Due to the stresses that the pandemic placed on health and employment, older workers have left the workforce at a higher rate and a younger age. These workers have been forced into an early retirement whether or not they were ready for it, risking long-term financial insecurity for themselves and reduced economic growth for the country.
The labor force participation rate for those 55 years and older has decreased by about 1.5 percentage points in a year. For the sake of comparison, the rate for those between the ages of 25 and 54 increased by 0.4 percentage points. Similarly, during the pandemic the employment situation offered little hope as unemployment rates for older workers quickly spiked to levels higher than those of younger workers. In April 2020, the rate for those over 55 was almost a whole percentage point higher than younger workers. According to a study by the National Institute for Retirement Security, over 25% of workers agree that COVID caused them to move up their retirement date, leaving the workforce without approximately 830,000 extra retirees.
This trend is unique to the current pandemic. Usually, during a time of economic downturn, seniority and tenure help older workers maintain their employment. However, because of the increased health risks and the adoption of telework, brought about by the coronavirus, older workers have been impacted disproportionately. These specific circumstances have not only pushed these workers out of their jobs but have also prevented them from being rehired. About 30% of workers over the age of 50 risk illness by attending their jobs, about three-quarters of which require close contact with others such as caregiving and transportation. Since the start of this year, over 80,000 people between the ages of 50 and 65 have died at the hands of COVID-19, more than three times the number of deaths for those up to 49 years old. As such, many employers are now hesitant to hire older people for fear of the possible health implications.
For many workers, the solution to health risks was to work remotely, relying heavily on teleworking technologies. For the older generation, this option was limited. Of the more than 5 million workers 65 and older, approximately 75%, are unable to telework. The prime age for remote working is between 35 and 44 years old, corresponding to workers who are settled into their employment, capable of handling technology, and not yet at high risk for COVID fatality. As such, these workers are keeping their jobs or being rehired at a rate double that of older workers.
Workers in their late 50s and 60s have now been burdened with early retirement, which weighs heavily on their savings. Generally, the pandemic limited the amount of money that workers were putting toward their retirement funds as an attempt to preserve their financial standing as unemployment increased and wages took a hit. 22% of Americans said that they were forced to dip into their emergency savings as a result of the pandemic, 10% reduced contributions to their retirement plans, and 12% withdrew money from their retirement accounts. The CARES Act even promoted this trend by allowing those suffering from pandemic hardship to remove up to $100,000 from tax-deferred retirement accounts without penalty. In addition, more workers applied for early social security benefits this year, according to the Census Pulse Households Survey. The longer-term impacts of these decisions will mean that monthly benefits will be permanently reduced, out-of-pocket expenses related to health care are likely to increase, and worker savings will continue to dwindle. For workers who expected to have another 5-10 years in the workforce, they are likely to face a much less comfortable retirement than they were expecting.
The country as a whole may also face decreased growth because of this trend. It is estimated that, without the pandemic’s impacts, the US would have an additional 3 million older workers in the workforce. People are unlikely to return to work after taking steps towards retirement, especially under the current circumstances. The lack of return to work has therefore placed much of the older generation into the permanent job loss category, which hampers economic growth.
To recap, older workers have taken a large hit to their employment as a result of the pandemic. Health risks and the inability to easily work from home caused a large number of workers over the age of 55 to leave or be removed from the workforce with little ability to rejoin. This trend has forced many to retire at an earlier age, adding stress to retirement funds, savings, and economic growth. Though this trend is expected to pass with the end of the pandemic, the unfortunate retirement situation for older workers cannot be negated.