Are Older Workers Retiring Early In This Recession?
Job growth is slowing amid surging coronavirus infections. Many workers 55 years old and older are leaving the labor force in droves, while others keep working, even at high risks to their health and that of their families.
More than a million older workers have left the labor force since the pandemic started. The labor force participation rate for workers 55 years old and older fell quickly to 38.5% in May 2020 from 40.3% in February, meaning that 1.6 million workers left the labor force in the matter of three months. The rate then recovered from to a new high of 39.4% in August, amid employment gains that were buoyed by declining virus cases and federal assistance for businesses. But the labor force participation rate of older workers then fell again to 38.7% in November, only slightly above the low of 38.5% in May. More than one million fewer workers 55 years old and older were in the labor force in November than in February, before the pandemic took its toll. Had all of these older workers stayed in the labor force and kept looking for work, the unemployment rate for workers 55 years old and older would have been 8.3% instead of the reported 5.8% in November.
There are several reasons why older workers are leaving the labor force in this recession. For some, it simply was the right time. They may have had some stock market investments that did well before and during the pandemic. For example, my calculations based on Federal Reserve data show that the average wealth for households between the ages of 55 and 69 years old was $1.4 million (in 2020 dollars) in June 2020, about the same level as the record high at the end of 2019, recovering almost all losses from the stock market selloff in the spring. So, why not take a breather when faced with the risks of a deadly virus?! Average wealth, though, reflects the top of the wealth distribution. Only a small share of older households – typically white, college educated and married — have enough wealth to choose to stop working when the virus raged across the country.
Other older workers, who have left the workforce, did so because they had lost a job and gave up hope finding a new one. Data from the Bureau of Labor Statistics shows that the number of discouraged workers 55 to 69 years old almost doubled from 93,000 in March to 175,000 in November of this year. This growth in the number of discouraged workers should be no surprise, given that the average length of unemployment for workers 55 to 64 years old, was 27.9 weeks in November. Older workers often experience longer unemployment spells than younger workers because of widespread age discrimination. By November, the average older unemployed worker had been looking for a job for more than half of the year.
Some older workers may have also decided to leave the labor force to avoid the health risks associated with the novel coronavirus, even if they needed the income. Data from the Bureau of Labor Statistics show that the number of people 55 years old and older who worked part time because of health reasons or family obligations – caring for a spouse, child, grandchild or parent, for instance – dropped by 501,966 workers – a relative decrease of 30.3% from 2019 to the months from July to October. In comparison, the number of people in this age group, who worked part time to supplement their retirement income only declined by 21.0% during that time. The health threats from the pandemic presented many older workers with a tough choice between physical and financial safety.
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Many other, older workers, though, felt that they needed to continue working, even if it meant greater exposure to the virus. Take the example of direct care workers, those working in long-term care facilities and helping people stay in their own homes. They get paid little and many rely on public programs such as Medicaid and SNAP to make ends meet, even when most work full time and have decades of experience in the labor market. Amid the pandemic, these crucial health care workers, especially Black and Latina women, faced some of the highest risks of contracting the virus. Faced with the choice of getting severely ill or dying from the novel virus or having their children go hungry or their families being evicted, many opted to continue to work. The share of older workers, for example, among direct care workers was higher during the pandemic than in 2019. Worse, the Trump administration has systematically undercut the enforcement of health and safety regulations, exacerbating the harrowing experience of many older workers who continue to work longer amid the health risks of the pandemic. Working longer was not a choice for many vulnerable older workers, but an unavoidable health hazard for these critical yet woefully undervalued health care workers and many others like them.
Older workers are often caught between maintaining their financial security and risking their health and that of their loved ones in this pandemic. Economic security at older ages was always a long way off for a large share of older workers. The pandemic only made an already bad situation much worse.