Even with the decline in the number of young Americans entering the workforce and the Trump administration’s crackdown on immigration, American employers have been able to count on the last baby boomers to avoid labor shortages. and soaring wages.
But the COVID-19 pandemic has hit this long-standing reality like a hand grenade.
And the effects are likely to be felt throughout the economy for years to come, in the form of recurring labor shortages, pressures for higher wages, problems for social security and private pension funds. , and a host of other areas.
When the health crisis hit early last year, workers of all ages were made redundant by the tens of millions. But the outcome of the pandemic-induced recession turns out to be very different for older workers than for their younger counterparts.
Young workers – regardless of the fattened unemployment benefits provided by Washington on a temporary basis – now face great pressure to resume their interrupted careers relatively quickly. And recent employment figures reflect that pressure to return to work.
This is not the case with older workers.
In large numbers, many have reassessed their finances and other factors and concluded that they are about as well retired now as they would be to return to work and continue their careers for a few more years.
Right now, it looks like many of these older workers will never come back.
“We are now, during this century, in a period of reduced immigration to the United States. We are also in a period of declining fertility,” said Richard Fry, senior researcher at the Pew Research Center specializing in the economy and education. “So keeping baby boomers in the workforce has contributed significantly to the growth of the economy as a whole.
“Whether it is a final exit from the labor market or temporary, we do not know,” he added. “But it really is an important question.”
For some older workers, this is a quality of life issue: they find being at home rewarding. And retirement income goes beyond what many expect without the expense of transportation, lunch, and the like.
Others have been pushed into early retirement for medical, family and personal reasons.
“It’s a big irreversible shock to a lot of people,” said Patrick Button, professor of economics at Tulane University, who has written extensively on age discrimination and the job market.
Even though pandemic restrictions have been lifted and businesses are struggling to find enough workers to fully reopen, the number of adults aged 55 and over who are participating in the workforce – that is, working or looking for work – has barely budged this year and is actually down from last fall, according to government statistics.
This is in stark contrast to those in their prime, aged 25 to 54, who have made considerable progress in re-entering the workforce.
The pandemic did not hasten Monique Hanis’ retirement, but it certainly crystallized her plans.
“I think it allowed time for reflection and conversations. It really reinforced the decision that I was ready, ”said Hanis, who turned 60 this week and also stepped down as senior director of communications at Advanced Energy Economy, a Washington trade association.
For Hanis, the pandemic has prompted a major rethink of life, health and priorities.
“You can’t always get your healthiest time back,” she said, “and as we get older it becomes a concern, being able to physically do the things we want to do, travel.”
Her husband, Doug Warnecke, retired two years ago at the age of 66. “After juggling two very demanding careers,” Hanis said, “raising kids through it all – I took six weeks off to have the babies and was back to work – you know, every rideshare and sports teams and whatever you do, and we just thought, “Time to have some fun. Let’s play.”
Admittedly, many older workers do not have sufficient savings and retirement funds to avoid working. Others want the stimulation of work.
“I’ve never, ever seen myself in a million years retire. I’m very work-oriented, so for me doing nothing on my own gets me climbing trees, ”said Christine Garza, 68, a former health educator in Charlottesville, Va., Who took classes. part-time and temporary. missions in recent years.
Still, the momentum among older workers is likely to have shifted, a shift from the past two decades, when they stayed at work and reversed a long central trend toward early retirement, said Courtney Coile, professor. at Wellesley College studying the economics of aging and health.
What allowed people to work longer was linked to better health and education, the increased role of women in the labor market, changes in company pension plans and in particular changes in employment. social security that prompted delaying retirement, she said.
In the last decade just before the coronavirus outbreak in the United States, employment for people 55 and older grew by an average of 1 million per year, compared to around 750,000 for workers in the force of the United States. ‘age. The fastest growth rate was among those aged 65 and over.
But since last fall, after a first burst of recovery, employment of older workers has leveled off.
At present, the change is exacerbating the labor shortage. There are a record number of vacancies and more and more people – young and old alike – have left their jobs and are on the sidelines.
Even before the pandemic, job trends did not look good for employers. With Americans having fewer babies, the working-age population is expected to increase over the next 10 years to a fraction of previous decades. “If more people retire than in the past, it’s a big potential crash for the workforce,” said William Frey, demographer at the Brookings Institution.
The long-term consequences of a decline in baby boomers have been very significant: their lower contribution to the labor force suggests slower economic growth ahead for the United States and potentially negative effects on overall productivity of the United States. the economy.
The reduced availability of older workers will complicate the Federal Reserve’s ability to guide interest rate policy and manage inflation.
There are also huge implications for public finances: having fewer workers will likely mean reduced tax revenues, including social security payments.
In the first quarter of this year, 30.3 million baby boomers said they were out of the workforce due to retirement, according to analysis of government data from the Pew Research Center.
That’s 2.7 million more than in the first quarter of 2020, a much larger increase than the average growth of about 2 million retired baby boomers per year over the past decade.
So far, there has been no surge in claims for Social Security benefits – one can start collecting benefits as early as 62 – but experts suspect that this may be in part because people, until now have been content with savings and generous forms of pandemic aid, including expanded unemployment benefits and several rounds of relief checks.
The Pew Center’s Fry is concerned about the long-term solvency of retirement programs like Social Security. As more and more seniors retire, he said, they will withdraw pensions and retirement plans, which has implications for the price of financial assets.
There is reason to believe that the abrupt breakdown in the participation of older workers in the labor market could be a lasting trend.
In June, 55% of unemployed people aged 55 and over had been unemployed for more than six months, compared with 36% for all other working age groups combined. And the longer a person has been unemployed, the more difficult it is generally to return to the workforce.
For workers 65 and over who were unemployed in June, half have been out of work for more than 46.5 weeks. For all workers, the median duration of unemployment was 17.6 weeks.
Many of them face obstacles to return. The AARP says more and more people are seeing age discrimination in employment.
And, despite the overall shortage of workers, experts say they haven’t seen companies generally step up efforts to recruit or retain older workers, focusing instead on racial and income disparities.
ReneeWard, founder of Seniors4Hire, a Huntington Beach-based organization that tries to match older workers with employers nationwide, said some companies trying to come back from the pandemic and desperately looking to fill positions were targeting old people.
Most of the jobs posted on its site are for jobs such as hotel clerk, building receptionists, tour guides, security guards, nannies and orderlies. Whether they offer enough pay, flexibility or safety protections to attract older workers is another question.
“This group will be much more resistant to returning to work,” said Jeffrey Korzenik, chief investment strategist at Fifth Third Bank in Tampa, Fla., Who closely follows the job market and its implications for the economy. .
And if fewer older workers return, he added, there will be less mentoring and knowledge transfer – a problem for manufacturers and other industries who fear losing a generation of experienced workers.
“We have a more vibrant economy when you have more people in the workforce who are productive, more robust consumers,” he said. “But there is no sign that they are coming back.”