Retirees have rejoined the labor force at a steady clip in recent months, attracted by a hot job market and reduced Covid health risks.
This “un-retirement” trend could help increase the available pool of workers and ease the hiring challenges businesses have reported.
As of April, 3.3% of people who were retired a year earlier are now employed — meaning about 1.7 million people “un-retired” over that time, according to Nick Bunker, an economist at job site Indeed, who analyzed data from the federal Current Population Survey.
The share has been rising since late summer last year. It was about 2.4% last August and 2.8% in January, for example, according to Bunker’s analysis.
Now, the percentage is roughly equivalent to pre-pandemic levels in late 2019.
“As Covid seems to be waning, the labor market continues to be strong, and nominal wage growth is still fairly high, that’s enticing people to take jobs,” Bunker said.
The ‘Great Retirement’
There was an exodus of workers into retirement in the early months of the pandemic.
The so-called Great Retirement exceeded the flow predicted by the demographic shift of baby boomers into retirement, according to the Federal Reserve Bank of St. Louis. There were 3.3 million (or 7%) more retirees as of last October than in January 2020, economists estimated.
Older Americans were more at risk of severe illness and death from Covid-19, perhaps motivating retirements among those able to do so.
To that point, 25% of adults who retired in the prior 12 months (and 15% of those who retired in the past one to two years) said factors related to Covid-19 contributed to when they retired, according to a Federal Reserve household report published this week. (The report reflects financial circumstances in late October and early November last year.)
Further, stock and home values swelled to record levels after an initial tumble in early 2020, perhaps offering a financial incentive to retire, too. The federal government also issued three rounds of stimulus checks to households over 2020 and 2021.
“These stronger balance sheets, in turn, likely created a pathway to retirement for many workers,” William M. Rodgers III and Lowell Ricketts, economists at the Federal Reserve Bank of St. Louis, wrote in January.
Covid-19 vaccinations have now increased, perhaps prompting many to come off the sidelines due to reduced health risks. Almost 91% of people 65 years and older are fully vaccinated, a larger share relative to the 67% of all Americans, according to the Centers for Disease Control and Prevention.
Meanwhile, it’s been an enticing market for job seekers in general. Job openings hit a record 11.5 million at the end of March, suggesting extremely high demand for labor among businesses.
Hourly wages (before inflation) are up 6% over the past year for the typical worker, higher than any point in the last 25 years, according to the Federal Reserve Bank of Atlanta, which has tracked data since 1997. Businesses have raised wages to compete for talent.
Of course, it’s unclear whether the un-retirement trend will continue.
Stocks and bonds have fared poorly in 2022, perhaps prompting retirees to rejoin the workforce for extra income. But there are signs the labor market may be starting to cool, and the Federal Reserve is also raising its benchmark interest rate to apply the brakes to the U.S. economy.
Many who retired during the pandemic are still young enough to reenter the labor market, according to the Federal Reserve Bank of Kansas City.
The number of retirees since February 2020 included: 700,000 people under 60 years old; 500,000 age 60 to 67; and 1.6 million age 68 to 75, according to the analysis, published in August.
“Many of those who postponed their plans to rejoin the labor force still have time to do so when the pandemic ends,” according to the authors, Jun Nie and Shu-Kuei X. Yang.