Job loss — not resignation — drove the pandemic's retirement boom
Many older workers exiting the workplace during the pandemic were not part of the Great Resignation, a new study found. They were pushed out of the labor force.
Since March 2020, 1.1 million more Americans between the ages of 55 and 74 retired earlier than what would have been expected during normal times, according to a recent report from The New School's Schwartz Center for Economic Policy Analysis. The number of those who retired involuntarily a year after losing a job was 10 times higher than pre-pandemic times, the report found.
“While the above-trend retirement rate has fueled the narrative of a ‘great resignation’ among older workers, our research indicates that most of these retirements occurred after periods of unemployment rather than directly from employment,” Barbara Schuster, the report’s analyst, and research associate at Schwartz Center for Economic Policy Analysis’s Retirement Equity Lab, said in a recent webinar.
These were “not by choice,” she said.
The big question is whether these older workers pushed into early retirement jump back into the labor force as the pandemic recedes — and if employers are ready to hire them.
Unemployment led to retirement
In March 2020, 35 million older workers were employed. At least 3.8 million workers ages 55 to 74, or 11 percent of all workers in that age group, lost their jobs the following month.
A year later, 400,000 workers were retired involuntarily, according to the report. Normally, 180,000 older workers would experience job loss in a given month and 30,000 of them would be retired one year later.
The number of people who went straight from a job to retirement—decreased slightly during the pandemic, which signals those older workers who remained employed were more likely to postpone retirement during this period, according to the analysis.
“Those who were able to keep their jobs stayed in them,” Schuster said.
More older workers would return if there was demand
Some of these forced retirees are beginning to come back.
“There is always a flow of those going from retirement back to employment,” Owen Davis, a research associate at the Schwartz Center for Economic Policy Analysis, told Yahoo Money. “In the last few months, we have seen the return to employment by retirees basically to where it was pre pandemic. This is noisy data, obviously, but we're certainly not seeing it now as some kind of extraordinary amount of return to employment from retirement.”
For older workers who retired and are eyeing a return, the ongoing tight labor market and turnover indicate that it’s likely still a good time to ramp back on.
There are plenty of open jobs. While the most recent jobs report by the U.S. Bureau of Labor Statistics reported an uptick in hiring, nearly 4.5 million people quit their jobs, according to the Labor Department's JOLTs (Job Openings and Labor Turnover Summary), which showed vacancies totaled 11.3 million, near record highs.
With close to two open jobs for each of the 6 million unemployed workers that the Labor Department counted in February, employees are in a more powerful position today than they’ve been in years.
“There is huge demand for workers, and boy, do we hope that there is demand for that excess supply of older workers because they really need the money,” Teresa Ghilarducci, who directs the Schwartz Center for Economic Policy Analysis and is a professor of economics and policy analysis at the New School for Social Research, told Yahoo Money. “But we are seeing lots of evidence that employers used the pandemic as a once-in-a-lifetime way to get rid of those expensive older workers.”
And that push back makes the way back harder regardless of a will to return.
“It's not really up to the worker to decide whether or not they're going to come back,” she said. “We're not seeing evidence to support that employers want these older workers back, and we looked. There's a big demand for younger workers, not so much for older workers.”
Although data indicates that “some older workers are in fact returning, these flows do not match the mass of the pandemic retirements that we observed,” Schuster said. “We do not see the same large numbers of retirees that were pushed out of the labor force also coming back.”
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This is not because these workers do not want to come back.
“If there is demand for older workers, we would expect them to actually unretire,” she said. “Or at least, that some of them will unretire, given that early retirement really hurts retirement readiness, and we are facing a historic high inflation rate that considerably increases the cost of living.”
Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter @kerryhannon
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