More than thirty years ago Finis Welch was the first labor economist to study the impact of the demographic shift caused by the baby boom cohort on the relative earnings of workers.

Since then a number of economists and social scientists have studied the impact of the baby boom generation on a variety of economic, political and social outcomes.  Today the aging of baby boomers has important consequences for the projected growth in government entitlement spending and a host of other economic issues.

In the area of labor and employment law, the aging of the baby boom cohort is causing a dramatic increase in age discrimination charges and lawsuits.  There were 47,360 new charges of age discrimination filed with the U.S. Equal Employment Opportunity Commission (EEOC) in 2008 and 2009, an increase of more than 60% compared to 1998 and 1999.  For reasons outlined below, we expect this trend to continue in the years ahead.

Currently 54.3% of the workforce is age 40 and above and protected by the Age Discrimination in Employment Act (ADEA).  As recently as 1980, only 40% of the workforce was age 40 and above.  We anticipate that the labor force participation rates of women age 40 and above and men age 55 and above will continue to increase in the years ahead.  In addition, employees protected by the ADEA are likely to delay retirement in coming years because: (i) the 1983 Social Security Amendments increased the “full retirement age” to 67 for workers who are currently in their 40’s, (ii) efforts to reduce the Federal debt and deficit may cause further increases in the Social Security “full retirement age”, and (iii) most workers’ retirement portfolios and home equity values have grown less than anticipated over the past decade.  These trends imply that a majority of the labor force will be protected by the ADEA throughout the next two decades.

 

Despite the fact that private sector employment contracted by over 8 million jobs between 2007 and 2009, charges of wrongful termination with the EEOC increased modestly between 2006 and 2009.  During this deep labor market downturn, however, the median duration of unemployment has remained unusually high for those who lost their job or were laid off.  Moreover, almost half of the unemployed who experienced a layoff or job loss were age 40 and above in 2010. Consequently, there may still be an increase in allegations of wrongful termination filed with the EEOC even as the economy recovers.  Many of these wrongful termination claims are likely to allege age discrimination.

The aging of the baby boom cohort has made workers age 40 and above the most numerous protected group for many employers.  It is important that companies keep this in mind as they monitor and evaluate their decision-making processes for hiring applicants, promoting or re-assigning employees, and reductions in force.