifts and typically involves shorter unemployment spells. 

14Linda Levine, The Increase in Unemployment since 2007: Is it Cyclical or Structural?

Congressional Research Service, R41785 (Washington, D.C.: November 2011).

Structural versus Cyclical 

Unemployment
 

Page 6 GAO-12-445 Unemployed Older Workers

In 2006, Labor convened an interagency15 Taskforce on the Aging of the 

American Workforce (the Taskforce)16 and issued a report in 2008 

highlighting strategies for increasing older Americans’ workforce 

participation.17 The Taskforce considered a broad range of issues 

concerning the aging of the American workforce, including legal and 

regulatory barriers that could prevent older workers from participating in 

the workforce, flexible work arrangements, and tools and technical 

assistance to support older workers’ employment. The Taskforce report 

recommended that Taskforce agencies continue to work together to 

implement strategies it had identified, such as to coordinate research and 

demonstration agendas and inventory legal and regulatory barriers that 

could limit older workers’ employment. The Taskforce’s recommendations 

mainly dealt with potential actions Taskforce agencies could undertake to 

help older Americans remain in or reenter the workforce or pursue selfemployment.

While income in retirement comes from a variety of sources, in the 

aggregate, Social Security retirement benefits are the largest source of 

retirement income for households with someone aged 65 or older. Other 

financial assets such as income from employer-sponsored retirement 

plans, private savings, and assets such as home equity are important 

sources of retirement income for many. (See fig. 1.)

 

15The Taskforce included senior representatives from nine federal agencies whose 

activities affect the lives of older Americans. These agencies were the Departments of 

Commerce, Education, Health and Human Services, Labor, Transportation, and the 

Treasury, along with the Equal Employment Opportunity Commission, the Small Business 

Administration, and SSA.

16Labor officials convened this task force to respond to a request from the U.S. Senate 

Special Committee on Aging and GAO recommendations in two reports: GAO, Older 

Workers: Demographic Trends Pose Challenges for Employers and Workers, GAO-02-85

(Washington, D.C.: Nov. 16, 2001), and Older Workers: Labor Can Help Employers and 

Employees Plan Better for the Future, GAO-06-80 (Washington, D.C.: Dec. 5, 2005).

17In 2008, this task force published its final report, Report of the Taskforce on the Aging of 

the American Workforce (Washington, D.C.: February 2008)

http://www.doleta.gov/reports/FINAL_Taskforce_Report_2-11-08.pdf.

Labor’s Taskforce Report 

on the Aging of the 

American Workforce

Sources of Retirement 

Income 
 

Page 7 GAO-12-445 Unemployed Older Workers

Figure 1: Sources of Aggregate Income for Households with Someone Aged 65 or 

Older, 2008

Note: “Household” here refers to what SSA identifies as aged units—either a married couple living 

together or an unmarried person. The age of a married couple is the age of the husband if he is 55 or 

older; if the husband is younger than 55, the age of the married couple is the age of the wife. Thus a 

married couple is considered to be 65 or older if the husband is 65 or older or if the husband is 

younger than 55 and his wife is 65 or older. Data reported by SSA for pension income includes 

regular payments from defined benefit and defined contribution plans and from individual retirement 

accounts (IRA) and Keogh accounts, but nonregular (nonannuitized or lump sum) withdrawals from 

IRA, Keogh, and defined contribution plans are not included. Social Security income includes 

retirement, auxiliary (such as spousal), survivors, and disability benefits. Data reported for income 

from assets include interest income; income from dividends, rents, or royalties; and estates or trusts. 

Other income includes noncash benefits, veterans’ benefits, UI benefits, workers’ compensation, and 

personal contributions. Income from others is excluded. The 95 percent confidence intervals for the 

share of aggregate income are 35.9 to 37.1 percent for Social Security, 29.1 to 30.3 for employment 

earnings, 17.9 to 18.9 for pension and annuity income, 12.3 to 13.1 for income from assets, 1.9 to 2.3 

for other, and 0.5 to 0.7 for cash public assistance.

Social Security retirement benefits are paid to eligible workers under the 

Old-Age, Survivors, and Disability Insurance (OASDI) program 

administered by SSA. The level of monthly retirement benefits an 

individual will receive depends on factors such as work and earnings 

history and the age at which the beneficiary chooses to begin receiving 
 

Page 8 GAO-12-445 Unemployed Older Workers

benefits.18 Generally, individuals may begin receiving Social Security 

retirement benefits at age 62; however, the payments will be lower than if 

they wait to receive benefits at their full retirement age, which varies from 

65 to 67, depending on the individual’s birth year.19 In contrast, the 

monthly benefit is increased for workers who delay receiving benefits 

beyond their full retirement age up to age 70.20 Employees and employers 

pay payroll taxes that finance Social Security benefits. Social Security 

also provides benefits to eligible workers who become disabled before 

reaching retirement age, as well as children, spouses, and widow(er)s of 

eligible workers. Benefits are based upon a common formula but are 

calculated differently for the different beneficiary types.21

Employer-sponsored retirement plans fall into two broad categories: 

defined benefit (DB) plans and defined contribution (DC) plans. DB plans 

promise to provide a benefit that is determined by a formula based on 

particular factors specified by the plan, such as salary or years of service.

Typically, DB plans provide annuity payments to retirees on a monthly 

basis that continue as long as the recipient lives.22 Under DC plans, 

workers and employers may make contributions into individual 

accounts.23

 

1842 U.S.C. §§ 402, 415.

At retirement, participants’ distribution options vary depending 

on the plan, but often include leaving their money in the plan, taking a full 

or partial distribution, or purchasing an annuity. In order to preserve the 

tax benefits from their DC plan savings, many participants chose to roll 

plan savings into an individual retirement account (IRA). IRAs are 

personal retirement savings arrangements that allow individuals to make 

1942 U.S.C. § 402(q)(1); 20 C.F.R. §§ 404.409 to 404.410.

2042 U.S.C. § 402(w); 20 C.F.R. § 404.313.

21In this report we use the term “Social Security retirement benefits” to refer to an 

individual’s retirement (old-age) benefits, and not other Social Security benefits such as 

spousal benefits or disability benefits, unless otherwise noted.

22A DB plan may also provide benefits to a surviving spouse, if the plan participant is 

married and took these benefits.

23The most common type of DC plan is the 401(k) plan, which typically allows workers to 

choose to contribute a portion of their pretax compensation to the plan. Some 401(k) plans 

may also provide for employer contributions, and Roth 401(k) plans may accept after-tax 

employee contributions. 
 

Page 9 GAO-12-445 Unemployed Older Workers

contributions to an individual account and receive favorable tax 

treatment.24

Like many other demographic groups, older workers have faced dramatic 

increases in unemployment and long-term unemployment since the 

recession began in 2007. For example, only about a third of older workers 

displaced from 2007 to 2009 had found full-time work by 2010, and those 

who did sustained greater earnings losses than did reemployed younger 

workers. Nonetheless, older workers’ labor force participation has 

continued to increase despite the worst labor market in decades. For 

example, the proportion of displaced workers age 65 or over who retired 

was substantially lower among those displaced during the recession than 

among those displaced prior to the recession.25

Unemployment rates for workers of all ages, including those 55 and over, 

have risen dramatically since the start of the recent recession in 

December 2007. As shown in figure 2, the seasonally unadjusted 

unemployment rate for older workers increased from 3.1 percent in 

December 2007 to a high of 7.6 percent in February 2010, before it 

 

24The tax treatment differs depending on the type of IRA. For example, with traditional 

IRAs, individuals who meet certain conditions can take an income tax deduction on some 

or all of the contributions they make to their IRAs, but they must pay taxes on amounts 

they withdraw from the IRA. Individuals below certain income limits may also contribute to 

Roth IRAs, which do not provide an income tax deduction on contributions, but permit taxfree withdrawals.

25In this report, displaced workers are defined as persons 20 years or older who lost or left 

jobs because their plant or company closed or moved, there was insufficient work for them

to do, or their position or shift was abolished. We analyzed displaced workers using the 

CPS Displaced Worker Supplement (DWS). Displaced workers have lost a job in the past 

3 years; however, they may be unemployed, employed, or not in the labor market at the 

time of the survey. See appendix I for more information about displaced workers and the 

DWS. In our analysis of displaced workers, “retired” is defined to include only people who 

are no longer in the labor force. Therefore, this definition does not include retired persons 

who have part-time work. See appendix II for more data on the labor force status of 

displaced workers in 2008 and 2010.

Older Workers’ 

Employment 

Prospects Have 

Deteriorated 

Multiple Measures Show 

Unemployment among 

Older Workers Rose 

Dramatically after 2007
 

Page 10 GAO-12-445 Unemployed Older Workers

decreased to 6.0 percent in December 2011.26 Further, as shown in figure 

3, the seasonally unadjusted number of unemployed older workers 

peaked at 2.3 million in February 2010 and decreased to approximately 

1.9 million by December 2011, compared with around 839,000 when the 

recession began in December 2007. As in prior recessions, smaller 

percentages of workers age 55 and over became unemployed. Some 

researchers attribute older workers’ lower unemployment rates to the fact 

that older workers tend to have longer job tenure and are consequently 

less likely to be laid off than younger workers.27

 

26This figure, along with all others describing characteristics of workers, is based on 

sample data and subject to sampling error. For example, we are 95 percent confident that 

the unemployment rate for workers age 55 and older was between 5.5 and 6.4 percent in 

December 2011. See appendix I for a description of sampling error and the surveys relied 

upon. In this report, confidence intervals for estimates and statistical tests for differences 

between estimates are presented in graphs, tables, or footnotes in the more detailed 

sections presenting the estimates, or in appendix III when indicated. Estimated labor force 

statistics in this report are based on analysis of microdata, which beginning in January 

2011 may diverge slightly from BLS published estimates; see appendix I for more 

information. Because we analyze a variety of labor force outcomes for several subgroups 

of the population in this report, we did not attempt to seasonally adjust any of the 

estimates. See appendix I for more information about seasonally unadjusted data.

27A recent study, however, suggests that older workers with less than 4.6 years of tenure 

are actually more likely to be laid off than their otherwise similar younger counterparts.

See Richard Johnson and Corinna Mommaerts, Age Differences in Job Loss, Job Search, 

and Reemployment, the Urban Institute (Washington D.C.: January 2011). 
 

Page 11 GAO-12-445 Unemployed Older Workers

Figure 2: Estimated Unemployment Rates by Age, 2007-2011

Note: Estimates have 95 percent confidence intervals within plus or minus 0.5 percentage points of 

the estimate itself. Recession dates obtained from NBER. Estimates are not seasonally adjusted.

Alternative measures show that the number of discouraged and 

underemployed older workers has also increased dramatically since the 

start of the 2007-2009 recession. According to the broadest measure, 

approximately 4.2 million older workers were unemployed or 

underemployed in January 2011, and approximately 3.65 million 

remained unemployed or underemployed in December 2011 (see fig. 3). 

In addition to the officially unemployed, this measure includes individuals 

who wanted to work and were available for work but did not actively seek 

employment in the last month for various reasons,28

 

28BLS considers workers who want work and are available for work but who did not 

actively seek work in the past month as “marginally attached to the labor force.” BLS 

records the reason given for not actively seeking work in the past month: for example, 

some marginally attached workers indicate family obligations, such as caring for an aging 

parent or a sick child as the reason they did not look for work. 

such as believing no 
 

Page 12 GAO-12-445 Unemployed Older Workers

jobs were available.29 It also includes part-time workers who would prefer 

full-time work.30

 

29BLS defines workers who want work and are available for work, but did not actively seek 

work in the past month because they thought no jobs were available, as “discouraged 

workers.” Discouraged workers are a subset of those marginally attached to the labor 

force.

30BLS identifies such workers as part-time for economic reasons, defined as those 

employed less than 35 hours per week who want and are available for, but are unable to 

find, full-time work, as well as people who prefer full-time hours of work but had their hours 

reduced by their employer. In this report GAO includes these workers in the term 

“underemployed,” along with marginally attached workers. 
 

Page 13 GAO-12-445 Unemployed Older Workers

Figure 3: Estimated Number of Unemployed and Underemployed Older Workers (55 

and Over), 2007-2011

Note: (1) Estimates have 95 percent confidence intervals within plus or minus 12 percent of the 

estimate itself. (2) See appendix II for BLS’s definitions of unemployed workers, discouraged workers, 

workers marginally attached to the labor force, and part-time for economic reasons. Our “broader 

measure of people affected by unemployment and underemployment” is the same as measure U-6 in 

BLS’s alternative measures of labor underutilization. Estimates are not seasonally adjusted.
 

Page 14 GAO-12-445 Unemployed Older Workers

Although older workers are less likely than younger workers to lose their 

jobs, it generally takes older job seekers longer to find new work.31 Since 

2007, many job seekers of all ages have experienced long-term 

unemployment,32

Since 2007, the number and percentage of long-term unemployed older 

workers—those out of work for more than half a year (27 weeks or 

more)—has increased substantially. In 2007, less than a quarter of 

unemployed older workers were unemployed for longer than 27 weeks, 

as shown in figure 4. By 2011, this number had increased to 55 percent.

Moreover, by 2011 over one-third of all unemployed older workers had 

been unemployed for over a year. Data from the Displaced Worker 

Supplement of the CPS corroborate that many older workers who lose 

their jobs struggle to regain employment. Specifically, the data show that 

only 31 percent of those older workers age 55-64 who were displaced 

between 2007 and 2009 had regained full-time employment by January 

2010 (see app. II).

but individuals age 55 and over have consistently 

experienced longer durations of unemployment than younger workers.

Moreover, the median length of unemployment has more than tripled for 

older workers since the recession started, increasing at a greater rate 

than that of younger workers. Prior to the recession, the median duration 

of unemployment for job seekers age 55 and over was 10 weeks 

compared with 9 weeks for job seekers aged 25-54. By 2011, the median 

duration of unemployment for older job seekers had increased to 35 

weeks compared with 26 weeks for younger job seekers. 

 

31In this report, we use the phrase “job seekers” to refer to the unemployed.

32BLS defines long-term unemployment as being unemployed for more than half a year 

(27 weeks or more). 

Long-Term Unemployment 

for Older Workers Has 

Increased Substantially 

since the Start of the 

Recession
 

Page 15 GAO-12-445 Unemployed Older Workers

Figure 4: Growth in Estimated Long-Term Unemployment of Older Workers (55 and Over), 2007-2011

Note: All estimates in this figure have 95 percent confidence intervals within plus or minus 3 

percentage points of the estimate itself. See appendix III for statistical comparisons of estimates 

across years. Some bars do not sum to 100 percent because of rounding.

The dramatic increase in long-term unemployment bodes poorly for the 

reemployment prospects of older workers; several studies suggest that 

unemployment erodes workers’ skills and reemployment prospects,33 and 

several experts we interviewed said long-term unemployment diminishes 

the likelihood older workers will ever be reemployed.34

 

33Rob Valetta and Katherine Kuang. Why is Unemployment Duration So Long? Federal 

Reserve Bank of San Francisco Economic Letter 2012-03 (San Francisco, CA, January 

2012), 1, and Linda Levine, The Increase in Unemployment since 2007: Is it Cyclical or 

Structural? Linda Levine and Gerald Meyer, Long-term Unemployment and Recessions

(Washington, D.C.: May 2010).

Thus, older 

workers who lose their jobs may face both immediate and long-term 

financial challenges. Long-term unemployed older workers who exhaust 

unemployment benefits before turning 62 are particularly at risk of 

34One expert believed that many older workers “face the real prospect of never working 

again, certainly not at their former wage levels.” See What to do about the New 

Unemployment, Urban Institute (Washington, D.C.: June 2011).
 

Page 16 GAO-12-445 Unemployed Older Workers

compromising their future retirement security. (For some potential causes 

of long-term unemployment, see fig. 5.)

Figure 5: Difference between the Estimated Number of Unemployed of All Ages and the Estimated Number of Available Jobs, 

2007-2011, and Various Explanations for High Unemployment

Note: Estimates for the number of unemployed workers have 95 percent confidence intervals within 

plus or minus 5 percent of the estimate itself. Estimates for the number of job openings have 

confidence intervals within plus or minus 10 percent of the estimate itself.

The length of time older workers remained unemployed varied across 

industries (see fig. 6). Nearly two-thirds of unemployed older workers in 

the manufacturing and financial service industries were out of work for 27 

or more weeks in 2011. In fact, in 2011, 20 percent of unemployed older 

workers within manufacturing had been out of work for more than 2 years.

In contrast, less than half of unemployed older workers in the education 

and health services or leisure and hospitality industries had been out of 

work for 27 weeks or more. Even though the education and health 

Some Subgroups of Older 

Workers Continue to Face 

Longer Spells of 

Unemployment than 

Others
 

Page 17 GAO-12-445 Unemployed Older Workers

services and leisure and hospitality industries had lower levels of longterm unemployment, the percentage of older workers in these industries 

who experienced long-term unemployment also grew significantly from 

2007 to 2011.

Figure 6: Estimated Duration of Unemployment for Older Workers (55 and Over) by Industry, 2007 and 2011 

Note: The “all other industries” category includes public administration; “other services”; agriculture, 

forestry, fishing and mining; and information and a small number of civilians employed in the armed 

forces. All estimates in this figure have 95 percent confidence intervals within plus or minus 11 

percentage points of the estimate itself. For information about the reliability of estimate and statistical 

comparisons of the estimates across different groups and years, see appendix III.
 

Page 18 GAO-12-445 Unemployed Older Workers

Rates of unemployment differed across demographic groups. For 

example, as shown in figure 7, unemployment rates for older men and 

women were comparable in 2007 but increased more for men than 

women after 2007, and were significantly higher for men than women by 

2011.35 In addition, older workers who were black or Hispanic had 

significantly higher unemployment rates than white older workers in both 

2007 and 2011. Regarding education level, older workers without a high 

school diploma were more likely to be unemployed before and after the 

recession than those with a high school diploma.36

 

35One possible explanation for men’s greater increase in unemployment since 2007 is the 

particularly steep increase in unemployment in the manufacturing and construction 

industries, which tend to employ higher percentages of men than women. 

However, the 

unemployment rate for workers with at least a bachelor’s degree 

approximately doubled by 2011 from its 2007 level, just as it did for those 

older workers with less education.

36One possible explanation of the unemployment increase among less educated older 

workers is that unemployment rates in manufacturing and construction increased 

dramatically in the recent recession, and these industries tend to employ a higher 

percentage of less educated workers than do many other industries. Also, a recent study 

of the long-term unemployed aged 18-64 also found that the long-term unemployed are 

less likely to hold a college degree. Kaiser Family Foundation/NPR Long-Term 

Unemployed Survey. 
 

Page 19 GAO-12-445 Unemployed Older Workers

Figure 7: Estimated Unemployment Rates by Demographic Group for Older 

Workers (55 and Over), 2007 and 2011

Note: All estimates in this figure have 95 percent confidence intervals within plus or minus 1 

percentage point of the estimate itself. For statistical comparisons of the estimates across different 

groups and years, see appendix III.

Across several different demographic groups, once unemployed, older 

workers were similarly likely to remain unemployed for more than half a 

year (27 weeks or more) in 2011. For example, in 2011, older 

unemployed workers with at least a bachelor’s degree were similarly likely 
 

Page 20 GAO-12-445 Unemployed Older Workers

to face long-term unemployment as those older workers with less 

education. In addition, older workers in each racial or ethnic group who 

became unemployed were equally likely to face long-term unemployment 

in 2011. Even older women—who in 2007 had lower rates of long-term 

unemployment than men—were similarly likely to face long-term 

unemployment after the recession, as shown in figure 8. Finally, while 

long-term unemployment increased for both younger and older workers, a 

higher percentage of older workers were long-term unemployed—

approximately 55 percent of unemployed older workers were out of work 

for over half a year, compared with approximately 47 percent of workers 

age 25-54 in 2011.

Figure 8: Estimated Duration of Unemployment by Age and by Gender, 2007 and 2011

Note: Estimates in this figure have 95 percent confidence intervals within plus or minus 3 percentage 

points of the estimate itself. For statistical comparisons of the estimates across different groups and 

years, see appendix III.
 

Page 21 GAO-12-445 Unemployed Older Workers

Despite high levels of unemployment and longer spells of unemployment, 

older workers’ labor force participation rate—the proportion of the 

population that is employed or actively seeking employment—increased 

throughout the 2007-2009 recession, continuing historic trends. In 

contrast, as shown in figure 9, the labor force participation rate for 

younger workers aged 16-24 has decreased since the recession began in 

2007, while the participation of workers aged 25-54 generally decreased, 

but to a lesser degree.37 Older workers’ increased labor force participation 

during the recession continued a long-term trend that began in the 1990s, 

and thus cannot be attributed solely to the 2007-2009 recession or 

declines in financial markets. Researchers have identified a number of 

factors contributing to this historic increase. For example, research 

indicates that improved health and longer life expectancies could increase 

older workers’ labor force participation. Researchers also note that rising 

labor force participation among older women is an important factor in the 

increase in labor force participation among older workers in recent years.

In addition, researchers have noted that some older workers may remain 

in the labor force to retain health care benefits until they become eligible 

for Medicare at age 65—particularly since fewer employers now provide 

retiree health care coverage.38

 

37Research suggests the long-term decline in young adults’ (aged 20-24) labor force 

participation is associated with increased school enrollment. Regarding individuals aged 

25-54, the decline in labor force participation is driven by men, particularly those with less 

education. The demand for less educated workers has fallen significantly over the past 

three decades. Similarly, inflation-adjusted wages for men with less than a high school 

diploma have also fallen. Some studies have suggested that increased access to Social 

Security disability benefits might also explain some of the historic decline in the labor force 

participation of men aged 25-54. See Abraham Mosisa and Steven Hipple, “Trends in 

Labor Force Participation in the United States,” Monthly Labor Review, October 2006, 35-

57. Also, Chinhui Juhn and Simon Potter, “Changes in Labor Force Participation in the 

United States,” Journal of Economic Perspectives, Vol. 20, No. 3, Summer 2006, 27-46.

38Mosisa and Hipple, “Trends in Labor Force Participation in the United States,” 35-57; 

Craig Copeland, Labor-Force Participation Rates of the Population Age 55 and Older: 

What did the Recession Do to the Trends? EBRI Notes Vol. 32, No. 2, Employee Benefit 

Research Institute (Washington, D.C.: February 2011), and Murray Gendell, “Older 

Workers: Increasing Their Labor Force Participation and Hours of Work,” Bureau of Labor 

Statistics, Monthly Labor Review, January 2008.

Older Workers’ Labor 

Force Participation 

Nonetheless Continued to 

Rise 
 

Page 22 GAO-12-445 Unemployed Older Workers

Figure 9: Estimated Labor Force Participation Rates by Age, 1948-2011

Note: All estimates in this figure have 95 percent confidence intervals within plus or minus 0.7 

percentage points of the estimate itself.

One recent report found that as a result of the recession, some older 

workers decided to remain in the labor force longer than previously 

planned, while others reentered the labor force, likely to bolster their 

income after the financial crisis.39

 

39Kristie M. Engemann and Howard J. Wall, “The Effects of Recessions Across 

Demographic Groups,” Federal Reserve Bank of St. Louis Review, St. Louis, MO, 

January/February 2010, 92(1), 1-26.

In fact, several one-stop career center 

staff we interviewed told us that they were serving increasing numbers of 

older individuals who had reentered the workforce from retirement. (For 
 

Page 23 GAO-12-445 Unemployed Older Workers

more information on the potential implications of older workers’ increased 

labor force participation on younger workers, see the following text box.)

Does Labor Force Participation by Older Workers Diminish Employment 

Opportunities for Younger Workers?

Results of recent academic studies contradict a popular notion that labor force 

participation by older workers diminishes employment opportunities for younger workers.

This notion assumes a zero sum game with regard to employment; that is, that there are a 

fixed number of jobs available at any given time and employment of one group results in 

unemployment for another group. However, according to a recent study of employment 

data from numerous countries over several decades,a increased employment of older 

workers has not been associated with decreased employment of younger workers. The 

study found that when employment of older workers increased, employment of younger 

workers also increased, and this relationship remained even when the researchers took 

account of overall economic growth. The study also analyzed what happened to younger 

workers’ employment rates in some European countries during specific time periods after 

increased numbers of older workers retired early, not because of changes in the economy, 

but because of changes in national retirement policies. The researchers found the 

opposite of what the popular notion of a zero sum game would assume; they found that 

when more older workers left their jobs to retire early, more younger workers became 

unemployed. The researchers concluded that “the evidence suggests that greater labor 

force participation of older persons is associated with greater youth employment and with 

reduced youth unemployment.”

b An additional study of multiple countries’ economic data 

also found that employment of older workers does not adversely affect the employment of 

younger workers.c Two possible explanations for the results of these studies are that (1) 

over time, entire economies grow as more workers enter the workforce, increasing the 

demand for all goods and services and also for workers, and (2) some jobs held by 

younger workers complement jobs held by older workers so that having one position filled 

leads to hiring for another position. For example, having a senior researcher may create 

the need for research assistants.

a

Jonathan Gruber, Kevin Milligan, and David A. Wise, Social Security Programs and 

Retirement Around the World: The Relationship to Youth Employment, Introduction and 

Summary, Working Paper 14647, http://www.nber.org/papers/w14647, NBER (Cambridge, 

MA: 2009). The 12 countries covered in this study were Belgium, Canada, Denmark, 

France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the United Kingdom, and 

the United States.

b

For more information on this research, see Jonathan Gruber and David A. Wise, eds., 

Social Security Programs and Retirement Around the World: The Relationship to Youth 

Employment, University of Chicago Press, February 2010.

c

Adriaan Kalwij, Arie Kapteyn, and Klaas De Vos, “Retirement of Older Workers and 

Employment of the Young” De Economist (2010) 158:341-359. The 22 countries covered 

by this study were Australia, Austria, Belgium, Canada, Denmark, Finland, France, 

Germany, Greece, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, 

Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
 

Page 24 GAO-12-445 Unemployed Older Workers

Among displaced workers40 aged 65 and over, a significantly larger 

fraction of those who lost their job during the recession years chose to 

remain in the workforce, compared with those who lost their jobs during 

the prerecession period. Specifically, the percentage of displaced workers 

aged 65 and over who retired and left the labor force declined from 61 

percent in the prerecession period to 35 percent in the recession years.

At the same time, the percentage of displaced workers age 65 and over 

who chose to remain in the workforce but were unemployed increased 

from 15 percent prior to the recession to 33 percent during the recession 

(see app. II).41 This could indicate that increasing numbers of older 

workers recognize that they are not well positioned for retirement. In 

addition, the increased availability of extended UI benefits could have 

caused some workers to remain in the labor force,42 although several 

researchers estimate this has had only a modest effect.43

Those older workers displaced from 2007 to 2009 who successfully 

regained employment by January 2010 generally sustained greater 

 

40Displaced workers are those who indicated that they lost a job for economic reasons 

(such as plant closures or their position being eliminated) during the previous 3 calendar 

years. Displaced workers are surveyed by the Census Bureau every 2 years, with the 

most recent survey interviewing people who lost their job during the recession period 

(January 2007-December 2009), and the previous survey interviewing people who 

predominantly lost their jobs prior to the recent recession (January 2005-December 2007). 

Older displaced workers may choose to stay in the workforce—becoming either employed 

or unemployed—or to exit the workforce, possibly into retirement. 

41One study indicates this increase suggests that growing concerns about the adequacy 

of retirement savings and the 2008 stock market collapse may have discouraged early 

retirement and prompted more older workers to remain in the labor force after losing their 

jobs. Richard Johnson, Rising Senior Unemployment and the Need to Work at Older 

Ages, Urban Institute (Washington, D.C.: September 2009). 

42Research indicates extended UI benefits could increase the unemployment rate in two 

ways: (1) by keeping older workers who would otherwise have dropped out of the labor 

force attached to the labor market or (2) by allowing the unemployed to turn down job 

offers they would have accepted had UI benefits not been available. See Jesse Rothstein, 

Unemployment and Job Search in the Great Recession, NBER (Cambridge, MA: October 

2011).

43See Gary Burtless and Adam Looney, Growth through Innovation: The Immediate Jobs 

Crisis and Our Long-Run Labor Market Problem. Brookings Institution (Washington, D.C.: 

January 2012); Jesse Rothstein, Unemployment and Job Search in the Great Recession 

NBER (Cambridge, MA: October 2111); and Rob Valetta and Katherine Kuang, Why is 

Unemployment Duration So Long? Federal Reserve Bank of San Francisco, (San 

Francisco, CA: January 2012); The Increase in Unemployment since 2007: Is it Cyclical or 

Structural? Levine and Meyer, Long-term Unemployment and Recessions. 
 

Page 25 GAO-12-445 Unemployed Older Workers

earnings losses than did younger workers. When comparing earnings 

before and after displacement, the median earnings replacement rate for 

workers aged 55-64 who were displaced from 2007 to 2009 was only 85 

percent, compared with approximately 95 percent for workers aged 25-54 

and over 100 percent for workers aged 20-24.44 Indeed, as shown in 

figure 10, an estimated 70 percent of reemployed displaced older workers 

sustained earnings losses (an earnings replacement rate of less than 100 

percent) compared with 53 percent of reemployed individuals aged 25-54.

Other researchers have also found that displaced older workers suffer 

greater wage losses than younger workers,45 and that the effects of job 

loss are likely to be long-lasting—including being more likely to lose 

subsequent jobs and experience additional unemployment spells.46

 

44This analysis is restricted to long-tenured displaced workers (workers with 3 or more 

years of tenure on the job they lost or left) who lost full-time, salaried jobs and were 

reemployed in full-time, salaried jobs at the time of the survey.

45A recent study using data from the Survey of Income and Program Participation found 

that between 1996 and 2007, the median hourly wage earned by displaced men aged 50 

to 61 who become reemployed at ages 50 to 61 was 20 percent lower than the median 

wage on the prior job. For those reemployed at age 62 or older, the median wage for the 

new job was 36 percent below the median wage for the prior job. In contrast, the study 

found that younger men’s median wages fell by only 4 percent for men aged 35 to 49 and 

2 percent for those aged 25 to 34. The study found that reemployed older displaced 

women also suffered wage losses, but these differences were not as significant as those 

for men. See Johnson and Mommaerts, “Age Differences in Job Loss, Job Search, and 

Reemployment.” 

46A recent study using data from the Health and Retirement Study (HRS) found that 

individuals who lost a job between ages 50 and 56 had “messy post-displacement 

employment histories.” Specifically, such workers were “more likely to job-hop, to suffer 

further involuntary job losses, and to experience subsequent unemployment than those 

who were still working for their age-50 employer at age 56.” See Steven A. Sass and 

Anthony Webb, Is the Reduction in Older Workers’ Job Tenure a Cause for Concern?

Center for Retirement Research at Boston College (December 2010).
 

Page 26 GAO-12-445 Unemployed Older Workers

Figure 10: Estimated Percentage of Reemployed Displaced Workers Who Earned 

Less on Their New Full-Time Jobs than on Their Previous Jobs, January 2010

Note: Estimates in this figure have 95 percent confidence intervals within plus or minus 7 percentage 

points of the estimate itself. Analysis is restricted to long-tenured displaced workers (workers with 3 or 

more years of tenure on the job they lost or left) who lost full-time, salaried jobs and were reemployed 

in full-time, salaried jobs at the time of the survey. For statistical comparisons of the estimates across 

different groups and years, see appendix III.

Since the start of the recession, workers of all ages have struggled to 

cope with unemployment. However, older workers generally face longer 

periods of unemployment than do younger workers and may face unique 

reemployment challenges. According to experts and one-stop career 

center staff we interviewed, such challenges include employer reluctance 

to hire older workers, out-of-date skills, and unfamiliarity with online 

applications, which can be particularly common for older workers with 

limited technological skills.

Unemployed Older 

Workers Face Many 

Challenges Coping 

with Unemployment 

and Regaining 

Employment 
 

Page 27 GAO-12-445 Unemployed Older Workers

Unemployed older workers in our focus groups wanted to return to work 

so they could pay for critical living expenses and contribute to their 

families and communities. 47

Older workers cited difficulty paying for health care and health insurance 

as a key financial challenge since they lost their jobs.

They told us that losing their jobs had taken 

a toll on their sense of self-worth, reduced their standard of living, and put 

them at risk of long-term financial hardship.

48

Many focus group participants said that being unemployed had made it 

difficult to afford mortgage or rent payments.

Specifically, many 

focus group participants described struggling to pay health insurance 

premiums and some said they had found it difficult to secure private 

insurance because of high costs or preexisting conditions. Many focus 

group participants said they had forgone seeking medical care or taking 

prescribed medications because they could not afford them. See 

appendix IV for examples of specific quotes from focus group participants 

regarding risks associated with long-term unemployment.

49

 

47GAO conducted focus groups in Baltimore, Maryland; Falls Church, Virginia; San Jose, 

California; and St. Louis, Missouri. GAO selected these locations based on metropolitan 

areas’ unemployment rates, geographic diversity, and the estimated costs for travel and

securing focus group facilities. In total GAO conducted 10 focus group sessions.

Methodologically, focus groups are not designed to (1) demonstrate the extent of a 

problem or to generalize results to a larger population, (2) develop a consensus to arrive 

at an agreed-upon plan or make decisions about what actions to take, or (3) provide 

statistically representative samples or reliable quantitative estimates. Instead, they are 

intended to generate in-depth information about the reasons for the focus group 

participants’ attitudes on specific topics and to offer insights into their concerns about and 

support for an issue. Please see appendix I for further details on our focus group 

methodology.

In addition, some focus 

group participants told us they had lost or were at risk of losing their 

homes. Others had taken in roommates, moved in with friends or family, 

48A survey of workers unemployed during the recession also found that some unemployed 

individuals age 55 and over had no health insurance or had gone without medical care.

See M. Heidkamp, N. Corre, and C. Van Horn, The “New Unemployables” Older 

Jobseekers Struggle to Find Work During the Great Recession, Sloan Center on Aging 

and Work, Boston College (Chestnut Hill, MA: 2010). A recent survey of long-term 

unemployed and underemployed individuals age 18-64 also found that many of the longterm unemployed individuals reported difficulty paying for health insurance or health care.

See Kaiser Family Foundation/ NPR Long-Term Unemployed Survey. 

49A recent survey of long-term unemployed and underemployed individuals aged 18-64 

also found that many long-term unemployed individuals reported difficulty paying for 

housing. See Kaiser Family Foundation/ NPR Long-Term Unemployed Survey. 

Unemployed Older 

Workers Have Difficulty 

Meeting Financial 

Obligations
 

Page 28 GAO-12-445 Unemployed Older Workers

or moved to a more affordable apartment to reduce their housing 

expenses. For example, one focus group participant told us his son had 

moved back home so that he could give his parents money for rent.

Most of our focus group participants had relied on UI benefits to help pay 

for critical living expenses while they were unemployed, and many said 

that without UI benefits they would have been in much greater financial 

jeopardy. Specifically, many focus group participants said that without UI 

benefits they would have lost their homes or even become homeless.

However, some participants said they had already exhausted their UI 

benefits or would soon exhaust their benefits. Some focus group 

participants indicated that, since losing their jobs, they had received 

public assistance, such as through the Supplemental Nutrition Assistance 

Program (formerly known as food stamps).50

Even with UI, many focus group participants said they had drawn down 

retirement savings, increased their credit card debt, or tapped into their 

home equity to cover living expenses while unemployed. Others reported 

borrowing money from family or friends or selling possessions to meet 

their financial needs.51

In addition, focus group participants said they had struggled to fulfill family 

financial obligations they had been able to meet in the past. Several 

mentioned that they were attempting to pay their children’s college tuition 

A majority of those who were old enough to claim 

early Social Security retirement benefits had already done so.

 

50A recent GAO report examines how many workers who lost their jobs during the recent 

recession received and exhausted UI benefits, the economic circumstances of those UI 

recipients who exhausted their benefits and whether they received support from other 

government programs, and the extent to which UI agencies refer those exhausting UI to 

other support programs. According to the report, 15 percent of these UI exhaustees had 

received benefits through the Supplemental Nutrition Assistance Program. See GAO, 

Unemployment Insurance: Economic Circumstances of Individuals Who Exhausted 

Benefits, GAO-12-408 (Washington, D.C.: Feb. 17, 2012). 

51A survey of unemployed older workers age 55 and over also found that unemployed 

older workers have increased credit card debt; sold possessions; borrowed money from 

family, friends, or adult children; or moved to a different house or apartment. See 

Heidkamp, M., Corre, and Van Horn, The “New Unemployables:” Older Jobseekers 

Struggle to Find Work During the Great Recession. Another survey of long-term 

unemployed and underemployed individuals ages 18-64 also found that many had taken 

money out of savings or retirement funds to pay bills, sold personal belongings, or 

borrowed money from relatives and friends. See Kaiser Family Foundation/ NPR LongTerm Unemployed Survey. 
 

Page 29 GAO-12-445 Unemployed Older Workers

or were helping to pay unemployed adult children’s living expenses. They 

also frequently expressed general concern about high unemployment 

among younger generations. Some said they were supporting their 

children’s employment by taking care of their grandchildren during the 

workday. Others mentioned that they were caring for their aging parents.

Many experts, one-stop career center staff, and other workforce 

professionals we interviewed said that some employers are reluctant to 

hire older workers.52 Because of legal prohibitions against age 

discrimination, employers are unlikely to explicitly express a lack of 

interest in hiring older workers;53 however, one workforce professional 

told us that local employers had asked her to screen out all applicants 

over the age of 40.54

According to experts we interviewed, a key reason employers are 

reluctant to hire older workers is that they expect providing health benefits 

to older workers would be costly. Several employer surveys corroborate 

Focus group participants perceived employer 

reluctance to hire older workers as their primary reemployment challenge, 

and several cited job interview experiences that had convinced them that 

age discrimination was limiting their ability to find a new job.

 

52In some cases, our interviews with one-stop career center staff also included individuals 

who worked for other organizations, such as nonprofits, to help older workers overcome 

their employment challenges. In this report, we refer to these individuals and the one-stop 

career center staff as “workforce professionals.” 

53The Age Discrimination in Employment Act of 1967, as amended, prohibits employment 

practices that discriminate against people who are age 40 or older. Pub. L. No. 90-202, 81 

Stat. 602, codified at 29 U.S.C. §§ 621-634.

54For information about evidence that employers discriminate against older job applicants, 

see Joanna N. Lahey, “Do Older Workers Face Discrimination?” Center for Retirement 

Research at Boston College, Issue Brief Number 33, July 2005. 

Unemployed Older 

Workers Face Many 

Challenges in Becoming 

Reemployed

Perceived Employer 

Reluctance to Hire Older 

Workers
 

Page 30 GAO-12-445 Unemployed Older Workers

this concern.55

The higher wages that older workers previously earned also make some 

employers hesitant to hire them, according to experts, workforce 

professionals, and our focus group participants.

In addition, a few focus group participants who had 

handled their previous employer’s health insurance or had been involved 

in hiring decisions said they had seen that older workers substantially 

increased insurance costs, which provided a disincentive to hire older 

workers. For example, one focus group participant told us that his prior 

employer had told him not to hire anyone older than him.

56

Workforce professionals we interviewed said that many older workers 

lack up-to-date skills with computers and other technology, and this puts 

them at a disadvantage in becoming reemployed. Some noted that after a 

long spell of unemployment, even those older workers who had 

previously been proficient with computer technology might find their 

For example, 

employers may expect that an older worker who accepts a job paying 

significantly less than the worker had previously earned might continue to 

search for a higher-paying job and might leave the job if a better offer 

became available. Also, according to experts we interviewed, employers 

may believe that an older worker who previously held a high-level position 

will be overqualified and therefore unhappy in a lower-level position.

Further, some experts we interviewed said employers may believe that an 

older worker may not be happy working for a younger, less experienced 

supervisor, which could cause interpersonal conflicts. Some focus group 

participants said potential employers had specifically mentioned these 

concerns during job interviews. Many of our focus group participants said 

they had great financial need for a new job and expected to take a 

significant pay cut to get one. See appendix IV for examples of specific 

quotes from focus group participants regarding challenges they 

experienced in becoming reemployed.

 

55See Marcie Pitt-Catsouphes, Michael A. Smyer, Christina Matz-Costa, and Katherine 

Kane, “The National Study Report: Phase II of the National Study of Business Strategy 

and Workforce Development,” Center on Aging and Work/Workplace Flexibility at Boston 

College Research Highlight 04, March, 2007, 21. Also, see The Real Talent Debate: Will 

Aging Boomers Deplete the Workforce? A WorldatWork Research Report, April 2007, 4. 

56A recent study using data from the Survey of Income and Program Participation found 

that between 1996 and 2007, the median hourly wage for reemployed displaced workers 

was lower at ages 50 to 61 than at ages 35 to 49. The authors of the study suggest that 

“concern over the expense of hiring older workers may be overblown.” See Johnson and 

Mommaerts, Age Differences in Job Loss, Job Search, and Reemployment.

Lack of Up-to-Date Skills and 

Diminished Skills
 

Page 31 GAO-12-445 Unemployed Older Workers

technology skills outdated. Some experts we interviewed said that 

employers might hesitate to hire and retrain older workers because they 

assume that older workers will not want to work much longer, so the 

employer would not get a good return on the training investment. Some 

workforce professionals also said that, according to their observations, 

employers have increased the number of skills they require applicants to 

possess, even for low-level positions. For example, a workforce 

professional told us one job posting for a receptionist stated that the 

applicant needed to be able to manage the employer’s website in addition 

to completing more typical administrative duties. Some focus group 

participants said that they were at a disadvantage in finding new jobs 

because injuries or other health problems prevented them from

performing the type of work they had done in the past or meeting 

requirements of available jobs in other fields.

According to workforce professionals, an ongoing trend among 

employers—to require job seekers to submit all applications and résumés 

online—creates difficulties for many older workers, particularly those with 

few or no computer skills. Further, workforce professionals told us that 

many online job applications require applicants to disclose information 

that readily reveals the applicant’s age, such as the year the job seeker 

graduated from high school, and that applications cannot be submitted 

until such fields are completed. Such information would make it possible 

for employers to screen out older workers, if the employer wanted to do 

so. Workforce professionals also said that even workers seeking jobs that 

require little or no computer use could get those jobs only by completing a 

long online application. For example, workforce professionals in two

locations told us that individuals seeking positions as maids and janitors 

in national chain hotels could apply for these positions only online and 

that the older workers seeking these positions often were unfamiliar with 

such applications.

Moreover, workforce professionals and focus group participants noted 

that online applications can vary widely among employers, cutting and 

pasting is sometimes not an option, and each application can take hours 

to complete. They also told us that many online applications cut off if an 

applicant has not completed or saved the work within a certain amount of 

time. This makes applying for jobs more difficult for workers with limited 

computer skills.

Workforce professionals at the four one-stop career centers we visited 

and some other experts said that some older workers experience 

depression and discouragement because of their long-term 

Challenges in the Online Job 

Application Process

Emotional Challenges That 

Result from Long-Term 

Unemployment
 

Page 32 GAO-12-445 Unemployed Older Workers

unemployment. While this challenge is not limited to older workers, 

depressed and discouraged older workers may not search for jobs as 

intensely as they might have otherwise and their performance in 

interviews may also be compromised.57 For example, workforce 

professionals said that depressed or discouraged job seekers may show 

up at interviews looking disheveled or may become short-tempered 

during interviews. A workforce professional in Falls Church, Virginia, said 

that employers have told him they had decided against hiring an older job 

applicant because the applicant had appeared too desperate for a job.

Many of our focus group participants said they had been discouraged or 

depressed because of their continued unemployment.

Workforce professionals identified different types of services that older 

workers need from the workforce system to help address their 

reemployment challenges, such as employers’ reluctance to hire them.

For example, workforce professionals said older workers need services 

that help them

• learn how to present their skills and experiences to potential 

employers in a way that does not draw attention to their age, 

extensive years of experience, and past high-level positions;

• develop interview responses that can diffuse employer concerns 

about hiring older workers, such as whether the job seeker would be a 

good fit, be willing to work for less pay, or be okay with reporting to a 

younger manager;

• understand how to adjust their physical appearance to make a better 

impression on prospective employers;

• develop skills, including technological skills, that employers currently 

expect their employees to possess; and

• complete and submit online job applications.

 

57A recent survey of long-term unemployed and underemployed individuals ages 18-64 

also found that many of these long-term unemployed individuals reported negative 

impacts on their mental and physical health. See Kaiser Family Foundation/ NPR LongTerm Unemployed Survey. 

Older Workers Need 

Reemployment Services 

That Address Their Unique 

Challenges
 

Page 33 GAO-12-445 Unemployed Older Workers

One-stop career center staff told us they offer classes and other support 

for workers to help with résumé writing, job interviewing, and computer 

skills. Some one-stop career center staff members told us that they 

perform mock interviews to help older job seekers learn how to gracefully 

respond to blunt questions that employers may ask older job applicants.

Staff at two of the one-stop career centers we visited told us they had 

studied the details of some large employers’ online applications to help 

job seekers avoid having their applications automatically rejected 

because of blank fields or inappropriate responses.

One-stop career center staff also told us that providing the type of 

assistance that some older workers need can be very time-consuming. 

For example, one-stop career center staff said that helping some older 

workers understand that their physical appearance or discouraged 

demeanor hurts their reemployment prospects usually requires sensitive 

one-on-one discussions. Also, one-stop career center staff told us they 

sometimes have to work individually with older workers for long periods of 

time to help them complete online applications.

Older workers who saved for retirement but lost their jobs following the 

recession could face reduced retirement security because of long-term 

unemployment, in part because they have fewer years to accrue 

additional benefits or make additional contributions, and they might rely 

upon their retirement savings to cover expenses incurred while they are 

unemployed. Furthermore, a long period of unemployment could lead 

older workers to claim early Social Security retirement benefits, which 

would reduce their monthly benefits for the rest of their lives.

Long-term unemployment can reduce an older worker’s future monthly 

retirement income in numerous ways, such as by reducing the number of 

years the worker can accumulate DB plan retirement benefits or DC plan 

savings, by motivating Social Security claims at an earlier age than the 

worker otherwise would have chosen, and by leading workers to draw 

down retirement savings to pay for expenses during unemployment.

Job loss can result in fewer years of work over a worker’s lifetime, which 

can lower the worker’s retirement income in several ways. For example, 

fewer years of work can prevent a worker covered by a traditional DB 

plan from having enough years of work with an employer to vest in (that 

is, earn a nonforfeitable right to receive) employer-funded retirement 

benefits, thus preventing the worker from having any retirement benefits 

Job Loss Can 

Diminish Retirement 

Income Prospects

Job Loss Can Lead to 

Lower Private Retirement 

Income, Early Social 

Security Claims, and 

Exhaustion of Retirement 

Savings

Fewer Years of Work Can 

Lower Retirement Income
 

Page 34 GAO-12-445 Unemployed Older Workers

from the employer.58 Fewer years of work can also reduce a worker’s final 

retirement benefit from a traditional DB plan if the number of years 

worked is used in the formula for calculating retirement benefits. For 

workers with DC plans, having fewer years of work can limit the amount 

of yearly employee and employer contributions that accumulate in a 

worker’s account and reduce the earnings from those contributions. 

Further, having fewer years of work gives a worker less time to move up 

the salary ladder and achieve higher levels of pay. For a worker with a 

traditional DB plan, this will result in lower benefits if salary levels are 

included in the formula for calculating benefits, and, for a worker with a 

DC plan, this can reduce the worker’s ability to increase contributions to 

the plan over time. Social Security retirement benefits may be reduced as 

a result of fewer years of work because the benefits are based, in part, on 

a calculation of the worker’s average monthly earnings over 35 years. 

The 35 years used for the calculation are the worker’s highest earnings 

years, adjusted for changes in wage levels. If a worker has less than 35 

years of earnings, then zeros would be used for earnings in the missing 

years, and this will result in a lower calculated benefit. Even if the worker 

had already worked for 35 years, losing work could reduce the worker’s 

Social Security retirement benefits because the worker did not have the 

opportunity to achieve higher earnings to replace low-earnings years in 

the benefit calculation.59

Our simulations of how job loss and a forced early retirement would affect 

an older worker’s retirement income show that workers who had been 

participating in an employer-sponsored retirement plan would lose more 

retirement income because of job loss than workers who relied 

 

58The terms of an employer-sponsored retirement plan may specify when the employee 

has earned a nonforfeitable right to employer-funded benefits (called vesting), typically 

after the employee reaches a certain age or has completed a certain period of service. 

Federal vesting requirements may apply to some plans. For example, to qualify for 

favorable tax treatment, private sector DB plans are generally required to vest within a 

maximum of 7 years if they use graded vesting, in which the employee is vested in an 

increasing percentage of the benefits over time. If the plan does not use graded vesting, 

employees must be 100 percent vested within 5 years. In addition, employees must be 

vested upon reaching retirement age (typically age 65 or earlier, if defined by the plan), 

and federal law limits the ability of plans to disregard an employee’s prior years of service 

after breaks in service of less than 5 years. 29 U.S.C. § 1053(a)-(b). However, plans 

sponsored by public sector employers are not generally subject to these requirements, 

although state laws may apply. 

59For more information on how Social Security retirement benefits are calculated, see 

online illustration at http://www.ssa.gov/oact/ProgData/retirebenefit1.html.
 

Page 35 GAO-12-445 Unemployed Older Workers

exclusively on Social Security retirement benefits.60

We simulated how losing years of work as well as losing coverage by an 

employer-sponsored retirement plan between ages 55 and 62 could affect 

retirement income. Specifically our simulation estimated pretax monthly 

retirement income beginning at age 62 for groups forced to leave work at 

ages 55 and 58, and we compared future retirement income of these 

groups with our simulation results for a group who stopped work at age 

62. The simulations show that retirement benefits from employersponsored plans are reduced much more than Social Security retirement 

benefits as a result of having fewer years of work. For example, medianlevel retirement benefits from employer-sponsored plans are 39 percent 

lower—$500 compared with $817—for workers with a DC plan (and no 

DB plan) who leave work at age 55 compared with similar workers who 

work until age 62. For these same groups of workers, median Social 

Security retirement benefits are only 13 percent lower—$1,273 compared 

with $1,467—for those who stopped working at age 55. Also, according to 

our simulations, the median Social Security retirement benefit for workers 

who leave work at age 55 or 58 with only a DC or a DB plan (but not both) 

is higher than the median benefits for such workers from an employersponsored retirement plan.

Workers with 

employer-sponsored retirement plans are in the best position to save for 

retirement because their retirement saving is facilitated and may be 

supplemented by their employers. Also, workers with access to employersponsored plans typically have higher average earnings than workers 

without access to such plans, and higher earnings will generally result in 

higher Social Security retirement benefits and generally in a greater ability 

to save for retirement. These workers also have the most retirement 

income to lose by becoming unemployed.

61

 

60Our simulations of how job loss and a forced early retirement would affect an older 

worker’s retirement income cover retirement income from employer-sponsored retirement 

plans and Social Security retirement benefits but not retirement income from other 

sources.

61Over time, the percentage of a worker’s retirement income coming from Social Security 

compared with private sources may increase because Social Security retirement benefits 

are subject to cost-of-living adjustments based on the Consumer Price Index for Urban 

Wage Earners and Clerical Workers published by the Bureau of Labor Statistics; however, 

retirement benefits from private sources may not be inflation-adjusted. 
 

Page 36 GAO-12-445 Unemployed Older Workers

The simulations also show that some workers with employer-sponsored 

retirement plans who lose their jobs in their 50s are likely to end up either 

not vesting in the plans or cashing out their savings when they lose their 

jobs. On the other hand, the simulations demonstrate that workers who 

have benefits from both a DB and a DC plan are in the best financial 

position for retirement. At the median level of benefits, even those who 

were forced to retire at age 55 would have higher monthly retirement 

income than workers with only a DB or DC plan who worked until age 62. 

Figure 11 shows the simulations’ results at the median level (middle value 

in distribution) of benefits for workers who had been participating in 

employer-sponsored plans. 

The older workers from our simulations in figure 11 are better positioned 

for retirement than many other older workers because (1) they were 

fortunate enough to be working for an employer that offered a retirement 

plan before they lost their job, and (2) their retirement benefits are at the 

median level, which means their benefits are higher than those of almost 

half of the other workers in their group with similar retirement plans. 

Workers with benefits in the lower range (25th percentile) have 

substantially lower benefits. For example, a worker with benefits from a 

DC plan at the 25th percentile level will receive only about $136 per 

month from the DC plan at age 62 if the worker stops working at age 58, 

and such a worker will receive only $239 if he or she stops working at age 

62. The results of our simulation show a best-case scenario for workers 

with DC plans because the simulation assumes the workers do not draw 

down any DC plan savings before age 62. 

Finally, the simulations demonstrate that workers with both a DB and DC 

plan are in the best financial position for retirement. At the median level of 

benefits, even those who were forced to retire at age 55 would have 

higher monthly retirement income than workers with only a DB or DC plan 

who worked until age 62.
 

Page 37 GAO-12-445 Unemployed Older Workers

Figure 11: Potential Effect That Fewer Years of Work Can Have on Retirement Benefits for Workers with Median-Level 

Retirement Benefits from Employer-Sponsored Plans and Median-Level Retirement Benefits from Social Security

Note: The cohort used from the simulation models comprises individuals who were age 55 in 2010 

and were participating in a retirement plan at their current employer. The models simulated retirement 

benefits at age 62 after all individuals in the cohort stopped working at ages 55, 58, and 62. The 

graphic shows the median level of benefits from employer-sponsored plans (including benefits from 

prior employers) based on the type of plan the individuals were participating in at the time of job loss.

The medians for private retirement benefits and for Social Security retirement benefits were 

calculated separately and cannot be combined to get a median for total retirement income. The 

models assumed that all participants who vested in benefits and did not cash out their benefits when 

they left the job before age 62 used DC plan savings to purchase an annuity at age 62.

Our simulations showed that workers with only Social Security retirement 

benefits have a comparatively small reduction in retirement income 

because of job loss, but, given their low monthly retirement income levels, 

the approximately $30 to $60 reduction could become problematic as 

retirees age and if health care costs and premiums continue to increase. 

Also, these workers may have great difficulty paying for living expenses 

while they are unemployed before they are old enough to claim Social 

Security retirement benefits because, if they do not have retirement 

savings, they may not have other savings to help them through a period 

of long-term unemployment. Figure 12 shows the simulations’ results at 

the median level of benefits for workers who stopped working at different 

ages and had only Social Security retirement benefits.
 

Page 38 GAO-12-445 Unemployed Older Workers

Figure 12: Potential Effect That Fewer Years of Work Can Have on Social Security 

Retirement Benefits of Workers without Employer-Sponsored Retirement Plans

Note: Benefit amounts shown are for claims filed at age 62. The cohort used from the simulation 

models comprises individuals who were age 55 in 2010 and did not have retirement benefits from an 

employer-sponsored plan or IRA at age 62.

The responses of our focus group participants, academic research, and a 

recent spike in Social Security claims indicate that long-term 

unemployment can motivate older workers to file for early Social Security 

retirement benefits, which will result in those workers and their survivors 

receiving lower monthly retirement benefits for the rest of their lives than if 

the workers had waited to claim benefits at full retirement age.62

 

62The full retirement age is the age at which an individual is eligible to receive unreduced 

retirement benefits. This age ranges from 65 to 67 depending on the year the recipient 

was born. 42 U.S.C. § 416(l); 20 C.F.R. § 404.409(a). 

Many 

unemployed older workers in our focus groups said that they were 

planning to claim Social Security retirement benefits as soon as they were 

eligible or had already done so. They said that they could not find a job 

and needed a source of income to help pay for living expenses, and 

therefore decided to claim Social Security retirement benefits early. Some 

focus group participants also expressed the notion that they needed to 

claim Social Security retirement benefits as soon as possible because 

they were afraid of changes Congress might make in Social Security 

benefits and wanted to ensure they were grandfathered into the program 

before the changes were made. A few older workers in our focus groups 

who were too young to claim Social Security retirement benefits but had 

health problems that affected their ability to work said they applied for 

Social Security disability benefits to help pay for living expenses after they 

became unemployed.

Unemployment Can Motivate 

Older Workers to Claim Social 

Security Retirement Benefits 

Early 
 

Page 39 GAO-12-445 Unemployed Older Workers

Claiming Social Security retirement benefits at age 62 will cause an older 

worker to receive lower monthly benefits than if the worker had waited 

until full retirement age to claim benefits. Because Social Security 

retirement benefits are adjusted to provide approximately the same 

estimated value of lifetime benefits regardless of when the benefits are 

claimed, claiming benefits early results in a reduction to the monthly 

benefit amount because the benefits are paid out over a longer period of 

time. Therefore, older workers who claim Social Security retirement 

benefits early will have less income from Social Security each month to 

pay for living expenses for the rest of their lives. Figure 13 shows how an 

older worker’s monthly Social Security retirement benefit would differ 

depending on the age at which the worker claimed the benefits.

Figure 13: Example of the Effect of Early Claiming on Monthly Social Security 

Retirement Benefits

Note: For this analysis, GAO applied Social Security retirement benefit formulas for delayed and early 

claiming to the age 62 benefit amount derived from the analysis used in the preceding figure (fig. 12). 

The illustration is based on an individual who worked until age 62. The individual used in the 

illustration (1) is from a subset of the cohort used in the simulation models comprising individuals who 

were age 55 in 2010 and did not have retirement benefits from an employer-sponsored plan at age 

62, and (2) had Social Security retirement benefits at the median level for the subset.

Academic studies have found that unemployment can lead workers to 

retire. A study published in 2009 covering 30 years of data on 

employment and retirement decisions found that during times when 

obtaining a new job is difficult, older workers were likely to retire in 
 

Page 40 GAO-12-445 Unemployed Older Workers

response to becoming unemployed.63 Regarding the then-ongoing 

recession of 2007-2009, the study estimated that more older workers 

would retire early because of unemployment than would delay retirement 

in an attempt to rebuild savings after the downturn in the financial market. 

Also, a 2012 study found that high unemployment increases Social 

Security retirement claims among men with limited education.64 The spike 

in claims for Social Security retirement benefits that occurred in 2009 

after large increases in unemployment rates offers support for the study’s 

findings. According to estimates from SSA’s Office of the Chief Actuary, in 

fiscal year 2009 about 139,500 (about 6 percent) more older workers 

applied for Social Security retirement benefits than would have been 

expected in the absence of a recession.65

The recession also led to an increase in applications for disability benefits 

from the Social Security Disability Insurance program. In 2009, SSA 

received approximately 205,000 (12 percent) more applications for 

disability benefits because of the recession, and applications also rose in 

2010 because of the recession, according to estimates by the Office of 

the Chief Actuary.66

 

63Courtney Coile and Phillip B. Levine, The Market Crash and Mass Layoffs: How the 

Current Economic Crisis May Affect Retirement, Working Paper 15395, 

While we do not know the percentage of these 

http://www.nber.org/papers/w15395, NBER (Cambridge, MA: 2009) . 

64The researchers estimate that the recession of 2007-2009 increased Social Security 

retirement claiming for men with limited education by about 40 percent. See Owen Haaga 

and Richard W. Johnson, Social Security Claiming: Trends and Business Cycle Effects,

Center for Retirement Research at Boston College (Chestnut Hill, MA: February 2012). 

65When the Office of the Chief Actuary made estimates in December 2008 for the number 

of retirement benefit claims SSA would receive in fiscal year 2009, it did not factor 

recessionary effects into the estimates because, at that time, it did not know if the 

recession would increase or reduce the number of applications SSA would receive for 

retirement benefits. Therefore, according to the Office of the Chief Actuary, comparing the 

estimates for retirement benefits applications for fiscal year 2009 that were made in 

December 2008 with the actual number of applications received in fiscal year 2009 

provides a reasonable estimate of the effect of the recession on Social Security 

applications in fiscal year 2009.

66When the Office of the Chief Actuary made estimates in April 2008 for the number of 

OASDI disability applications SSA would receive in fiscal year 2009, it was not recognized 

within the United States that the economy was in recession, and a recession was not 

expected. Therefore, the Office of the Chief Actuary did not factor recessionary effects into 

the April 2008 estimates. According to the Office of the Chief Actuary, comparing the 

estimates for OASDI disability benefits applications for fiscal year 2009 that were made in 

April 2008 with the actual number of applications received provides a reasonable estimate 

of the increase in applications due to the recession. 
 

Page 41 GAO-12-445 Unemployed Older Workers

additional applications that were filed by older workers, the majority of 

disability awards (approved applications) are for individuals age 50 and 

over. Also, for individuals age 50 and over, awards for disability benefits, 

as well as the percentage of individuals in the population who have been 

awarded disability benefits have increased since the recession started.67

Older workers who lost their jobs in the recession had significant injuries 

or health problems, and were not old enough to claim Social Security 

retirement benefits have strong incentive to apply for Social Security 

disability benefits. If they are awarded benefits, they will receive monthly 

payments and, after a 24-month waiting period, they will be eligible for 

health insurance from the Medicare program.

(See app. V for information on the increase in disability benefit awards.)

68

An increase in the number of individuals receiving disability benefits is 

costly for the OASDI trust funds.

Also, receiving Social 

Security disability benefits gives unemployed older workers an alternative 

to claiming Social Security retirement benefits early. This is because 

individuals who are awarded Social Security disability benefits and remain 

eligible for those benefits can continue receiving them up until full 

retirement age, when they can begin receiving full retirement benefits.

69

 

67According to the Office of the Chief Actuary, applications did not increase as a result of 

the recession for Aged benefits under the Social Security Supplemental Security Income 

(SSI) program. To be eligible for SSI Aged benefits, individuals must be 65 or over and 

have very low income and few assets. Such individuals may have already been 

unemployed before the recession, which could help explain why the recession did not 

increase applications for SSI Aged benefits.

According to the Office of the Chief 

Actuary, some workers who applied for disability benefits as a result of 

the recession probably would have applied eventually, but job loss or 

other effects of the recession motivated them to apply earlier. However, 

other workers may never have applied for disability benefits if they had 

not lost their jobs, and the trust fund would not have made disability 

payments to those workers.

68 Receipt of disability benefits is generally subject to a 5-month waiting period beginning 

with the month the applicant was both insured for disability and disabled, as defined by 

statute. 42 U.S.C. § 423, 20 C.F.R. § 404.315.

69Unlike Social Security disability benefits, early Social Security retirement benefits do not 

increase expenditures from the OASDI trust funds. This is because retirement benefits are 

actuarially adjusted based on the age the benefits are claimed.
 

Page 42 GAO-12-445 Unemployed Older Workers

Unemployment can also lead an older worker who has a retirement 

account to use some or all of those savings to cover living expenses while 

unemployed. Slightly over half of the older workers in our focus groups 

who reported having retirement savings in an IRA or DC plan also 

reported that they had used some or all of these savings to pay for 

expenses while they were unemployed. For example, focus group 

participants described using retirement savings to cover expenses such 

as mortgage and car payments, medical bills, a child’s college tuition, and 

moving to more affordable housing. A survey of unemployed workers 

conducted in March 2010 also found that a high percentage reported 

using savings set aside for retirement or other purposes to help make 

ends meet.70 In addition, an October 2010 survey of workers age 50 and 

over found that nearly a quarter reported that they had used all their 

savings during the past 3 years.71

The earlier a worker stops working and cashes out DC plan savings, the 

lower the savings will be and the shorter the period that the savings are 

likely to last. Depending on the level of savings, the length of time the 

worker spends unemployed, and the worker’s other financial resources, a 

worker may be at risk of using a large percentage of DC savings during 

unemployment. If the worker is fortunate enough to find another job that 

includes an employer-sponsored retirement plan or pays enough to 

enable the worker to save some earnings in an IRA, the worker will be 

able to resume saving for retirement. Figure 14 illustrates how a worker’s 

retirement savings of $70,000 in a 401(k) plan could change after 2 years 

of unemployment, depending on how much the worker withdrew from the 

account while unemployed.72

 

70Heidkamp, Corre, and Van Horn, The “New Unemployables”, Older Job Seekers 

Struggle to Find Work During the Great Recession. 

The figure also shows how the account 

value could increase if the worker became reemployed and resumed 

71Sara E. Rix, AARP Public Policy Institute, “Recovering from the Great Recession: Long 

Struggle Ahead for Older Americans” (Washington, D.C.: May 2011). This study surveyed 

adults aged 50 and over who had been in the labor force at some point during the 

previous 3 years.

72We used $70,000 as the starting point for this illustration because it is about the median 

level of DC plan savings for employed workers age 55 and over who have a DC plan 

account from a current or past employer. For purposes of this illustration, we decided to 

round this median to the nearest $10,000. Based on 2007 Survey of Consumer Finances 

data, the estimated median is $70,800 and its 95 percent confidence interval is within plus 

or minus $13,204, or between $57,596 and $84,004. 

Unemployment Can Lead Older 

Workers to Use Their Private 

Retirement Savings Early 
 

Page 43 GAO-12-445 Unemployed Older Workers

saving for retirement. As shown in figure 14, if the worker did not make 

any withdrawals during the period of unemployment, savings could have 

reached nearly $110,000 by age 62, after becoming reemployed. On the 

other hand, if the worker withdrew 50 percent of the retirement account 

balance while unemployed but then found a job and saved for another 5 

years, the worker would still have less savings than before unemployment 

began. 

Figure 14: How Drawdowns from Retirement Savings during Unemployment Can Affect Amounts Saved at Time of Retirement 

if a Worker Became Reemployed and Resumed Saving

Note: This illustration is based on an individual who was born at the beginning of 1953, turns 55 in 

2008, and retires at age 62 in 2015. To calculate changes in the account balance over time, we used 

the interest and rate-of-return assumptions as reported in past and projected under the intermediate 

cost assumptions in the 2011 Annual Report of the Board of Trustees of the Federal Old-Age and 

Survivors Insurance and Federal Disability Insurance Trust Funds (also known as the OASDI 

Trustees’ Report). We used scaled earnings for medium annual earners as reported in past and 

projected in the 2011 OASDI Trustees’ Report. We assumed the employee contributions to the 

retirement account are 6 percent of the individual’s wages and received a 3 percent employer 

matching contribution.
 

Page 44 GAO-12-445 Unemployed Older Workers

If the individual shown in figure 14 worked beyond the age of 62, the 

worker could continue to increase the savings and postpone the time 

when the savings would need to be used. If the worker worked until age 

65, savings could reach about $139,500, if no withdrawals were made 

while unemployed. But, if substantial withdrawals were made while 

unemployed, the worker would need to work past age 62 just to get back 

to the level of savings in the account before the unemployment began. On 

the basis of our estimates, if the worker withdrew 50 percent of the 

retirement account balance while unemployed and became reemployed 

at age 57, it would take about 5 1⁄2 more years of saving (age 62 1⁄2) until 

the account balance got back to the level it was when the worker was 55.

In the period shortly before the recession started, we estimate that 40 

percent of employed individuals age 55 and over had no DB plan and no 

retirement savings or savings below $50,000.73 Specifically, we estimate 

that 22 percent of older workers had no private retirement savings and did 

not participate in a retirement plan, and an additional 18 percent only had 

retirement savings of less than $50,000 in a DC plan or IRA. Another 23 

percent had total retirement savings of $50,000 or more in a DC plan or 

IRA and did not participate in a DB plan. We estimate that 37 percent of 

older workers were participating in a DB plan at their current employer or 

had earned the right to receive benefits from a past employer’s DB plan, 

and about half of these (19 percent of all older workers) had both a DB 

and a DC plan.74

When older workers’ retirement plans and retirement savings are 

combined with those of their spouses, the resulting estimates indicate that 

more households than individuals have private retirement savings or plan 

participation. For households with at least one spouse over age 55, an 

estimated 16 percent had no retirement savings or plan participation, and 

an additional 13 percent had savings of less than $50,000. Figure 15 

shows the estimated percentage of part- or full-time employed individuals 

See figure 15 for the results of our analysis, based on 

data from the 2007 Survey of Consumer Finances.

 

73Percentage estimates based on the 2007 Survey of Consumer Finances have 95 

percent confidence intervals of within plus or minus 3.4 percentage points of the estimate 

itself. See appendix I for additional information about this survey and estimates. 

74Our analysis does not cover the dollar value of benefits that individuals expect to receive 

from DB plans because these data are not collected in the Survey of Consumer Finances. 

Before the Recession, 

Many Older Workers Had 

Little or No Retirement 

Savings
 

Page 45 GAO-12-445 Unemployed Older Workers

age 55 and older and their households according to the type of retirement 

plans or savings they had at the time of the 2007 survey. The percentage 

of those shown as participating in a DC or DB plan includes those who 

were participating at their current employers or who had accumulated 

benefits from a prior employer.

Figure 15: Estimated Levels of Retirement Savings and Types of Plan Participation for Employed Workers 55 and Over and 

Their Households, 2007
 

Page 46 GAO-12-445 Unemployed Older Workers

Note: For the purpose of this figure, retirement savings are considered to be participation in a DB or 

DC plan at a current employer, earned DB benefits from a past employer, a DC account from a past 

employer, a Keogh account, or an IRA. In this figure, rollover IRAs—IRAs that were started with funds 

rolled over from a DC plan account—are counted as DC savings, not IRAs. Also, Keogh accounts are 

counted as IRAs. Our analysis of households only includes the retirement savings and plan 

participation of the head of household and the spouse and does not include the retirement savings or 

retirement plan participation of additional family members. Percentage estimates in this figure have 

95 percent confidence intervals that are within plus or minus 3.2 percent of the estimate itself.

Because of rounding, percentages for “total value of retirement savings” for households does not sum 

to the corresponding combined value for categories “IRA only” and “DC.” 

Changes that have occurred since 2007, including job losses and 

financial market declines, have likely reduced retirement savings for some 

older workers.75 Also, after the start of the recession in 2007, to cut costs, 

some employers suspended contributions to their employees’ DC 

accounts, which will ultimately reduce employees’ retirement income.

According to the Employee Benefit Research Institute’s (EBRI) annual 

Retirement Confidence Survey, workers’ confidence in being able to 

afford a comfortable retirement has eroded since 2007.76

 

75According to a recent study using data from the Health and Retirement Study, “The 

retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 

declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their 

wealth would have increased over these 4 years.” See Alan L. Gustman, Thomas L. 

Steinmeier, and Nahid Tabatabai, “How Did the Recession of 2007-2009 Affect the Wealth 

and Retirement of the Near Retirement Age Population in the Health and Retirement 

Study?” NBER Working Paper 17547, 

For example, in 

2007, according to EBRI estimates, 11 percent of workers age 55 and 

over said they were not at all confident about having enough money to 

live comfortably in retirement. By 2011, that percentage had increased to 

22 percent. In addition to the impact of the 2007-2009 recession and 

ensuing financial downturn, these changes may indicate that more older 

workers are becoming aware that they do not have enough savings to 

retire and need to keep working to increase their income or save more for 

retirement. This may help explain why the proportion of older workers 

participating in the workforce has continued to increase. Also, since the 

onset of the recession, more workers have reported that they expect to 

retire at older ages than in the past. EBRI conducted an analysis of 

expected retirement ages of workers age 50 and over using 2006, 2008, 

and 2010 data from the University of Michigan’s Health and Retirement 

Study. EBRI found increases from 2006 to 2010 in the percentage of 

http://www.nber.org/papers/w17547 (Cambridge, 

MA: October 2011).

76Ruth Helman, Craig Copeland, and Jack VanDerhei, Issue Brief No. 355: The 2011 

Retirement Confidence Survey: Confidence Drops to Record Lows, Reflecting “the New 

Normal,” Employee Benefit Research Institute (Washington, D.C.: 2011). 
 

Page 47 GAO-12-445 Unemployed Older Workers

workers age 50 and over who expected to retire after age 65.77 However, 

workers’ reports about plans to delay retirement should be considered 

with some skepticism because EBRI has found that a large percentage of 

workers retire earlier than they expected for various reasons, including 

health problems, downsizing or closure of their company, and having to 

care for a spouse or other family member.

Experts we interviewed most frequently selected a range of policy 

proposals that could potentially help unemployed older workers regain 

employment as the economy improves.78 In the current context of high

unemployment and slow job creation, the impact of such policies is likely 

to be muted by limited job openings. Nonetheless, experts we spoke to 

said these policies could potentially help some older workers obtain 

reemployment. Labor has taken some steps to help older workers by 

implementing several strategies proposed in its 2008 Taskforce report.

 

77Sudipto Banerjee, “Retirement Age Expectations of Older Americans Between 2006 and 

2010,” Employee Benefit Research Institute, Notes Vol. 32, No. 12, Dec. 2011, 2-12. 

78The 12 experts we interviewed primarily work in academia and think tanks, and were 

selected based on their expertise on older workers, workforce development, or retirement 

policy. We selected a group of experts to help ensure a range of viewpoints. We asked 

these experts if they would be willing to assess the strengths and weaknesses of policy 

proposals to help long-term unemployed older workers regain employment. Prior to 

interviewing the experts, we sent them a list of the 21 policy proposals we had compiled 

from previously published studies and reports. We asked the experts to select those 5 

policies they believed merited serious consideration. The 8 policies addressed in this 

section are those that received votes from 4 or more of the 12 experts we interviewed.

The expert discussion cited in this report should be interpreted in the context of two key 

limitations and qualifications. First, although we were able to secure the participation of a 

balanced, highly qualified group of experts, other experts in this field could not be included 

because we needed to limit the size of the panel. Second, although many points of view 

were represented, the panel was not representative of all potential views. 

Experts Selected 

Policies to Consider 

as the Economy 

Recovers, and Labor 

Has Taken Some 

Steps to Help Older 

Workers 
 

Page 48 GAO-12-445 Unemployed Older Workers

Experts we interviewed most frequently selected a variety of policy 

options that could help address unemployed older workers’ reemployment 

challenges. Experts selected these policies from a broader list of 

proposals we compiled from previous studies,

79

The eight policy proposals experts most frequently selected fall into three 

categories, organized by the underlying issue they are meant to address: 

(1) employer reluctance to hire older workers, (2) the need to enhance 

reemployment assistance targeted specifically to older workers, and (3) 

the need to encourage older workers to obtain reemployment as quickly 

as possible. However, some of the policy proposals experts selected will 

be of limited effectiveness as long as the number of job seekers greatly 

outnumbers the number of available jobs. Further, the effectiveness of 

some proposed policies could be limited if older workers’ unemployment 

is caused by structural rather than cyclical changes. However, experts we 

spoke to said these policies could potentially help older workers obtain 

reemployment.

many of which were 

conducted before the recession. (For a complete list of the proposals we 

presented to experts, see app. VI.) While there was no consensus among 

experts and each proposal had advantages and disadvantages, several 

experts we spoke to said implementing several policies in combination 

would likely improve older workers’ employment levels more than 

implementing any of the policies in isolation. Experts differed on whether 

they believed the policies should be narrowly targeted at older workers or 

more broadly applied to all long-term unemployed workers. Some experts 

suggested all long-term unemployed workers—not just those who are 

older—should qualify to receive assistance under some proposed 

policies. Others said that policies specifically targeted to older workers 

could help “level the playing field” and contain federal costs. Finally, 

experts said that implementing many of the policies would increase 

federal spending and involve legislative changes, and would therefore 

need to be considered carefully in the context of our nation’s current longterm fiscal challenges.

 

79Before interviewing experts, we reviewed the literature, including past GAO reports, 

academic studies, and federal agency reports, to identify policies that have been proposed 

to help unemployed older workers regain employment. The eight policies that received 

votes from at least 4 of the 12 experts are listed in tables 1 to 3 along with experts’ 

comments on the policies’ strengths and limitations. 

Proposed Policies to Help 

Older Workers as the 

Economy Recovers
 

Page 49 GAO-12-445 Unemployed Older Workers

Of the eight proposed policies most frequently selected, three aim to 

address employer reluctance to hire older workers (see table 1). As 

discussed previously, almost all of the experts and workforce 

professionals we interviewed said that some employers are reluctant to 

hire older workers. When explaining why this might be the case, many 

experts cited older workers’ higher health care costs and salary 

expectations. Many experts we interviewed said that eliminating the 

requirement that Medicare generally be the secondary payer for benefits 

for workers age 65 and over covered by an employer group health plan 

could improve employers’ willingness to hire older workers.80

Table 1: Experts’ Views on Key Strengths and Limitations of Selected Policy Proposals to Help Address Perceived Employer 

Reluctance to Hire Older Workers

However, 

the experts also acknowledged that implementing such a policy would 

shift health insurance costs from employers to the public system and 

exacerbate Medicare’s current financial challenges. Two of the other 

proposed policies experts most frequently selected would provide 

incentives to employers to encourage them to hire long-term unemployed 

older workers, such as by offering temporary wage or training subsidies.

Experts’ favored policy proposals to help address perceived employer reluctance to hire older workers

Eliminate the requirement that Medicare generally be 

the secondary payer for workers covered by an 

employer group health plan.

Key strengths as identified by experts

a Could minimize younger workers’ cost advantage to employers because of 

their lower health care costs, and by doing so would make hiring older 

workers more attractive to employers.

Could be justified on the grounds of fairness, since working individuals 65 

and over have paid their Medicare taxes and are entitled to the benefit.

Key weaknesses as identified by experts

Might not help that many older workers, or the neediest among them, 

because it would apply only to those 65 and over, who can typically collect 

Social Security retirement benefits, and not those 55-64.

This would represent a cost to the government and exacerbate Medicare’s 

financial challenges, although it is unclear by how much. The cost might be 

limited because workers 65 and over tend to be in better health—and 

therefore less expensive to cover—than nonworkers 65 and over.

 

80For workers aged 65 or over and covered by their own or their spouse’s employer’s 

group health plan, federal law generally requires that the employer’s group health plan be 

the primary payer and Medicare be the secondary payer for benefits. 42 U.S.C. § 

1395y(b)(2)(A); 42 C.F.R. §§ 411.170, .172, .175. 
 

Page 50 GAO-12-445 Unemployed Older Workers

May not increase the employment rate of those 65 and over very much, since 

many work part-time and are not covered by their employers’ health 

insurance plans.

Congress could offer temporary wage subsidies to 

employers that hire older workers who have 

experienced long-term unemployment (27 or more 

weeks).

Key strengths as identified by experts

Could influence employers’ behavior to make them more likely to hire older 

workers. 

Limiting eligibility to older workers makes the policy more efficient by 

reducing the likelihood that the government would be subsidizing individuals 

that employers would have hired anyway.

Could be cost-effective when the costs of long-term unemployment and 

entitlement programs are taken into account.

Key weaknesses as identified by experts

May lead some employers to postpone hiring to get the benefit, because it 

would make older workers unemployed for 27 or more weeks cheaper than 

those unemployed for a shorter period. 

May influence the type of workers employers hire, rather than increasing 

overall employment levels.

May want to expand eligibility to all unemployed older workers, not just those 

unemployed for 27 or more weeks, because evidence indicates that 

unemployed older workers tend to remain unemployed for long periods of 

time.

Potential for employer windfalls if employers would have hired the older 

worker even without the subsidies.

Congress could offer training subsidies to employers 

that hire older workers who experienced long-term 

unemployment (27 weeks or more). To be eligible for 

the training subsidy, employers would have to commit 

to retaining these workers for a certain amount of time 

(e.g., 6 months to a year). 

Key strengths as identified by experts

May increase older workers’ employment levels because the training 

subsidies would be led by employer demand and tied to an actual job. 

Could help prevent older workers’ skills from atrophying because of 

prolonged unemployment and help return them to their pre-unemployment 

productivity levels.

Limiting eligibility to older workers makes the policy more efficient by 

reducing the likelihood that the government would be subsidizing individuals 

that employers would have hired anyway.

Key weaknesses as identified by experts

Would need to ensure that current employees of organizations receiving 

subsidies are given comparable levels of training so they are not at risk of 

subsequent displacement.

Could pose equity issues, since workers of all ages have been affected by 

increased long-term unemployment.

Potential for employer windfalls if employers would have provided this 

training even without the subsidies.

Source: GAO summary of experts’ views on policy proposals selected by four or more experts.

a For workers aged 65 or over and covered by their own or their spouse’s employer’s group health 

plan, federal law generally requires that the employer’s group health plan be the primary payer and 

Medicare be the secondary payer for benefits. 42 U.S.C. § 1395y(b)(2)(A); 42 C.F.R. 

§§ 411.170, .172, .175.
 

Page 51 GAO-12-445 Unemployed Older Workers

Experts most frequently selected three proposed policies to enhance the 

reemployment assistance the federal workforce development system 

currently provides to older workers (see table 2). One of these policies 

proposes that Labor develop a job search assistance program specifically 

targeted to older workers to provide training in basic computer skills, 

résumé writing, and online application filing. The second proposed policy 

would involve changing the WIA and SCSEP performance measures to 

remove a potential disincentive for serving older workers.81

Table 2: Experts’ Views on the Strengths and Limitations of Selected Policy Proposals to Enhance Reemployment Assistance 

Specifically Targeted to Older Workers 

The third 

policy proposes increasing funding for the SCSEP program to reflect 

increases in the older worker population. 

Experts’ favored policy proposals to help enhance reemployment assistance specifically targeted to older workers

Labor could develop a job search assistance program 

specifically targeted to older workers that provides 

training in basic computer skills, résumé writing, online 

application filing, and other areas where older workers 

may require specialized assistance.

Key strengths as identified by experts

Could help older workers navigate the new, more advanced job search 

technologies that may be unfamiliar to them because they have not searched 

for a job in many years.

Job search assistance has proven beneficial to older workers and is generally 

more valuable to them than training, given their time left in the labor force.

Could be efficient because of a potentially large take-up rate, ease of program 

development and implementation, and low costs.

 

81Each state receiving funds under WIA is required to report annually the state’s and local 

areas’ progress on several performance measures based on indicators such as 

participants’ earnings, and Labor uses these measures to determine fiscal incentives and 

sanctions. 29 U.S.C. § 2871, 20 U.S.C. § 9273. The SCSEP program is subject to similar 

performance measures, 42 U.S.C. § 3056k, but does take the unique characteristics of the 

SCSEP population into account when setting performance goals for SCSEP grantees, 

according to Labor officials. For example, Labor officials said the average earnings 

performance goals set for SCSEP grantees reflects average earnings that result from 

more likely part-time work. In a previous GAO report, we found that Labor’s calculation of 

the earnings measure, which compares pre- and post enrollment earnings for participants 

in WIA adult and dislocated worker programs, could be a barrier to enrolling older workers 

because older workers’ high prior wages and their tendency to work part-time could 

negatively affect a local area’s performance on the earnings measure. Although Labor has 

changed the earnings measure so it no longer compares pre- and post enrollment 

earnings, the measure could still provide a disincentive for serving older workers because 

older workers may be more likely to work part-time and could still have lower earnings 

after exiting the program than other adults, since older dislocated workers generally suffer 

greater earnings losses than do younger workers. See GAO, Older Workers: Employment 

Assistance Focuses on Subsidized Jobs and Job Search, but Revised Performance 

Measures Could Improve Access to Other Services, GAO-03-350 (Washington, D.C.: Jan. 

24, 2003). 
 

Page 52 GAO-12-445 Unemployed Older Workers

Key weaknesses as identified by experts

May overlap somewhat with services already offered to the general 

unemployed population.

Does not address what is perceived as employers’ reluctance to hire older 

workers, which likely affects their reemployment prospects more than whether 

their job search skills are up to date.

Congress could change WIA and SCSEP performance 

measures to eliminate any disincentives to placing 

older workers in part-time employment.

Key strengths as identified by experts

Could level the playing field for older workers, who may be penalized by the 

current measures, and make it easier to serve older workers through the onestop career center system, especially those seeking part-time work.

Could be implemented at a low cost because it primarily involves an 

administrative or technical change.

Key weaknesses as identified by experts

Unlikely to reduce unemployment by very much, since WIA and SCSEP serve 

only a fraction of eligible individuals in need of job search assistance.

Could mean fewer younger workers will get services at one-stop career centers 

if funding levels do not increase; however, this is not a serious limitation if 

current measures unfairly penalize older workers.

Congress could expand funding for SCSEP to take into 

account increases in the older worker population.

Key strengths as identified by experts 

Increased funding could help meet the employment needs of a very 

disadvantaged and underserved population that many employers are unlikely 

to employ in the absence of severe labor shortages. 

Only a small percentage of eligible individuals are currently served by SCSEP; 

expanding funding to keep up with the aging population could help keep this 

percentage from declining. 

Research has shown that SCSEP has done a reasonably good job at 

accomplishing its goals. 

Key weaknesses as identified by experts

Expanding the SCSEP program would cost money and could be difficult given 

the current budget environment. 

SCSEP is designed to serve the neediest older workers, and as a result, other 

subgroups of older workers that have been negatively affected by the recession 

would not benefit from this policy option. 

Source: GAO summary of experts’ views on policy proposals selected by four or more experts.

Finally, as previously discussed, the longer older workers remain 

unemployed, the greater their risk of losing relevant skills or of dropping 

out of the labor force. Consequently, several proposed policies aim to 

encourage older workers to obtain reemployment as quickly as possible 

or build their job skills to better position them for reemployment. Experts 

we interviewed most frequently selected two such policy proposals (see 

table 3). Specifically, a number of experts we interviewed believed that 

implementing a wage insurance program could help unemployed older 

workers accept new full-time jobs that pay less than they had previously 

earned. In addition, a number of experts favored a policy that would 
 

Page 53 GAO-12-445 Unemployed Older Workers

require the long-term unemployed to enroll in training to remain eligible 

for UI benefits.

Table 3: Experts’ Views on the Strengths and Limitations of Selected Policy Proposals to Encourage Older Workers to Obtain 

Reemployment as Quickly as Possible

Experts’ favored policy proposals to encourage older workers to regain employment as quickly as possible

Congress could enact a wage insurance program that 

temporarily compensates older workers—up to a specified 

maximum benefit—for accepting new full-time jobs that pay less 

than their previous jobs within a given time frame.

Key strengths as identified by experts

Could help older workers transition to the lower wages they will 

likely receive upon becoming reemployed and reduce the likelihood 

of premature withdrawal from the labor force.

Could help protect older workers’ retirement security and lessen 

their reliance on government assistance by reducing the likelihood 

that they will use retirement savings to replace lost income because 

of lower wages.

Could result in less spending on UI for older workers, and those 

savings could help fund the wage insurance program.

Key weaknesses as identified by experts

Could be expensive for the government, since unemployed older 

workers almost always take a pay cut when they become 

reemployed. 

Might not affect older workers’ reemployment significantly, since the 

problem may be that they are unable to find work at any wage. 

May encourage older workers to settle for low-wage, less promising 

employment that increases the probability of a subsequent period of 

unemployment.

May stigmatize unemployed older workers by putting them in a 

separate class of workers than everyone else.

Congress could require long-term unemployed individuals (27 or 

more weeks) to enroll in publicly funded retraining programs or 

publicly subsidized on-the-job training programs as a condition 

of receiving UI benefits. Some of the training funds could be 

obtained by redirecting a portion of individuals’ UI benefits for 

these purposes.

Key strengths as identified by experts

Could help prevent older workers’ skills from eroding because of 

long-term unemployment and alleviate concerns that UI benefits are 

simply a government handout.

Could potentially be less expensive for the government in the long 

run than providing UI benefits without conditions for retraining.

Could help older workers adjust to the fact that today many job 

losses are permanent rather than temporary and that they may 

need to obtain new skills to become reemployed.
 

Page 54 GAO-12-445 Unemployed Older Workers

Key weaknesses as identified by experts

The United States may lack the necessary training infrastructure 

and funding to launch a major training program that sufficiently 

prepares workers for jobs that pay decent wages and benefits.

Would require an enhanced understanding of reemployment 

barriers and employers’ training needs before the policy could be 

implemented.

Would need to ensure that the training provided is linked to actual 

employment opportunities to justify the financial investment in 

training.

Requiring all long-term unemployed older workers to enroll in 

training may not make sense financially, particularly for those with a 

short remaining work life.

Source: GAO summary of experts’ views on policy proposals selected by four or more experts.

Labor officials told us that Labor has taken several steps to implement 

selected strategies recommended in 2008 by the Taskforce on the Aging 

of the American Workforce. These steps included awarding approximately 

$10 million in grants to 10 organizations in 2009 through the Aging 

Worker Initiative demonstration project to test new ways of providing 

training and other services to connect older Americans with employment 

opportunities in high-growth, high-demand industries. Labor is currently 

in the process of evaluating these grants.82

 

82According to Labor officials, the evaluation examines the implementation of the grants, 

documents the various types of interventions, assesses attributes of the treatments, 

estimates how successful they were in assisting aging workers in becoming employed or 

reemployed, and determines the potential for implementation of various methods in the 

broader workforce system. The final report is expected in December 2012, according to 

Labor officials.

Also, in 2008, Labor 

expanded a demonstration project designed to assist individuals in 

creating or expanding their own businesses, which addresses the 

Taskforce’s recommendation to facilitate self-employment for older 

workers. Specifically, Labor awarded a second round of grants to four 

demonstration sites through this project—Project GATE (Growing 

America Through Entrepreneurship). In addition, Labor officials told us 

that they had taken steps to connect one-stop career centers to Aging 

and Disability Resource Centers (which serve adults with disabilities, 

Labor Implemented Some 

Proposed Strategies to 

Help Older Workers, but 

Has Shifted Priorities since 

the Recession
 

Page 55 GAO-12-445 Unemployed Older Workers

including the elderly) to enhance communication.83 In addition, Labor 

officials told us that since the recession began, the department has taken 

various steps to help the long-term unemployed, many of whom are older 

job seekers. Labor also continues to sponsor National Employ Older 

Workers Week, an event held annually in September in localities 

throughout the country.

84

As Labor officials we interviewed noted, the Taskforce conducted its work 

under different economic circumstances, when the workforce community 

was primarily focused on avoiding potential labor shortages. Since then, 

the number of unemployed individuals per job opening has greatly 

increased and technology has continued to change the job search and 

application process. Consequently, some issues may have assumed 

greater importance since the Taskforce issued its report, especially 

employer reluctance to hire older workers and the prevalence of online 

applications.

According to Labor officials, the onset of the 2007-2009 recession shifted 

Labor’s focus away from implementing strategies recommended in the 

Taskforce report to responding to greatly increased demand for services. 

As more Americans lost jobs and struggled to find reemployment, 

increasing numbers sought reemployment services through the one-stop 

career center system, according to Labor officials. Administrative data 

Labor provided show that from 2007 to 2010 the overall number of all 

WIA adult and dislocated worker program participants the one-stop career 

centers served nearly tripled—from over a million participants in 2007 to 

 

83Aging and Disability Resource Centers are designed to serve as “one-stop shops” for 

individuals and their families who need information about or access to long-term support 

services. The centers are part of a collaborative effort led by the Administration on Aging 

(AoA) and Centers for Medicare and Medicaid Services (CMS). Other Aging and Disability 

Resource Center partners include the Department of Health and Human Services Office 

on Disability, the Administration for Developmental Disabilities, the Department of 

Education, and the Veterans Administration.

84According to Labor officials, National Employ Older Workers Week “provides Senior 

Community Service Employment Program grantees with an opportunity to reach out to 

employers and the whole community as they recognize the vital role of older workers and 

their employers in the workforce.”
 

Page 56 GAO-12-445 Unemployed Older Workers

over 3 million in 2010.85 The number of older workers served by these 

programs from 2007 to 2010 increased at an even greater rate—over 3.5 

times—from approximately 124,000 in 2007 to around 441,000 in 2010.

Although long-term unemployment hurts job seekers of all ages, it poses 

some greater challenges for older workers. Specifically, once 

unemployed, older workers tend to stay unemployed longer, and those 

who regain employment generally sustain greater wage losses than do 

younger workers. The challenges older workers face once they lose their 

jobs also highlight the increased fragility of retirement security in this 

country. Long-term unemployment can reduce retirement income, and 

older Americans have fewer years to recover from such losses. A long 

spell of unemployment may even force some older Americans to leave 

the labor market and retire earlier than they had hoped. The high costs of 

long-term unemployment—overlaid upon the retirement insecurity facing 

so many workers—explain the different paths older workers are taking.

Thus, some are using their retirement savings and taking Social Security 

retirement benefits early in response to this extended joblessness. Yet it 

is striking that other older workers are choosing to remain in the labor 

force longer as older workers’ labor force participation continues to rise 

despite the worst labor market in generations. At least part of this trend 

may be due to inadequate retirement savings or accounts that suffered 

losses from the financial crisis.

According to experts we interviewed, some proposed policy options could 

help older workers regain employment as the economy continues to 

improve. In addition, a renewed focus by Labor on older workers’ needs 

could help workforce professionals better address the unique needs of 

older job seekers. While Labor took steps to implement some of the 2008 

Taskforce recommendations, Labor officials understandably shifted their 

focus away from the report’s findings when the recent recession caused a 

dramatic increase in demand for workforce services. Now, a renewed 

 

85The administrative data from Labor for WIA adult and dislocated worker program 

participation is for program year 2007, starting April 1, 2007, through program year 2010, 

ending on March 31, 2011. In addition to increased demand for services, additional 

funding provided under the Recovery Act contributed to this increase in the number of 

individuals the programs served. Specifically, the Recovery Act provided an additional 

$500 million in funding for grants to the states for adult employment and training activities, 

and $1.25 billion for grants to the states for dislocated worker employment and training 

activities. Pub. L.No. 111-5, tit. VIII, 123 Stat. 115, 172-73 (2009).

Conclusions 
 

Page 57 GAO-12-445 Unemployed Older Workers

focus on the needs of unemployed older workers is needed to identify 

strategies to help address older workers’ significant reemployment 

challenges because older workers remain a critical and growing segment 

of the workforce. This effort could include examining what has been 

learned since 2008 about addressing older workers’ employment needs in 

light of a changed economy, the shift to online employment applications, 

and employers’ altered expectations. Without a renewed focus on the 

unique needs of older job seekers, many unemployed older Americans 

may face difficulty regaining the employment they need to support 

themselves and their families in the short term, while also facing longterm financial hardship in retirement.

To foster the employment of older workers, we recommend that the 

Secretary of Labor consider what strategies are needed to address the 

unique needs of older job seekers, in light of recent economic and 

technological changes.

We provided a draft of this report to the Department of Labor and the 

Social Security Administration. Labor provided a written response (see 

app. VII). Both agencies provided technical comments, which we 

incorporated as appropriate. Labor agreed with our recommendation and 

noted a couple of its initiatives focused on the employment of older 

workers. Specifically, Labor cited its current evaluation of the Aging 

Worker Initiative demonstration project, which will assess the success of 

new interventions used by 10 local grantees to help connect aging 

workers with employment opportunities. In addition, Labor cited its 

sponsorship of the annual National Employ Older Workers Week that 

provides outreach opportunities for SCSEP grantees. 

Recommendation 

Agency Comments 

and Our Evaluation
 

Page 58 GAO-12-445 Unemployed Older Workers

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution until 30 days after the date of this 

letter. At that time, we will send copies of this report to the Secretary of 

Labor and the Commissioner of Social Security, and other interested 

parties. In addition, this report will be available at no charge on GAO’s 

website at http://www.gao.gov. If you or your staff have any questions 

concerning this report, please contact me at (202) 512-7215 or 

jeszeckc@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

GAO staff who made key contributions to this report are listed in appendix 

VIII. 

Sincerely yours,

Charles Jeszeck

Director, Education, Workforce, and Income Security
Appendix I: Objectives, Scope, and 

Methodology

Page 59 GAO-12-445 Unemployed Older Workers

The objectives of this study were to examine (1) how the employment 

status of older workers has changed since the recession, (2) older 

workers’ financial risks from long-term unemployment and challenges in 

finding new jobs, (3) how periods of long-term unemployment might affect 

older workers’ retirement income, and (4) what other policies might help 

unemployed older workers regain employment and what steps the 

Department of Labor (Labor) has taken to help unemployed older 

workers. We conducted this performance audit from October 2010 

through April 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence we obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. We determined 

that the data that we analyzed were sufficiently reliable for the purposes 

of this report.

To obtain background information on older workers’ employment and 

retirement prospects, we reviewed numerous studies, reports, and 

surveys of older workers. We interviewed officials from Labor and the 

Social Security Administration (SSA) and reviewed relevant data from 

those agencies.

To examine changes in the employment prospects of older workers since 

the start of the recession, we analyzed monthly data for 2007 through 

2011 from the Current Population Survey (CPS) produced by the Bureau 

of Labor Statistics (BLS). We also analyzed data from the 2008 and 2010 

Displaced Worker Supplement to the CPS.

We selected the CPS mainly because it is nationally representative and

contains large sample sizes, demographic and industry information, and 

data directly relevant to unemployment and underemployment.

Similarly, we analyzed the 2008 and 2010 Displaced Worker Supplement 

to the CPS because this supplement contains data on the employment 

and earnings status of displaced workers before and after their job loss. 

Displaced workers are defined as persons 20 years or older who lost or 

left jobs within the past 3 years for the following reasons: because their 

plant or company closed or moved, there was insufficient work for them to 

do, their position or shift was abolished, or similar economic reasons. The 

Displaced Worker Survey (DWS) is administered every 2 years as a 

supplement to the CPS. In the 2008 DWS, people are identified as 

Appendix I: Objectives, Scope, and 

Methodology 

Analysis of Employment 

Data on Older Workers
Appendix I: Objectives, Scope, and 

Methodology

Page 60 GAO-12-445 Unemployed Older Workers

displaced if they lost or left their jobs for one of the specified reasons 

between January 2005 and December 2007. In the 2010 DWS, people 

are identified as displaced if they lost or left their jobs for one of the 

specified reasons between January 2007 and December 2009. Displaced 

workers have lost a job in the past 3 years; however, they may be 

unemployed, employed, or not in the labor market at the time of the 

survey.

We use the following labor force definitions in this report:

• Unemployed workers are all jobless persons who are available to take 

a job and have actively sought work in the past 4 weeks.

• Marginally attached workers are persons who are not in the labor 

force, who want and are available for work, and have looked for work 

in the past 12 months. They are not counted as unemployed because 

they had not searched for work in the prior 4 weeks.

• Discouraged workers are a subset of the marginally attached who 

indicate that they have not searched for work in the prior 4 weeks for 

the specific reason that they believed no jobs were available for them.

• Workers employed part-time for economic reasons are those 

employed less than 35 hours per week who want and are available 

for, but are unable to find, full-time work, and those who prefer fulltime work but had their hours reduced by their employer because of 

business conditions. 

We assessed the reliability of the CPS generally and of data elements 

that were critical to our analyses and determined that they were 

sufficiently reliable for our analyses. Specifically, we

• reviewed documentation on the general design and methods of the 

CPS and on the specific elements of the CPS data that were used in 

our analyses,

• interviewed BLS officials knowledgeable about the CPS data and 

consulted these officials periodically throughout the course of our 

study, and

• completed our own electronic data testing to assess the accuracy and 

completeness of the data used in our analyses. To the extent 
Appendix I: Objectives, Scope, and 

Methodology

Page 61 GAO-12-445 Unemployed Older Workers

possible, we compared our estimates against published reports using 

the CPS data, such as BLS reports.

As a result of our assessment, we identified a limitation with the CPS 

basic monthly data. Specifically, beginning in January 2011, labor force 

estimates based on microdata diverge slightly from BLS published labor 

force estimates. According to Census Bureau officials, these 

discrepancies result from new steps that CPS implemented in 2011 to 

help prevent the inadvertent disclosure of individuals in the public use 

files. While some primary topside labor force estimates will agree, all 

others will be slightly off. This is solely the result of these disclosure 

protection procedures. Census Bureau officials told us that the masking 

procedures implemented in 2011 are random and are applied to all 

records on the file identically; they do not create any systematic biases 

that would affect our analysis of older workers.

Throughout this report, when monthly data are presented, the estimates 

are not seasonally adjusted. We were advised by Census Bureau 

officials not to attempt to seasonally adjust our analyses of CPS 

microdata, because the sample sizes in the age groups we present are 

relatively small. Most of the data in this report are annual averages, for 

which seasonal adjustments are irrelevant. Where monthly data are 

presented, unadjusted estimates and seasonally adjusted estimates do 

not necessarily diverge by a large amount. For example, this table shows 

seasonally adjusted data for figure 2, compared with the unadjusted data 

shown in table 4. 

Table 4: Comparison of Seasonally Adjusted and Unadjusted Unemployment Rates 

for Workers Age 55 and Older, Selected Months 

Unemployment rate, age 55 and 

older, unadjusted

Unemployment rate, age 55 and 

older, seasonally adjusted

December 2007 3.1% 3.2%

June 2009 6.8% 7.0%

February 2010 7.6% 7.2%

December 2011 6.0% 6.2%

Source: GAO analysis of CPS public use microdata and published data series downloaded from BLS website. 

Note: Estimates of unadjusted unemployment rates calculated by GAO using CPS public use 

microdata. These estimates are identical to BLS’s published unadjusted unemployment rates for 

workers age 55 and older. Estimates of seasonally adjusted unemployment rates for workers age 55 

and older are downloaded from BLS’s website.
Appendix I: Objectives, Scope, and 

Methodology

Page 62 GAO-12-445 Unemployed Older Workers

We also use nationally representative data from the Job Openings and 

Labor Turnover Survey (JOLTS), a monthly survey developed by BLS to 

address the need for data on job openings, hires, and separations. We 

use the JOLTS data to present a comparison of the number of 

unemployed persons with the number of job openings over the period 

January 2007 to December 2011. This is the only national data source 

available to measure job openings in the United States.

To learn about older workers’ financial risks from long-term 

unemployment and challenges in finding new jobs, we conducted 10 

focus group sessions with a total of 77 long-term unemployed older 

workers aged 55 or over at four locations. These sessions involved 

structured small-group discussions designed to gain more in-depth 

information about specific issues that cannot easily be obtained from 

another method, such as a survey or individual interviews. Consistent 

with typical focus group methodologies, our design included multiple 

groups with varying characteristics but some similarity on one or two 

homogeneous characteristics. All but one of the groups involved 8 to 10 

participants; the remaining group had only 5 participants because of poor 

attendance.

Our overall objective in using a focus group approach was to obtain 

views, insights, and feelings of older workers who had been looking for a 

job for more than half a year. Specifically, we wanted to learn what 

challenges they had faced since becoming unemployed, what barriers 

they perceived as hindering their ability to become reemployed, and their 

views on how their spell of unemployment had affected or would likely 

affect their retirement income and decisions. By including long-term 

unemployed older workers with and without employer-sponsored 

retirement plans, we intended to gather a range of perspectives regarding 

how unemployment might affect retirement prospects.

We conducted 10 separate focus group sessions with long-term 

unemployed older workers. Specifically, focus group participation was 

limited to individuals 55 or older who had been unemployed for 27 weeks 

or more and who had worked for their previous employer for at least 3 

years before losing their job. We held three sessions with individuals 

aged 55-61 who did not have an employer-sponsored retirement plan at

the job they lost, three sessions with individuals aged 55-61 who did have 

an employer-sponsored retirement plan at the job they lost, and three 

sessions with individuals aged 62-67 regardless of their retirement plan 

coverage. We also conducted one focus group session in Falls Church, 

Focus Groups with Older 

Workers and Interviews 

with One-Stop Staff and 

Other Experts
Appendix I: Objectives, Scope, and 

Methodology

Page 63 GAO-12-445 Unemployed Older Workers

Virginia. We conducted this session as a pretest, but because we did not 

need to significantly change our focus group guide after the session, we 

decided to include the results of the pretest in our focus group analysis.

We selected three cities—in addition to our pretest location in Falls 

Church, Virginia—in which to conduct focus groups. We selected these 

locations based on metropolitan areas’ unemployment rates, geographic 

diversity, and the estimated costs for travel and securing focus group 

facilities. We conducted three sessions in each of the following three 

cities—Baltimore, Maryland; San Jose, California; and St. Louis, Missouri.

Additionally, we used criteria in selecting participants that ensured a mix 

of gender and that accounted for the race and ethnicity of the area in 

which the focus groups were located.

Discussions were structured, guided by a moderator who used a 

standardized list of questions to encourage participants to share their 

thoughts and experiences. During the sessions, we informed participants 

that their names would not be used in the published report. We conducted 

one pretest focus group session prior to beginning our travel for the 

sessions. 

Each of the 10 focus groups was recorded and transcriptions were 

created, which served as the record for each group. Those transcripts 

were then evaluated using content analysis to develop our findings. The 

analysis was conducted in two steps. In the first step, three analysts 

jointly developed a set of codes to track the incidence of various 

responses and themes during focus group sessions. In the second step, 

each transcript was coded by an analyst and then those codes were 

verified by a second analyst. Any coding discrepancies were resolved by 

both analysts agreeing on what the codes should be. In addition to focus 

group sessions, we conducted one-on-one interviews with selected longterm unemployed individuals in three of our four focus group locations.

Methodologically, focus groups are not designed to (1) demonstrate the 

extent of a problem or to generalize results to a larger population, (2) 

develop a consensus to arrive at an agreed-upon plan or make decisions 

about what actions to take, or (3) provide statistically representative 

samples or reliable quantitative estimates. Instead, they are intended to 

generate in-depth information about the reasons for the focus group 

participants’ attitudes on specific topics and to offer insights into their 

concerns about and support for an issue. The projectability of the 

information produced by our focus groups is limited for several reasons. 

First, the information includes only the responses from long-term 
Appendix I: Objectives, Scope, and 

Methodology

Page 64 GAO-12-445 Unemployed Older Workers

unemployed older workers from the 10 selected groups. Second, while 

the composition of the groups was designed to ensure a range of age, 

retirement plan coverage, and racial background, the groups were not 

randomly sampled. Third, participants were asked questions about their 

experiences or expectations, and other long-term unemployed older 

workers not in the focus groups may have had other experiences or 

expectations. Because of these limitations, we did not rely entirely on 

focus groups, but rather used several different methods to corroborate 

and support our conclusions.

We also interviewed staff at one-stop career centers in each of the 

locations where we conducted focus groups to learn more about 

challenges unemployed older workers face in finding employment.

Further, we interviewed experts about older workers’ reemployment 

challenges. We selected these experts based on their knowledge of older 

workers’ issues, labor economics, and the workforce development 

system. Specifically, we used several criteria to select experts to 

interview, such as (1) having conducted research and published studies 

on relevant topics (including older workers, the workforce development 

system, labor economics, or retirement issues) or (2) representing 

associations with highly established awareness or knowledge of issues 

relevant to the employment and retirement prospects of older workers.

To assess how periods of long-term unemployment might affect older 

workers’ retirement income, we used the Policy Simulation Group’s (PSG) 

microsimulation models to simulate Social Security benefits and 

retirement plan income. For our simulations, we used PSG’s Social 

Security and Accounts Simulator (SSASIM), Genuine Microsimulation of 

Social Security Acounts (GEMINI), and Pension Simulator (PENSIM) 

simulation models. GEMINI simulates Social Security benefits and taxes 

for large, representative samples of people born in the same year. 

GEMINI simulates all types of Social Security benefits, including retired 

workers’, spouses’, survivors’, and disability benefits. It can be used to 

model a variety of changes to Social Security. GEMINI uses inputs from 

SSASIM, which has been used in numerous GAO reports, and PENSIM, 

which was developed for the Department of Labor. GEMINI relies on 

SSASIM for economic and demographic projections and relies on 

PENSIM for simulated life histories of large, representative samples of 

How Unemployment Might 

Affect Retirement Income
Appendix I: Objectives, Scope, and 

Methodology

Page 65 GAO-12-445 Unemployed Older Workers

people born in the same year and their spouses.1 Life histories include 

educational attainment, labor force participation, earnings, job mobility, 

marriage, disability, childbirth, retirement, and death. Life histories are 

validated against data from the Survey of Income and Program 

Participation, the Current Population Survey, Modeling Income in the 

Near Term (MINT3),2

In order to compare pretax retirement benefits accumulated at different 

ages, we simulated and analyzed retirement benefits for three cohorts of 

individuals born in 1955. For the first cohort, we conducted the simulation 

to have all individuals stop work at age 55 and estimated the retirement 

benefits earned by that age for each individual in the cohort. Similarly, for 

the second and third cohorts, we simulated that all individuals in the 

cohort stopped working at ages 58 and 62, respectively, and estimated 

pretax retirement benefits earned by those ages. In the simulations, for 

each cohort, we had all individuals claim their benefits at age 62, 

regardless of when they stopped working. We determined the median 

level of benefits from employer-sponsored retirement plans and Social 

Security using all individuals in each cohort, including those who would 

have had no retirement benefits from an employer-sponsored plan 

because they did not vest in benefits or they cashed out of their 

retirement plan when they stopped working. To compare how job loss at 

different ages may affect retirement benefits, we compared the retirement 

benefits for the individual at the median level of retirement benefits in 

each cohort. For our analysis of how job loss might affect retirement 

benefits for those participating in employer-sponsored plans, we only 

and the Panel Study of Income Dynamics. 

Additionally, any projected statistics (such as life expectancy, 

employment patterns, and marital status at age 60) are, where possible, 

consistent with intermediate cost projections from the Social Security 

Administration’s Office of the Chief Actuary. At their best, such models 

can provide only very rough estimates of future incomes. However, these 

estimates may be useful for comparing future incomes across alternative 

policy scenarios and over time.

 

1

While these models use sample data, our report, like others using these models, does 

not address the issue of sampling errors. The results of the analysis reflect outcomes for 

individuals in the simulated populations and do not attempt to estimate outcomes for an 

actual population. 

2

MINT3 is a detailed microsimulation model developed jointly by SSA, the Brookings 

Institution, RAND, and the Urban Institute to project the distribution of income in retirement 

for the 1931 to 1960 birth cohorts. 
Appendix I: Objectives, Scope, and 

Methodology

Page 66 GAO-12-445 Unemployed Older Workers

included individuals who were participating in an employer-sponsored 

retirement plan at the job they had when they stopped working. Our 

analysis took into consideration retirement benefits earned by individuals 

in the cohort and retirement benefits for the surviving spouse of someone 

who vested in a DB plan. Our analysis includes retirement income from 

employer-sponsored retirement plans and Social Security retirement 

benefits and does not include retirement income from other sources.

PENSIM uses several different asset allocations for defined contribution 

(DC) accounts and assigns each type of allocation to a portion of 

individuals in the cohort, based on existing research on actual use of 

different asset allocations. For our analysis, the PENSIM model used the 

assumption that all individuals who vested in employer-sponsored 

retirement benefits and did not cash out their benefits when they left the 

job before age 62 used DC plan savings to purchase an annuity at age 

62. In the model the annuity prices are based on projected mortality and 

interest rates using annuity price loading factors that ensure that the cost 

of providing these annuities equals the revenue generated by selling them 

at those prices. 

We used nationally representative 2007 Survey of Consumer Finances 

(SCF) data from the Board of Governors of the Federal Reserve to 

estimate the percentage of employed individuals age 55 and older 

(working full- or part-time) who were participating in employer-sponsored 

retirement plans or had private retirement savings before the recession 

caused substantial job losses.3

 

3

The Survey of Consumer Finances data that we used were collected from May 2007 to 

March 2008. The collection period includes a few months of the recession that started in 

December 2007; however, the significant increases in unemployment that followed the 

onset of the recession had not yet occurred. 

In addition to providing household-level 

data, the SCF also provides detailed individual-level economic 

information about an economically dominant single individual or couple in 

the household. To estimate the percentage of older workers with defined 

benefit (DB) plans, we included in our analysis any employed older 

worker who (1) was participating in an employer-sponsored DB plan at a 

current job, (2) had participated in an employer-sponsored DB plan at a 

past job and was expecting to receive retirement benefits from the plan, 

or (3) was already receiving payments from an employer-sponsored DB 

plan. Similarly, to estimate the percentage of older workers with a DC 

plan, we included any older workers with an account from a DC plan from 
Appendix I: Objectives, Scope, and 

Methodology

Page 67 GAO-12-445 Unemployed Older Workers

a current or past employer, and we counted rollover individual retirement 

accounts (IRA) as DC accounts. We produced analogous estimates for

households with an employed head of household or spouse age 55 or 

over. Our estimates for households only include retirement benefits and 

savings of the head of household and a spouse or partner and do not 

include retirement benefits or savings held by additional family members.

We assessed the reliability of the SCF generally and of data elements 

that were critical to our analyses and determined that they were 

sufficiently reliable for our analyses. Specifically, we reviewed 

documentation on the general design and methods of the SCF and on the 

specific elements of the SCF data that were used in our analyses and 

completed our own electronic data testing to assess the accuracy and 

completeness of the data used in our analyses.

To illustrate how drawdowns from retirement savings before retirement 

can affect amounts saved by the time of retirement, we developed a 

model to tabulate retirement account balances for a hypothetical 

individual. For this, we used an individual who was born at the beginning 

of 1953, turns 55 in 2008, and retires at age 62 in 2015. We used 

$70,000 as the starting point for this illustration because it is about the 

median level of DC plan savings for employed workers age 55 and over 

who have a DC plan account from a current or past employer, based on 

2007 SCF data. To calculate changes in the account balance over time, 

we used the intermediate interest and rate-of-return assumptions as 

reported in past and projected under the intermediate cost assumptions in 

Social Security’s 2011 Annual Report of the Board of Trustees of the 

Federal Old-Age and Survivors Insurance and Federal Disability 

Insurance Trust Funds (also known as the OASDI [Old-Age, Survivors, 

and Disability] Trustees’ Report). We used scaled earnings for medium 

annual earners as reported in past and projected in the 2011 OASDI 

Trustees’ Report.4 We assumed the employee’s contributions to the 

retirement account to be 6 percent of the individual’s wages and the 

employee received a 3 percent employer matching contribution.

 

4

Scaled earnings are earnings levels that have been scaled up or down to reflect the 

average patterns of work and earnings of actual insured workers over their careers.
Appendix I: Objectives, Scope, and 

Methodology

Page 68 GAO-12-445 Unemployed Older Workers

The 12 experts we interviewed primarily work in academia and think 

tanks, and were selected based on their expertise on older workers, 

workforce development, or retirement policy. We selected a group of 

experts to help ensure a range of viewpoints. To identify policies that 

could help unemployed older workers become reemployed, we compiled 

a list of 21 proposed policy options from the relevant literature. (See app. 

VI for the list of 21 policy options.) In many cases, the policy options on 

the list we compiled were proposed before the recession started in 2007.

Prior to interviewing the experts, we sent them a list of the 21 policy 

proposals we had compiled and asked them to select the five policies that 

merited the most serious consideration because they were either relevant 

in the current economy or could be relevant as the economy recovers.

We also asked these experts to assess the strengths and weaknesses of 

policy proposals to help long-term unemployed older workers regain 

employment.

After interviewing all 12 experts, we tallied the number of votes each 

policy proposal had received. The 8 proposed policies addressed in the 

body of the report are those that received votes from 4 or more of the 12 

experts we interviewed. The expert discussion cited in this report should 

be interpreted in the context of two key limitations and qualifications. First, 

although we were able to secure the participation of a balanced, highly 

qualified group of experts, other experts in this field could not be included 

because we needed to limit the size of the group. Although many points 

of view were represented, the group of experts we interviewed was not 

representative of all potential views. While we conducted preliminary 

research and heard from national experts in their fields by conducting 

these expert interviews, these discussions cannot represent the full 

variety of opinions on the policy proposals. More thought, discussion, and 

research must be done to develop greater agreement on what we really 

know, what needs to be done, and how to do it. These two key limitations 

and qualifications provide contextual boundaries. Nevertheless, the 

experts we interviewed provided insightful comments in responding to the 

questions they were asked.

To identify what steps Labor has taken to help unemployed older workers, 

we interviewed Labor officials.

As noted above, we relied on estimates from several surveys, including 

the CPS, the Displaced Worker Supplement to the CPS, SCF, and 

JOLTS. Because these surveys are probability samples based on random 

selections, the specific sample selected is only one of a large number of 

Experts’ Views on Policies 

to Help Unemployed Older 

Workers and Steps Taken 

by Labor to Help 

Unemployed Older 

Workers

Sampling Variability
Appendix I: Objectives, Scope, and 

Methodology

Page 69 GAO-12-445 Unemployed Older Workers

samples that might have been drawn. Since each sample could have 

provided different estimates, we express our confidence in the precision 

of our particular sample’s results as a 95 percent confidence interval (for 

example, plus or minus 7 percentage points). This is the interval that 

would contain the actual population value for 95 percent of the samples 

that could have been selected. In this report, 95 percent confidence 

intervals are provided along with sample-based estimates where used.

We calculated standard errors for estimates from the CPS using the 

Census generalized variance functions, as published in the BLS technical 

notes to the household survey data published in the Employment and 

Earnings monthly publication.
Appendix II: Workforce Status of Workers 

Displaced between 2005-2007 and 2007-2009 in 

January 2008 and January 2010

Page 70 GAO-12-445 Unemployed Older Workers

Note: (1) Estimates for 25- to 54-year-olds and 55- to 64-year-olds have 95 percent confidence 

intervals within 5 percentage points of the estimate itself; estimates for people 65 and older have 

confidence intervals within 10 percentage points of the estimate itself. The following estimates have 

margins of error greater than or equal to 30 percent of the estimates: for people 55-64, the 

“percentage retired” in 2008, for people 65 and older, the percentage employed full-time, percentage 

employed part-time, and percentage not in the labor force (other) in both 2008 and 2010. For 

statistical comparisons of the estimates across different groups and years, see appendix III.

Appendix II: Workforce Status of Workers 

Displaced between 2005-2007 and 2007-2009 

in January 2008 and January 2010
Appendix III: Additional Figure Notes for 

Employment Figures, Including Statistical 

Significance Tests

Page 71 GAO-12-445 Unemployed Older Workers

Figure 3: Estimated Number of Unemployed and Underemployed Older 

Workers (55 and Over), 2007-2011

• Appendix I includes the definitions used in the report of unemployed 

workers, marginally attached workers, discouraged workers, and 

workers employed part-time for economic reasons.

Figure 4: Growth in Estimated Long-Term Unemployment of Older 

Workers (55 and Over), 2007-2011

• There was a statistically significant change in the proportion of 

unemployed older workers in each of the categories shown in the 

figure between 2007 and 2011. Specifically:

• The proportion of unemployed older workers who were unemployed 

for under 5 weeks, for 5-14 weeks, and for 15-26 weeks each 

declined significantly from 2007 to 2011.

• The proportion of unemployed older workers who were unemployed 

for 27 weeks to a year, and for more than 1 year, each increased 

significantly from 2007 to 2011.

Figure 6: Estimated Duration of Unemployment for Older Workers (55 and 

Over) by Industry, 2007 and 2011

• Because of the smaller number of persons with long durations of 

unemployment in 2007, some of the estimates for duration of 

unemployment by industry are unreliable in 2007 (the margins of error 

for the estimates are high relative to the value of the estimates.) For 

2007, the following estimates have margins of error that exceed 30 

percent of the estimate itself: the percentage unemployed for 27 

weeks or more for all industries except wholesale and retail trade, 

manufacturing, and “all other industries”; and for the percentage 

employed for 27-52 weeks, 53-104 weeks, and 105 or more weeks for 

all industries. In 2011 the following estimates in the figure have 

margins of error that exceed 30 percent of the estimate itself: the 

percentage unemployed for 53-104 weeks in leisure and hospitality, 

and the percentage unemployed for 105 or more weeks in: 

transportation and utilities, financial activities, and leisure and 

hospitality.

Appendix III: Additional Figure Notes for 

Employment Figures, Including Statistical 

Significance Tests
Appendix III: Additional Figure Notes for 

Employment Figures, Including Statistical 

Significance Tests

Page 72 GAO-12-445 Unemployed Older Workers

• For each industry in the figure, the percentage of unemployed workers

who have been unemployed for 27 weeks or more is significantly 

higher in 2011 than in 2007.

Figure 7: Estimated Unemployment Rates by Demographic Group for 

Older Workers (55 and Over), 2007 and 2011

• Differences in unemployment rates between 2007 and 2011 are 

statistically significant for all groups in this figure.

• Differences in unemployment rates between men and women are 

statistically significant in 2011, but not in 2007.

• Differences in unemployment rates between whites and blacks, and 

between whites and Hispanics, are statistically significant in both 2007 

and 2011; however, differences between whites and the “all other 

races” group are significant only in 2011.

• Differences in unemployment rates between those with no high school 

diploma and each of the other education groups are statistically 

significant in both 2007 and 2011.

Figure 8: Estimated Duration of Unemployment by Age and by Gender, 

2007 and 2011

• Differences between younger and older workers in the percentage 

unemployed for 27 weeks or longer were significant in both 2007 and 

2011.

• Differences between men and women in the percentage unemployed 

for 27 weeks or longer were statistically significant in 2007, but not in 

2011.

Figure 10: Estimated Percentage of Reemployed Displaced Workers Who 

Earned Less on Their New Full-Time Jobs than on Their Previous Jobs, 

January 2010

• Differences between younger workers and older workers are 

statistically significant in the 2010 survey, but not in the 2008 survey.
Appendix III: Additional Figure Notes for 

Employment Figures, Including Statistical 

Significance Tests

Page 73 GAO-12-445 Unemployed Older Workers

• For both younger workers and older workers, there was a statistically 

significant increase in the percentage of workers with earnings 

replacement rates less than 100 percent between the 2008 survey 

and the 2010 survey.

Appendix II: Workforce Status of Workers Displaced between 2005-2007 

and 2007-2009 in January 2008 and January 2010

• For 25- to 54-year-olds and 55- to 64-year-olds, the following 

estimates are significantly different between 2008 and 2010:

• the percentage unemployed,

• the percentage working full-time, and

• the overall percentage working/not working.

• For people 65 and older, the following estimates are significantly 

different between 2008 and 2010:

• the percentage unemployed,

• the percentage retired, and

• the percentage not in the labor force (other).
Appendix IV: Quotes from Focus Groups with 

Long-Term Unemployed Older Workers

Page 74 GAO-12-445 Unemployed Older Workers

The following table provides examples of specific focus group quotes 

organized by topic. These selected quotes further exemplify our findings 

on the risks long-term unemployed older workers face, the challenges 

they experience becoming reemployed, and how long-term 

unemployment has affected their plans for retirement. (For audio clips 

from GAO’s focus groups with unemployed older workers, use this 

http://www.gao.gov/multimedia/video/#video_id=590295: ) 

Table 5: Selected Quotes from Focus Groups with Long-Term Unemployed Older Workers

Topic/quotes

Focus group participant 

characteristics

Some unemployed older workers want to work and have difficulty meeting financial obligations

That’s our culture. We want to work. We need to work. 56-year-old man 

You’ve got to support a family, so you’re still out there on the pavement or the Internet looking for a 

job.

55-year-old man 

I was used to a 70-hour week, and then to go from that to nothing, your sense of self-worth isn’t there. 58-year-old woman 

Medical can cost you $1,000 a month. When you think about Social Security at my age group—my 

Social Security is $1,300 a month. Medical is $1,000, where is my mortgage and food?

64-year-old woman

I don’t have medical insurance right now. Any medical insurance. Because it is too expensive. 63-year-old woman

I’ll never retire. I still have a kid in college. My son lost his job about 6 months after I did, so my wife 

and I are paying his mortgage, his car insurance, and everything he has, electric, all that stuff.

55-year-old man 

Perceived employer reluctance to hire older workers

The interview was going really, really well and ... she went, “Oh no!” and I said, “What is it?” [And she 

said], “Oh nothing, nothing, I just noticed what year you graduated high school.”

59-year-old man 

They asked me one question that always knocked me out of the game—they’re not allowed to ask 

how old you are, but they wanted to know when I graduated from college.

62-year-old man 

I would sacrifice pay to start somewhere else. I say, “I’ll start at rock bottom . . . whatever it takes.” 59-year-old man 

I need a job. I have to pay insurance for me and my wife. I have seven kids. I’m trying to get them 

through college. I’ll take that $10 job. I need a job that bad.

64-year-old man 

Emotional challenges that result from long-term unemployment

When you’re not working, you don’t feel very good, you are depressed. You feel discouraged. Your 

self-esteem is about an inch high.

62-year-old woman 

One of the most devastating things with becoming unemployed was with losing my identity. I was one 

thing and then I was nothing.

58-year-old woman 

Claiming Social Security retirement benefits as soon as possible

I’m turning 62 in a few days, and I’m like “What am I going to do?” You can’t find a job out there so I 

might as well retire.

61-year-old man 

I just turned 62 in January, and I just filed for my Social Security so that I would have some kind of 

income to fall back on, because unemployment was exhausted.

62-year-old woman 

If I don’t find a job, I’ll claim at 62 because of, you know, unemployment will be long gone by then. And 

if I do sell that house, anything I have left after the sale will be gone by then, too. So, if I find a job, I 

won’t claim unless or until I have to for health reasons or whatever. 

59-year-old woman

Appendix IV: Quotes from Focus Groups with 

Long-Term Unemployed Older Workers
Appendix IV: Quotes from Focus Groups with 

Long-Term Unemployed Older Workers

Page 75 GAO-12-445 Unemployed Older Workers

Topic/quotes

Focus group participant 

characteristics

I want to secure my place because if the eligibility requirement on that changed, then you’re out of 

luck, too. It’s scary.

58-year-old woman

They’re talking about cutting it off, so I think anybody that’s eligible for it, they need to try and go and 

apply for it. 

66-year-old woman

Using retirement savings to cover expenses during long-term unemployment

Coping financially has been really rough, because even though I had a retirement plan, it’s not enough 

to pay my mortgage and my car payment. . . . So then you tap into what you have saved . . . you see 

that dwindle down to nothing and then you still got to make it to 62, and you don’t have enough to 

make it to 62.

59-year-old woman

When I got laid off . . . my daughter was in college at the time . . . I wanted her to finish school so, of 

course, I depleted all of my savings, my 401(k).

55-year-old woman

Source: Transcripts of focus groups GAO conducted with long-term unemployed older workers.
Appendix V: Percentage of the Population 50 

and Older, but Less than Full Retirement Age, 

with Initial Dispositions and Awards of Social 

Security Disability Insurance, 2000-2010

Page 76 GAO-12-445 Unemployed Older Workers

Appendix V: Percentage of the Population 50 and Older, 

but Less than Full Retirement Age, with Initial 

Dispositions and Awards of Social Security Disability 

Insurance, 2000-2010
Appendix VI: Proposed Policies Presented to 

External Experts

Page 77 GAO-12-445 Unemployed Older Workers

Policy option

Selected by at least 

four experts

Policies to help address perceived employer reluctance to hire older workers

1. Labor could develop a comprehensive and highly visible campaign to educate employers on the strengths 

of older workers as potential employees and their important role in the 21st century economy.

NO

2. Congress could offer temporary wage subsidies to employers that hire older workers who have 

experienced long-term unemployment (27 or more weeks).

YES

3. Congress could offer training subsidies to employers that hire older workers who experienced long-term 

unemployment (27 weeks or more). To be eligible for the training subsidy, employers would have to 

commit to retaining these workers for a certain amount of time, for example, 6 months to a year.

YES

4. Congress could offer a tax credit—that applies to the first year of employment—to employers that hire 

older workers who experienced long-term unemployment (27 weeks or more). 

NO

5. To reduce the potentially high cost to employers of providing health insurance benefits to older workers, 

Congress could eliminate the requirement that Medicare generally be the secondary payer for workers 65 

and over who are covered by an employer group health plan.

YES

6. Congress could allow older workers and their employers to opt out of paying the Social Security payroll 

tax once the worker has accumulated 35 years of covered earnings. 

NO

7. Congress could provide tax credits to new small businesses that are owned by older workers and employ 

a high percentage of older workers (such as 50 percent or more). 

NO

8. Congress could pass legislation (such as the proposed Fair Employment Opportunity Act of 2011) that 

prohibits employers and employment agencies from screening workers out of the candidate pool solely 

because they are unemployed. 

NO

9. To alleviate employer concerns about declining productivity and increased health care costs at older ages 

(at or near Social Security’s full retirement age), Congress could allow employers to set a mandatory 

retirement age (of 66 or greater) for new hires who were within 10 years of reaching this age (e.g., 56 or 

older).

NO

10. In partnership with other federal agencies, Labor could identify the legal and regulatory barriers to the 

employment of older workers and determine (1) whether legal and regulatory changes are needed and (2) 

the impact of potential changes. 

NO

Policies to help enhance reemployment assistance specifically targeted to older workers 

11. Labor could collect and disseminate information on the most effective strategies for serving older workers 

through the workforce investment system.

NO

12. Labor could develop job search assistance programs that address skill deficiencies common among 

seniors, such as deficiencies in basic computer skills, résumé writing, and online application filing. 

YES

13. Labor could encourage partnerships between one-stop career centers and the Small Business 

Administration (SBA) to provide entrepreneurial development services to older job seekers. As part of this 

effort to link older workers with SBA’s programs and services, SBA could provide targeted information to 

older workers regarding entrepreneurial resources, counseling, and training on its website.

NO

14. To directly assist older workers who wish to start their own businesses, Labor could replicate Project 

GATE (Growing America Through Entrepreneurship) at one-stop career centers, targeted specifically to 

older workers. 

NO

15. Labor could direct the Bureau of Labor Statistics to work with the Census Bureau to (1) add specific 

questions to the CPS about older workers and their labor force participation, and (2) request a special 

tabulation of census data on older workers designed to match workforce investment areas. These data 

would allow one-stop staff to better target services to the different types of older workers within their 

jurisdiction. 

NO

Appendix VI: Proposed Policies Presented to 

External Experts
Appendix VI: Proposed Policies Presented to 

External Experts

Page 78 GAO-12-445 Unemployed Older Workers

Policy option

Selected by at least 

four experts

16. Congress could change Workforce Investment Act of 1998 (WIA) and Senior Community Service 

Employment Program (SCSEP) performance measures to eliminate any disincentives to placing older 

workers in part-time employment.

YES

17. Congress could expand funding for SCSEP to take into account increases in the older worker population. YES

Policies to help encourage older workers to obtain reemployment as quickly as possible

18. Congress could enact a reemployment bonus program that provides a low-value bonus (for example, 

approximately $1,000) to Unemployment Insurance (UI) claimants who accept new jobs within a given 

time period (for example, 3-6 months). The program could target UI claimants with an above average 

likelihood of exhausting their UI benefits. 

NO

19. Congress could enact a wage insurance program that temporarily compensates older workers for 

accepting new full-time jobs that pay less than their previous jobs within a specified time frame. For 

example, the program could pay older workers 50 percent of the difference between their old and new 

wages over a period of 2 years (up to a specified maximum benefit). The subsidy could be limited to 

individuals making less than $50,000 at their new jobs and who accepted their new jobs within 27 weeks 

of filing for UI. 

YES

20. Labor could encourage one-stop career centers to prioritize job-matching services (i.e., matching older 

workers’ existing skills with available jobs) rather than training or retraining services.

NO

21. Congress could require long-term unemployed individuals (those unemployed for 27 or more weeks) to 

enroll in publicly funded retraining programs or publicly subsidized on-the-job-training programs as a 

condition of receiving Unemployment Insurance. Some of the training funds could be obtained by 

redirecting a portion of individuals’ unemployment benefits for these purposes. 

YES

Source: GAO.

Note: To compile this list of policy options, we reviewed the literature, including academic studies, 

past GAO reports, and federal agency reports, to identify policies that have been proposed to help 

unemployed older workers regain employment. We presented these options to 12 experts in areas 

such as older workers’ issues, labor economics, and the workforce development system, and asked 

the experts to select the five policies that they believed merited serious consideration. Policies that 

were selected by 4 or more experts are described in more detail in the body of the report.
Appendix VII: Comments from the Department 

of Labor

Page 79 GAO-12-445 Unemployed Older Workers

Appendix VII: Comments from the 

Department of Labor
Appendix VII: Comments from the Department 

of Labor

Page 80 GAO-12-445 Unemployed Older Workers
Appendix VIII: GAO Contact and Staff 

Acknowledgments

Page 81 GAO-12-445 Unemployed Older Workers

Charles Jeszeck, (202) 512-7215 or jeszeckc@gao.gov

In addition to the contact named above, Laura J. Heald, Assistant 

Director; Lucas Alvarez; Laurel E. Beedon; James E. Bennett; Amy Buck; 

David M. Chrisinger; William Colvin; Sarah C. Cornetto; Cynthia L. Grant; 

Gene G. Kuehneman Jr.; Kathy D. Leslie; Douglas A. Manor; Jaclyn 

Nidoh; Rhiannon Patterson; Kathy Peyman; Mark F. Ramage; David M. 

Reed; Nyree M. Ryder Tee; Aron E. Szapiro, Frank Todisco; and Walter 

Vance made key contributions to this report.

Appendix VIII: GAO Contact and Staff 

Acknowledgments 

GAO contact

Staff

Acknowledgments 
Related GAO Products

Page 82 GAO-12-445 Unemployed Older Workers

Income Security: Older Adults and the 2007-2009 Recession. 

GAO-12-76. Washington, D.C.: October 17, 2011.

Retirement Income: Ensuring Income throughout Retirement Requires 

Difficult Choices. GAO-11-400. Washington, D.C.: June 7, 2011.

Private Pensions: Some Key Features Lead to an Uneven Distribution of 

Benefits. GAO-11-333. Washington, D.C.: March 30, 2011.

Social Security Reform: Raising the Retirement Ages Would Have 

Implications for Older Workers and SSA Disability Rolls. GAO-11-125. 

Washington, D.C.: November 18, 2010.

Private Pensions: Alternative Approaches Could Address Retirement 

Risks Faced by Workers but Pose Trade-Offs. GAO-09-642. Washington, 

D.C.: July 24, 2009.

Employment and Training: Most One-Stop Career Centers Are Taking 

Multiple Actions to Link Employers and Older Workers. GAO-08-548. 

Washington, D.C.: April 21, 2008.

401(k) Plans: Policy Changes Could Reduce the Long-term Effects of 

Leakage on Workers’ Retirement Savings. GAO-09-715. Washington, 

D.C.: August 28, 2009.

Private Pensions: Low Defined Contribution Plan Savings May Pose 

Challenges to Retirement Security, Especially for Many Low-Income 

Workers. GAO-08-8. Washington, D.C.: November 29, 2007.

Retirement Security: Women Face Challenges in Ensuring Financial 

Security in Retirement. GAO-08-105. Washington, D.C.: October 11, 

2007.

Highlights of a GAO Forum: Engaging and Retaining Older Workers.

GAO-07-438SP. Washington, D.C.: February 28, 2007.

Senior Community Service Employment Program: Labor Has Made 

Progress Implementing Older Americans Act Amendments of 2000, but 

Challenges Remain. GAO-06-549T. Washington, D.C.: April 6, 2006.

Related GAO Products
Related GAO Products

Page 83 GAO-12-445 Unemployed Older Workers

Older Workers: Employment Assistance Focuses on Subsidized Jobs and 

Job Search, but Revised Performance Measures Could Improve Access 

to Other Services. GAO-03-350. Washington, D.C.: January 24, 2003.

(131032)
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