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State of the Union and Older Americans

Obama's small-beer ideas for finding work and retirement savings

By Richard Eisenberg

Pundits are saying President Obama’s January 28 State of the Union focused on small-bore ideas. But for older Americans looking for help from Washington to find work or to save for retirement, I’d say it was more like small beer.
Below are the key proposals from the speech plus views about them from experts I’ve consulted and me:
The Long-Term Unemployed
Roughly 3.9 million Americans have been out of work for more than six months — the long-term unemployed. They make up about 38 percent of all unemployed people in the U.S. (about the same as in 2012) and half of the long-term unemployed are over 50. According to AARP, it takes unemployed people over 50 about a year to find a new job, which is almost twice as long as people under 50.

(MORE: Programs to Help the Long-Term Unemployed)
Obama’s key proposals:
He’s getting CEOs at major corporations such as AT&T, Procter & Gamble and Xerox to sign a pledge saying they won’t refuse to hire people just because they’re unemployed. President Obama says the pledge would “give more unemployed workers a fair shot” at a new job. That’s beause some firms continue to discriminate against out-of-work job applicants. A recent Northeastern University study found that employers would rather call back applicants with no relevant experience who’ve been out of work a few months than those with more relevant experience unemployed for more than six months.
Firms signing the pledge will, among other things: commit to ensure that advertising doesn’t discourage or discriminate against the unemployed; review screens used in hiring so they don’t disadvantage individuals from being considered for jobs based solely on their unemployment status and interview qualified long-term unemployed individuals.
I agree with AARP CEO A. Barry Rand who said “asking the business community to hire the long-term unemployed takes an important first step.” (Though I’d note that the word “solely” in the pledge is a huge loophole).

(MORE: A Must-See Film for Being Over 50 and Out of Work)
I’m hoping that all firms will follow the new guidelines for HR professionals just spelled out by the Society for Human Resource Management (SHRM), the largest HR association in the world.
Among them: When reviewing job applications and crafting job advertisements, focus on the knowledge, skills and abilities you seek for the position. Do not assume candidates are overqualified. Recognize nontangible skills the long-term unemployed may possess, such as drive, loyalty, a desire to succeed and a sense of purpose. Ensure that qualified candidates get an opportunity to explain any gaps in employment.
The administration will help community colleges partner with businesses so the schools offer classes and training programs to match skills that are needed. That’s a recommendation heartily endorsed by my Next Avenue colleague, Kerry Hannon (author of Great Jobs for Everyone 50+). I’m with her.

(MORE: How to Get the Long-Term Unemployed Back to Work)
He wants to extend emergency unemployment insurance benefits. Congress, of course, failed to renew benefits that expired for 1.5 million jobless Americans at the end of 2013. Susan Sipprelle, writer and producer of the excellent documentary about unemployed Americans over 50, Set For Life, tells me she thinks extending unemployment benefits is "a fine short-run solution," but "for the long term, we must improve education and create more jobs."


Personally, I’m dubious that the legislators will reverse course in 2014.
What Obama Didn’t Say
Elizabeth Isele, a serial entrepreneur and co-founder of the nonprofit Senior Entrepreneurship Works, told me she didn’t feel the president went nearly far enough to help older unemployed Americans — particularly those who want to start businesses.
Among the programs and policies she wishes Obama had announced:

  • A national initiative for long-term unemployed seniors with little chance of rehire to use their unemployment benefits to capitalize a business startup without penalty
  • Entrepreneurship initiatives reaching out to people 50+
  • Actions to mitigate obstacles senior entrepreneurs face, such as age bias from lenders
  • Tax incentives for seniors starting businesses and for private investors willing to finance their startups

Obama's Retirement Proposal
Obama’s big idea to help address the nation’s retirement crisis, the so-called “myRA,” is intriguing — but it’s really aimed at younger employees, not the older work force.
The myRA would be a starter savings account offered through employers who don’t currently offer retirement plans. It’s a cross between a Roth IRA and a tax-deferred 401(k), but invested only in U.S. savings bonds. You couldn’t cash out before retirement without paying a tax penalty, unless you roll over the money to an ordinary IRA.
President Obama said it “guarantees a decent return with no risk of losing what you put in.” While technically true, you could earn less than inflation, which — as economists note — would be a loss.
According to The Wall Street Journal, the Treasury Department is expected to encourage employers to offer myRAs to employees who’d be automatically enrolled unless they opted out.
What myRAs wouldn’t have, however, is an employer match, and that’s a shame. Many employers with 401(k) plans kick in money when their employees contribute. Those matches go a long way in helping people potentially amass healthy-sized retirement funds.
In a year from now, let’s see which of these proposals — if any— made a difference.

Photograph of Richard Eisenberg
Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More
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