Posted on May - 14 - 2011

Why older workers are creating their own jobs

Deborah Ramsey went to work straight out of high school in the 1970s, working her way through the now-familiar rounds of layoffs, promotions and job changes at a series of banking, insurance and consulting companies in Philadelphia, her hometown. “I did my bit,” she recalls.

In 2005, she was working as an administrator for a technology consulting firm that was undergoing restructuring. “A lot of people were being laid off or leaving. I had been through two big layoffs before, I knew what they smelled like.” Ramsey decided to leave voluntarily, spurred by the changing work environment and caregiving responsibilities at home, where she looks after a mentally disabled daughter, an aging mother and mother-in-law, and her husband, a disabled veteran.

At age 52, she was ready for a change. Over the years, she had developed a strong interest in herbal remedies and massage therapy to help her daughter, who also suffers from asthma.

“I figured I had 20 good years left of life. I knew I couldnt keep doing what I was doing, and I needed to do something for myself. And I had been getting massages myself and really enjoyed it. It seemed to me women my age needed to start relaxing and enjoying life more, so I started Googling massage schools and wound up going back to school to get trained as a professional massage therapist.”

While she trained, Ramsey remodeled her basement and installed a massage table; and her first “clients” were friends who agreed to let Ramsey practice her new skills on them. Her practice flourished, and she moved out of the basement in 2009 to open her own inner city storefront natural wellness and spa, with help of the Womens Opportunity Resource Center, a nonprofit that helped Ramsey with training and a $35,000 loan.

Ramseys transition underscores an important trend among workers over age 50 who find themselves bounced out of the workforce. Many are choosing to become self-employed entrepreneurs.

Entrepreneurs age 55 to 64 represent a rising share of start-up activity, according to the Kauffman Index of Entrepreneurial Activity, accounting for 23 percent of new entrepreneurs in 2010, up from 14.5 percent in 1996.

The shift comes against a backdrop of continued tough times for older workers, as reflected in last weeks report on April unemployment. The jobless rate for workers over age 55 stood at 6.5 percent in April considerably lower than its peak of 7.3 percent last August, and much lower than the overall nine percent rate.

But older unemployed workers are having a much more difficult time finding new work. Last month, job searches required 44.6 weeks for workers age 55-64, much higher than for younger workers.

“Things may be getting a bit better in general, but for workers over 55, not much,” says Richard Johnson, senior fellow and director of The Urban Institutes program on retirement policy. “For older people who lose jobs its really hard to get a new one.”

The tough jobs climate fuels an instinct many baby boomers harbored before the recession to strike out on their own, says Jeff Williams, CEO of Bizstarters, a company that provides coaching and training to older entrepreneurs.

“For five years before the recession, boomers were jumping into entrepreneurship like crazy, he says. They wanted to to keep working, even if it wasnt in a corporate environment very few were saying they wanted to play golf five days a week. But now they also are saying they dont have enough money. Theyre much worse off than they were two years ago.”

Williams, who also does workforce training in suburban Chicago, says he finds that about 35 percent of the 50-plus jobless workers he helps are finding new positions. But for many, the new positions last less than 18 months. “Theyre really getting hired to do projects,” he says. “The companies dont describe it that way, but 18 months later theyre being told that the project they were hired for is going away, and so are you. People are starting to understand that were all independent contractors now.”

Re-employed workers also typically take a pay cut of about 25 percent, Williams says. Thats confirmed by Johnsons research, which shows that displaced workers age 50 to 61 typically see median hourly wages fall 20 percent below previous pay.

Ramseys story was featured recently at Over 50 and Out of Work, a web project by independent journalist Susan Sipprelle that has set its sights on showcasing the plight of 100 out-of-work boomers, alongside interviews with experts on economic policy and employment.

Ramseys business model has evolved since she started in the basement. “Weve moved from a focus on pampering and relaxation to a medical orientation. Were doing natural treatments for things like fibromyalgia and arthritis, and weight reduction for older women. Thats where the money is.”

She employs two other therapists now, and three friends have started related businesses through their association with Ramseys work. “Im doing more now than I could have ever imagined,” she says. “I dont know why I didnt do this sooner.”

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