There’s One Upside For Unemployed Older Workers: Happiness

A recent study suggests that there's at least one upside for the millions of beleaguered older Americans among the nation's long-term unemployed: Unlike their working peers, retirement -- officially calling it quits --actually makes jobless workers happier.

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As silver linings go, this might not make anyone jump for joy. But it might make a few hop a little — especially those concerned about the growing army of aging “discouraged workers” who’ve given up looking for a job. A recent study suggests that there’s at least one upside for the millions of beleaguered older Americans among the nation’s long-term unemployed: Unlike their working peers, retirement — officially calling it quits –actually makes jobless workers happier.

To be clear: This study offers little comfort for those who need to work because they can’t make ends meet. But the findings do have practical significance for folks in the 55+ set whose search for employment is as much about staying engaged and happy as it is about economics. For them, surprisingly, the best way to cope with a long and fruitless job search may be to simply give it up. Likewise, the study has contrarian implications for  policy makers, economists and other interested parties — especially those in the Obama and Romney campaign — who are weighing the importance of  discouraged workers on the labor force participation rate, which has been in long decline. As the economy heats up, some observers wonder whether many discouraged workers will start hunting for jobs again, thus raising the unemployment rate. But some of that concern may be misplaced if, as this study suggests, a portion of the long-term unemployed (out of work for 27 weeks or more) have found that giving up the job search altogether has improved their outlook and overall happiness.

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To see why that might be — why early retirement may be the wisest course for some out-of-work older people — it’s crucial to understand why unemployed people typically experience a decline in “subjective well-being.” (That’s how researchers describe measured happiness levels.) The obvious reasons — a lack of money and the stresses and frustrations that come along with it — are not the complete story. Rather than fretting simply because they can’t keep up with the Joneses, unemployed workers are also grumpy because they’re not keeping up with the Joneses’ … expectations.

That is, the jobless are unhappy in part because of the feeling that they’re not conforming to societal standards. They should be working, they believe, and they’re not. This explains in large part why most unemployed people do not experience significant boosts in reported well-being when they start getting unemployment benefits, or why all those “days off” don’t give them even a little lift in spirits. (It’s also true that people with jobs who voluntarily retire are generally no happier in retirement than they were when they were working.)

By contrast, older workers who retire after a long stretch of unemployment actually get happier when they officially give up the job hunt. That’s according to the findings of a team of economics researchers, led by Clemens Hetschko of Freie University in Berlin, who looked at 15 years of socio-economic data in Germany, following people from working age into retirement. And while it’s impossible to know for sure why the switch from “I’m unemployed” to “I’m retired” makes people happier, Hetschko and friends have a theory. (“Identity theory,” to be exact.)

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As the researchers wrote, “Retiring is associated with a switch in social categories and an increase in identity utility for the formerly unemployed.” In other words, a large chunk of our self-image is constructed from our sense of belonging to a group or groups and adhering to the rules, standards and values of the group. So when we switch from unemployment (standards-violation) to retirement (standards-upholding) we remove a powerful source of self-criticism and loathing. We feel better about ourselves because we’ve gone from being social outcasts to being more “normal.”

Now, to be sure, Germany is not America, but given the similarities in both cultures’ work ethics — those Protestants referenced in the phrase “Protestant work ethic” were mostly German Lutherans — there’s good reason to think Hetschko’s findings apply to U.S. workers as well. This is a country where one of the first questions we ask someone we’ve just met is, “What do you do for a living?” Which means that, for all the self-esteem people get from working with others and contributing to society, the happy-making course of action for at least some unemployed older workers is to hang it up and file for Social Security. To paraphrase a classic imperative: Don’t just stand there in the unemployment line, retire.