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What should be done (Policy options) Unemployment policies at the national and the state levels must be reviewed and revised to meet the challenge of increasing number of unemployed older workers. One of the significant and recent Federal policy tools that encouraged older workers to remain in the work force was The Age Discrimination in Employment Act of 1967 (ADEA). The intent of the law was to promote the employment of older persons based upon their ability rather than age. It explicitly prohibits age discrimination in hiring, employment, and firing (the Equal Employment Opportunity Commission (EEOC) enforces ADEA). But the intersection between unemployment, employment, and retirement policies should also be reviewed and strategies developed for removing conflicting incentives. The following is a set of policy options based on my findings: 1. Stay the present course as the economy will recover. This option basically means letting the employment market resolve the problem in the long term. In the short to medium term, this option includes counting on positive affects from the American Recovery and Reinvestment Act of 2009 (ARRA). The Act adds 120 million for additional grants to the Community Service Employment for Older Americans and 400 million to modernize state unemployment insurance operations. Other ARRA minor changes included for the Trade Adjustment Assistance Program (an additional UI program instituted in 2002 targeted specifically for older workers from industries which were negatively impacted by trade) attempting to lower certain barriers to participation. UI benefits have also been extended through the Emergency Unemployment Compensation Act of 2008 (which will expire in December of this year) and the Worker, Homeownership, and Business Assistance Act of 2009. 2. Change retirement policies This option calls for changing national level retirement policies with a tax incentive for keeping older workers by reducing UI contributions companies pay on older workers and raising them for younger workers. In response to concerns that such a policy would crowd out younger workers, a recent NBER study should be referred to that shows increasing employment of older workers does not negatively impact the employment rate of younger workers. 3. Change the mission of the Washington State's ESD to prepare for providing more services older workers. Washington State ESD should revise their implementation of RCW 50.62 and plan now for adjusting for more unemployed older workers. It will need to determine what programs help unemployed older workers become re-employed. It needs to find ways to make UI benefits less a one-way bridge to full retirement benefits but rather a mix of financial, educational, and other support to help older workers continue to contribute to society. Washington State The extent of unemployed older workers in Washington State seems less severe in comparison to the national level and that of other states. Deseree Phair of the LMEA showed that the 45 to 54 and 55 and older category of workers in King County were generally gaining in proportion to those of others. Instead of unemployment, the worry is how to keep older workers in the labor force, depending on the sector, as there may not be enough younger ones taking their place. Additionally, it is thought that older workers have important knowledge and skills that may be irreplaceable; as this knowledge leaves, productivity and competitiveness could decline. State policy in RCW 50.62 (“Special employment assistance”) defines older unemployed workers as those “unemployment insurance claimants who are at least fifty years of age”. The law also stated that older workers have “greater difficulty finding new employment at wages comparable to their prelayoff earnings relative to all unemployment insurance claimants who return to work. Although enacted in 1987 , the current implementation of this policy is inadequate because the ESD does not appear to do anything specifically to mitigate the challenges of an unemployed older. Nor does it appear that state has a policy to deal with the increasing number of older unemployed workers now or in the future. It is even difficult for the public to get unemployment and employment statistics broken down by age from state e-Government resources (such as the LMEA web site). Since state unemployment data by age is difficult to find proxy can be used to estimate the scale of this category of demographic unemployment. First, UI Claims by age group was obtained by personal correspondence with an ESD employee. The numbers of claims by older workers from January to September this year about 11% to 12% of unemployed older workers today collect UI and by implication likely consider themselves not retired. Secondly, Census Bureau Longitudinal Employer-Household Dynamics (LEHD) data for King County shows employment by the 55 to 64 aged cohort has grown upward since 1996 and the trend is increasing. These two data sources show that as Boomers age the number of older workers in the labor force will increase and so, too, the number of unemployed older workers will also rise, irrespective of economic conditions. Since Boomers are a significant part of the economy, accounting for about 45% of all consumer spending, perhaps getting as high as 50% by 2015, having them out of the workforce or living on limited incomes, could slow economic growth, productivity , reduce revenue, and strain UI trust funds, Social Security and Medicare. 4. Private Unemployment Insurance. Basically a variation of a forced savings account, Private unemployment insurance could benefit workers, capital markets, and state governments. Workers benefit from such a system because they can help prepare themselves for the financial impact of job loss. Workers could draw on private insurance benefits, supplementing those from the state without penalty. Governments benefit from such a system as it could help ease the pressure on UI benefit trust funds. And the self-employed could have an unemployment insurance coverage, too, which has been denied to them under current law. Companies which underwrite such insurance would collect valuable data on the labor market and create new sources of investment capital. Sources: Urban Institute. Retirement Policy Program. Rising Senior Unemployment and the Need to Work at Older Ages Richard W. Johnson. September 2009. Johnson, R.W. (2009, November 09).