Prior to terminating employees in connection with a reduction in force (RIF), downsizing firms often rely on a preliminary period over which voluntary separations and a freeze on hiring reduce the size of the work force before any employees are dismissed. The RIF itself will then require fewer involuntary terminations. This might appear to be an unmitigated good for both employees and employers. However, as regards the accuracy of statistical testing for age discrimination charges, quite the opposite may be true. Whether or not it is depends upon the length of the pre-RIF period and the age characteristics of those leaving the firm.

If the pre-RIF period is sufficiently long and if younger workers represent a larger percent of those leaving the company voluntarily than they do of the employer’s work force—as the data we present below imply—the percent older employees represent of the firm’s work force will increase as the pre-RIF period lengthens. The older the work force becomes, the likelier it is that the conventional statistical test for age discrimination—which we review later—no longer distinguishes accurately between discriminatory and non-discriminatory RIFs. It would appear then that when a company’s downsizing efforts include a sufficiently long pre-RIF period, a second statistical test—in addition to the conventional one—might usefully be applied to the data before drawing conclusions about age discrimination.

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