You’re looking to buy a car. You believe that Hondas are more reliable, fuel-efficient, and longer-lasting than are GM cars. If the price difference between a GM car and a Honda were $5k or $10k, you would go with the Honda. However, when you go to the car lot and shop out cars, you find that you can’t get a Honda for less than $60,000 more than a comparable GM.
When you ask the dealer about the price difference, he says, “The reliability of Hondas are unmatched in the industry; they save a lot of money on gas; and they have a great reputation and this particular model has an outstanding track record.” He is flummoxed when you buy the GM that both of you think is a worse car than the Honda.
WBUR has an article entitled, “Great Job. Now You’re Fired,” which discusses how older workers are finding themselves fired [sic] from their jobs. I’m not here to say that age discrimination – actual, counterproductive discrimination based on age – does not exist, I will comment on the rational for favouring younger (i.e. cheaper) workers.
The older worker in the example above is a lot like that reliable, fuel-efficient Honda. The problem becomes either the perception or the reality that the older worker is asking for more money than they are worth. If they are doing the same job as a younger person, albeit slightly more efficiently, it makes little sense to pay them vastly more money to do that same job. (I encountered this a lot in engineering: interns and new engineers were really cheap on projects, and it made little sense to have more expensive engineers do the exact same work as the young people did.)
Interestingly, WBUR cites increased health care costs as a reason that employers dislike older employees; this is but another reason why many of us are calling to decouple insurance coverage from employment. Employers rarely care about what they are not paying for, so a different system would remove the disincentive to hire and retain older workers.
Meanwhile, the market is sorting itself out in regards to highly skilled, older workers: temp agencies are some of the biggest employers in America. This enables an employer to name the price that it will pay for a job, and the agency to provide the best person to do that job.