COVID-19 and older employees: What employers should know and how they can lessen the impact

A version of this article was originally published in the October 2020 edition of Employee Benefit Plan Review.

The COVID-19 pandemic has sent shock waves around the world and its effect on global society will reverberate for many years. Already, researchers at institutions such as the Brookings Institution, the National Bureau for Economic Research (NBER), and the Centers for Disease Control (CDC) are analyzing data regarding the impact of the pandemic on current and future retirees. Early evidence indicates that older employees and retirees have been, and will continue to be, disproportionately disadvantaged by the pandemic.

Many employers are committed to maintaining an inclusive workforce that includes diversity not only with respect to race, gender and sexual orientation, but also with respect to age. It is important for employers to understand the unique pressures facing their older employees and current and future retirees as a result of the COVID-19 pandemic. This article will discuss some of the issues facing this age group, recent policy proposals by researchers at the Brookings Institution, and actions employers can consider to lessen the impact.

According to the CDC, the rate of hospitalization for individuals aged 65-74 is 8 times higher than individuals aged 18-29. The rate of death in the age 65-74 category is 90 times higher than the age 18-29 category.[1] These disparities are more pronounced in higher age brackets. An obvious reason is that older age groups are more likely to have underlying medical conditions such as chronic kidney disease, coronary artery disease, hypertension and a history of stroke, all known to increase the risk of hospitalization and death from COVID-19. Another reason is the higher incidence of living in retirement communities, assisted living facilities and nursing homes where COVID-19 has been rampant.

According to a working paper recently circulated by NBER, there is early evidence that the COVID-19 pandemic is having a greater impact on the employment of older employees than other employees.[2] In April 2020, the unemployment rate for employees age 65 and older was 15.43% compared to 12.99% for employees age 25-44.[3] The working paper notes that many jobs taken by older adults serve as a supplement to retirement income or as a bridge to retirement, allowing employees to delay the commencement of Social Security and defer depleting retirement savings. These jobs often include managerial positions, transportation drivers, sales and construction for men, and managerial, administrative/clerical, sales and personal service for women. These types of jobs typically involve services that do not translate easily to working remotely.[4] The working paper cites evidence that retirements increased in the early months of the pandemic.[5] The working paper also suggests that those continuing to work may face increased age discrimination by employers due to their vulnerability to COVID-19. For those who have lost jobs, reemployment after the pandemic subsides will likely be more challenging. The working paper concludes that all of these factors indicate that the economic downturn triggered by COVID-19 will likely have a greater impact on older employees than in past recessions.[6]

It is estimated that 401(k) plan accounts on average decreased about 19% in the first quarter of 2020.[7] While the stock market bounced back after first quarter 2020, the surge of COVID-19 cases and deaths during the summer months does not...