The Great Recession, the Social Safety Net,
and Economic Security for Older Americans
Richard W. Johnson and Karen E. Smith
Urban Institute
Presented at the 17th Annual RRC Conference
August 7, 2015
How Did the Great Recession Affect Older
Adults?
• We examine trends in labor force statistics, income,
wealth, Social Security claiming behavior
• compare outcomes in various datasets
• We model Social Security claiming behavior
• use administrative data from 1980 to 2011 linked to
household surveys
How Did Unemployment Affect Older Workers and Their
Families during the Great Recession and Recovery?
• We measure:
• unemployment
• earnings
• poverty
• time to reemployment
• income level and source
• How effective were various types of insurance and
income supports?
•
•
•
•
unemployment insurance
retirement and disability benefits
other income supports (SNAP)
family (spousal earnings)
• Compare outcome by age, before and after recession
Measuring Unemployment
• Restrict sample to adults ages 25+ who were
employed for at least one full month in first 6 months
of survey
• requires fairly strong attachment to labor force
• workers younger than 25 are excluded
• Unemployment spell begins when a worker has been
(1) out of work and (2) on layoff or looking for work
for an entire month
• more stringent criteria than official unemployment rate
• Unemployment spell continues until worker receives
earnings
• captures discouraged workers
Survey of Income and Program Participation
• SIPP interviews respondents every 4 months
• We track workers for 45 months before and after the
recession
• Before: 2004 panel (Jan. 2004 – Sept. 2007)
• After: 2008 panel (Aug. 2008 – April 2012)
• Compare outcomes by age
•
•
•
•
25 – 34
35 – 49
50 – 61
62+
• Focus on long-term unemployed workers
• out of work for at least 6 months
The Recession Substantially Increased the Likelihood of
a Long-Term Unemployment Spell
Share of Workers Ages 25+ Ever Unemployed over a
45-Month Period
14%
Before Recession
After Recession
9%
6%
3%
2%
1%
Any
Source: 2008 SIPP panel.
6+ months
12+ months
Younger Workers Were More Likely than Older Workers to
Become Unemployed During the Recession and Recovery
Share of Workers Ages 25+ Ever Unemployed between
Aug. 2008 and April 2012, by Age
17%
25-34
14%
35-49
12%
50-61
62+
7%
6%
6%
6%
3%
Any
Source: 2008 SIPP panel.
6+ months
2%
3%
3%
12+ months
2%
Older Unemployed Workers Spent More Time out of
Work than Their Younger Counterparts
Median Length of Unemployment Spell by Age,
before and after Recession (months)
> 24
Before
Recession
7.5
4.5
25+
7.3
6.3
4.2
25-34
Source: 2008 SIPP panel.
8.7
4.5
35-49
7.7
5.1
50-61
62+
After
Recession
Unemployment Spells Were Nearly Twice as Likely to Last
12+ Months after the Start of the Recession as Before
Share of Unemployment Spells that Lasted at Least
12 Months by Age, before and after Recession
63%
43%
37%
47%
36%
32%
After
Recession
25%
20%
25+
17%
25-34
Source: 2008 SIPP panel.
17%
35-49
50-61
Before
Recession
62+
Yet, Long-Term Unemployed Workers Were Less Likely to
Become Impoverished during the Recession
Share of Long-Term Unemployed Workers in Poverty,
by Age
54%
44%
44%
47%
Before
Recession
39%
37%
34%
29%
After
Recession
12% 13%
25+
25-34
Source: 2008 SIPP panel.
35-49
50-61
62+
Unemployment Insurance Extensions Substantially
Increased the Program’s Reach during the Recession
Share of Long-Term Unemployed Workers Collecting
Unemployment Insurance Benefits, by Age
57%
50%
48%
44%
38%
26%
22%
22%
24%
15%
25+
25-34
Source: 2008 SIPP panel.
35-49
50-61
62+
Before
Recession
After
Recession
Unemployment Benefits Still Generally Replace
Less than Half of Lost Earnings
Median Share of Earnings Replaced by Unemployment
Insurance for Long-Term Unemployed Workers, by Age
41%
44%
44%
48%
40%
44%
38%
41%
44% 42%
Before
Recession
After
Recession
25+
25-34
Source: 2008 SIPP panel.
35-49
50-61
62+
Supplemental Nutrition Assistance Program Benefits and Other
Government Help Became More Common at Older Ages
Share of Long-Term Unemployed Workers Receiving
SNAP and Other Government Assistance, by Age
36%
23%
34%
25%
24%
Before
Recession
26%
After
Recession
17%
11%
11%
5%
25+
25-34
Source: 2008 SIPP panel.
35-49
50-61
62+
Spousal Earnings Protected Many Long-Term Unemployed
Workers Ages 62+ during the Recession
Share of Long-Term Unemployed Workers with
Spousal Earnings, by Age
40%
38%
33% 34%
25%
36%
38%
28%
27%
18%
25+
25-34
Source: 2008 SIPP panel.
35-49
50-61
62+
Before
Recession
After
Recession
Single Long-Term Unemployed Workers Are Much More
Likely to Fall Into Poverty than Their Married Counterparts
Share of Long-Term Unemployed Workers in Poverty,
by Marital Status
58%
48%
28%
26%
20%
17%
8%
7%
Before
Recession
After
Recession
Married
Source: 2008 SIPP panel.
Before
Recession
After
Recession
Single
One month
before
unemployment
spell
Six months
after spell
began
Retirement and Disability Benefits Helped Fewer Older
Unemployed Workers than in the Past
Share of Long-Term Unemployed Workers Receiving
Retirement or Disability Benefits, by Age
86%
78%
Before
Recession
After
Recession
12%
19%
9%
25+
2% 2%
4% 3%
25-34
35-49
Source: 2008 SIPP panel.
11%
50-61
62+
Many Unemployed Workers Suffered Large Earnings Losses
When They Became Reemployed during the Recession
Median Percent Decline in Monthly Earnings for
Unemployed Workers Who Become Reemployed, by Age
33%
Before
Recession
23%
20%
17%
16%
11%
8%
25+
9%
25-34
Source: 2008 SIPP panel.
18%
After
Recession
10%
35-49
50-61
62+
Conclusions
• Unemployment insurance extensions expanded the
program’s reach during the Great Recession and its
aftermath
• helped keep the poverty rate relatively low
• Spousal earnings protected many workers who lost
their jobs
• Social Security kept many unemployed workers ages
62+ out of poverty
• But wage penalties associated with unemployment
suggest longer-term consequences