How millions of unemployed Americans can afford to quit their jobs

Only trouble is, the numbers don’t back it up.

Instead, early retirement – whether forced by the pandemic or otherwise – is playing a large role in America’s burgeoning labor market.

People have left the workforce for a multitude of reasons over the past two years – layoffs, unsettled health conditions, childcare needs, and any personal issues arising from the disruption. caused by the pandemic. But among those who have left and are unable – or unwilling – to return, The vast majority are older Americans who have accelerated retirement.

Earlier this month, Chief Economist ADP Nela Richardson says A strong stock market and soaring home prices “have given some higher-income people options. We’ve seen a large portion of the Boomer workforce retire. And where they are now. a better position.”
In assessing the employment recovery, economists have pointed out that although the unemployment rate has dropped, 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 workers “not old age” – people over 55 – are excluded from the indexes, a much clearer picture of how the labor recovery is going because it removes the retirement narrative.

Aaron Sojourner, a labor economist and professor at the University of Minnesota’s Carlson School of Management, said last month that an additional 3.6 million Americans left the workforce and said they didn’t want a job. do compared to November 2019.

Older Americans, 55 and older, accounted for 90% of that increase.

Sojourner told CNN Business: “I think a lot of the stories imagine that prime-age workers are missing, but it’s actually aged a lot.

Labor shortage and retirement

The unfortunate labor shortage has become a shorthand for the complex reality of pandemic workforce.
Americans are quit their job in record numbers – more than 4 million per month as of July – but most of the quitting is happening among young people who are leaving for other work jobs or higher wages. They did not leave the workforce entirely.

“Part of it is the lack of quality work,” says Sojourner. “It’s a bit confusing why employers don’t raise wages and improve working conditions fast enough to bring people back. They say they want to hire people – there are 11 million job openings – but they do. doesn’t create the job opportunities People want.”

To be sure, some companies got a raise to attract and retain employees. Some businesses even offer signing bonuses to get workers in the door. But economists are uncertain whether these incentives exist and will improve workers’ conditions in the long run.

“I might want a 65-inch TV for $50,” says Sojourner, “but that doesn’t mean a lack of TV, it means I’m not willing to pay enough to have someone sell me a TV.

Nearly 70% of the 5 million people left the workforce during the larger pandemic 55, according to researchers from Goldman Sachs, and many of them don’t want to go back.

Retirement tends to be more “engaged” than other exits from the workforce, the researchers write. Even so, they expect that an improvement in the virus situation and increased vaccinations will allow older workers to return to the workforce.

In normal times, retired people are often drawn back into the workforce. According to research from Fed City, the “unexpected” rate has dropped significantly during the pandemic, exacerbating labor shortages.

There are some early signs that older people will return to the workforce as vaccination rates rise and employers offer higher wages. Rates have not continued to drop to just over 2% at the start of the pandemic, but in recent months have risen to around 2.6%, by Nick Bunker, an economist at Indeed. This is still lower than the pre-pandemic rate of about 3%.

Then again, older workers are likely to compete with younger, more qualified applicants for jobs, which can make their return more difficult. .


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