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Are Older People Robbing The Young In The Jobs Market?

03/11/2016 11:23

For years, whenever I have talked about the need for policies to support older workers, I have been tossed the question, "Doesn't supporting older people in work do younger people out of a job?" At a time when the unemployment of younger people has been high on the policy agenda, this has seemed a relevant question to any thinking person in the street, not to mention the journalist or interviewer keen to provoke a decent discussion out of a self-evidently worthy cause.

My riposte to what I have sometimes, perhaps arrogantly, described as "an economically illiterate question," has generally gone along the lines of; "Well, economies don't really work like that. The hidden hand of the price mechanism and the market directs people to do the work that is needed, thus providing them with an income, and in the process generates more demand, increasing market activity and in due course fuels opportunities for workers doing different jobs - including younger people."

In other words, I have argued, what goes around comes around and if you or I manage to stay in a job or get a new one at 60 or 70 plus, this can only benefit the life chances of our neighbours' children. The idea that there is a fixed quantum of jobs (or a "lump of labour") available to be done in any society is therefore fallacious. Labour economists talk easily of the "lump of labour fallacy," and soothe the stirring of uneasy consciences as youth unemployment rises through the roof.

There is indeed evidence to support this view that a fixed lump of labour is a fallacious notion and that rationing of jobs to give youth a chance, is just plain daft. In a way, it has been part of economic thinking since 1776 when Adam Smith proposed that a "hidden hand" guided us to pursue our individual best interests to the benefit of the wider society; an idea which Mrs Thatcher famously re-invented in her statement, "There is no such thing as society."

Since the early 1970s, (when the UK dabbled with a failed Job Release Scheme, encouraging employers to make older workers redundant and "make way for the young unemployed") the lump of labour fallacy has become a mantra, uttered by policy makers and civil servants alike whenever they are challenged on this point. The problem with this is that there has been too little drawing back to pose the question, "could there not in some circumstances be at least some lumpiness in the labour market?"

In other words, might we, without jettisoning economic theory completely, accept that the sharp elbows of older and capable older returners could be doing the young a disservice? For example, does an older person doing a lower status, less well paid role or working part time to help eke out his or her pension, in some unknowing way add to the inequity of a society in which the young struggle quite unlike oldies of the "guilded generation"?

In a recent TAEN/LSE Older Workers' Seminar, billed as a Colloquium on the Lump of Labour Fallacy, Lord David Willetts developed some of his well-known arguments about intergenerational unfairness, hinting that perhaps the mantra had been called in evidence too often. Citing the example of the bus pass, which provides subsidised transport to the older person in a low paid job, he suggested the playing field had been tilted unfavourably away from the younger person who might be less able to compete for the same job.

In the same vein, we can all probably think of examples where it might be true that a particular job being done by an older person could be done by someone younger, though equally we can cite cases where it is nonsense to suggest that an older person could be doing a younger citizen out of work.
The presentations in our Colloquium on the Lump of Labour Fallacy can be seen on the TAEN website. Digesting them into a single synthesis is not easy but on the whole, the "fallacy" notion seems valid.

There was not much evidence to support the idea that the increase in numbers of older people working longer is contributing to youth unemployment. Mark Keese of the OECD, drew on international and comparative evidence to show that the opposite is true. But the issues are more complicated than that, as we discovered.

My fallible synthesises of an impossibly broad range of issues would go something like this. On the whole, in aggregate, economists are right to talk of a "lump of labour fallacy" and older workers or job seekers should not be guilt tripped into giving up their jobs to make way for the young. On the other hand, public policies should be designed to create a more level playing field between younger workers and older workers. Better encouragement is needed for older workers to move into different roles, change careers, re-train and combine work or volunteering with other things in life, including caring for grandchildren, sick or less able relatives.

If all this seems obvious and straight forward - well maybe it is. But if we invoke a mantra, in the guise of a theory, wrapped up in an oversimplification - which the much vaunted "lump of labour fallacy," has somehow become - somehow we can deny manifest unfairness in our existing arrangements.

If older workers were doing their grand-children out of jobs by simply being workers, this surely would add pangs of guilt to the many barriers we know the older unemployed person already has to face in the labour market.

On the other hand, we do both them and their grandchildren a disservice if we imagine that the pool of starter jobs demanding few skills is so deep we can never scrape the bottom. Policies which reflect changing generational challenges as well as needs, interests and capabilities must be part of any sensible, pragmatic, humane approach to working and ageing throughout the life course.

The Colloquium on Older Workers and the Lump of Labour Fallacy was held on 18th October at the London School of Economics. Speakers were Lord Willetts, Executive Chairman of the Resolution Foundation, and Visiting Professor at Kings College London and Cabinet Minister in the Coalition Government to 2015; Mark Keese, Head of the Employment Analysis and Policy Division in the Directorate for Employment, Labour and Social Affairs at the OECD; Robert Anderson Head of the Living Conditions and Quality of Life Research Unit, the European Foundation for the Improvement of Living and Working Conditions and Jacques Wels, who is based in the Centre METICES at the Université libre de Bruxelles, and at University of Cambridge. Sarah Vickerstaff, Professor of Work and Employment at the University of Kent's School of Social Policy, Sociology and Social Research was our discussant.

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