Unretiring Workers on the Rise
One unexpected trend that has emerged in recent months as COVID-19 vaccination rates rise and salaries increase is that recently retired persons are re-entering the workforce. Early retirements brought on by the pandemic were a contributing factor to the many labor distortions as they related to the pandemic. Health concerns being a primary motivator for those to decide to leave the workforce. Around 3 million workers opted to take an early retirement during the pandemic. Of those early retirees, about 91% were ages 55 or older.
Nick Bunker, director of economic research at the Indeed Hiring Lab told Market Watch that more than 2.5% of retired workers in the U.S. went back to work in October of this year. “Now that the labor market is stronger, more people who said they were retired are being enticed by stronger wages and more job opportunities,” said Bunker. Now, with about 195.3 Million people in the US vaccinated (approx. 59% of the population) those workers are starting to return to help raise labor force participation rates to 61.6 percent (still below the 63.3% mark pre-pandemic.)
Bunker used data from the Current Population Survey from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics to determine the “unretirement” rate. In October the rate was 2.6%, 2.5% in September, and 2.4 in August. These rates are still below pre-pandemic rates (about 2.5-3%) but have shown steady signs of improvement since the low point of 2.1% in June of 2020. Bunker said that “The trend suggests there’s a group of people out there who want to work and are increasingly finding it.”
Demand for labor has increased as record numbers of U.S. workers are leaving their jobs. Last month we reviewed several factors as to why this is happening and what employers can do to help curb this. Now, a more diverse array of jobs as well as bigger paychecks are drawing back those who opted for retirement. Aaron Sojourner, a labor economist and associate professor at the University of Minnesota said “We can see there’s some reversal occurring now [from the great resignation]. We seem to be bouncing back a little bit.” Some of the factors Sojourner contributed to this reversal are 1. Vaccination rates climbing, 2. Restraints on childcare easing and thus relieving grandparents of care responsibilities they may have shouldered for working parents 3. Job prospects are improving and wages are rising along with them. “If they’re enticed back into the labor market by improving public health and jobs that’s good,” Sojourner said. “It means they have better options … The inside-the-labor-market option got better than the outside-the-labor-market option.”
That last part may be an important factor to consider. These returning workers may decide to retire again if they don’t ultimately feel fulfilled by their decision to return. Whether these retirements are durable or temporary is largely a function of how people want to use their time according to Sojourner. Ultimately, it is up to the organizations whether they want to begin exploring by adding these more experienced workers who may not be around as long versus a less seasoned worker who might not need to be replaced as soon and starting the hiring process over again.
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