The pandemic pushed more than 3 million baby boomers into premature retirement, according to a new analysis from Miguel Faria e Castro, a senior economist at the St. Louis Fed.
Why it matters: The wave of early retirements is contributing to the labor shortage that's roiling the U.S. economy.
What's happening: Many older workers faced layoffs, and others left the workforce to protect themselves from the risk of infection.
- It's much harder for workers in their 50s and 60s — or older — to re-enter the workforce after a period of unemployment, due to persistent ageism in corporate America.
- So it's likely that many of those who left jobs got discouraged and chose to retire instead.
Siavash Radpour, associate research director at the Retirement Equity Lab at The New School, a private university in New York, said some older workers face discrimination in hiring. They may be passed over even in industries with plenty of openings, such as food services, because employers consider the jobs physically demanding, he said. That means some older workers “don’t really have the option to come back to the labor force,” he said.
Research suggests that some early exits from the workforce in the pandemic were more pronounced among seniors with less education and lower incomes.
A higher share of workers without a college degree retired before the traditional retirement age of 65 compared with those who had a college education, according to the Retirement Equity Lab. The lab’s analysis of census data found that retirement rates for those ages 55 to 64 without a college degree rose by 0.8 percentage point from 2019 to 2021, compared with a decline of 0.6 percentage point for similarly aged workers with a degree.
Boston College’s Center for Retirement Research used census data to determine that job losses earlier in the pandemic were steeper among lower-income older workers compared with higher-earning ones.
About 38% of workers aged 62 and older and in the lowest third of weekly earnings no longer held jobs in the fourth quarter of 2020, up from 28% in the second quarter of 2019, according to the analysis from Geoffrey Sanzenbacher, a research fellow at the center.
Among similarly aged workers in the highest third of weekly earnings, 22% weren’t working during the fourth quarter of 2020 compared with 18% in the second quarter of 2019.