As experts try to explain why companies are struggling to hire, some have argued that the pandemic has encouraged older American workers to retire earlier than expected.
Why is this important: While it is true that retirements are unusually high, then the job market may have less slack than many assume.
- However, it is not uncommon for people to retire and eventually return to work.
In numbers : The percentage of the retired U.S. population has increased slightly for years, but has risen from 18.5% in February 2020 to 19.6% in May 2021. This is an increase of about 2.9 million people during the period.
- In a study first conducted by the Dallas Fed in May and updated in July for Axios, only 1.2 million people would have retired assuming 2019 retirement rates are maintained.
- This means an additional 1.7 million people retired earlier than expected.
- This trend is confirmed by the activity rate, which remains depressed at 38.4% for those 55 and over. This is down from 40% levels before the pandemic.
What they say : “Early retirement decisions during the pandemic, spurred by well-amortized 401 (k) accounts, have partly dampened the supply of older workers,” wrote Oxford Economics senior US economist Lydia Boussour.
- “The significant health risks of the virus for older workers and their reduced ability to telework have led many to withdraw from the labor market. “
Yes, but: “I am convinced that at least part of the retiree population is more transient in nature, especially since some are relatively young,” Kristina Hooper, chief global market strategist, Invesco told Axios.
- Retirees could return as wages rise and the risk of COVID decreases – and as retirement savings run out, Hooper says.
The bottom line: “People’s decisions to work are affected by a wide range of factors, and even if some constraints are removed, it will take some time for post-COVID normal to resemble pre-COVID normal,” the economist said. Chief American of Oxford Economics, Greg Daco. Axios.