Pandemic bringing early retirements
Even with declining numbers of young Americans entering the job market and the Trump administration’s crackdown on immigration, U.S. employers were able to count on the last of the baby boomers to prevent labor shortages and soaring wages.
But the COVID-19 pandemic has hit that longstanding reality like a hand grenade.
And the effects will likely be felt throughout the economy for years to come, in recurrent labor shortages, pressure for higher pay, problems for Social Security and private pension funds, and a host of other areas.
When the health crisis struck early last year, workers of all ages were laid off by the tens of millions. But the result of the pandemicinduced recession is turning out to be vastly different for older workers than for their younger counterparts.
Younger workers now face strong pressure to resume their interrupted careers relatively quickly.
Not so among older workers.
In large numbers, many have reassessed their finances and other factors and have concluded that they are about as well off retiring now as they would be going back to work and soldiering on for a few more years.
Right now, it looks like many of these older workers will never come back.
“We are now, in this century, in a period of reduced immigration to the U.S. We are also in a period of lower fertility,” said Richard Fry, a senior researcher at the Pew Research Center specializing in the economy and education. “So the fact that boomers were staying in the labor force has been an important contributor to economywide growth.”
For some older workers, it’s a quality-of-life issue: They have found being at home fulfilling. And retirement incomes go further than many expect without job-related expenses of transportation, lunches and such.
Others have been nudged toward earlier retirement by medical, family and other personal reasons.
“This is a big shock that’s irreversible for a lot of people,” said Patrick Button, an economics professor at Tulane University who has written extensively on age discrimination and the labor market.
Even as pandemic restrictions have been lifted and businesses are struggling to find enough workers to fully reopen, the number of adults 55 and older who are participating in the labor force — that is, working or looking for work — has barely budged this year and is actually down from last fall, according to government statistics.
That’s in sharp contrast to people in their prime working years, ages 25 to
54, who have made significant strides in getting back into the job market.
The pandemic did not accelerate Monique Hanis’ retirement, but it certainly crystalized her plans.
“I think it allowed for thoughtful time and conversations. It really solidified the decision that I was ready,” said Hanis, who this month turned 60 and left her job as senior director of communications at Advanced Energy Economy, a business association in Washington.
For Hanis, the pandemic spurred a broad rethink about life and priorities.
“You can’t always get your healthiest time back,” she said, “and as we get older, that becomes a concern, to be able to physically do the things that we want to do, to travel.”
Her husband, Doug Warnecke, retired two years ago at age 66. “After juggling two really demanding careers,” Hanis said, “raising kids through all of this — I took six weeks off to have the babies and I was back to work — you know, all the carpooling and sports teams and all the stuff you do, and we’re just like, ‘It’s time to have fun. Let’s play.’”
To be sure, many older workers don’t have adequate savings and retirement funds to stay away from jobs. Others want the stimulation of work.
“I never, ever in a million years saw myself retiring at all. I’m very work-oriented, and so for me, just not doing anything itself drives me up a tree,” said Christine Garza, 68, a former health educator in Charlottesville, Va., who has been taking part-time and temporary assignments in recent years.
Still, it’s likely the momentum among older workers has shifted, a change from the past two decades, when they remained on the job and reversed a centurylong trend toward earlier retirement, said Courtney Coile, a Wellesley College professor who studies the economics of aging and health.
What kept people working longer had to do with better health and education, the increased role of women in the job market, shifts in company retirement plans and especially changes to Social Security that incentivized delaying retirement, she said.
In the decade before the coronavirus outbreak in the U.S., employment among people 55 and older grew on average by 1 million a year, compared with about 750,000 for prime-age workers. The fastest growth rate was among those 65 and older.