Retirees are ‘unretiring’ — and that’s good for the labor market

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  • In fact the “non-retirement” rate, which measures those switching from retirement to employment, is accelerating, according to an analysis by Nick Bunker, an economist.
  • This is good news for the labor market, and according to economists speaks to improvements in public health and job-related factors such as higher wages.
  • There was an increase in early retirement during the pandemic. It remains an open question how many will be permanent or temporary.

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Retirees are coming out of retirement, and that’s a good sign for the labor market.

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According to economists, early retirement among older Americans was one of several labor distractions related to the COVID-19 pandemic, as health risks and other factors prompted many to quit their jobs.

But there is an open question: Are these retirements permanent, or will these workers rejoin the labor force?

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The North could have major implications for the American economy and even the finances of everyday Americans, at a time when overall labor force participation has been very low.

According to Nick Bunker, director of economic research for North America at the job site, the number of retirees re-entering the job market is on the rise.

That's largely a positive — most pandemic-era retirements are for "good" (like an inflated nest egg) rather than "bad" reasons (forced retirement amid a health crisis), he said.

,[The trend] suggests there's a bunch of people out there who want work and are finding it fast," Bunker said.

bunker analyzed Data from the Current Population Survey (a household survey by the US Census Bureau and the US Bureau of Labor Statistics used to piece together a portion of the monthly jobs report) to determine the so-called retirement rate.

(For those who reported retiring in 2020, this rate measures the percentage who said they were employed after 12 months.)

Bunker found that in October 2021, the retirement rate was 2.6%, up from the 2.5% rate for September and 2.4% in August.

He said this is a noticeable pickup in "retirement" relative to other periods during the pandemic. By June 2020, the rate had fallen to 2.1%.

Bunker said the current rate is still slightly below its pre-pandemic trend of 2.5%-3%. (These rates don't apply to a specific age group, but it's safe to assume that most retirees are older, he said.)

'Bounce back'

But according to Aaron Sojourner, a labor economist and associate professor at the University of Minnesota, even a slight upward change in that rate can have a meaningful effect because it applies to a larger group of people.

"We can see that something reverse is happening now," Sojourner said. "Looks like we're holding back a little."

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About 3.6 million more Americans were out of the labor force and did not want jobs in October 2021 relative to October 2019; Of those, 3.3 million, or 91%, were Americans age 55 and older, according to a Analysis Sojourner handled the federal data. He said it signals the magnitude of early retirement.

Sojourner said whether these retirements are sustainable or temporary depends largely on how people want to use their time.

COVID vaccination rates are climbing; Childcare restrictions appear to be easing, freeing grandparents from caregiving responsibilities for working parents; Job prospects are improving and wages are rising.

Amidst that backdrop, will people in their 50s, 60s and beyond spend their time in or outside the labor force?

"If they are lured back into the labor market -- by improving public health and jobs -- that's good," Sojourner said. "That means they have better options.

"The inside-the-labour-market option outperformed the outside-the-labour-market option."

Of course, finances can also be a concern for those who feel they need to take a paycheck to make ends meet.

edge workers

Whether or not workers are lured back into the labor market is an important consideration for the US economy.

While overall job growth is accelerating, millions of workers are on edge. Sojourner said employers have raised salaries (especially in certain sectors such as restaurants) and to some extent, prices to attract job interest.

He added that bringing more workers into the job market and boosting the labor supply could help ease any wage and price pressures, and that the Federal Reserve is likely to slow the economy and rein in consumer demand. decreases.

Of course, early retirement isn't the only factor that can contribute to the less-than-anticipated labor supply.

Perhaps the biggest of them all: The pandemic continues. 84,000 were the average new covid cases One day on Monday, a rise from the recent low of 64,000 on 24 October. and covid-related deaths, while on the decline and which occurs heavily among unaffiliated people, still averages more than 1,000 a day.

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