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The differential treatment of a group based solely on the grounds of chronological age is known as age discrimination. Unlike race and gender, age is immediately and strongly tied to experience and future job tenure. In addition, a worker can age while still in the same job, whereas changing one’s group is unlikely for women and racial and ethnic minorities. Problems of age discrimination are important from a policy standpoint because many older people are able to work longer than was the case with previous generations. Many also wish to work longer, while some may not have saved adequately for retirement. A number of plans to fix Social Security budgetary problems require continued work at older ages.
Employers can discriminate by age across several areas: wages, promotions, hiring, firing and layoffs, and forced retirement. On average, older workers make more money than younger workers because age is highly correlated with both general labor-market work experience and tenure (or longevity of employment) at a particular employer, and experienced workers generally make more money than inexperienced workers. It is difficult to disentangle the effects of age from experience. Older workers may be less likely than younger workers to accept employment at lower wages because they are used to being paid higher wages based on their experience. Promotion probability is also related to experience. Older workers are less likely to be hired or fired than younger workers, but they are often removed through retirement packages.
Not much is known about group differences in age discrimination. Some studies have found that women are affected by age discrimination at an earlier age than men, but others have found no difference between genders in this regard. Even less is known about differences in age discrimination by race. Group characteristics of the person doing the potential discrimination, such as age, race, and gender, among others, also determine the presence and extent of discrimination.
There are a number of reasons that employers could discriminate against older workers. Employers may irrationally dislike older workers, employees may dislike working with older workers, or consumers may dislike buying products and services provided by older workers. This irrational dislike is also known as animus or taste-based discrimination. Although Gary Becker’s models of taste-based discrimination in a competitive market for race and gender can be used to model age discrimination, they are limited by the correlation of age and returns to experience in most jobs in the real world, and by the fact that workers age while employed. No evidence has been found for tastebased discrimination against older workers.
Employers could also discriminate against older workers because of incorrect stereotypes, and because, on average, older workers may be less productive or more expensive than younger workers, causing employers to be reluctant to hire them when there are screening costs. This type of differential treatment is termed statistical discrimination. When asked why other companies may be reluctant to employ older workers, human resources managers cite shorter career potential; lack of energy, flexibility, or adaptability; higher costs for benefits and salary; more health problems, leading to more absences; knowledge and skills obsolescence; a need to promote younger workers; suspicions that an older worker might leave his or her current job to retire; and fear of discrimination lawsuits. Many of these reasons support either the incorrect stereotypes hypothesis or the statistical discrimination hypothesis.
Age discrimination against workers over the age of forty is prohibited by the Age Discrimination in Employment Act (ADEA) of 1967/68, which prohibits discrimination in advertisement, hiring, promotions, and firing, except in cases where there is a Bona Fide Occupational Qualification (BFOQ). A BFOQ is allowed if the job requires a member of a certain group to perform it. For example, in a movie, the studio would be allowed to advertise for and hire a young white woman to fill the part of a young white woman. With age, BFOQs are sometimes allowed for safety reasons even if a percentage of older workers would be able to safely perform the job tasks. Examples of BFOQ for safety reasons include mandatory retirement for airline pilots and minimum hiring age for bus drivers and air traffic controllers.
- Crew, James C. 1984. Age Stereotypes as a Function of Race. The Academy of Management Journal 27 (2): 431–435.
- Diamond, Peter A., and Jerry A. Hausman. 1984. The Retirement and Unemployment Behavior of Older Men. In Retirement and Economic Behavior, ed. Henry J. Aaron. Washington, DC: Brookings Institution.
- Duncan, Colin, and Wendy Loretto. 2004. Never the Right Age? Gender and Age-Based Discrimination in Employment. Gender, Work & Organization 11 (1): 95–115.
- Kite, Mary E., and Lisa Smith Wagner. 2002. Attitudes Toward Older Adults. In Ageism: Stereotyping and Prejudice Against Older Persons, ed. Todd D. Nelson. Cambridge, MA: MIT Press.
- Lahey, Joanna N. 2005. Age, Women, and Hiring: An Experimental Study. National Bureau of Economic Research (NBER) Working Paper No. 11435. Cambridge, MA: NBER.
- Nelson, Todd D. 2002. Ageism: Stereotyping and Prejudice Against Older Persons. Cambridge, MA: MIT Press.
- Neumark, David. 2001. Age Discrimination Legislation in the United States. National Bureau of Economic Research (NBER) Working Paper No. 8152. Cambridge, MA: NBER
- Rhine, Shirley H. 1984. Managing Older Workers: Company Policies and Attitudes: A Research Report from the Conference Board. New York: The Conference Board.
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