Article 43


Tuesday, October 04, 2005

The Age Discrimination Epidemic

December 2003




While governments and institutions have emphasized gender and age discrimination issues in their employee counseling sessions and bulletin board postings, many of the same institutions have been practicing an equally serious form of discrimination - age discrimination. By the year 2005, 15% of the U.S. workforce will be over age 55. In 2000 workers median age was 45, roughly the median age for the baby boomers. By 2030, 20% of Americans will be over age 65. Today, just 16% of men over age 65 are still working. In 1940, one-half of 69 year old men were still working; in 1997 only 46% of 62 year old men were still working. An option for reducing Social Security costs is to keep the workforce employed well past todays retirement age. Peter Drucker proposes that people work until age 75. If this is to happen, our society must overcome many myths and incorrect perceptions of older people, it must incentivize older workers to continue to work, and age discrimination in the workplace must be stopped! 

Currently 79% of eligible workers begin collecting retirement benefits at age 62. This contributes to a labor shortage that will cramp U.S. economic growth prior to the middle of the 21st century. Social Security formulas - based on 35 years of work that an employee usually completes before age 60 - encourage early retirement. Although incomes usually rise with additional years of work, any pay increases after the 34-year mark result in higher Social Security taxes but only small increases in benefits.

Many of those retiring early from companies are being forced out by companies hoping to replace them with younger workers and immigrant workers that will work at substantially lower wage rates. During the last year of the Clinton administration under immense lobbying pressure from U.S. companies, the U.S. Congress passed a bill sponsored by Spencer Abraham of Michigan to raise the limits on H1B visa holders from 65,000 to 195,000. Many of these visa holders come to the U.S. and take engineering and software jobs that U.S. citizens, particularly older workers, are perfectly capable of filling. Of course, the attractiveness of immigrant workers to companies is their willingness to work at very low wages in a work environment of endowed servitude. There is overwhelming evidence that many U.S. companies lay-off older U.S. workers and replace them with lower paid foreign workers. The voters of Michigan rewarded Mr. Abraham for his lack of concern for older workers by making him a one term Senator.

Numerous mythical concerns about older workers handicap their ability to find employment. These myths include,

· Older workers cost more. In fact a retired worker that has earned retirement benefits, including healthcare benefits, from a previous employment can cost far less than a younger worker that needs health insurance and other fringe benefits. Besides that the older worker can bring wisdom of experience to the job.

· Older workers are sick more. In fact, older workers actually take fewer sick days than those under 40 years of age.

· Older workers can’t learn new skills. While it often takes longer to train older workers, older workers change jobs less frequently; therefore, it can be overall more cost effective to train older workers than to train younger workers.

· Older workers are less productive. Older workers tend to work smarter, have a better sense of human behavior, and a better sense of when to intervene. When Grumman Corporation made lay-off decisions based strictly on worker performance, they found out after the downsizing that the average age of their employees had increased by 10 years.

If we are to overcome the culture and tradition of discriminating against older workers, it will be necessary to develop labor laws that have some teeth. As a general rule, the courts have not been particularly sensitive to the plight of older workers. The U.S. Congress has not yet developed a champion for the elderly to fill the shoes of the late Congressman Claude Pepper of Florida despite the fact that many of the most productive members of Congress are well above 70 years of age. Furthermore, it is getting tougher to prove age discrimination in court. For example, a California state appeals court - in a case brought under the states age discrimination law - said that employers could give younger workers preference over older ones if they had an economic justification for doing so.

While age discrimination is a despicable practice under any conditions, it is particularly important that the U.S. tradition of discriminating against older workers, a tradition developed when there was an excess of young workers and unemployment was high, be wiped out before the baby boomers begin to reach retirement age. Now is the time for the U.S. to experiment with (1) older worker retraining programs; (2) policy options such as offering tax credits for hiring and retraining older workers, particularly the low skilled; (3) extending the Earned Income Tax Credit as an incentive for older workers to continue to work; (4) stopping age discrimination in federal agencies, Federal laboratories, and universities that spend public funds; and (5) stopping age discrimination by companies. To get the attention of employers that have embedded age discrimination into their culture, the penalty for age discrimination must be swift and very painful and the penalties must have high public visibility. The social costs for companies found guilty of age discrimination have not been significant.

The number of age-discrimination complaints filed with the U.S. Equal Employment Opportunity Commission has risen 23.5 percent in the last two years--the fastest-growing category of discrimination cases. While age-discrimination laws also cover hiring and promotions, the majority of the cases filed have to do with unfair termination practices.Institutions routinely practice age discrimination and are often ignorant of the fact that theirpractices are discriminatory. For example,

· Salary curves as a function of age routinely show salary decline after age 45.

· One DOE national laboratory was ruled by the courts to have preferentially terminated older employees during a major lay-off and in response to the courts directive, terminated employees were rehired and given back pay. Despite its history of age discrimination, current policy at that laboratory is that 80 percent of its new hires will have received their last degree within two years of their employment by this national laboratory. Although this practice is an obvious example of defacto age discrimination, it is legal.

· Most companies view older employees that have not been promoted to management positions or those that have remained at the same management level for several years as inferior and deserving of termination. Many companies view an engineer that hasn’t been promoted into a management position to not be a very good engineer.

· University administrators often assign the most undesirable teaching positions to the older faculty, hoping to promote early retirement and it is common for university administrators to speak about the importance of the young faculty.

· Many companies have defacto upper limits for the age at which an employee may be promoted.

AT&T has been sued for terminating older workers and replacing them with foreign born employees willing to work for very low salaries. In 2002 a Goodyear worker filed an age discrimination lawsuit. Sun Microsystems is being sued for replacing older workers with H1B hires. On March 17, 2003, U.S. District Judge Ann D. Montgomery ruled that the Supervalu age-discrimination case will go to trial, denying Supervalu’s motion for a summary dismissal of the case. “Plaintiffs have demonstrated sufficient evidence,” she wrote in her 31-page opinion, “supported by the record, suggesting a pattern or practice of discriminatory conduct by Supervalu.” The evidence discussed in the opinion includes notes from a meeting of company executives on January 29, 1998 in which a Supervalu vice president, is quoted as saying, “This is how we stay legal, to eliminate the old people from the system.” In the months that followed, the plaintiffs jobs were eliminated by Supervalu.

Many of those that are charging age discrimination are also claiming that their job has not actually gone away; rather, they are being replaced by foreign workers that enter the U.S. with either an H1B visa or an L-1 visa. There is much evidence that other companies are guilty of this practice. For example, Representative Mica’s “interest” in the L-1 program arose earlier this year when Mike Emmons, one of Mr. Micas constituents contacted Congressman Mica with an urgent complaint: Emmons, an engineer with Siemens in Mica’s Florida district, was being replaced by a foreign national subcontracted by Tata, an Indian/American firm. Adding insult to injury, Siemens was also forcing Emmons to train his foreign replacement (as a condition for Emmons to get his severance package). Siemens admitted that these events were taking place, not just in Emmons’ case, but for many American workers at Siemens.

On April, 2003, in Silicon Valley, KEVIN FLANAGAN, a Bank of America employee, stepped into the parking lot at Bank of America and shot himself dead. Just moments before he took his life, Kevin had been laid off by Bank of America. Some of Bank of America’s technology workers, who like Flanagan have also had to collect pink slips over the last several months, think they know why Flanagan took his life: Bank of America not only outsourced his job to India, but forced him to train Indian workers to do the job he had to give up. Bank of America is one of several major U.S. corporations - General Electric, Microsoft, Intel are among others - under scrutiny for outsourcing jobs to India. The Bank of America created what is called a “Global Delivery center” in 2000 to identify projects that could be sent offshore. The Bank has also acknowledged that it had asked local workers to train foreigners because such knowledge transfer was essential.

The American programmer in this tragedy was forced to train his foreign replacements, putting the lie to the industry lobbyists’ claim that the foreign workers are needed because the Americans lack the necessary skills. The example also puts the lie to the industry lobbyists’ claim that the programmers’ main problem is the “ bust,” that jobs are available in the non-tech sector. It also puts the lie to the industry lobbyists’ constant claim that the foreign workers are needed because American kids are too lax in their studies, the “Johnny Can’t Do Math” syndrome because Kevin was a National Merit Scholar.

Tom Flanagan, Kevins father remarked,

A significant reason for which my son took his life was indeed as a result of his job being outsourced. He knew it was coming as long as 6-8 months ago. He had plans for the future. He intended to enter law school, among other things. No one who knew him saw this coming, not one person. I had many conversations with Kev over his final months and not one time did he ever show the obviously deep depression he was suffering. Clearly there were other issues in his mind, but the loss of his job, a job he dearly loved, was too much… the final straw. What kind of a person was he? He was a brilliant man; a cum laude college graduate in philosophy and computer science; a National Merit Scholar; a “Mentally Gifted Minor” when he was in junior and high school.

Although, cost savings is the most common and true justification for age discrimination in the workplace, corporations often justify age discrimination by making use of the erroneous argument that scientists make their most important discoveries during their twenties and thirties and by their late forties have done their most important work. Another erroneous argument that one sometimes hears from companies’ HR departments (usually people that know nothing of engineering or engineering education) is that engineers become dated as they age and must be replaced by employees whose education is more up-to-date. This concept is often resident in companies managed by business majors, lawyers or scientists that do not understand engineering education and its emphasis on teaching theory. In fact, engineering education emphasizes theory because, unlike engineering technology, the scientific theories that underpin engineering change very, very slowly; therefore, an engineer well-grounded in theory has an education that will support a 50 year career. As new technologies evolve, including computational technologies, companies can easily retrain those engineers that have learned the theories that underpin the practice of engineering.

Not only has a government owned laboratory been found in the courts to be guilty of age discrimination, the National Science Foundation has promoted age discrimination by declaring there was a shortage of scientists and engineers in the U.S. when it knew the opposite to be true. The Information Technology Association of America (ITAA) is a trade association of about 500 member firms. It released the survey report, Bouncing Back: Jobs, Skills and the Continuing Demand for IT Workers - that was supported by Microsoft, Cisco Systems, Intel Corporation, ITT Technical Institute, American Association of Community Colleges, Brainbench, The Chubb Institute, Dice Inc., Prosoft Training and SRA International. Project advisor was the National Workforce Center for Emerging Technologies (NWCET) (1) funded by the National Science Foundation. ITAA is doing a service for its members by supporting and lobbying for increased availability of temporary foreign workers through the H-1B visa program. In order for ITAA to support and publish survey results, the survey must prove the need for increased temporary worker admissions. By selective survey techniques and non-disclosure of the weakness of the connection between the sample and the total population, the survey has delivered the conclusions needed by the ITAA. What has happened is that ITAA has issued yet another misleading survey - whose conclusions are predetermined (and favorable to their large corporate members, who pay for the surveys). NSF has consistently supported the erroneous claims of the ITTA.

More than 500,000 U.S. technology workers lost their jobs between January 2001 and December 2002. During the same period, companies sponsored more than this number of high-tech workers on H-1B and other temporary visas. According to the INS, the median salary for an H-1B worker is 25 percent less than that of an Americans. The unemployment rate for electrical engineers (EEs) rose to an unprecedented 7.0 percent in the first quarter of 2003, according to the U.S. Department of Labor. The rate stood at 3.9 percent in the previous quarter. It is a full percentage point above the quarterly figure for all workers. The previous high quarterly EE jobless rate was 4.8 percent (second quarter, 2002). Santa Clara County, the home of Silicon Valley has an unemployment rate of 8.3 percent. Jobs continue to disappear, with the number of jobs in the county now at a seven-year low. Despite the high unemployment rate for electrical engineers, the ITAA and U.S. corporations continue to lobby to maintain the H1B visa count at 195,000 per year.

Issues surrounding the aging population highlight several fundamental problems that the U.S. must address:

· The lack of productivity growth in healthcare services.

· Financial and cultural disincentives to keeping the aging population on the job and working. 1 Tom Flanagan, father of Keviin Flanagan, MAY 26, 2003, email to Chidanano Rajgatatta.

· A youth-oriented, inefficient education system that does not offer cradle-to-grave education opportunities and emphasize older worker retraining.

· Inattention to developing systems that provide care for the elderly at costs they can afford.

· How to eliminate the parasitic, defacto age discrimination, that infects most U.S. institutions.

· A political system locked-in to the use of political processes for decision-making that is rapidly falling behind the private sector in using modeling and simulation to forge decisions that are systematically rational. Instead of itself collecting data on age discrimination, Congress calls for a study by an institution whose members endorse age discrimination. 


Posted by Elvis on 10/04/05 •
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