Millions of workers retired during the pandemic. The economy needs them to "unretire," experts say.
An economist will tell you it's a hot labor market: A record number of people quit their jobs in September, and the U.S. is seeing record job openings as the economy chugs back to life from the coronavirus pandemic. The pandemic drove millions of workers into early retirement — and experts say they could be key to reviving the economy.
The number of people who retired rose much faster than the typical pace during the pandemic. More than 3 million additional people retired compared with normal, a Federal Reserve Bank of Saint Louis analysis found. Meanwhile, the economy is still down nearly 4 million jobs from before COVID-19.
"40% of the older workers that were pushed out of the labor market because they were unemployed, they were laid off, they were fired during the pandemic, 40% of them were permanent job losers and most of them said OK, I'm not just a discouraged worker, I'm not a long-term unemployed, I'm going to tell the [Labor Department] survey I'm retired,'" said Teresa Ghilarducci, labor economist and professor at The New School.
Older workers were a much bigger share of the unemployed workers in the pandemic compared with the last recession, she said. She found many of these workers were not college educated and could not work from home. Their retirements came out of hopelessness without strong prospects of going back to the workforce.
While businesses pre-pandemic typically kept workers with more seniority and laid off newer workers, that didn't hold during COVID, Ghilarducci said. "And then we didn't see that willingness of employers to hire older workers in those phases when the COVID cases were down and the economy was coming back."
Americans are already working more days, longer hours and later in life than people in other industrial countries, but the number of U.S. workers expecting to work beyond 62 years old ticked down during the pandemic.
The pandemic did not deplete the value of financial assets the way the Great Recession did – so some people had the nest egg necessary to retire. But in many cases, earlier retirement can also permanently lower someone's standard of living. As workers are pushed out, they may have to go into debt, draw down savings, collect Social Security earlier and pay for pre-Medicare health care.
"I think there's a lot of noise right now and a lot of disagreement about who the retirees are that retired earlier than expected. Is it the people who were forced to leave the labor force, or is it the people who were more empowered financially to be ready to say 'no, under these conditions I don't want to be working right now'?" said AARP senior strategic policy advisor Jen Schramm.
The expert consensus: The U.S. needs workers. Despite record openings and soaring demand, businesses claim they can't find workers. "Unretirements" could help solve part of the equation.
Older workers who need money are the ones who are going to have to come back, said economist Diane Swonk. She said when it comes to hiring, employers need to cast a wider net — and that's helped along by the tight market.
"We need everyone we could get. We've never had such stunning job openings ever," Swonk said.
There has been some uptick in "unretirement" in recent months. But policy experts warn it will take much longer to get the full picture.
"What we're seeing now in 2021, and particularly in recent months, is that as more of this population has been vaccinated and as the labor market improved, these people are increasingly returning to work," said Indeed economist Nick Bunker.
Older people are also more susceptible to COVID-19, further driving up concern in the workforce — and now there's another variant of COVID-19, Omicron.
Bunker said it is still being determined just how much of retirement was "unemployment masked and given the name retirement" but providing opportunity and assuaging their health concerns will help get them back in the door.
But even if retirees return to work at the average pre-pandemic pace, it will take more than two years to bounce back from the recent surge in retirements, the Federal Reserve Bank of Kansas found.
Last month, employment among workers 55 and older increased while unemployment dropped slightly. Older workers are typically more likely to face long-term unemployment than younger workers. While long-term unemployment among older workers changed little last month, it has declined in recent months. Older Americans coming out of retirement might not be returning to the same landscape.
"Will they return to standard kinds of jobs or will they return through doing contract work or gig work?" Schramm said.
Meanwhile, leisure and hospitality, health care and the trucking industries need workers. Older workers could take on some of those jobs, Ghilarducci said. But workers would need to be trained and employers would have to implement flexible schedules. So far, they have not — or worked to combat ageism, she said.
"The economy absolutely will grow if everybody who wants a job gets a job."