‘Lump of labor’ nonsenseBlog added by Allen Greenberg on January 10, 2014
Allen Greenberg

Allen Greenberg

Joined: May 29, 2013

Economic recovery or not, if you’re 50 and older today, you’re probably worried about your job.

Older workers, of course, have always had to watch over their shoulder as younger generations enter the workforce. But the recession displaced millions of those 50 and above, giving them even more reason to lose sleep.

Worse yet, the average length of time spent without a job among workers 55 and older stretched to longer than a year at certain points during the downturn and recovery, much higher than the 36 weeks for younger workers.

Understandably, with their retirements threatened, many older workers hope to stay in the workforce as long as they can, so much so that their numbers were expected to surpass those who are 25 to 34.

With so many younger Americans still out of work, it’s no wonder resentment of older workers is so high.

Yet as it turns out, despite what our intuition might tell us, that antipathy is grossly misplaced.

The Center for Retirement Research at Boston College has put out a report that thoroughly debunks the popular misconception that older Americans who stay on the job longer are denying jobs for younger workers.

Analyzing labor market data to see whether it could find any changes in employment among those under 55 when those 55 and older worked in greater numbers, the center found … nothing.

It turned up no evidence younger workers were losing work and, in fact, just the opposite: greater employment, reduced unemployment and higher wages.

In other words, despite the widely held notion, older workers aren’t crowding out their younger counterparts.

The concept that younger and older workers are engaged in a zero-sum game for a fixed number of jobs – it’s called the “lump of labor” theory – can be traced to Henry Mayhew’s 1851 “London Labour and the London Poor.”

Mayhew, however, ignored the fact that technological advances create new products and services, raise national income, and increase demand for labor throughout the economy.

Don’t get me wrong. There’s no doubt an older worker occupying a single, specific job prevents a younger worker from filling it.

But this is about macroeconomics, not micro. A longtime employee’s decision to stay on the job and stay productive helps stir other job growth. In other words, he might be able to dine out and shop and fuel the economy more than if he weren’t on the job – little of which would happen had he retired, or certainly not at the same level.
Lawmakers in Congress negotiating immigration reform in coming weeks and months should note the Mayhew crowd also fails to acknowledge that job opportunities grow with a growing population of immigrants because these new arrivals enter the market as consumers as well as workers.

In other words, the economy grows with every new worker.

“This horse has been beaten to death,” the report’s authors note.

Indeed, it has, though their note of exasperation is more than understandable.

Given the wretched state of the U.S. retirement system, it’s crucial employers understand that the lump-of-labor theory is just nonsense.

We cannot afford to see people dumped out of their jobs just at a time when they need to work longer in order to have a more secure retirement.

If not to protect loyal workers with years on the job, employers might want to consider one other statistic in this equation, out of their own self-interest.

In 2006, 16,548 people filed age-related complaints with the federal Equal Employment Opportunity Commission. That number shot up to 22,857 in 2012.

Originally published on BenefitsPro.com
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