From the U.S. Government Accountability Office, www.gao.gov Transcript for: The Challenges Facing Unemployed Older Workers Description: Audio interview by GAO staff with Charles Jeszeck, Director, Education, Workforce & Income Security Related GAO Work: GAO-12-445: Unemployed Older Workers: Many Experience Challenges Regaining Employment and Face Reduced Retirement Security Released: May 2012 [Background Music] [Narrator:] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's May, 2012. The number of workers age 55 and older experiencing long-term unemployment has grown substantially since the recession began in 2007. A group led by Charles Jeszeck, a director in GAO's Education, Workforce, and Income Security team, recently reviewed the effects this reality is having on older workers. GAO's Jeremy Cluchey sat down with Charles to learn more. [Jeremy Cluchey:] Can you talk about some of the particular employment challenges that older workers are facing in the current economic climate? [Charles Jeszeck:] Well Jeremy we've found a number of problems facing older workers in the report that we just completed. First, there is discrimination against older workers on the part of some employers. Some employers believe that older workers, they can't learn new skills, that they just aren't as smart or as up to date with technology as younger workers and so there are definitely some issues there. There are also issues about older workers may require, may raise healthcare costs more than younger workers. They're more expensive. Similarly, some older workers had higher wages in their previous jobs and employers may be concerned that as soon as the economy does recover that these older workers would, you know would leave. Then there are issues about older workers, just like younger workers a number of them, do need training. The concern that some employers have about older workers is that because they're older they may not have as long a career with the company and so the company might not be able to recoup the investment they make in their training. [Jeremy Cluchey:] Your team spoke with a range of people in groups to get a sense of the risks older adults face including focus groups of unemployed workers. What did you learn from these conversations? [Charles Jeszeck:] Well Jeremy we had, we held, conducted focus groups with unemployed workers throughout the country and we found, like workers of all ages, many older worker households are really suffering from the great recession. Some of them were losing their homes. They lost their health insurance. They had depleted their savings. So some real problems that, real challenges that they've been facing. Some of the older workers told us, in fact a number of them told us that unemployment insurance was really a critical support for them during this time and—unlike sort of the mythology out there that people simply take unemployment insurance and don't try to look for new work—these people that we talked to, they had been in the labor force for many years, some of them had very prominent positions in their companies, these people were very dedicated, they really wanted to work. This was so important to them and they continued to search for work during this period, and without the unemployment insurance they actually, they might've lost some of these other, their homes or some of these other things far sooner than ultimately what happened. [Jeremy Cluchey:] You also looked at the potential impact of these risks on retirement income, what did you find there? [Charles Jeszeck:] Well, older workers because they're later in their career, they have less time to recover from any shocks to their retirement savings compared to younger workers, and so across the board we saw problems. For those workers who were fortunate enough to have a traditional pension plan and they lost their job they wouldn't be getting any additional accruals or benefits from that plan, it's just pretty much what they had, what they had earned up to that point. For workers fortunate enough to have a 401k, unemployment meant a reduction in their contributions to the plan, reduction in the employer contributions if the employer was making such contributions, and then more seriously in many instances when these workers had been unemployed for a long period of time, the—they would drain their accounts to meet ongoing expenses, and we found that this was a serious problem that if someone, say who had been unemployed for 2 years had reduced their account by, say 50 percent and then got reemployed, it would still take them 5 or 6 years to get back to where they were under reasonable rate-of-return assumptions. [Jeremy Cluchey:] What can be done about this? What are some possible policies that could address these risks? [Charles Jeszeck:] Well I think the number one thing is to, is to get the economy creating jobs again. Once you move away from that, you know, we looked at, we talked to a lot of experts, did a lot of options, a lot of different things that could be done to help older workers and unemployed workers in general. They have advantages and disadvantages. A number of these suggestions, these proposals cost money. This is a period of considerable budget constraints so that's a challenge. We did have some recommendations to the Department of Labor that as the economy recovers that they could do certain things for some of their training programs to make them a little bit more targeted towards older workers and the particular problems that older workers have. [Background Music ] [Narrator:] To learn more, visit gao.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional watchdog, the U.S. Government Accountability Office.