Uneasy Un-Retirements

Older workers can still be a source of relief for tight labor markets.

In the recovery from the Global Financial Crisis, I found myself in the uncomfortable position of defending my generation. Millennials were stereotyped as lazy for not working (when no one was hiring!) and living with their parents (hard to afford rent without a job!). But the economy recovered, and younger workers established themselves. Now, the tables have turned: Millennials are in our prime working years, and we’re wondering where all the older workers have gone.

The recovery from the pandemic has created ample opportunity for workers of all skill levels. The labor force participation rate (LFPR) for workers between the ages of 25 and 64 now exceeds the rate seen in the pre-COVID era; for prime-aged women, participation touched an all-time high. But workers aged 65 and over are holding back.

Older workers’ pandemic-led departure from the labor force was rational. COVID carried the greatest risk to older people, and their urge to stay home was understandable. Rapidly recovering markets generated wealth effects, allowing many to afford a break from the workforce. Buoyant real estate markets allowed homeowners to sell at a gain and relocate to retirement destinations.

Labor Force Participation by Age