One of the most insidious myths this year was that young people did not want to work because they were all in favor of government help. People had too much Many money, went the story.
Only the problem is that the numbers don’t back it up.
Instead, early retirement – whether forced by the pandemic or made possible otherwise – plays an important role in America’s changing job market.
People have left the workforce for a myriad of reasons over the past two years – layoffs, health insecurity, childcare needs and many personal issues resulting from the disruption caused by the pandemic. But among those who are gone and cannot or will not return, the vast majority are older Americans who have accelerated their retirement.
Earlier this month, ADP chief economist Nela Richardson said that the strength of the stock market and soaring house prices “have offered options for people with higher incomes. We have already seen much of the baby boomer workforce is retiring. And they’re in a better position now. “
In assessing job recovery, economists pointed out that while the unemployment rate has fallen, the labor force participation rate has not improved at the same rate. But Jared Bernstein, a member of President Joe Biden’s Council of Economic Advisers, said that once “non-prime-age” workers – those over 55 – are excluded from the measures, a much clearer picture of the evolution of employment recovery emerges as it suppresses the retirement narrative.
Last month, an additional 3.6 million Americans left the workforce and said they didn’t want a job compared to November 2019, says Aaron Sojourner, labor economist and professor at the Carlson School of Management of the University of Minnesota.
Older Americans, aged 55 and over, accounted for 90% of the increase.
“I think a lot of stories imagine that older workers are lacking as well, but it actually tilts a lot older,” Sojourner told the CNN affair.
The shortage of labor and retirement
The often deplored labor shortage has become a shortcut for the complicated reality of workforce during a pandemic.
Americans are quitting their jobs in record numbers – over 4 million every month since July – but much of that quitting is happening among young people leaving for others jobs or better pay. They do not completely leave the labor market.
“This is in part due to a shortage of quality jobs,” explains Sojourner. “It’s a bit of a puzzle why employers don’t raise wages and improve working conditions fast enough to attract people. They say they want to hire people – there are 11 million. of vacancies – but they don’t create positions that people want. “
Federal Reserve Chairman Jerome Powell highlighted the issue at a press conference on Wednesday.
“There is an underlying demographic trend to all of this … The question of how much we can recover is a good question, and what we can do is try to create the conditions,” which allow people to come back, he said.
Certainly, some companies have increased salaries to attract and retain staff. Some companies also offer signing bonuses to get workers out the door. But economists are unsure whether these incentives are here to stay and sustainably improve workers’ conditions.
“I can want a 65 inch TV for $ 50, but that doesn’t mean there is a shortage of TVs, it means I’m not willing to pay enough to have someone sell me a TV,” he said. declared Sojourner.
Nearly 70% of the 5 million people who left the workforce during the pandemic are older than 55, according to Goldman Sachs researchers, and many of them aren’t looking to return.
Retires tend to be “stickier” than other exits from the workforce, the researchers wrote. Nevertheless, they expect that an improvement in the viral situation and increased vaccination will allow older workers to return to the workforce.
In normal times, retired people are often drawn into the workforce. But the “selfish” rate fell significantly during the pandemic, exacerbating the shortage of workers, according to research from the City of Kansas Fed.
There are signs that older people are returning to the workforce as vaccination rates rise and employers offer higher wages. The rate of nonretimer fell to just over 2% at the start of the pandemic, but in recent months has been completed at around 2.6%, according to Nick Bunker, economist at Indeed. This is still a far cry from the pre-pandemic rate of around 3%.
Again, older workers potentially compete with younger and more skilled applicants, which could make their return more difficult.
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