Retirement isn’t always forever. Over the course of a business cycle, about 20 percent of people are working within 12 months after they first report being retired, according to calculations by Goldman Sachs. The question now is how many people who took early retirement because of the Covid-19 pandemic will return to work. Will it be more than the usual one-fifth, or more, or about average? How “sticky” is retirement?
A surge of older workers returning to the labor force would ease labor shortages that have hampered businesses and driven up wages. There has already been a fairly large rebound. The labor force participation rate for people aged 55 to 64 fell to 63.5 percent in January from 65.5 percent in February 2020, but has since bounced back to 64.8 percent as of last month.
Retirees are being pulled in opposite directions, says Joseph Briggs, a Goldman Sachs economist. On one hand, as the pandemic comes under control it becomes safer for retirees to resume working. On the other hand, he said in an interview: “Household balance sheets are much stronger now in many ways than they’ve ever been,” so the need to work has lessened.
Some employers are making a big push to get older workers back. “Take a partner at an accounting firm,” Tim Rowley, chief technology officer of PeopleCaddie Inc., a Chicago-based professional staffing company, said in an interview. “They put in 25 to 30 years. They walked off into the sunset only to have the company call up and make them an offer they can’t refuse. We’re seeing some pretty attractive packages.”
One positive sign for a further rebound in participation is that 3 percent of people 55 and older who are out of the labor force say they want a job, according to Bureau of Labor Statistics data. That’s the average since the pandemic recession began. It’s higher than the 2.8 percent who said so during and immediately after the recession of 2007 to 2009.
True, as of now that desire to work is mostly notional. Seventy-two percent of people 55 and older who are out of the labor force but say they want a job report that they did not actually look for work in the previous 12 months. If they could be induced to look, there’s a good chance they would find something; there were more than 10 million job openings in the United States as of September, according to the Bureau of Labor Statistics.
Older Americans have reasons to keep working or to return to work that should outlast the pandemic, says Daniel Bachman, the economic forecaster for the United States at the consulting company Deloitte. “As people are living longer they need more savings,” he says. “Also people are healthier, especially at the upper end of the income distribution, so they can work longer. Those things are driving people to remain in the work force.”
Bachman admits that retirement has its attractions as well. He wrote in May for a Deloitte publication, “It will take some effort and imagination on the part of recruiters to convince people to come out of retirement once they have gotten busy with grandchildren and hobbies.”
The New York Times
