From official figures, the United States is enjoying a jobs recovery. In fact, it has been several quarters now that the U.S. official unemployment rate has been shrinking. Moreover, the psychologically important 300,000 weekly unemployment claims threshold has pretty much held steady for several quarters now, give or take a few weeks. All this points to a robust jobs picture in the United States. However, if you take a deeper look into these figures, certain disturbing patterns arise.
The main reason why the unemployment rate is so low is because a record number of Americans have simply given up looking for work. We are talking about labor participation figures that haven’t been seen in over three decades. That is how bad the problem is. There has been a lot of debate as to why so many Americans have just stopped looking for jobs. One key part of this is that most of the new jobs being created are actually very low-paying jobs in the service sector.
One particular factor that hasn’t gotten much analysis is the impact of changes in the federal age discrimination law. The primary law governing age discrimination in the United States is the ADEA – Age Discrimination and Employment Act. The ADEA is supposed to protect Americans aged 40 and over from age discrimination. Thanks to the relatively recent Supreme Court case Gross v. FBL, the effective burden of proof for proving age discrimination has shifted to plaintiffs. This has all but destroyed the possibility of bringing this claim. It is very hard to prove that your age is the “butt for” reason why you didn’t get hired or promoted.
As you can well imagine, any perception among older Americans regarding rampant age discrimination is sure to dampen their zeal and willingness to look for work. Indeed, such violations are probably more rampant in certain sectors than others. This high degree of legal immunity is probably more brazen in sectors of the economy that place a higher focus on technology. If the focus is on a younger workforce or a more dynamic workforce, expect age discrimination to surface.
Unfortunately, given the current legal framework for filing such a claim, it is almost impossible for plaintiffs to succeed. If anything, the best they can do is file a claim and pressure the defendant to settle quickly due to the fear of bad publicity. Still, this particular factor is worth noting when looking for explanations as to America’s historically low labor force participation rates.